202 National Final Flashcards by Austin Jay Godfrey

The income remaining after deduction losses for vacant apartments and collection charges are:

Effective gross income

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A contract is terminated if:

It is impossible for one of the parties to perform

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Which of the common-law agency duties of an agent will be easiest for a dual agent to perform fairly for both parties to a transaction?

Accounting

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The best way to describe a novation is:

A new contract which substitutes for a new contract

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The annual report of XYZ Mortgage Company, issued as a requirement of the Home Mortgage Disclosure Act, shows a pattern of numerous loans made in one area of the city and very few made in another area. The XYZ Company lending patterns might constitute:

Redlining

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The Wilsons have purchased a newly-built home and 3 months after closing the roof fails. Which of the following is TRUE in this case?

The Wilsons have recourse against the builder because of the implied warranty of fitness and merchantability

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Sellers listed their home with a broker. After three months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission. This listing was most likely:

An exclusive agency listing

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J. has a 2-acre tract of land that she is subdividing into lots. She plans to make each lot 60 feet by 190 feet in depth. If you provide a street 28 feet wide by 210 feet in depth, how many full lots will J be able to market?

a) 7 Lots

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Which of the following items could NEVER constitute a fixture?

d) Land

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An agency agreement between the seller and a broker to sell a specific piece of real property will be terminated by all the following EXCEPT:

c) Revocation of the listing salesperson’s license

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A potential buyer signs a contract with a seller but then decides not to buy. The seller may sue the potential buyer for specific performance or damages UNLESS the contract was:

d) An option

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The party making an offer is called the:

b) Offeror

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FHA functions MOST like:

d) An insurance company.

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A major ADVANTAGE of an FHA loan for a first-time buyer with limited funds is:

c) A relatively small down payment is required

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There is a three-day right of rescission under the truth in lending laws for all but which one of the following?

a) A first mortgage loan to buy a new house

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The secondary mortgage market buys mortgages from

b) Banks

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Two weeks after entering into a listing agreement, a broker learns that the subject property is within an improvement district whose assessment roll has just been confirmed. Both broker and seller now have an obligation to disclose to prospective buyers that:

b) There is now a special assessment that is a lien against the property

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A real estate sale where there are installment payments to the seller and which a deed is held by the seller would be a (an):

b) Contract for deed

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During property showing, an agent notices high water marks behind shelves in the basement. The property disclosure makes no mention of water problems. Before writing an offer, the agent should:

c) Inform the buyer of the observation and suggest inspection

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Tax deductions on a personal residence include all the following EXCEPT:

c) Depreciation

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The purchase and sales agreement provides for release of earnest money to the seller after the buyer’s property inspection. The seller requests the earnest money prior to the property inspection. The broker should:

d) Refuse to release the earnest money

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The buyer says in front of the witness, “I will pay you $150,000 for your property at 23 Smith Street.” The seller says, “Okay”, and they shake hands. The agreement is NOT an enforceable contract since it does NOT involve:

b) Writing.

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A tenant with a triple net lease rents a building that has the following yearly operating expenses: Property taxes $5,000, Utilities $7000, Repairs & Maintenance $1,500. The tenant would be responsible for how much of these expenses?

d) $13,500

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An easement can be created by any of the following EXCEPT:

b) Merger of the titles.

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When the ownership of a property cannot be traced from its origin to the present owner because of a break in the chain of title, the establishment of current ownership usually REQUIRES:

c) A suit to quiet title

For the borrower, the major ADVANTAGE of Private Mortgage Insurance (PMI) for a home mortgage loan is that the:

c) Borrower can finance a larger percentage of the sale price

An investor wants to purchase a 24-unit apartment house where rents are $360 per month. What is the most that he can pay for the property if he wants his money to earn 12%?

b) $864,000

A couple applied for a loan to finance the purchase of a new home. What Federal Act was created to ensure that they have knowledge of all closing costs?

d) Real Estate Settlement Procedures Act

What type of mortgage plan may permit a builder/developer to obtain the release of lots, one at a time, as they are developed:

b) Blanket mortgage

A national company desires a parcel of land which MUST be four times the size of its proposed building. If the building design includes 20,000 square feet, then which of the following MINIMUM lots should be purchased:

b) 2 acres

The mortgage secured by 2 or more parcels is called:

b) A blanket mortgage

Legal description which gives directions and distances is one by:

d) Metes and bounds

A contract is terminated if:

c) It is impossible for one of the parties to perform

If a salesperson changes brokerage firms, what happens to the salesperson’s listings?

a) They remain with the original brokerage firm

Which deed conveys the most interested real estate?

d) They all convey the same interest

Two unmarried people want to buy property together and want to make sure that on one's death, the other receives the entire estate. They would take this title as:

d) Joint tenants

The right of survivor-ship feature is usually found in:

c) Joint tenancy

After a salesperson explains the services to be provided, the sellers sign a listing agreement with the salesperson’s realty company and broker. The salesperson also signs the listing form. As a result, an agency relationship is established between or among the:

d) Broker and the sellers

The purpose of requiring earnest money in a real estate sales contract is to:

c) Provide evidence of the buyer’s intention to carry out the contract.

In a jurisdiction where the common law of agency applies, a broker has listed a home and then presented to the seller an offer from another client of the broker. The offer has been accepted. The broker has what type of agency relationship with the parties?

d) Dual agency

Purchase of common stock in a corporation gives:

c) An interest that is classified as personal property.

A tax against a specific property resulting from a public improvement that benefits that property is known as:

d) A special assessment

The cost approach is based upon:

b) Reproduction or replacement cost

Which of the common-law agency duties of an agent will be easiest for a dual agent to perform fairly for both parties to a transaction?

b) Accounting

An appraiser looks at a house that is in good condition and well kept. Other homes on the street have junked cars and un-kept yards. This is an example of a (an):

c) Economic obsolescence

When a foreclosure sale of a property does not produce sufficient funds to cover the loan balance, the mortgagee may be entitled to a personal judgement against the mortgagor. This personal judgement is called:

d) A deficiency judgement

With what type of lease would a lessee pay fire insurance?

b) Triple-net lease

In which of the following cases will a formal appraisal ALWAYS be REQUIRED?

c) In order to obtain an FHA insured loan

If an agricultural lease is terminated unexpectedly, the tenant farmer may:

c) Recover the emblements

In a jurisdiction where the common law of agency governs real estate activities, a broker has a single agency relationship with a seller. This relationship will terminate when:

d) The sale of the property is completed

The document used in a real estate sale that creates the legal rights of the buyer and seller is the:

a) Purchase contract

According to the principle of progression, a three-bedroom, one-story home is MOST likely to bring the highest price if located in a neighborhood where:

c) Most homes are larger than the sale home

Which of the following would be an example of a legal non-conforming use?

c) Being allowed to continue a residential use as land formerly zoned for residential use which has recently been rezoned to commercial use

A firm has entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm’s agents have contacted. The realty firm has an agency relationship with:

a) The builder

seller’s agent is contacted by a potential buyer whose financial status is questionable. When asked to write an offer, the agent should:

d) Relay any reservations to the seller

The best way to describe a novation is:

c) A new contract which substitutes for a new contract

Which of the following is the most reliable in estimating the sales price of a single-family residence?

b) Market data

A home buyer wants to borrow $100,000. The lender quotes on the loan origination fee of 1 point plus a loan discount fee of 1 point. What size loan must be obtained to pay the 2 points and still leave $100,000?

b) $102,041

The best way for a lender to avoid a tax sale is:

a) Require the borrower to place sufficient money in a tax reserve escrow

A prospective seller asks a salesperson to provide a listing price for a property. The salesperson should suggest:

c) A competitive market analysis to determine the property’s value.

The Wilsons have purchased a newly-built home and 3 months after closing the roof fails. Which of the following is TRUE in this case?

a) The Wilsons have recourse against the builder because of the implied warranty of fitness and merchantability

Property has a net income of $30,000. An appraiser decides to use a 12% capitalization rate as opposed to a 10% rate. Use of the higher rate results in:

c) A $50,000 decrease in appraised value

A and B purchase an apartment building for $220,000. A contributed $132,000, B invests $88,000. At the end of the year, the net worth is $12,000. How much will each partner receive based on their individual investment?

d) A $7,200 B $4,800

Rental rates are influenced PRIMARILY by

c) Local supply and demand

A person buys a house for $150,000 with $50,000 down and obtains a loan for $100,000. She/he pays interest and some principal for 5 years on the note and $70,000 in one lump sum at the end of 5 years. This is an example of:

d) A partially amortized loan

The sellers have agreed to give the buyer a carpet allowance to replace the living room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard for a pad and installation. If the family room is 22’6” x 15’, how much will it cost the owners (to the nearest cent)?

a) $935.63

Errors and Omissions insurance typically covers the broker for:

c) Unintentional misrepresentations.

A real estate broker enters into an agreement to represent a buyer who is seeking a property to purchase, and remains a single agent throughout the transaction. A seller with whom this broker negotiates is this broker’s:

b) Customer

A management agreement is a contract which identifies which one of the following?

c) Property manager’s authority

Which legal description identifies property with "lot and block"?

b) Recorded plat

Which of the following could be included in a building code ordinance?

a) Material for plumbing

Sellers listed their home with a broker. After three months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission. This listing was most likely:

a) An exclusive agency listing

Horizontal township lines are known as:

a) Tiers

The buyer wants to make the purchase offer contingent on a complex mortgage. The buyer’s agent who is creating the contract should:

b) Suggest the buyer ask a lawyer to furnish the wording

A seller mentions to his agent that the previous owners of his property may have disposed of hazardous waste on the site. Under the comprehensive Environmental Response, Compensation, and liability act (CERCLA), who is liable for damages from the dumping prior to the sale of the property?

a) Seller

Which of the following would be an easement by necessity?

a) A driveway through a neighbor's property which provides the only access to a public street

The cost approach includes all the following EXCEPT:

c) Capitalization rate

In selecting a capitalization rate for an income producing property, the appraiser will consider all the following EXCEPT:

c) Interest expense on borrowed capital

An owner hired a company to build a swimming pool at a home. The owner failed to pay the bill once the work was completed and the construction company filed a lien to obtain payment of the debt. The encumbrance created is called:

b) A mechanics lien

The appraisal on a quality single-family residence would be the LEAST influenced by:

a) Projected rental income

The real estate licensee who accepts a private fee for referring a buyer to a specific title company may be in violation of:

a) RESPA

What is the loan amount on a sale of $200,000 with the loan-to-value ratio of 80%?

b) $160,000

Earnest money should be deposited to trust accounts:

a) In a timely manner, according to state laws

A provision contained in a two-year lease states that should the tenant retain possession after expiration of the lease, it will be on a month-to-month basis with a 50% increase in rent. This provision is intended to discourage a:

c) Tenancy at sufferance

Which of the following is true regarding liability for rental payments under an assignment of a lease?

c) The assignee becomes primarily liable under the lease and the assignor retains secondary liability

On January 15, a seller paid $960 in AD Valorem tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1st. What will be the seller’s credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360 day year and a 30 day month:

c) $800

J gives a tenancy at will. If J dies, what effect does this have on the tenancy?

a) The tenancy is terminated by J's death

A grants J a life estate in a property and the remainder to P.J. He then leases the property to M for 5 years. Which of the following is true?

c) M has a tenancy which terminates at J's death

202 National Final Flashcards

(88 cards)