CA DRE Exam Flashcards
(275 cards)
1
Q
A trade fixture is
A
Not an appurtenance.
2
Q
Appurtenance
A
An Accessory or adjunct that is attached and incidental to something that has greater importance or value. As applied to real property, an object attached to or a right to be used with land as an incidental benefit but which is necessary to the complete use and enjoyment of the property.
When a landowner has been given an Easement for the passage of light and air over an adjoining lot, the easement is an appurtenance to the land. Other common appurtenances to land include barns, outhouses, fences, drainage and irrigation ditches, and rights of way.
3
Q
A Lease Is…
A
(a) A less than freehold estate; AND (b) an Estate for Years; and (c) an Encumbrance; and (d) Personal Property; and (e) an Interest in Real Property; AND (d) Chattel Real
4
Q
To be VALID, a Grant Deed Must Be:
A
(1) Written
(2) Signed by Grantor
(3) Have adequate description of property
(4) Name Grantees
5
Q
To be EFFECTIVE, a Grant Deed must be
A
(1) Delivered to the Grantee
6
Q
To be RECORDED, a Grant Deed must be
A
(1) Acknowledged
(2) Contain a Legal Description
Delivery is presumed when its is recorded.
7
Q
What do an Estate for Years and an Estate at Sufferance have in common?
A
Neither require a notice to vacate.
8
Q
Unlawful detainer action is used by…
A
An Offended Lessor
9
Q
Can a Lessee Grant an Easement? And if they can, with what restrictions?
A
They can, but only for the term of the lease.
10
Q
What is the minimum number of days for an eviction?
A
15 Years
11
Q
What events can sever joint tenancy? Which cannot?
A
A lien DOES NOT sever a Joint Tenancy.
A foreclosure DOES sever a Joint Tenancy
12
Q
What are the four unities of a joint tenancy?
A
Time, Title, Interest and Possession
13
Q
Qualities of a Joint Tenancy
A
(1) Absolute right of survivorship.
(2) Cannot be willed.
(3) One JT can sell interest without consent of other JTs.
(4) Never presumed by Courts to be JT.
(5) Corporation cannot be JT.
14
Q
Qualities of Tenancy in Common
A
(1) Only one unity - possession
(2) Shares may be equal or unequal
(3) Presumed by courts to be TIC if no method mentioned in Deed.
15
Q
Community Property
A
Only husband and wife. Each may will their interest
16
Q
How long must a broker retain copy of contract after termination of an independent contractor?
A
Three years
17
Q
How long must all records be kept?
A
Three Years
18
Q
Examples of deceptive advertisements
A
(1) “No down payment” if buyer is advised to borrow the down payment.
(2) “move right in” when major repairs are needed.
(3) Obtaining a loan “over the phone” when further verification is required.
(4) “Free gifts and prizes” is NOT DECEPTIVE if DISCLOSURE MADE to all parties.
19
Q
Failure to advertise when a Broker promises to do so is…
A
Actual Fraud
20
Q
A Pocket Listing is…
A
a property where a broker holds a signed listing agreement (or contract) with the seller, whether that be an “Exclusive Right to Sell” or “Exclusive Agency” agreement or contract, but where it is never advertised nor entered into a multiple listing system (MLS), or where advertising is limited for an agreed-upon period of time
Unethical Behavior
21
Q
Broker’s duties re: w/c insurance
A
Required for licensed AND non-licensed employees.
22
Q
Desk Cost
A
The cost to the broker for having a salesperson in the office.
23
Q
How is Desk Cost determined?
A
By taking total cost of rent, utilities, salaries, etc. and dividing by number of salespersons (deks)
24
Q
Company Dollar
A
Income after commissions are deducted.
25
May a broker share commissions with a buyer or other unlicensed persons?
Yes, a broker may share commission with a buyer if the seller is informed. A broker may pay money to unlicensed persons if full disclosure is made.
26
What requirements for an employee to make withdrawals from a broker's trust fund account?
Employee must be bonded
27
What disclosures are required re: death?
Must disclose if someone died on the property within the past THREE years.
28
What is the AIDS exception?
If someone died of AIDS, it must only be disclosed when asked.
29
When can a DRE licensee represent the sale or purchase of a used mobile home?
When the mobile home has been registered with DMV or HCD.
30
When must a copy of a contract be given to someone?
When they sign it.
31
What are the minimum age rules for real estate contracts?
(1) No minimum age for divorced person.
(2) No minimum age for a married person.
(3) Minimum age for a never married person is 18.
-Contracts signed by minors are void.
32
Rules re: presenting offers
Offers are MATERIAL FACTS and should be presented at teh same time. If that is not possible, seller must be informed of any offers "coming in" before accepting existing offer.
33
Rules re: Offers with Deposits
(1) Offers with post-dated checks, promissory notes or no deposit should be taken by the agent and presented to the seller. Seller should be informed fo the status of deposit (i.e., it was a post-dated check, etc...)
34
Hold Harmless Clause
protects the agent from liability for material facts known by the seller but undisclosed to the agent or buyer.
35
What is the effect of a counter-offer?
Automatically terminates the offer.
36
Is performance an essential element for a valid CONTRACT?
No.
37
What is the effect of a liquidated damages clause?
If initialed by buyer and seller, then buyer has agreed to forfeit deposit if he defaults. THe broker and seller then split the deposit.
38
What is the Courts' view of liquidated damages?
They are disfavored.
39
In the event of a loss, who is liable and why?
Under UNIFORM VENDOR AND RISK ACT OF 1947, the PARTY IN POSSESSION of the property is liable in the event of a loss.
40
Novation
When one broker is replaced by another broker.
41
What does a Seller Carryback Mortgage create?
A SPECIFIC VOLUNTARY LIEN.
42
Eminent Domain is...
"the power to take private property for public use by a state, municipality, or private person or corporation authorized to exercise functions of public character, following the payment of just compensation to the owner of that property."[1] The property is taken either for government use or by delegation to third parties who will devote it to public or civic use or, in some cases, economic development. Created by 5th amendment, taking must be for public use and just compensation must be paid.
It is not ZONING OR A POLICE POWER.
43
Mechanics Liens/Timeline
There is a limited amount of time to file mech lien.
A mechanic's lien dates back in priority to the beginning of work and are on a parity with each other.
44
What are requirements for effecting a Mechanic's Lien?
(1) Must be verified (validated) and (2) recorded.
45
Is a confrontation with the owner required for a prescriptive easement?
No.
46
Prescriptive Easement
an easement upon another's real property acquired by continued use without permission of the owner for a period provided by state law to establish the easement. The problems with prescriptive easements are that they do not show up on title reports, and the exact location and/or use of the easement is not always clear and occasionally moves by practice or erosion.
47
Inverse condemnation
An action for inverse condemnation “is an eminent domain proceeding initiated by the property owner rather than the condemner. The principles which affect the parties’ rights in an inverse condemnation suit are the same as those in an eminent domain action.
Some common areas an individual might sue a public entity for inverse condemnation include flooding, mud slides and debris flow, backed up sewer lines, broken water mains, landslides, brush fires, emission of noxious gas, and other similar disasters.
Forces the government to buy the property. Statute of limitations is 3 years.
48
Covenants
Real covenant is a term used in real property law to describe a promise concerning the use of land. Real covenants are classified as either affirmative, a promise to do something (e.g. build a fence) or negative, a promise to not do something (e.g. not use the land for commercial activity).
49
Do all covenants run with the land?
NO
50
Condition
an event which may alter a person's interest in the property. Examples: If daughter-in-law Beatrice terminates her marriage to Reggie Fauntleroy, her interest in the real property will terminate and revert to the grantors, Mom and Dad Fauntleroy.
51
Do all conditions run with the land?
YES
52
What is an Easement Appurtenant?
An easement appurtenant attaches to the land permanently and benefits its owner. In order for it to exist, there must be two pieces of land owned by different individuals. One piece, the dominant estate or tenement, is the land that is benefited by the easement. The other piece, known as the servient estate or tenement, is the land that has the burden of the easement. An easement appurtenant is a Covenant running with the land since it is incapable of a separate and independent existence from the land to which it is annexed. A common example would be where one landowner—A—is the owner of land that is separated from a road by land owned by B. If B sells A a right of way across his or her land, it is a right that is appurtenant to A's land and can only be used in connection thereof.
53
Does an easement appurtenant run with the land?
Yes, it transfers with the transfer of the DOMINANT TENEMENT.
54
Easement in Gross
An easement in gross is not appurtenant to any estate in land. It arises when a servient piece of land exists without a dominant piece being affected. This type of easement is ordinarily personal to the holder and does not run with the land. For example, if A has a number of trees on his or her property and B contracts with A to enter A's land to remove timber, B has both an easement in gross and a profit. At Common Law, an easement in gross could not be assigned; however, most courts currently allow certain types of easements in gross to be transferred.
55
Does an easement in gross run with the land?
No, it runs with the person/entity.
56
What is the most common holder of easements in gross?
utility company to service property owners.
57
Is an unlocated easement valid?
Yes
58
Can an easement be terminated by release from the servient tenement?
No
59
What is the priority for government liens
(1) Always take priority over other liens; and
| (2) Multiple government liens will have parity.
60
Escrow requirements
(1) Buyer and seller must execute escrow instructions.
(2) Executed escrow instructions means that all terms and conditions have been fulfilled.
(a) Escrow instructions are NOT recorded and NOT notarized
61
Termite Reports
(1) Should be ordered by seller PRIOR to placing property on the market.
(2) If escrow receives two reports, escrow must get written instructions from buyer and seller
(3) Preventative work is paid for by buyer, but only if he chooses to get the work done
62
Who does escrow report transactions to?
The IRS
63
How does a Seller appear in a preliminary title report?
As the TRUSTOR
64
What is the effect of defects that are known to both buyer and seller but not disclosed to title company?
Excluded from title insurance policy.
65
Does a standard policy of title cover zoning?
NO
66
Who may grant an exception in the building code?
Local Building Inspector.
67
Who can initiate changes in zoning?
(1) Subdivider/developer
(2) Individual property owner
(3) Government
68
Downzoning
To change from high density use to a lower density use. Example Commercial to residential or R3 to R1.
69
What normally sets the highest building requirements?
Local building codes.
70
Injuction
Court order used to enforce private deed restrictions
71
What does the Real Estate Commission do when it discovers a subdivider is doing something illegal?
The commissioner issues a desist and refrain order.
72
What is the effect of a completion bond held by a contractor?
The insurance company is responsible for completion of the project.
73
Rules for a LAND PROJECT
(1) Advertisements must be approved in advance by RE Commissoiner.
(2) Land project has a 14 day right of rescission for the buyer.
74
What is a megalopolis?
A very large city
75
Are sidewalks part of the common area of a condominium project?
Yes
76
What must sellers give to a condominium buyer?
(1) CC&Rs
(2) By Laws
(3) Financial Statement
77
What is unique about how title is held for a condominium?
Only time where one purchases a fee simple interest and an In-common interest at the same time.
78
Holden Act
Housing Financial Discrimination Act.
Prohibits discrimination in lending (redlining)
79
What is the effect on an innocent buyer of seller and seller's agent being guilty of discrimination?
No effect if buyer innocent.
80
What is the penalty for quoting discriminatory prices (i.e., high price to minorities and low price to whites)?
Makes both seller AND agent liable for damages.
81
What is the process for filing a complaint about discrimination?
(1) Complaints about discrimination can be filed at the state and federal level.
(a) State Level - Department of Fair Employment & Housing; Within 60 days.
(b) Federal Level - Department of Housing and Urban Development; Within 1 Year.
82
Sales Tax apples to what?
Tangible personal property.
83
Real estate syndications are regulated by who?
The Corporations Commissioner.
84
What is a fee appraiser?
An appraiser who is self-employed and charges a fee. The fee is established through negotiation between appraiser and the party hiring the appraiser.
85
Using unacceptable method to appraise property in order to influence lender on a government guaranteed or insured loan is what?
A FELONY
86
What is the most important factor influencing value?
LOCATION.
87
What are essential elements of value?
(1) Utility
(2) Scarcity
(3) Demand
(4) Transferability (DUST/STUD Mnemonic)
----
Expectation is NOT an element of value.
88
Economic Life
Depends ont he owner's repair policy and the age, use and condition of the property. It is assigned by the appraiser and used for depreciation. Usually shorter than physical life
89
If two houses are constructed identically on adjacent properties and ten years later both houses are placed on the market, one at considerably less value than the other, what is the most likely reason for the discrepancy?
Physical deterioration.
90
Functional Obsolescence
Occurs inside the property lines
91
Economic Obsolescence
Occurs outside the property lines. It is the hardest to cure
92
What is an example of functional obsolescence
changes in construction styles.
93
Examples of economic obsolescence
A poor sewer system in the area and non-conforming improvements in close proximity to a property
94
What methods are used to appraise land?
(1) Market Data (Comparison)
(2) Land residual
(3) Development method
(4) Allocation
not Equity
95
What do Market Data, Comparison, Market Comparison all have in common?
Different names for the same approach in appraising
96
What are Market Data/Comparison based on?
Principle of substitution
| -Compares one property with another Used for vacant land and single family residences
97
Capitalization/Income/Capitalization of Net Income
Names for the same approach used to appraise income producing properties. Converts income to value. Value determined by dividing the net income by the desired (capitalization) rate of return
98
Economic rent
is Market Rent - determined by comparison.
99
Contract Rent
is the amount of rent actually paid
100
Gross Rent Multiplies
"GRM" is the ratio of the price of a real estate investment to its annual rental income before expenses:
Gross Rent Multiplier (GRM) = Sale Price / Potential Gross Income
Not as accurate as appraisal but gives quick value idea. With GRM, a property value may be estimated using the following related formula:
Sale Price = Gross Rent Multiplier x Potential Gross Income.
101
Replacement Approach/Cost Approach/Replacement Cost Approach
names for the appraisal approach used to appraise special purpose properties (library, schools, church, etc.) and new residential property
102
Replacement cost
Amount to construct a comparable structure of equal utility
103
Reproduction Cost
Amount to construct an exact replica Usually higher than replacement cost
104
Warehouse Rental
Based on square footage
105
Warehouse Appraisal
Based on cubic footage
106
Is there concern with the economy when appraising a medical building?
No
107
Where does the FED buy or sell bonds?
Federal Open Market Committee
108
Deregulation of lending industry
Means no limit on the interest they can pay on deposits. It is the relaxing of rules by regulators
109
Revolving line of credit/open end mortgage
HELOC = revolving line of credit -- set amount max borrow
-----
Open end mortgage - A type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. There is usually a set dollar limit on the additional amount that can be borrowed.
110
Negative amortizatin
Consists of payments that are less than what is due.
111
What is the grace period for a lender to assess a late charge?
10 days (can assess if MORE THAN 10 days late)
112
A Promotional note
A form of promissory note used with new subdivisions to attract buyers to real property by offering attractive, discounted lending packages to promote sales.
It is short term, 36 months or less
113
Are trust deeds and mortgages negotiable?
The trust ntoe and mortgage note ARE negotiable.
114
Are alienation (due on sale) clauses enforceable?
Yes
115
Property is
Real or Personal
116
Real Property (Definition)
Made up of the land, all that is affixed to it and that which is APPURTENANT (belongs to) it
117
Real Property - Examples to know for DRE Exam (5)
1. Is IMMOVABLE
2. a BEARING WALL
3. VEGETATION
IS NOTs:
4. is NOT TRADE FIXTURES
5. is NOT A LEASEHOLD (LEASEHOLD is PERSONAL PROPERTY)
118
The most important economic consideration of land is?
SCARCITY
119
A tree becomes personal property by..
MOBILITY when it is cut down
120
SPECIFIC EXAMPLES: Farm Owner/Crops Land Transfer
When title to the farm transfers, the crops go with the land
121
FIXTURES
Items that were personal poperty and have become attached in such a manner as t become real property
122
5 Tests Courts Use to determine if Fixture is now part of Real Property (MARIA)
1. Method of Attachment
2. Adaptability
3. Relationship of the Parties
4. Intention *This is the most important factor*
5. Agreements
Also know: 1. They are incorporated into the land;(2) THey are items of personal property attached to RP; (3) COST is NOT a factor Courts use; (4) DATE OF ATTACHMENT IS NOT a factor Courts use
123
Riparian water rights
"Riverbank" water rights. Water rights when property borders rivers, streams & Courses.
**If there's a Q with "In Watersheds" as an answer, it's the right answer.***
124
Littoral Rights
If land borders water deep/wide enough to be navigable (Oceans, Seas, Lakes) it belongs to the state. If you have the right to use the water you have Littoral Rights.
125
Differences to know between Riparian and Littoral Rights
```
Riparian = Rivers & Streams
Littoral = Lakes & Oceans
```
126
Appropriation
The right to use water from a nearby lake.
127
Items "Appurtenant" to the land
Items that run with the land. Even if they are not mentioned in the Deed, they transfer anyway.
Examples: (1) Easements Appurtenant; (2) Covenants; (3) Stock in a Mutual Water Company (is an Easement Appurtenant)
128
Mutual Water Company
A company organized for the purpose of providing water to its members..
129
Ownership (Definition)
Right to USE, POSSESS, ENJOY and TRANSFER
130
What is an Estate?
Any ownership right in real property. Freehold or Less Than Freehold Estates
131
Fee Simple/Estates in Fee
1. Ownership interest in real property
2. The most interest one can hold in land
3. Does NOT MEAN IT'S free of Encumbrances
132
Estate of Indefinite Duration
Freehold estates are estates of indefinite duration that can exist for a lifetime or forever. Some types of freehold estates are classified as "estates of inheritance," where the estate continues beyond the life of the holder and descends to their living heirs upon death as specified by the will or by law
For Exam: KNOW "Estate of Inheritance"
133
Estate of Inheritance
IS AN ESTATE IN FEE for Exam
134
Fee Simple Defeasible
An interest in real property that may be defeated upon the happening of a certain described event.In other words,someone must take an action in order for the estate to come to an end.
For exam know the "No Alcohol" or Reversion example.
135
Life Estate
Interest for life.
136
Consumer Price Index (CPI)
consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households. The CPI in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services."
For Exam: Commonly used in COMMERCIAL LEASES as a way of ADJUSTING RENTS.
137
Gross Lease
A type of commercial lease where the landlord pays for the building's property taxes, insurance and maintenance
(Rent Only)
138
Net Lease
The opposite of a gross lease is a net lease. Under a net lease, the tenant is responsible for some of the additional costs associated with the property. There are three types of net leases: single net, double net and triple net. Under a single net lease, the tenant pays rent plus property taxes. Under a double net lease, the tenant pays rent plus property taxes and insurance. Under a triple net lease, the tenant pays for rent plus property taxes, insurance and maintenance.
139
Estate At Sufferance
When Lessee is holdover with no lease (owner suffers lessees)
140
Strip Commercial Development
A life of stores along a major transportation route.
141
Property Manager's responsibility with regards to building codes
PM Must make sure building meets building codes at the time it was complete.
142
Section 8
Law whose purpose is to allow affordable housing for all US Citizens.
143
What are the requirements to manage property?
1. Real Estate Broker's License
| 2. Management Agreement
144
Property Management Fees Are
1. Negotiable
2. Flat Fee and/or Percentage of Rents
For Exam also know: No receipt of secret profits allowed; No receipt of discount on supplies allowed.
145
Surrender
When landlord and tenant agree to cancel the lease early
146
What is the effect on a lease of a property manager forcing a tenant to sign a contract agreeing to make improvements?
The lease is a voidable contract.
147
Who is qualified to make inspection of a leased property?
A property manager
148
Corrective Maintenance
Means repairs for broken equipment
149
Maximum Security Deposits Allowed by Law
2 Months if unfurnished
| 3 Months if furnished
150
Shell
Is a tenant improvement allowance
151
Leasehold Estate
1. Is a less than freehold estate
2. Leasehold is owned by the LESSEE
3. Less than Freehold owned by Lessee (may be phrased any of these ways)
152
Is a Lease an Estate?
Yes,
It's NOT A Trust Deed
153
Estate For Years
Another name for a lease. It is an estate for a definite period of time fixed in advance
154
Requirements for writings for lease agreement
1. Leases for more than one year must be in writing.
2. Only must be signed by LESSOR to be valid
3. Payment of rent in advance is NOT a requirement to be valid
155
Rights of Tenant
1. Quiet Enjoyment (free of disturbances by landlord)
| 2. Possession
156
Sublease
When Tenant sub-leases their interest to a sub-lessee
157
Sublessor
What original lessee becomes when sublease occurs (becomes sublessor to sublessee). A sublessor transfers RIGHTS (use of property) but not DUTIES (personal liability for lease obligation)
158
Assignment
When entire leasehold is transferred to new lessee. Unlike sublease, original lessee transfers RIGHTS and DUTIES (liability)
159
Sublease & Assignment - what default rights if not addressed in agreement?
Tenant has both rights if not addressed in the lease.
160
Percentage Lease
One where rent is computed based upon gross sales.
161
Constructive Eviction
Where landlord fails to maintain property or make it usable for tenant.
Know for exam: Commercial lease constructive eviction --> Suit for damages.
162
Unlawful Detainer Action
Court proceeding for eviction.
Know for exam:
1. used by offended lessors
2. must bring a Court action
163
A buyer can withdraw their offer _________?
Anytime prior to acceptance, regardless of what K says about being irrevocable.
164
When a contingency sale agreement is made, what happens to buyer's deposit if contingency does not occur?
Deposit goes back to buyer.
165
Who is responsible for disclosure of Mello Roos bonds ?
Seller's Agent
166
Gross Rent Multiplier
GRM = (Sales Price) / (Monthly or Yearly Rent);
GRM x Actual Rent = Anticipated Sales Price.
167
Notice period for a mobile home?
10 days
168
Date of purchase agreement is?
Date buyer gets written confirmation of seller's acceptance.
169
What information does RE Commissioner have?
Sewer assessments, liens, utilities to a lot, blanket encumbrances and maintenance of streets.
170
Maximum period for an exclusive listing?
45 days
171
When is/is not a buyer required to withhold a portion of the sales price from the seller?
When it was the seller's principle residence OR the property is worth less than $100k
172
Documentary Transfer Tax
DTT = PP less assumed loan rounded up to nearest $500.00. Then DTT Rate x amount.
173
What must advance fee Ks state?
1. Amount of advance fee
2. What is to be done for fee to be earned
3. When the fee will be earned
4. No guaranteed results.
174
Who may answer queries about real estate listings?
Only DRE licensees
175
When a buyer signs an exclusive authorization to acquire a property there is usually a clause which allows the broker to do what?
Represent other buyers during the time limits of the agreement.
176
In the eyes of the RE Commissioner, any individual employed as a salesperson by a licensed broker is considered to be ___________?
An employee
177
What does RESPA require regarding HUD booklet?
Must be provided by the lender to potential buyer within three days of the loan application.
178
What has to be on TDS?
Fences shared with neighbor, Deed restrictions, Conditions.
Repairs made according to code do not have to be disclosed.
179
Avulsion
Sudden, perceptible loss of land by action of water.
180
Accretion
Gradual accumulation of land deposited by the shifting fo the river or ocean's action
181
Erosion
Wearing away of land by the action of water or wind
182
Alluvion
Land increased by the buildup of sediment
183
All easements are what?
Encumbrances
184
How many acres in a section
640
185
How many sections in a township?
36
186
What is the max the DRE Recover Acct will pay?
$20k per claimant/$100k per licensee (up to 5 $20k claimants)
187
What are the rules about $ for advertising?
Broker can get $ ONLY for advertising costs (but not for ads in a general circulation newspaper), any other funds up front are an advance fee.
188
TILA Recission period
3 days. Only applies to refis not purchase $.
189
What's the max amount of time a DRE licensee acting as servicer can hold loan payments before sending on to Lender?
25 days
190
What does the grantor warrant in a grant deed?
Warrants that he has not already conveyed title to another and that he revealed all encumbrances placed by the grantor.
He does NOT warrant that he owns the property.
191
Advertising disclosure requirements?
Must state broker or company's name.
192
When is a finder's fee allowed to be paid?
To an unlicensed person OK to influence them to do something (for example - refer PCs to broker). Rule is just can't pay an unlicensed person for anything a DRE license would be needed for.
193
How long must you keep records?
3 years from close of transaction; if transaction doesn't go through then 3 years from date of listing.
194
Effect of death or incapacity on a K
Invalidates K unless the heirs of the party sign an acknowledgment.
195
Recommending the manner in which title is taken is
1. Tax advice
2. Legal advice
3. Discrimination, possibly (if gender based)
Possible trick "all of the above" answer
196
Exclusive Authorization and Right to Sell Listing - what happens if seller revokes
Seller can revoke authority of broker unilaterally but seller may be liable for a commission or damages. If original agreement in writing, revocation must be in writing.
197
How much is max of broker's funds that can be in trust account?
$200.00
198
What is the effect of constructive eviction (and a few examples)?
Gives the tenant rights to:
1. Move without 30 day notice
2. Fix the problem and deduct from rent
3. Stay and not be evicted.
Examples: No hot water, unlawful entry by landlord, broken staircase/cannot access.
199
TILA Advertising requirements for graduated mortgages
Must show amount of the graduated mortgage payments (can't just show the starting one)
200
What does a sublease transfer?
Possession but not ownership.
201
Which means of holding property (TIC, JT, CP) can pass by intestate succession.
Tenants in common. JT goes to other JT even if no will. CP goes to surviving spouse even if no will.
202
Who is responsible to DELIVER TDS to buyer?
BUYER's agent
203
If a RE improvement project completed, but no Notice of Completion, how long to file mech lien?
90 days
204
Substantially overestimating value of property to get a listing is...?
Illegal, not just unethical.
205
Woman owns RE as SP, gets married and changes title to her name "married woman" What effect on title?
Creates a cloud - could create presumption of CP from that point forward. She would have to prove no CP interest.
206
If the current highest and best use of a property will change, what is the current use called?
Interim use.
207
Prescription is a method of obtaining what?
An EASEMENT, not TITLE to property.
208
When bank requires borrower maintain a minimum savings balance for term of RE loan, this is known as?
Compensating balance.
209
During escrow, what does escrow officer become
AGENT for each of the parties to escrow
210
What blocks a licensee from engaging in fraud?
the CIVIL CODE, not CCP or BProf C or Crim code.
211
How are risk and Cap rate related?
Risk is the primary factor in determining a cap rate. So, a low risk property (i.e., USPS) has a low cap rate and a high risk property (i.e., new business) would have a higher cap rate.
212
"No money down" and Reg Z
In an ad, that term or similar ones are too general to trigger requirements for finance term disclosure.
213
How to calculate value with depreciation
(Replacement cost) x (dep rate) = $ dep per year
($ dep per year) x (yrs of dep) = $ total del
(Replacement cost - ($total dep) = (Value today)
(Value today) + (land value) = (appraised value)
214
When would it be advantageous for a lender to waive a PPP?
In a tight money market where there is a lack of money available for RE loans. In a tight market, lender can re-lend money at a higher rate.
215
What is a commercial acre?
An acre minus space for streets and parking
216
Who does the selling broker represent?
Despite the name, the BUYER. the LISTING BROKER represents the seller.
217
In a tax-free exchange, who does the agent represent?
Each party is both a buyer and a seller (there are 2 transactions), so a single agent can get 2 commissions from the same party.
218
If a buyer wants to back out of an accepted offer and the seller AGREES, what is buyer liable to seller for?
Nothing. Seller AGREED to release buyer.
219
If buyer wants to start making repairs to property while in escrow, what must occur?
Amended escrow instructions executed by buyer and seller.
220
A leases to B, B leases to C. A dies. What is status of C's lease.
Still valid. As long as underlying assignment was valid, full lease still valid.
221
Salesperson of Broker is _______ of seller?
AGENT, not sub-agent
222
What are possible consequences of broker not disclosing dual agency?
Suit, refusal to pay commission, rescission of contract.
223
Can landlord ask potential renters about marriage status?
No, discriminatory.
224
What is required to create agency rel?
Ability of principal to control actions of agent
225
Under TILA what does phrase "An extension of credit in connection with a security interest in real property is, or will be, acquired" means...?
1. An open-ended credit transaction, or
2. A closed ended credit transaction, or
3. A real property loan transaction.
226
TILA disclosure statement requires which disclosures?
1. List of items included in finance charge
2. Description of the security interest held by lender
3. APR
227
JT and TIC share one common unity?
Unity of POSSESSION (Each party has equal possession rights).
228
When does lender fund balance of construction loan?
When period to file a mechanic's lien has passed.
229
Market value is determined by _____?
ACTUAL value paid (not offers or appraisals).
230
The Mortgage Loan Broker Law requires a mortgage loan disclosure when?
Any JUNIOR LOAN under $10,000.00
231
How are due but unpaid property taxes treated in escrow statement?
As either a credit to buyer OR debit to seller.
232
What is NOT deducted from gross income to determine annual net income when using cap approach to appraise property?
Cost of Capital (which is fancy term for interest on financing).
233
When a buyer initially purchases a home with Cal Vet financing, they receive _________?
Contract of Sale
234
What is leverage?
Practice of using a small amount of buyer's money and a large amount of financing to purchase and make $ off real estate.
235
When a prospective buyer is a family member of the licensee, who must licensee disclose that to?
The Seller
236
What is the consequence for failing to give notice of Mello-Roos tax before signing the sales contract?
Permits the buyer or tenant a three day right of rescission after receiving the ntoice
237
When lease does not address sublease or assignment, what is the default?
Lessee has right to sublease or assign.
238
When is it legal for a landlord to discriminate?
When it's an ad for a roommate in the landlord's home.
239
Calculating price per front foot:
- Lot 200 ft deep
- Sold for $4.40/sq ft
- Total price $198k
1. $198,000.00/$4.40 = 45,000.00 total sq ft.
2. 45,000.00 sq ft / 200 ft deep = 225 front feet
3. $198,000.00/225 = $880.00 per front foot.
240
Calculating value/depreciation:
1. New building costs total $450,00.00. Of that, $53,000.00 was the land.
2. 40 yr economic life and straight line depreciation.
3. What is expected value after 16 years?
1. $450,000.00 cost - $53,000.00 land value = $397,000.00 value of the improvement.
2. Value of improvement
241
Judgment lien can also be known as?
General lien
242
DRE license renewal rules
Must be renewed every 4 years. You get a 2 year "grace period" to renew without having to take exam again. If beyond the additional 2 years, take exam again.
243
Must exclusive listing agreements include a termination date?
Yes, otherwise invalid.
244
"Safety Period" and commissions
90 days (if you rep buyer, seller can't sell to that buyer for 90 d after your commission ends) BUT YOU MUST GIVE WRITTEN NOTICE to seller of the safety period.
245
What is the chain of events necessary to comply with the agency disclosure law:
1. Disclose
2. Elect
3. Confirm
246
Can an unlicensed employee write ads for broker?
YES, if broker reviews before publishing.
247
Covenants vs Deed Restrictions
Covenant is a promise to do or not do something. Violating a covenant can result in an injunction. Deed restriction is that limits what can be built on a property or how it can be used. Violating a restriction can result in loss of title (more severe).
248
FHA or VA has programs to purchase 1-4 unit dwellings to be used as a rental?
FHA, not VA.
249
Request for Notice?
A Request for Notice of default is filed with the county recorder when the 2nd TD is recorded. If there is a default on the 1st TD, the recorder will send a copy of the NOD to the holder of the second. This gives the 2nd holder time to reinstate the first. The Request for Notice is recorded for the benefit of the MORTGAGOR.
250
Fraud vs Misrepresentation
Fraud is a deliberate attempt to deceive; misrepresentation is not. You can be disciplined for either.
251
VA Loans and the Certificate of Reasonable Value (CRV)
The VA has no dollar limit, but they will not loan above the CRV. It's the highest value that VA can resell teh loan to FM/FNM. The max loan amount on a specific property is based on the purchase price or VA appraised amount, whichever is less.
252
What year did it become law to provide Lead Based Paint Disclosures?
1996. The law requires owner of dwelling unites built prior to 1978 to provide the buyer or lessee with booklet entitled "Protect Your Family From Lead in Your Home."
253
Are LOSSES on the sale of a principal residence tax deductible?
NO
254
What gov entities have authority over subdivisions?
State, County and City governments. Subdivision Map Act gives local gov authority, Subdivided Land Act gives stat RE Commissioner.
255
How many sq ft in an acre?
43,560
256
Net value
aka Effective Yield. It's the true return for the investor on a note.
257
When are 3rd party items such as title insurance premiums paid?
At close of escrow. This is when Title Ins becomes effective.
258
What is one board foot?
One board foot equals 144 cubic inches. To calculate:
| length x width x depth.
259
Timeline for selling broker to ensure recordation of TD?
Within one week of closing TD must be recorded or cause it to be delivered to the beneficiary with written recommendation it be recorded unless written instructions from beneficiary not to record.
260
3 Phases involved in building a single family dwelling are...?
Land acquisition, development and construction.
261
How do co-op apartments work?
Apartment building owned by a corporation where tenancy in the unit is obtained by purchasing shares of stock in the corporation. The corporation is the sole owner and there is one mortgage, prop tax, etc.. which are not individually deducted by the stockholders.
262
When is a structural pest control report required?
For any FHA or VA loan. Private lenders may require as well.
263
How long does DRE broker have after sale of mobile home to give written notice of the transfer to Dept of Housing and Community Development?
10 calendar days
264
What is a frequent way mortgage lenders increase the effective yield?
By charging mortgage discount points.
265
Who issues a reconveyance deed?
Only the trustee. The beneficiary REQUESTS the reconveyance but does not issue it.
266
Property Residual Method (Appraising)
a method for estimating the value of property based on estimated future income and the reversionary value of the building and land.
267
Land Residual Method (Appraising)
A means to determine land value by deducting the value of the income attributable to the improvements alone from the value of the income of the property.
268
When broker advertises for loan, what must be in ad?
"Real estate broker, Califorinia Dept of Real Estate"
269
When DRE broker convicted of fraud, can he be suspended pending hearing?
No, RE Comm must investigate and hold hearing to suspend
270
Frontage vs Front Foot
Frontage is a measure of distance; front foot is a method of valuation (i.e., price per front foot)
271
Estoppel
deriving agreement from allowed action
272
What are required for RE K to be valid?
```
Consideration
Offer & Accept
Lawful object
Competent Parties
Legally sufficient writing
```
273
When advertising a loan that bears a fixed rate of interest, fi a specific monthly payment is included it must also state what?
APR
Principal loan amount
Amount
Number and period of payments scheduled
274
When selling a business opportunity, where must the Notice to Creditors of a Bulk Transfer be filed and when?
In the county where the goods are located and at least 12 days prior to the sale.
275
Does a lessor hold a reversion interest?
Yes
