Broker Test Flashcards
Pass (292 cards)
1
Q
Who creates deed restrictions on a property
A
A vendor
2
Q
The appraiser has been asked to appraise an apartment complex for an investment buyer. Which form of estimating value would be the most beneficial to the investor?
A
Income Approach (also called the capitalization approach)
3
Q
A seller charges the broker with cheating money due to them through a misrepresentation of the price of the home, in addition to a violation of the law of agency three years after the property closed. What can happen if the seller sues?
A
The seller can file a civil suit and, if the suit alleges a violation of Chapter 475, he can seek a claim from the Real Estate Recovery Fund.
4
Q
The court case of Johnson v. Davis in Florida is important to Florida real estate brokers because the court’s ruling made it clear that:
A
B) Any material fact or defect must be reported or disclosed to the buyer for his decision.
5
Q
Caveat emptor
A
Let the buyer beware
6
Q
The only mortgage that includes the boat, the boat dock, and other personal property with the home loan is called:
A
A package mortgage
7
Q
The lender has a loan that is in the second position in priority to another loan. What type of mortgage is this?
A
A junior mortgage
8
Q
The seller refuses to sell their property to a mixed-race couple. What is the best legal recourse the couple has against the seller
A
The Civil Rights Act of 1866
9
Q
An installment contract differs from the usual sales contract in which manner?
A
The installment contract does not call for the entire purchase to be made and all the money paid at closing, but the sale contract does require a complete payout.
9
Q
In which of the following would the income approach as a means of determining value be the most useful?
A
In pricing an apartment complex for an investor
10
Q
The clause in a mortgage that permits the lender to declare the entire unpaid balance due immediately payable upon default is called the:
A
Acceleration Clause.
11
Q
Susan gave a listing agreement to her broker to sell her home. Her best friend, Katherine, decided to buy it and Susan did not want to pay the broker their commission. The broker responded that they would be paid no matter who the buyer was. What type of listing did Susan have?
A
exclusive right to sell
12
Q
The Federal Fair Housing Act prohibits discrimination in all EXCEPT:
A
The elks club
13
Q
Tony has a problem with his garage. He needs to add an addition to the garage so that he can get his mother’s wheelchair out of the car and on to the sidewalk. By building the garage to the sidewalk, it will be extended 2 inches on one corner beyond what the city allows for building. What can Tony do?
A
Tony can ask for a special hardship variance.
14
Q
The rental broker sells a rental list to a prospective tenant. The tenant calls and goes to all the properties listed, only to discover that the property list was at least a month out of date and they were unable to find any housing. The prospective tenant calls the broker and demands their money back for an out-of-date list. Can the tenant do this?
A
Yes. The broker was required to have the tenant sign a one-page contract that stated that if the list was not accurate, the tenant had the right to get a refund of 100% of their fee.
15
Q
The State of Florida and the Federal Government are concerned about clean water. Under the Clean Water Act, Section 404, who can issue permits to allow dredging or fill material in navigable waters in Florida?
A
The Army Corps of Engineers
16
Q
SARA has provisions for which item?
A
The National Priorities List
17
Q
Effective Gross income=
A
Rental GPI + Other income - Vacancy and credit costs.
18
Q
The Federal Fair Housing Act of 1988 added which of the protected classes to Federal Fair Housing?
A
Familial Status and Handicapped Status
19
Q
The recording of liens on a property is important because:
A
It gives each of the liens a priority of payment, an order after the priority liens.
20
Q
What law requires that the closer must use the Closing Disclosure form for any closing related to federally-related mortgage loans?
A
TILA/RESPA Integrated Disclosure (TRID) Rule
21
Q
What law requires that every buyer and every seller sign a sales contract?
A
The Statute of Frauds
22
Q
Susie has been found guilty by the FREC and has been issued a Probation Order. How long will the probation last and when will it begin?
A
The probation is for 90 days and will begin 30 days after the filing of the final order.
23
Q
Which type of relationship is an example of an agency relationship?
A
A landlord and a property manager
24
A monthly payment necessary to amortize a 30-year home loan for $154,000 at 8% is $1,130. How much interest will the mortgagor pay over the 30-year term?
$1,130 x 360 = $406,800. Subtract original loan amount from total amount paid. $406,800 - $154,000 = $252,800
25
A building has vacancies and the property manager is concerned because they feel that the rent may be too low. Upon reviewing the budget, a certain loss between the gross income and the effective gross income is noted. What is this called?
The vacancy rate
26
Jackie has her broker's license and it is past due for renewal. She has moved in the last month and she forgot to inform the FREC of her new address. The Department sent her renewal notice to the old address and, with the move, Jackie didn't even think about renewing her license. She realized what happened about two weeks after the renewal date. May Jackie renew her license under these circumstances?
Jackie's license is currently involuntarily inactive. Since she has already taken her continuing education classes, she will need to pay the appropriate late fees and change her address online to reinstate her license.
27
Vickie is a little spacey as a real estate sales associate. She signs a single agency representation with a seller. Her broker has reminded her several times to be careful to lock up a home that she has on an open house on Sunday. Last Sunday, Vickie forgot to lock up again as she was in a hurry to get home. As a result, burglars came in and took all the electronic equipment in the home before the sellers got home. What is this an example of?
This is an example of a lack of due care.
28
Paul is reviewing papers with a seller in order to list the seller's home. The seller has a survey in all the papers asks the broker why the survey would be important to have. What should the broker say?
The survey should show all the encroachments on the property and may save the buyer money - allowing a potentially better offer.
29
A fiduciary relationship between a licensee and a client/principle is created when a:
Buyer enters into a single agency buyer representation agreement with a sales associate.
30
Ramon is representing the seller in a single agency relationship. The seller has indicated to Ramon that he does not want a sign placed in the yard because his wife has Alzheimer's, and it makes her cry to see the sign. What should Ramon do?
Ramon should follow the wishes of his seller.
31
The sales associate completes a sales contract for a buyer on a Sunday afternoon. The contract is accepted on Sunday night and an earnest money check is given to the sales associate. When does the sales associate have to get the earnest money check to the broker?
Monday by 5:00 p.m.
32
The borrower's right to reclaim ownership of his property after foreclosure is called:
Statutory redemption
33
What is a contingency when it is used with a contract?
It is a condition that must be met before the contract is fully executory.
34
A property manager has many important jobs to do, but the most important job is:
Understanding that a property manager must provide the highest return on the building within the objectives of the owner.
35
Both brokers and sales associates must take post-license courses within the first renewal period after obtaining their licenses. How much time is required in these courses?
The sales associate course is 45 hours; the broker's course is two 30-hour courses.
36
A property manager broker is responsible for several security deposits of tenants in the building. They keep careful records of all the tenants' money and reconcile the accounts monthly. How much of their own money are they allowed to keep in the property management account to make sure it has adequate money for fees?
$5,000
37
Becky is a single agent representing the seller in a transaction. The seller has AIDS and discloses that fact to Becky. Becky does not tell the other agent nor is it disclosed by either the seller or Becky to the buyer. The buyer sues Becky for nondisclosure of a material fact. Does the buyer have a case?
AIDS is not a material fact that must be disclosed.
38
Broker Bill took money out of his trust account in order to pay some of his utility bills that were due immediately. He reasoned that he would get his commission soon; so the money would be his anyway and why not pay his bills now? The FREC did not agree with that position and charged him with a violation of license law. What did Bill do?
39
Broker Bill took money out of his trust account in order to pay some of his utility bills that were due immediately. He reasoned that he would get his commission soon; so the money would be his anyway and why not pay his bills now? The FREC did not agree with that position and charged him with a violation of license law. What did Bill do?
In the act of taking money from his trust account, which was not his, to pay his bills, Broker Bill committed conversion of the trust fund.
40
The appraiser has given a property a high market value based on the maximizing use of land value. Which of the principles of value are they using to obtain this value?
The principle of highest and best use
41
The substance that is colorless, odorless, and hazardous to humans as well as the second leading cause of lung cancer is:
Radon.
42
A broker uses an office in their home exclusively for business. They have a sign and all the requirements under license law and want to deduct the home office as a business expense. What IRS form would be used to do this?
Form C
43
Andrea is the managing broker of Real Realty Corp. in Sanford. She was suddenly taken ill to the point where she can no longer perform the managing brokerage duties. What should happen next?
No new brokerage business may take place, and the company has 14 calendar days to replace Andrea.
44
Annualized debt service on an investment piece of property most nearly means:
The amount of the monthly principal and interest, annualized.
45
Which of the commercial leases is based in part of the cost of the Consumer Price Index?
An Index Lease
46
The Department has been investigating, for some time, the claims of an individual against a broker. Once the evidence has been considered and the Department has issued a formal complaint. How long does the Department have to file this formal complaint after beginning the investigation process?
Five years
47
The sellers of 123 Mulberry Lane were killed in a car crash yesterday. What will happen to the listing of their home?
The listing is canceled upon the death of the sellers.
48
Jennifer was arrested for shoplifting at a local mall. What must Jennifer do with regard to her license?
Jennifer must report the incident within 30 days to the DBPR.
49
Sandra lives in a low income area of Bunnell, FL. The area qualifies for help to low-income individuals or households to repair their properties. She has some major repairs that need to be made on her home to bring it up to livable condition. She qualifies as low income because she and her family of four make less than $40,000 a year. The family does not have any debts, but their current housing is substandard. What type of loan would be a good choice for Sandra?
Sandra should apply for a Rural Housing Services Administration Loan (USDA).
50
The broker prepares the offer from the buyer and brings it to the broker working for the seller. In the wording of financing, where the earnest money deposit is to be listed, the words "not applicable" appear. Why would this appear on a sales contract?
The broker knew that the buyer was a VA buyer and that an earnest money deposit was not required.
51
What type of disclosure is required for ad valorem taxes to the buyer?
The buyer should be provided a statement either in the contract or on a separate document that the buyer should not rely on the seller's current taxes as the amount the buyer will have to pay.
52
Curtis has a commercial property valued at $650,000. He has a loan on the property for $400,000 for 20 years. The difference between the value and the loan is called?
Equity
53
Jim made an offer on a property that he liked in a small city. The offer was accepted by the seller, and they agreed on a closing date. The sale contract called for a title search, but when the title company searched for the property, they found its address to be different because the city had changed the street names and numbers in the neighborhood. What can Jim do with this situation?
The incorrect address description does not affect the contract.
54
The IRS allows deductions for an additional home called the Second Home Tax Advantage. Which is a TRUE statement regarding this law?
The second home is allowed to take off the property taxes and the interest under certain circumstances, as is a primary home.
55
Janet was surprised when her application for broker was denied. She could not think of why this happened. What could be a reason that the license was denied?
Janet did not correct an error or omission on her application in a timely manner.
56
What does the phrase "legally sufficient" in regard to real estate mean?
The complaint must allege that a violation of real estate law has occurred.
57
The person who does NOT have representation in a listing or a sale is called a:
A no-brokerage relationship customer.
58
Jack makes his living renting mobile home lots to the snowbirds who come to Florida. Does Jack need a license?
No. sales associates who rent short term mobile home lots do not need licenses in Florida.
59
The settlement agent from a title company gives the buyer and seller a statement of conditions to be met. If the seller agrees that the property has no new encumbrances since the initial title search and that the existing loan will be paid off. The title company promises to insure for the amount of the buyer's new loan. This written commitment is called:
A title binder.
60
Jake, a broker from Indiana, is under investigation by the Indiana Real Estate Commission for commingling his trust account. He decides to leave Indiana and become a Florida resident and a broker in Florida. He does not disclose that he is currently under investigation in Indiana. What will likely happen to Jake's application for licensure?
If Jake fails to disclose, he will have his license revoked if it is discovered. A Florida license cannot be issued to Jake while he is under investigation in another state.
61
Which of the following regulates the advertisement of credit terms available for the sale of a home? It requires the disclosure of pertinent information such as down payment and
annual percentage rate if a "triggering" item such as interest rate is advertised.
Regulation Z
62
A licensee who is working as a transaction broker for the seller and buyer in a real estate transaction is responsible for the use of limited confidentially to both parties. What does this mean?
Limited confidentiality means that the sales associate will not disclose that the seller is willing to take less or the buyer will pay more in any real estate transaction where the sales associate is representing both sides.
63
When a loan is fully amortized, how does the payment work to pay off the note?
The interest is higher at the beginning, and principal is lower, but the payment remains the same.
64
Data that an appraiser collects and places side-by-side on a grid, so the appraiser can add to or subtract from the value the comparables to get the value of a subject property. This procedure is called:
Paired sales analysis.
65
A broker handles the sales of existing condos for sellers in a large building. A prospective buyer came in and looked at a two-bedroom condo, liked it, and put down earnest money to go with the offer. The seller accepted the offer, and it was considered a contract. 2 weeks later, within three days of receiving the condo documents, the prospective buyer notified the broker that they were canceling the contract and that they wanted their earnest money back. What can the broker do?
The broker can give the earnest money back to the purchaser without the seller's written consent.
66
To depreciate property that is used in business, certain guidelines must be followed. Which of these would the IRS disallow?
Property that will last no more than one year.
67
In a tax-deferred exchange, which of the following is taxable?
Boot
68
The Lead-based Paint Disclosure Rule affects all of the following types of housing
Private housing.Public housing.1-4 family flats.
69
Who creates deed restrictions on a property?
A grantor
70
The appraiser has been asked to appraise an apartment complex for an investment buyer. Which form of estimating value would be the most beneficial to the investor?
The Income Approach
71
A seller charges the broker with cheating money due to them through a misrepresentation of the price of the home, in addition to a violation of the law of agency three years after the property closed. What can happen if the seller sues?
The seller can file a civil suit and, if the suit alleges a violation of Chapter 475, they can seek a claim from the Real Estate Recovery Fund.
72
The court case of Johnson v. Davis in Florida is important to Florida real estate brokers because the court's ruling made it clear that:
Any material fact or defect must be reported or disclosed to the buyer for his decision.
73
Who makes changes to the commission rules
the commission
74
The Human Rights Act exists to ensure that
federal civil rights laws are carried out
75
Which law regulates the sale and promotion of vacation clubs?
76
How many hours of classroom instruction are required to become a real estate agent in the state of Florida?
63
77
How much time do you have to report a change of address to the Department of Business and Professional Regulation (DBPR)?
10 calendar days in writing
78
What is an escrow agent?
A person or company in charge of overseeing the negotiation, administration and closing of a real estate transaction.
79
Who is responsible for keeping track of funds in a trust and maintaining proper records of the account?
Trustee
80
.
When an agent works for both the buyer and seller, there is the possibility of the agent being motivated by selfish interests. What is this called?
conflict of interest
81
What is the name of the limitation that allows someone else to make specific use of your real estate?
easement
82
What part of the Contract for Deed allows for the cancellation of the contract for failing to make payments?
Forfeiture clause
83
What is the name of the estate that conveys with a lease or other short term living agreement?
Nonfreehold Estate
84
The general term value means:
The worth, usefulness, or utility of an object to someone for some purpose
85
Because the housing market deals with many different types of desires and needs, it is said to be:
stratified
86
The Uniform Settlement Statement required by the Real Estate Settlement Procedures Act by law shall be delivered or mailed to the borrower no later than:
At, or before, the date of settlement
87
The tax assessment roll, showing the assessed value of property in an area, would be used to:
Establish the tax base for the community
88
Accrued depreciation
The total depreciation of an improvement to date
89
The federal law which requires the use of certified appraisers to obtain a loan is called:
FIRREA.
90
This Act Requires Appraisers to be monitored by ASC
DODD-FRANK
91
Assemblage.
The principle of value, which states that two parcels combined will be of greater value than each single parcel by itself is called:
92
What is the first step of the appraisal process?
State the problem
93
Conformity
The principle of value which states that the more the properties are alike, the more they will hold their value
An appraisal principle of value based on the idea that the more a property or its components are in harmony with the surrounding properties or components, the greater its value.
94
An AVM is
A tool for valuing property which assists valuators in their job
95
The basic difference between an FHA loan and a VA loan is:
FHA insures its loans; VA guarantees them.
96
Prepaid rent on a real estate closing statement is always
as a debit to the seller and as a credit to the buyer.
97
grantor
seller
98
grantee
buyer
99
Subleasing can be described as
less than an assignment
100
Obligatory advances apply to what loan type?
Construction Loan
101
A woman who receives a property by descent receives the property by
Inheritance
102
A standard title insurance policy covers the purchaser from title problems relating to
forgery in the chain of title.
103
Which of the following tenancies is a free-hold interest?
life estate
104
What is the last action against a debtor?
Execution
105
FHA loans are made by
qualified lenders.
106
A property manager, in apartment renting, might require that
all lessees provide three character references.
107
An oil and gas lease is classified as
personal property
108
An exclusive listing in a broker’s inventory before sale is called a
executory bilateral contract.
109
A substitute of buyer in a purchase contract by the seller is known as
novation
110
A valid deed needs
Accepted, witnessed.
111
Fidelity bonds safeguard brokers against
employee theft.
112
What information is the seller obligated to release to the buyer?
Known defects in the property
113
Where in the deed would the term “to have and to hold” appear?
Habendum clause
114
Whom does SAFE licensing apply to?
Mortgage Loan Originators
115
When a person dies intestate, the court appoints
an adminitrator
116
The legal process used to remove a title is
an action to quiet title.
117
Compound interest is typical in which type of mortgage?
Reverse annuity.
118
How is an offer terminated?
Rejection by the offeree.
119
open end loan
the mortgagor (purchaser/borrower) is entitled to demand additional loan funds without the need to undergo a new underwriting process.
120
The first act in violation of the Americans with Disabilities Act comes with a maximum penalty of
$55,000.
121
The servient estate in an easement appurtenant is the property
on which the easement is placed.
122
Encumbrances
a claim or claims against a property or asset by a party other than the owner. Examples: Mortgages: A financial claim against a property
Easements: A non-financial claim against a property
Property tax liens: A financial claim against a property that can result in foreclosure
Restrictive covenants: A clause in a deed that limits how a property can be used
Mechanic's liens: A claim for payment for work done to improve a property
123
Police Power
is the power of the state to establish legislation to protect public health and safety and promote general welfare.
124
Radon
is an odorless radioactive gas released from rocks under the earth's surface; it usually is released into the atmosphere.
125
Easement Appurtenant
Refers to a legal right linked to owning a specific piece of land. It serves to benefit that land by granting access or usage over an adjacent property, known as the servient estate. This type of easement is inherently tied to the land's ownership and typically involves two adjoining properties
126
Devisee
Refers to a transfer of real property under a will
127
Plottage
the process of combining adjacent parcels of land to form one larger parcel. Typically the value of the whole parcel will be greater than the sum of the individual smaller parcels.
127
External obsolescence.
refers to a loss of value outside the property
128
Riparian rights
water rights granted to owners along a river or stream.
129
Functional obsolescence.
Functional obsolescence is a loss in the value of a property resulting from a deficiency in the floor plan of the house.
130
Subordination agreement
Is used to make the claim of one party junior to, or inferior to, a claim in favor of another. It is generally used to grant first lien status to a lienholder who would otherwise be secondary to another party, with the approval of the party that would otherwise have the first lien.
131
Amortized Mortgages
A loan that is paid off in regular installments over a set period. The payments are divided between the principal, the amount borrowed, and the interest, which is what the lender charges.
Payment schedule: The total monthly payment amount stays the same, but the portion that goes to interest and principal changes each month.
Interest and principal: At the beginning of the loan, most of the payment goes toward interest, and only a small amount goes toward the principal. Over time, the ratio changes, and eventually most of the payment goes toward the principal.
132
Reverse annuity mortgage
reverse annuity mortgage (RAM) is a type of loan that allows homeowners to receive regular income payments from their lender in exchange for the equity in their home:
133
Ginnie Mae.
Ginnie Mae purchases FHA-insured, VA-guaranteed, and Rural Development loans on the secondary mortgage market.
When government-related loans are purchased, Ginnie Mae would be involved
134
Freddie Mac
Freddie Mac is a government-sponsored enterprise (GSE) that helps ensure the availability of home mortgage credit in the United States. Freddie Mac's primary business is to buy loans from lenders and then sell securities backed by those loans to investors.
135
Fannie Mae
Fannie Mae and Freddie Mac work together to keep the mortgage market stable and accessible. They buy mortgages, bundle them into securities, and sell them to investors. Fannie Mae primarily buys loans from larger commercial banks, while Freddie Mac buys loans from smaller banks and credit unions.
136
Satisfaction of mortgage
Once you have made final payment on your mortgage, a satisfaction of mortgage will provide notice that the mortgage lien has been removed
137
Reconveyance clause
is used to release the lien created by a trust deed.
138
Reversion clause
Could be used in a deed and stipulates that if not complied with, the property reverts to the owner.
139
Encumbrance
a claim against a property or asset by a party other than the owner
All liens are encumbrances, not all encumbrances are liens
140
Net lease
a commercial real estate agreement where the tenant pays rent plus some or all of the property's operating expenses
141
Gross lease
a commercial lease agreement where the tenant pays a fixed amount of rent each month, and the landlord is responsible for covering the majority of the property's operating costs
142
Tenancy in common.
Tenancy in common allows for percentage differences in ownership.
143
joint tenancy
the holding of an estate or property jointly by two or more parties, the share of each passing to the other or others on death.
144
Leasehold estate
a legal agreement that grants a tenant the right to use a property for a set period of time, in exchange for rent or other payments.
145
Tenancy by the entirety
Tenancy by the entirety (TBE) is a legal arrangement that allows married couples to jointly own property as a single entity
146
adverse possession
A claim based on adverse possession must be notorious, open and hostile.
147
Cost Approach
The cost approach is considered most reliable in the appraisal of special-purpose buildings, such as churches and schools.
148
149
Unilateral Contract
A unilateral contract involves a promise to induce the other party to do some act, such as an open listing contract, where the property owner can cancel the listing at any time prior to an agreed upon deal.An option is a promise to keep open for a specified period an offer to sell or purchase property.
150
Bilateral Contract
A bilateral contract is a binding agreement between two parties where each party promises to perform a specific action.
151
Protection.
A broker is entitled commission even after the listing expires if the property is sold to someone who was introduced to the property by the broker. This is stipulated in a clause within the standard listings. Usually, there is a time period written into the clause, which is called the protection clause.
152
Quitclaim Deed
a legal form that transfers property to someone else. allows the current property owner to transfer whatever title they have to the grantee.
153
hypthocation
refers to the practice of using an asset as collateral for a loan while retaining ownership of the asset, When a borrower hypothecates an asset, they pledge it as security for a loan without giving up ownership. The lender places a lien on the asset, which means they can seize it if the borrower defaults on the loan.
154
Accretion
Refers to the gradual increase in land size due to natural forces, such as water, wind, or other natural processes.
155
Avulsion
the sudden removal of land by natural forces, such as an earthquake, flood, or volcanic action.
156
Constructive notice
Recording the deed, while property is being transferred from one party to another,
157
When a broker violates the Sherman Antitrust Act, he or she may be punishable by a maximum fine of
$100,000
158
The Civil Rights Act of 1866 prohibits discrimination based on:
Race
159
steering
is a discriminatory real estate practice that involves influencing a buyer's choice of community based on a protected characteristic, such as race, color, religion, gender, disability, familial status, or national origin.
160
Arbitrage
is an investment strategy where an investor purchases an investment property below market value and then sells or rents it for a profit
161
Blockbusting
convincing homeowners to sell or rent homes below market value
162
Redlining
is a discriminatory real estate practice that involves denying financial services to people based on their race or ethnicity and where they live.
163
Novation
A substitute of buyer in a purchase contract by the seller
164
Habendum clause
The habendum clause states the rights of the person taking over a property, including the nature and duration of their ownership clause in the deed where the term “to have and to hold” appears.
165
freehold estates
Life estates and fee simple are freehold estates. Leasehold interests are nonfree-hold estates.
166
Quiete Enjoyment
refers to the tenant’s right to use without interference from the owner or others claiming an interest.
167
voluntary alienation
the owner of the property, the grantor, made the decision of his own accord to transfer his property to another. Example- a deed
168
Warehousing
refers to the process of loans being used as collateral for other loans.
169
Laches
An equitable doctrine used by the courts to bar a legal claim or prevent the assertion of a right because of undue delay, negligence, or failure to assert the claim or right.
170
CAM license
If a license holder is managing a property with eleven or more units and an annual budget over $100,000, they need a CAM license. Apartment buildings may be an exception.
171
Chapter 120,
172
Discount Rate
The discount rate is the interest rate available to member banks to borrow from the federal reserve
173
Agency by estoppel/Implied Agency
agency is formed based on the words or actions of the agent and principal that evidences an intent to form the agency. An agency does not necessarily need to be created through a written agreement.
174
Express agency
An express agency is formed through an oral or written agreement. An agency does not necessarily need to be created through a written agreement. A listing agreement is an example of an express agency.
175
License not required:
Court appointed persons who follow the court directive, banks that are federally regulated and SEC registered dealers selling businesses to accredited investors. Lawyer still needs a license just avoids requirements.
176
Depreciation
the loss of value due to a building or property due to any cause, such as deterioration, damage and normal wear and tear.
177
collusion
Dividing up territories with another brokerage would be considered collusion, a violation of the federal Sherman Antitrust Act. The Sherman Antitrust Act was enacted by the federal government in 1890 as consumer protection legislation designed to encourage competition. Dividing up geographic territories, fixing commission rates or fees, or boycotting brokerage firms with cut-rate commissions would all be considered brokerage business activities that violate this federal law.
178
In order to be a licensee member of the Florida Real Estate Commission, an individual
must have been licensed a minimum of
2 years
179
Frec is composed of
7 members
180
10. Licensure may be suspended for what maximum period of time?
10 years
181
The passage of rules require
a quorum vote of the Commission.
182
A sales associate chooses not to renew his license at the appropriate time. His license will
be
involuntary inactive.
183
26. Required brokerage relationship disclosures must be retained by the broker for:
5 years
184
Title to real property passes to the grantee when the deed is
delivered and accepted
185
Which two expenses are deductible for income taxes that are not deducted in calculating
net operating income?
interest and depreciation
186
Who is the Mortgagee
lender
187
Respa
RESPA, or the Real Estate Settlement Procedures Act, is a federal law designed to protect consumers in real estate transactions by promoting transparency and eliminating abusive practices, such as kickbacks and referral fees, in the settlement process. Good faith estimate
188
Alienation clause
An alienation clause (a/k/a due on sale clause) requires the seller to pay off the mortgage balance upon sale of the property
189
Marketable title
A title to real property that is considered to be free of defects and encumbrances
190
Blind ad
An ad that omits the broker’s name is a blind ad. Blind ads are not permitted.
191
Discount Points
money paid at closing so the buyer can lower the interest rate on a mortgage.
192
subprime mortgage
an option for a person with questionable credit. Interest rates are higher than a typical mortgage due to the increased risk of default.
193
Statutory warranty deed
A deed that the seller must deliver to the purchaser
194
Department of State
The Department of State handles registrations of business entitles, such as corporations and LLC’s. The corporation is created by filing of an Articles of Organization with the Department of State.
195
How many days does a Florida condominium buyer have to cancel a purchase contract after signing it?
15
196
executory contract
An executory contract is a contract that has terms to be completed at a later date. It is not fully performed until all acts required are completed, such as a mortgage
197
Implied Contract
formed based upon the actions of the parties that evidence an intent to enter into a contract, such as where a seller permits a broker to show a property before any formal agreement is entered into.
198
Nonconforming use
A zoning variance where a parcel of land does not need to be in compliance with current zoning requirements because the use was present before the zoning regulation went into effect. It is also known as being “grandfathered in”
199
Schedule E
the tax form used for the deduction of taxes paid on non-investment property
200
Schedule A
the form used for itemized deductions.
201
NMLS
NMLS (Nationwide Mortgage Licensing System) is the nationwide licensing organization for mortgage loan originators. SAFE Mortgage Licensing Act is the name of the law regulating mortgage loan originators (MLO).
202
Chattel
Chattel is personal property like a home furnishing
203
Variable Expense
A variable expense is an unpredictable expense that is usually based upon the property’s own requirements. A roof replacement, replacing the brick façade of a building and renovating the building lobby are examples of capital expenses, which are the costs associated with maintaining the property, and are usually costs to maintain it over the long term.
204
minimum penalty for a violation of Florida Statutes 475
Second degree misdemeanor and up to 60 days imprisonment
205
Flat fee listing agreement
Under a flat fee listing agreement, the broker can advertise the property, but does not negotiate the sale. However, while they do not typically show the property, it is not prohibited if the seller agrees to the showing, The fee is usually paid upfront and is not conditioned upon a sale.
206
Short Sale
When the property is worth less than the total of the amount owed in debt against the property (e.g., a mortgage loan), a short sale could be performed, which involves the lender taking a loss. The bank imposes certain restrictions on the sale (e.g., the seller cannot walk away with any money).
207
Escalator Lease
An escalator lease has an expense stop that passes expenses that exceed an agreed upon amount to the tenant. Such a lease is for the property owner’s protection in the event the costs are more or rise more than expected.
208
House rules
House rules govern all of the rules of a condominium, such as the related to the use of said common areas and prohibited behavior (e.g., loud music, pets)
209
proprietary lease
is a condominium corporation’s lease with the condominium shareholders. A purchaser becomes a shareholder in the corporation and is a tenant pursuant to the corporation’s proprietary lease
210
The broker has ____ after receipt of the letter to contact the investigator to schedule an appointment.
15 days
211
If a broker’s escrow account is audited by a DEC investigator, the investigator can look at the last _____ of bank statements and cancelled checks.
6 to 12 months
212
A claim to the Florida Real Estate Recovery Fund must be filed within _____ of the alleged violation or after its discovery.
2 years
213
exculpatory clause
The exculpatory clause in a mortgage permits a borrower to surrender their property without any further liability. The lender cannot take any further action. That is called a non-recourse loan. Most loans are recourse loans and permit the lender to recover against the borrower’s personal assets.
214
Coastal Zone Management Act (CZMA)
promotes states’ management of coastal areas, such as beaches, barrier islands, reefs, dunes and wetlands. The National Oceanic and Atmospheric Administration (NOAA) administers CZMA.
215
What is the maximum fine for a broker that fails to follow FREC guidelines related to a rental information transaction?
$1,000
216
How much of a Florida broker’s personal funds can be placed in the broker’s property management escrow account?
$5,000
217
A licensee’s fiduciary responsibilities are:
Reasonable care, skill and diligence, along with honesty, accountability, loyalty, full disclosure, obedience and confidentiality are part of a licensee’s fiduciary duty to the principal.
218
Florida has mutual recognition agreements:
FL does not have reciprocity agreements with any other states. A reciprocity agreement allows a broker that is licensed in one state to be able to operate in another state without the need to take pre-licensing course work and/or an examination. A FL broker must meet the licensing requirement of any state in which the broker seeks to be licensed. However, FL does have mutual recognition agreements with other states, so a non-FL resident who is a broker in one of the states with comparable licensing requirements can become licensed in FL without meeting all of FL’s licensing requirements, though the licensee must still pass a 40 question exam covering FL RE law. This option is not available to FL residents licensed in other states to obtain a FL license. FL has mutual recognition agreements with the following 7 states: Alabama, Arkansas, Connecticut, Georgia, Illinois, Mississippi, and Nebraska.
219
Truth in lending act required disclosures:
The four primary items requiring disclosure are amount financed, finance charge, annual percentage rate and total to be paid in principal and interest.
220
Title insurance
Title insurance protects against a defect in title existing at time of closing only and not to any defects that may arise in the future. It does not protect against property damage or liability. The title insurance company also typically prepares title abstracts for buyers.
221
Goodwill
A business’ widely known name, reputation and service quality is referred to as goodwill. It is an intangible asset, as opposed to personal property, which is a tangible asset. A tangible asset can be touched. An intangible asset cannot be touched. It has no physical presence. Amortization of goodwill is not tax deductible.
222
“C” corporation
A “C” corporation is a general corporation, which pays corporate income taxes. A corporation is a legal entity subject to taxation. It is a fictitious creation that exists only by law. A subchapter “S” corporation is taxed like a partnership. The principal pays taxes at the personal level, as opposed to an LLC, which is a limited liability company. It is not a corporation. A Subchapter “S” has the benefits of corporations (limited liability) and is taxed like a partnership at the personal level. It is a pass through entity.
223
Cash on cash return
Cash-on-cash return is the before tax income cash flow divided by the cash investment.
224
Express Contract
An express contract can be in writing or oral and contains terms definitely agreed upon. Real estate contracts are written express contracts.
225
According to Florida Statues 475.5015, a broker is required to maintain legible records of all transactions, financial records, etc. for____
5 years
226
ILSA (Interstate Land Sales Full Disclosure Act)
It regulates marketing of land sales to buyers in another state and is intended to prevent fraudulent marketing. It requires complete disclosure of full and accurate information about the land.
227
probable cause panel
decides if there is enough evidence to prosecute a broker for wrongdoing or whether to dismiss the complaint.
228
equalization program
used by a municipality to assess property values in two separate towns that use different valuation percentages in order to ensure both towns are taxed fairly.
229
Eaves
Eaves are the portion of the roof that overhangs the walls. They protect the home from the elements.
230
Net Listing
A net listing is created when the broker receives any money above a price specified by the broker and client.
231
Lis pendens
Lis pendens is the Latin term for pending litigation, which is a filing that provides legal notice to the public (e.g., a prospective purchaser) that there is litigation (legal action) pending against a property.
232
capitalization rate
the annual expected dollar return that an investor can expect to receive and is the main method to compute the present value of an income producing property.
233
Time value of money
The value of an asset based on its past, current or future value is called the time value of money. The theory behind the time value of money is that money presently available is worth more than the same amount in the future due to the potential earning capacity of the currently possessed money.
234
Nonsolicitation
A nonsolicitation order is issued by the government to protect against blockbusting. Blockbusting is the practice of pressuring a homeowner to sell or lease the property by telling the owner that a certain protected class is moving into the area.
235
Concurrency
Concurrency is the requirement that minimum infrastructure is required before development can occur
236
Reformation
Reformation is the legal tool that permits a court to rewrite a contract.
237
Federal Fair Housing Act
was part of the Civil Rights Act of 1968 and prohibits discrimination in housing transactions based on religion, national origin, race or color.
238
undisclosed dual agency
created when a subagent or seller’s agent agrees to act on behalf of the buyer, as opposed to acting in the seller’s best interests
239
Coastal Construction Control Line Program (CCCL)
is also known as a control line and is the name of the line established to define the fluctuation of beach dunes according to 100 year storm surges and related weather conditions that can be predicted.
240
tenancy for years
has a fixed termination date and does not renew. It can be created for any period of time (e.g., 1 day, 1 week or 1year).
241
Office manager
is a licensed associate real estate broker who chooses to work as an office manager under the name and supervision of another individual broker or another broker and is governed by the regulations for real estate salespersons.
242
cluster zoning
a type of multiuse zoning permitting different residential uses in the same zone.
243
Experience for appraisers
No experience is necessary to become a registered trainee appraiser. Certified general real estate appraisers require 2.5 years. Licensed real estate appraisers and certified residential real estate appraisers require 2 years.
244
Sherman Antitrust Act
protects against real estate broker monopolies and monopolies and restraints on fair trade in all other industries.
245
development of regional impact (DRI)
a large development, such as a shopping mall, sports arena, amusement park, that will have a substantial effect on the safety and welfare of citizens of more than one county
246
federal trade commission (FTC)
is the federal government administrative agency that regulates and investigates unfair trade practices in any industry.
247
Static risk
is damage or loss to a property that is caused by liability for accidents or a natural occurrence, such as a storm or fire. Static risks are insurable.
248
Dynamic risk
refers to such things as changes in the economy, environment, people’s tastes, supply and demand and tax codes. Dynamic risks are not insurable.
249
Subject to mortgage
When a property is purchased “subject to” an existing mortgage, the seller remains personally liable for payment of the debt and the bank can still foreclose against the property. While there is no lien or liability against the purchaser, there is still a lien against the property for the unpaid balance of the mortgage.
250
Pages of closing disclosure
Page One: Loan terms, including the amount borrowed, interest rate, and monthly payments.
Page Two: Closing cost details, such as origination fees, mortgage points, and application fees.
Page Three: Cash needed to close, including escrow deposits and seller credits.
Page Four: Loan disclosures, like assumption, demand feature, and late payment information.
Page Five: Loan calculations, other disclosures, and contact information
251
Girder
the main steel carrying beam that connects each side of the foundation.
252
Caveat emptor
is a Latin phrase that means “buyer beware”
253
Spot zoning
rezoning of a property to allow it to be used differently from the zoning requirements for the zoned area
254
conditional release
provision in the listing agreement permits a seller from ending the listing before its expiration
255
Under Florida law, a cooperative purchaser has _______ days to cancel the contract from the date of signing the contract and receipt all of the required disclosures.
15 calendar days
256
Deed in lieu of foreclosure
refers to the situation where a borrower transfers the deed to the bank to avoid a record of foreclosure.
257
Subagency
created when the agent and seller agreed that the other agents who show the home will also work forthe agent
258
When someone dies and leaves children all the real property that he owned. What tax may be due?
Federal
259
General agent
Has authority to handle the affairs of a principal in connection with a particular matter and is provided with limited power to perform one or more acts (e.g., agree to accept the highest offer on a property and sign a contract).
260
Granting Clause
The clause in a deed that shows the seller’s intent to transfer the real estate. The clause with the names and addresses of the grantor and grantee that contains the words of conveyance and intent to transfer the real estate
261
Capital Gains
Capital gains represent profits on a capital investment, such as RE. Profit realized from the sale of RE held for 3 years is long term capital gains. Long term capital gains are profits on assets that are owned for more than 12 months. Short term capital gains are profits on assets that are owned for 12 months or less. Profit on long term capital gains is subject to a reduced tax rate and is not taxed as ordinary gross income, but profit on short term capital gains is taxed as ordinary gross income.
262
Ostensible partnership
exists where no formal partnership was filed with the Florida Department of State, but the conduct of the partners make it appear that they have a partnership and a court could deem it an ostensible partnership.
263
Moratorium
is a delay or temporary stoppage of property development within a community.
264
constructive eviction
occurs when a tenant is not provided with quiet enjoyment. If the tenant did not create the issue, the tenant can vacate the premises and no longer be required to pay rent pursuant to the lease.
265
Estoppel certificate
provided by a tenant to confirm details concerning the tenancy, such as the length of the lease period and amount of security deposit.
266
violation of the Fair Housing Act of 1968
A 2nd violation of the Fair Housing Act of 1968 within 5 years of the 1st offense calls for a penalty of up to $25,000. The penalty for a 1st offense is $10,000 and it is $50,000 if 3 or more violations within 7 years. More violations can result in fines of $25,000 or $50,000.
267
Fine to provide notice to DBPR for change of address
$500
268
Vicarious liability
the legal principle with regard to a broker’s responsibility for the acts of an agent.
269
Escheat
Escheat refers to the state’s acquisition of property when a person dies with no heirs
270
90 days
90 days after the tenant takes possession to file a lien notice concerning the unpaid commission or 90 days after any necessary services are completed related to a lease renewal.
271
Jones v. Mayer case
Supreme Court determined that racial discrimination in housing is not permitted under any circumstance, so the exemptions in the Fair Housing Act of 1968 that permit housing discrimination are not legal.
272
How much can a broker keep up to of the broker’s personal funds in the broker’s sales escrow account to cover fees, such as account maintenance/service fees, check printing fees and similar charges.
$1,000
273
For property management escrow accounts, the broker can keep up to how much of the broker’s personal funds?
$5,000
274
According to Florida Statutes 475.23, a licensee has to notify DBPR of a change of address within how many days, and is subject to a $500 fine for failure to provide timely notice.
10 days
275
When the FREC’s Investigation Section of the DRE sends a letter to a broker informing the broker of the need to conduct an office inspection and an escrow audit, how many days does the broker have to contact the investigator after receipt of the letter?
15 days
276
If a broker’s escrow account is audited by a DEC investigator, the investigator can look at the last how many months of bank statements and cancelled checks.
6 to 12 months
277
A claim to the Florida Real Estate Recovery Fund must be filed within how many years of the alleged violation or after its discovery?
2 years
278
Page 1 of closing disclosure
Loan Terms, Loan amount,Interest rate:
Monthly Principal and Interest:
Balloon Payments: Payment Calculation:
Estimated Total Monthly Payment:
Estimated Taxes, Insurance & Assessments:
Closing Costs: Cash to Close:
279
Page 2 of closing disclosure
Loan costs, origination fees, mortgage points, application fees, underwriting fees.
Services the borrower didn't shop for, ex, appraisals,
Services Borrower Did Shop For such as- as title agent fees, surveying, inspection fees etc. that the borrower is able to shop for themselves.
Other Costs – prepaid escrows, recording costs, and other third-party costs associated with the closing of the purchase.
Taxes and govt fees, prepaids, initial escrow payment at close
Other: additional costs and fees associated with the closing, such as association fees, real estate commissions, title insurance etc. are typically listed in this section.
Total Other Costs and Total Closing Costs
280
Page 3 of closing disclosure:
Calculating Cash to Close
Summaries of Transactions
Deposits
281
Page 4 of closing disclosure
282
Page 5 of closing disclosure:
Loan calculations, disclosures and lender contact information
283
Operating statement
contains income, vacancy rates and expenses, such as management, maintenance and legal expenses.
284
Planning commission
a local board that determines how the development of a municipality, town, city or village is laid out and the permitted uses of the areas in the municipality.
285
megans law
Megan’s Law requires sex offenders to put their names in a public registry.
286
book value
its original cost minus depreciation.
287
Civil Rights Act of 1968
prohibits discrimination in housing transactions based on race, religion or national origin, so it applies as well,
288
The Civil Rights Act of 1964
prohibits discrimination related to obtaining FHA and VA loans and in any program that gets federal funding
289
Under Florida law, a cooperative purchaser has ____days to cancel the contract from the date of signing the contract and receipt all of the required disclosures.
15 calendar days
290
A prepayment penalty clause
prohibits any financial penalty for paying the loan off early.
