Flashcards in Difficulty Level II Exam Deck (80)
M was trespassing on N's land. N asked the court to permanently bar M form this wrongful activity. What remedy was sought by N?
Which of the following would be an example of functional obsolescence?
Surplus Utility (page 306)
Which of the following would be a credit on a seller's closing statement?
D took title to property under the name BD. When she sold the property, she signed CD as grantor. The buyer has?
A cloud on the title (page 108)
How are the taxes on a property calculated?
Multiply the assessed valuation by the tax rate in mills
Part of a legal description reads T7R4W. The south boundary of the township is so described is how many miles north the of the base line?
36 miles north
when a new mall opened the rental income of the old mall was reduced by $4,600 per month Assuming a 12.5% cap rate, what was the loss in value for the old mall?
income (for the year) / cap rate = value
$4,600 x 12 = $55,200/12.5%=$441,600
A valid contract could be unenforceable because of :
the statute of limitations. (it is out of date)
The clause in a deed that defines the "extent of the estate granted" is known as what type of clause?
The Habendum Clause (The have and to hold clause, following the granting clause which defines the extent of ownership the grantor is conveying. (page 104)
If Z's interest in land entitles her to impose restrictions on it's future use, her interest is a
Fee simple estate
To be valid, a deed requires that it:
has words of conveyance
and is in writing. It need not be signed it takes effect on the date of DELIVERY.
On a real estate closing statement, prepaid rent would always be a:
Debit to the seller (Because the seller has received money for use beyond the seller's ownership period, it is a seller debit. The seller must turn over the prepayment to the buyer.)
A broker is prohibited from accepting a listing from a minor because of:
The fact that a minor cannot appoint an agent. (a minor lacks contractual authority)
RESPA (Real Estate Settlement Procedures Act) applies to:
First Mortgage.. Applies to any residential R/E transaction involving a new first mortgage loan. Designed to ensure that the buyer and seller are both fully informed of all costs related to closing the transaction.
What is Ground Rent?
The portion of the rent attributable to the land alone
Owner E gave open listings to brokers F, G, and H. Which of the following statements is true of the brokers?
The one who procures the buyer earns the entire commission.
If three brokers all talked to buyer J, who later purchased directly from E, which broker is entitled to a commission?
The broker who started an uninterrupted chain of events that directly led to the sale.
An appraiser could determine the cost of replacement by using all of the following methods:
Unit in place,
Construction cost index.
However an appraiser could not use Observed condition to determine the cost of replacement because this is necessary to determine the accrued depreciation
What type of liability does a purchaser have "subject to a loan"?
The Seller remains liable for any possible deficiency judgement should the buyer default.
An offer can be terminated by:
A counter offer (an acceptance contingent upon a change in price)
A revocation by the offeror
The Death of the offeror.
it can not be terminated by asking for more time.
FHA Loans are:
Fully amortized they can not have balloon payments.
they cover housing only
points may be payable by the buyer
and an FHA appraisal is required
In determining net income for the income approach, an appraiser would be concerned with all of the following:
Collection losses &
In determining the cost to build various structures on a vacant lot and the value the property would have with the improvements, an appraiser uses the:
The Development Method which considers cost of construction and deducts this from estimated value of land and structure when completed. This provides the land value for the use. The development method is used to determine the highness and best use.
Which is true of a blind ad?
All ads must contain the salesperson name and agency. Without this it is usually gounds for disciplinary action.
Can be paid at any time without penalty
A house that gains in value because of higher-cost homes being built in the area is an example of the principle:
Progression: an appraisal principal that the value of a lesser-quality property is favorably affected by the presence of a better quality property.
J & K are brothers and hold the title to the family farm in fee simple. Upon the death of either, his interest will pass with out probate to the survivor. How do they hold title?
As Joint Tenants because there is the right of survivorship (and no probate)
Freehold Estates are:
Life Estates and Fee Simple.
One tenant in common, without the concurrence of the other tenants in common, may:
Use the property without paying the covenants for the use.
will his or her interest to someone other than a cotenant.
Sell his or her interest without approval of the covenants.
HE MAY NOT place an easement over the property
A 660' x 660' parcel contains what percentage of the land contained in a 1,320' x 1320' parcel?
660 x 2 = 435,600
1320 x 2 =1,742,400
435,600/1,742,400=.25 or 25%
J received a property by descent. Therefore, J received the property by
Descent is an acquisition of an estate by inheritance in which a heir succeeds to the property by operation of law rather than by will.
The fact that no two pieces of property are identical is a reason for:
Specific Performance (page 207) ...if the seller breaches a R/E sales contract, the buyer may sue for specific performance unless the contract specifically states otherwise. In a suit for specific performance, the buyer asks the court to force the seller to go through with eh sale and transfer the property as previously agreed.
The person on a trust deed who is in the same position that a mortgagor is in on a mortgage is known as a
A recorded deed would adversely affect rights in a property under
a prior unrecorded deed to a party who has failed to take possession. (The later purchaser takes title because there was no notice of the prior interest.
Using all three methods of appraisal for a property and assigning different weights to each method is known as:
Reconciliation or Correlation
All of the following are liens agains R/E property
unpaid tax assessment
A restrictive covenant is not a lien it is an encumbrance.
A lien is a charge against a property that can lead to foreclosure.
A township was bisected by a straight line from the NW corner of section 6 to the SW corner of section 36. Eash of the two parcels thus formed contains how many acres?
a township has 36 sections each is 640 acres.
36 X 640 = 23,040/2 = 11,520
K sold to M, but M inadvertently recorded the deed in the wrong county. What are the rights of the parties?
Between K & M, M has a good title. Between the parties, there has been a valid transfer, but recording fails to give constructive notice of M's interest. M may not be protected against later interests of third parties.
An example of a specific lien is
a special assessment. Because it applies to specific property. A specific lien affecting or attaching only to a certain, identified parcel of land or piece of property.
A women's rights group established a nonprofit housing project that gave preference to single women with children. Their action is:
This is improper under the civil rights act of 1968. This is discrimination as well as discrimination as to familial status.
An estate that automatically ceases upon the death of the owner would be a
Tenancy at will. It would also by terminated by the sale of the property.
A map showed topographical lines drawn a wide distance apart, indicating that:
the land is relatively flat. When the lines are close together, it indicates a steep slope.
A handicapped prospective lessee wants to water the thresholds, widen an interior doorway and install grab bars. What is true?
The Landlord can condition approval on the restoration fate premises at the end of the tenancy. The Landlord can condition the rental on an agreement to restore the premises if a non handicapped person would not wish the alternations.
Assuming that eight points = 1% in interest, a lender who charges 7.5% interest but wishes to receive the equivalent of 8.25% interest would charge how many points?
7.50 - 8.25 = .75
.75 x 8 = 6 points
A broker ants t advertise a property located in an African-American neighborhood in a newspaper aimed at African-American readership. To do so, the broker would need to:
also advertise properties in white neighborhoods in the same paper. Otherwise, the broker could be guilty of steering.
An offer has been accepted on a ten-acre parcel when the listing broker learns that the buyer has been buying land in the area at a much higher price. The broker should:
notify the seller of the facts because the fiduciary duty continues for the life of the agency (until closing).
Salesperson L, working for broker M, was able to complete a complex transaction that benefited both the buyer and seller. The parties wanted to show their appreciation by giving L additional compensation. L can receive this compensation from:
His broker Only! Broker M
Which of the following types of property could command the highest loan to value ratio loan?
A single family residence because it their loan values are often the lowest. The ratio may be 80% of the value of the property or less because the borrower may make a down payment of at least 20%.
Which of the following is an example of blockbusting?
Soliciting listings based on a fear of racial change in an area. This induces panic selling due to the fear of entrance of people of a different race, color, religion or national origin.
Depreciation would be calculated by an appraiser using the:
The Cost Approach. This is the cost to build today less depreciations plus the value of the land. (A separate land value must also be ascertained) Pg 304-307
A R/E broker's duties to the principle include all of the following:
it is an agency, not an employment relationship.
Because depreciation is very important advantage of R/E investments, a R/E professional should know that:
land is not depreciated. Only improvements can be depreciated. Land usually appreciates!
A bilateral contract whereby the offeror and offered are both grantors would be a(n):
exchange. They are both grantees
Duress applied to one party to a contract makes the agreement:
voidable. it maybe voided at the option of that party.
Salesperson J's contract with his broker K calls for a 50/50 split of all listing and sales commissions. J sells a home listed by broker L for $180,000. L's listing provides for a 6% commission. If L splits the commission 40/60, with 60% going to the selling office, what will J earn on the sale?
$180,000 x 6% = $10,800
$10,800 x 60% = $6,480
$6,480 x 50% = $3,240
Salesperson J earns $3,240.
Broker K also earns $3,240
While listing broker L earns $4,320
J verbally agreed to a six-month lease of a store, but prior to occupancy, J changed her mind. Her verbal agreement is:
Enforceable! A lease under a year need not be in writing.
Each owner would receive a separate tax statement in a:
Condominium development because there is individual ownership of each unit.
A savings and loan association using an LTV ratio of 80% on a triplex appraised at $220,000 would make a maximum loan on the property of
$220,000 x 80% = $176,000
A mortgage where interest only is to be paid is what type of mortgage
A Term Loan where the principal is payable on the due date.
J agreed to buy K's farm, but the deed given by K had the wrong legal description, describing land that K did not own. J, who wants the land bargained for, would ask the court for:
a Reformation. J wants the deed as it was intended to read.
A settlement statement would show a new bank loan as a:
Credit to the buyer. It goes against the purchase price which is a debit to the buyer.
To what loan type would obligatory advances apply?
A Construction loan. Payments are made by the lender as work progresses.
What happens when a truster finishes making the payments on a trust deed?
The trustee gives a deed of reconveyance. This returns legal title to the trustor.
Broker N earned a commission when owner P sold her home without help of any agent. N had what type of listing?
An Exclusive-right-to-sell. This entitled N to a commission if anyone, including the owner, made the sale.
A buyer is assuming a one-year policy of fire insurance that was taken out 7 months and 4 days prior to closing. The policy cost $257. The closing statement would reflect crediting the seller?
$527/12 = $43.91 per month
$43.91/30 = $1.46 per day
$43.91 x 7 months = $307.37
$1.46 x 4 days = $5.85
$307.37 + $5.85 = $313.22
$527 prepaid for the lease - $313.22 amount used = $213.78 credited to the seller.
A deed restriction is best described as a(n):
Upon foreclosure of a trust deed, the buyer would receive a:
Trustee's deed. The trustee holds title as security.
J breached a contract to sell a property to K. This resulted in a loss to K of $40,000, which a court awarded to K. This amount is known as what type of damages?
Compensatory. Because it compensates K for damages suffered.
You could expect to find compound interest on what type of mortgage?
A reverse annuity. Because no payments are made the interest would compound.
G derives 90% of her income from activities involving the sale of real estate. G is not a licensed real estate salesperson or broker, yet her activities are entirely proper if:
She sells her own property. A principal need not be licensed.
A broker listed a home for $105,000 with an exclusive right to sell listing that specified a 6% commission. While the listing was in effect, the broker received a verbal offer of $100,000. The broker transmitted the acceptance to the buyer but was informed that the buyer found another property and would not complete this purchase. The broker is entitled to:
Nothing! The statute of frauds requires purchase agreements be in writing. The broker never procured a ready, willing and able buyer.
Which of the following would be a debit on a buyer's closing statement
Prepaid taxes. The buyer must reimburse the seller for the prepaid portion.
The R/E Settlement Procedures Act applies to:
purchase-money loans. applies to first mortgage purchase loans for one to four residential units.
Mortgage loan brokers differ from mortgage bankers in the mortgage loan brokers:
are not principals to their loans. They are middlemen who seldom use their own money.
A lender might make an FHA or a VA loan rather than a conventional loan because of the:
lower risk. Government insurance or guarantee reduces lender risk
A buyer's settlement statement would show all of the following:
the value of an assumed insurance policy
the amount of assumed loans in the impound account
It would not show: the loan prepayment penalty because this is a debit on the seller's statement.
FHA loans are made by:
Qualified lenders. Institutional lenders approved by the FHA make FHA loans.
Who discounts a mortgage:
Mortgagee. A lender sells the loan for less than the face value on the loan.
Tor provide protection against inflation, a lessor wants the inclusion of a lease clause relating to:
The CPI. The consumer price index is an inflationary index. if rent is tied to the index, the lessor would be protected.