Exam 3 Flashcards by Caiti Jones

Which of the following terms BEST describes personal property that, by its attachment to real property, is regarded as real estate?

(a) trade fixture

(b) emblements

(d) improvement

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A real estate office is located on a street corner in a neighborhood zoned for residential/professional use. The zoning committee changes the zoning to R-1. The office is now an example of:

(a) a non-conforming use

(b) a zoning violation

(d) a variance protected use

(a) a non-conforming use

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The right to use a neighbor’s private road for entry and exit to your property, which would pass to a buyer upon the sale of your property, is best described as:

(a) an easement in gross

(b) an easement appurtenant

(d) a prescriptive easement

(b) an easement appurtenant

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When a property owner grants a right of use to another while keeping legal title themselves this is:

(a) lis pendens

(b) a reservation

(d) an easement

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A property use granted by the zoning committee or deed restrictions that benefits the neighborhood is called:

(a) a POA

(b) a non-conforming use

(d) a variance

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What method of legal description is most common in residential subdivisions and relies on a plat for accuracy?

(a) The Government Survey System

(b) Metes and Bounds

(d) The Rectangular Survey System

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New residential construction in a city is required to have a certain number of bathrooms per sq. ft. plus at least Cat 5 wiring. These rules are an example of:

(a) building codes

(b) zoning

(d) condemnation

(a) building codes

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A residential property owner is selling his home. The buyers will also be purchasing all the appliances and the dining room furniture. In addition to the sales contract and the deed, what other paperwork will most likely be included as part of this transaction?

(a) A note and a mortgage

(b) An addendum and/or a bill of sale

(d) A reservation and an addendum

(b) An addendum and/or a bill of sale

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Which of the following statements about an easement appurtenant is true?

(a) It is a benefit for the dominant property and a limit for the servient property

(b) It is terminated by the sale of the property

(d) It gives the owner permission to use another’s property that is easily revoked

(a) It is a benefit for the dominant property and a limit for the servient property

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A lessee pays a fixed amount of rent. She also pays all the operating expenses of the property including the property taxes and maintenance. This lease is known as:

(a) gross lease

(b) graduated payment lease

(d) periodic lease

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If a property is sold on a short sale, the party selling the property must:

(a) be an agent of the lender

(b) be associated with an appraiser

(d) have the approval and cooperation of the mortgagee

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A title insurance policy has been provided to a buyer by the seller, along with a general warranty deed. The title insurance will protect the buyer from a financial loss caused by:

(a) an encumbrance to which the policy has not taken an exception

(b) an encumbrance that was disclosed by the seller

(d) a flood or hurricane

(a) an encumbrance to which the policy has not taken an exception

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When two people purchase real property and take title as tenants in common, they have elected a form of ownership that allows for:

(a) rights of survivorship

(b) title to pass without probate

(d) subrogation

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A tenant signs a lease agreement that calls for periodic increases of rent at scheduled intervals. The lease is referred to as:

(a) a gross lease

(b) a net lease

(d) a percentage lease

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Marco has purchased a property from John and received a quit claim deed. When he tries to sell the property, he learns that John and a neighbor each had a 50% tenancy in common interest in the property. What is true?

(a) Marco can transfer clear title to a buyer for the entire property

(b) Marco must honor the tenancy in common rights of the neighbor

(d) Marco can sue John for failure to disclose he was only a part owner of the property

(b) Marco must honor the tenancy in common rights of the neighbor

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A buyer has a signed sales contract on a property and has not yet gone to closing. This is an example of:

(a) the principle of anticipation

(b) an equitable estate

(d) tenancy in common

(b) an equitable estate

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What is the most likely disadvantage to a lender in accepting Deed in Lieu of Foreclosure?

(a) a delay in receiving funds for the property

(b) the liability for existing liens on the property

(d) it is more expensive that the cost of a foreclosure sale

(b) the liability for existing liens on the property

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A component of the Gross Income Multiplier (GIM) is:

(a) net yield

(b) vacancy rate

(d) operating expense

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An appraiser reduces the value of a home due to 60amp service when the standard electrical service for the subdivision is 100amp. What is he citing?

(a) Physical deterioration

(b) Economic obsolescence

(d) Deferred maintenance

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Which of the following statements about the income approach to value is CORRECT?

(a) It determines an investment property’s value based on comparable investments

(b) It determines an investment property’s value based on its return

(d) It determines an investment property’s value based on the GIM

(b) It determines an investment property’s value based on its return

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A new license holder has prepared a detailed listing presentation package to present to prospects and it always includes a CMA on the property. He has secured his first listing. After his presentation of this package and the CMA, including a range of values for the neighborhood, he has told the sellers they must list the property for $395,000. The sellers have accepted this price even though they do not agree with it. What is wrong with this scenario?

(a) The result of the CMA should have been a price rather than a range

(b) There is nothing wrong with this scenario

(d) A sales license holder must use a listing presentation package prepared by the broker

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If property value is affected by negative forces outside the property which are beyond the control of the owner like crime rates, this is referred to as:

(a) physical depreciation

(b) economic obsolescence

(d) straight line depreciation

(b) economic obsolescence

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The direct sales comparison (market data) approach would be MOST appropriate for establishing the value of a:

(a) 5-year-old single-family house

(b) duplex

(d) working farm

(a) 5-year-old single-family house

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What is the difference between replacement cost and reproduction cost of a building?

(a) Both approaches describe a building with the same usefulness, but the replacement cost uses modern materials and methods, while reproduction uses historic materials.

(b) The replacement cost is about style and appearance while the reproduction cost duplicates the building

(d) Only the reproduction cost is concerned with the utility of the building

(a) Both approaches describe a building with the same usefulness, but the replacement cost uses modern materials and methods, while reproduction uses historic materials.

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A sales license holder has been asked to list a unique property. Which of the following would be most useful in helping the agent and the seller determine a value for the listing? (a) The GRM (b) An income approach appraisal (c) A cost approach appraisal (d) A market approach appraisal

There are four basic characteristics of value. They are demand, scarcity, transferability and: (a) taxability (b) immobility (c) situs (d) utility

(d) utility

A property is listed for $588,000. It sells for $605,000. The appraisal comes in at $602,000. What is the market value for this property? (a) $588,000 (b) $602,000 (c) $605,000 (d) $598.33

(b) $602,000

An appraisal is: (a) an opinion of value (b) a range of value (c) a determination of value (d) a market analysis

(a) an opinion of value

A salesperson who completes a written listing agreement with a seller is helping to create a contractual relationship between? (a) the seller and a buyer (b) the seller and the salesperson (c) the seller and the broker (d) the salesperson and the broker

In stating a seller’s price and terms to a prospective buyer, the seller’s broker is required by the law of agency to state only those terms that are: (a) included in the listing agreement (b) his opinions on the property value (c) open for negotiation (d) able to be determined by a visual inspection of the property

(a) included in the listing agreement

Buyers have made an offer to purchase a house for $250,000 including the dining room furniture. The offer will expire at 5:00 p.m. on Sunday. On Thursday, the sellers reply in writing that they will accept the offer of $250,000 but they will not include the dining room furniture. While the buyers are considering the counteroffer on Friday, the sellers change their minds and decide to accept the original offer, dining room furniture to be included, and they state so in writing. What is the current obligation of the buyers? (a) The buyers are now under contract to buy the property but can withdraw until 5:00 p.m. on Sunday (b) The buyers are now under contract to buy and cannot withdraw from the agreement (c) The buyers are not legally obligated to purchase the house (d) The buyers have until 5:00 on Sunday to decide if they want to buy the house or not

During a real estate transaction, who determines the amount of the earnest money? (a) the buyer (b) the seller (c) the agent presenting the offer (d) the agreement of the buyer and seller

(d) the agreement of the buyer and seller

Under what circumstances will a sales license holder be permitted to keep listings and sales contracts after the termination of sponsorship by a broker? (a) If the sales license holder can move to a new broker within 48 hours (b) If the sales license holder can move to a new broker immediately (c) Under no circumstances (d) If a new sponsoring broker agrees to accept the contracts

A property owner has a property tax exemption due to a physical disability. The result is a $1500 reduction in the annual property tax bill. The listing license holder has not disclosed this exemption. This failure to disclose a material fact about the property is an example of: (a) fraud (b) negligent misrepresentation (c) puffing (d) errors and omissions insurance

(b) negligent misrepresentation

A buyer and seller have signed a purchase agreement and all contingencies have been met. The seller has changed his mind and no longer wants to sell. What legal remedy can the buyer use to force the seller to consummate the sale? (a) sue for liquidated damages (b) accept mutual rescission (c) sue for specific performance (d) sue for punitive and compensatory damages

A designated agent is: (a) one appointed by a broker in a dual agency situation (b) one appointed by a broker acting as an intermediary (c) one hired by a consumer to list property (d) one appointed by the court in the case of a dispute over a contract

(a) one appointed by a broker in a dual agency situation

A license holder in an agency relationship: (a) owes a fiduciary duty to customers (b) must treat all parties with honesty and fairness (c) supports and defends the best interest of customers (d) is not responsible for accounting of funds held in a transaction

(b) must treat all parties with honesty and fairness

When the acts or conduct of a license holder leads a consumer to believe that licensee is representing the consumer’s best interests this is an example of: (a) agency by ratification (b) oral agency (c) implied agency (d) illegal agency

Which of the following are requirements for a real estate contract to be valid? (a) Competent parties, legal purpose, in writing (b) Offer and acceptance, in writing, consideration (c) Legal purpose, in writing, offer and acceptance (d) Competent parties, consideration, legal purpose

(d) Competent parties, consideration, legal purpose

When one party to a contract can rescind, this contract is: (a) valid and enforceable (b) voidable (c) void (d) invalid

(b) voidable

Kathy has a signed contract that has not yet gone to closing. It has created an equitable estate for her. This contract can also be described as: (a) defeasible (b) executory (c) void (d) voidable

(b) executory

Which real estate agreement is the exception to the Statute of Frauds? (a) A lease for one year or less (b) A listing agreement (c) A buyer representation agreement (d) A cooperating broker commission split agreement

(a) A lease for one year or less

A broker has a listing, and the seller is overseas. There is no possibility of the use of electronic documents and the seller would like the broker to represent him at closing and sign all the required documents. What authorization would allow the broker to do this? (a) A listing agreement signed by the seller will allow the broker to do this (b) A limited agency agreement will allow the broker to do this (c) A limited power of attorney acceptable to the title company will allow the broker to do this (d) A special agency agreement will allow the broker to do this

What would be necessary for a broker to be successful in a lawsuit for a commission? (a) A written listing agreement (b) Be able to prove he/she was the procuring cause of sale (c) A verbal compensation agreement of any kind (d) Evidence of lack of cooperation by the client

(b) Be able to prove he/she was the procuring cause of sale

A property is advertised as “For Sale by Owner.” The seller owns 2 homes. The seller receives several offers and chooses the buyer based on the buyer’s national origin. Neither party is represented by a broker. Which of the following is true about violation of the Fair Housing laws? (a) The seller is in violation of the Fair Housing Act (b) The seller is not in violation because his actions do not involve a broker (c) The seller is only in violation for 6 months (d) The seller is only in violation for 2 years

(b) The seller is not in violation because his actions do not involve a broker

A client is abandoned by the agent. What can the client do? (a) File for release due to abandonment (b) Wait for the written agreement to expire (c) Verbally terminate the contract (d) Find another agent

(d) Find another agent

Which of the following would be considered an operating expense when a property manager draws up the operating budget for the owner? (a) repainting units for new occupants (b) depreciation (c) mortgage loan payments (d) building an extension on the parking garage

(a) repainting units for new occupants

A license holder has been sponsored by a broker under independent contractor status. What is true regarding employment taxes in this case? (a) The broker will withhold a portion of the agent’s commission for tax reasons (b) The broker will contribute to SSI for the agent (c) Nothing will be withheld from any commission for tax reasons (d) The broker will begin to withhold taxes once the agent earns more than $25,000. in commissions

49. A buyer files a lawsuit against a listing broker because, after closing, termite damage was discovered on the property. The listing broker had no knowledge of any termite problems on the property, and the seller did not disclose any termite problems. What type of insurance will protect the broker in this situation? (a) general liability insurance (b) errors and omissions insurance (c) property and casualty insurance (d) legal insurance

(b) errors and omissions insurance

Mary, a new license holder, is very excited about using her social media skills to market property for her sellers. She has secured her first listing and intends to post a video of the home online. Which of the following statements about this is true? (a) She is prohibited from doing this because it violates her duty of confidentiality to her clients (b) She can post the video with the written permission of her clients (c) She can only post the video after previewing it with her clients and broker (d) She can post the video with verbal permission from the clients

(b) She can post the video with the written permission of her clients

A buyer and seller have signed a Purchase and Sale Agreement for a commercial property. The agreement contains a Due Diligence Contingency Clause. The buyer has placed a $10,000 earnest money deposit on the property and has paid $500.00 for the due diligence contingency. The buyer has had the property evaluated by an investment advisor and an inspector. He has decided that he no longer wants to purchase the property. He is still within the Due Diligence Clause time period. Which of the following best describes his options at this point? (a) He can terminate the offer and receive all his money back (b) He can terminate the offer and forfeit all monies paid (c) He cannot terminate the contract as he has signed it and agreed to its terms (d) He can terminate the offer and receive a refund of his earnest money only

(d) He can terminate the offer and receive a refund of his earnest money only

An oceanfront property is being advertised as having “the best view in the state”. This is most likely an example of: (a) puffing (b) negligent misrepresentation (c) fraudulent misrepresentation (d) statement of a material fact

(a) puffing

A visually impaired individual with a service animal applies to lease an apartment. The apartment complex has a strictly enforced “no pets” policy. Compliance with Federal Fair Housing laws requires the landlord to allow the tenant to have the dog on the property. The dog damages the apartment. Who is required to pay for repairs in this instance? (a) The landlord (b) The property manager (c) The dog owner (d) The apartment complex insurance provider

A property is being listed for sale by a broker. The property has a 35-foot easement across the front and zoning requires a 45-foot setback. Which of the following actions should be taken by the broker when listing this property? (a) He must disclose the zoning setback only, since it will take precedence in this case (b) He should only disclose the easement as it will make marketing the property easier (c) He does not have to disclose either restriction as that is the seller’s responsibility (d) He must disclose both limitations on the property use

(d) He must disclose both limitations on the property use

A homeowner will be abroad for one year and wants to lease his home for that period. He hires a broker to lease the property and specifies that he will not sign a lease where the tenants have any children or pets. What must the broker do? (a) The broker must obey the wishes of the owner/client (b) The broker must tell the owner that the owner cannot lease under those terms as it would violate the Federal Fair Housing Act (c) The broker must tell the owner that although he can specify “no pets”, he cannot specify “no children” to comply with Fair Housing laws (d) The broker must tell the owner he can only enforce those terms if the owner promises in writing to indemnify the broker in the event of a lawsuit

(c) The broker must tell the owner that although he can specify “no pets”, he cannot specify “no children” to comply with Fair Housing laws

An individual feels he has been a victim of discrimination in housing. He has several choices for remedies and resolution of this situation. Which remedy should he choose if his goal is a quick end to the discriminatory treatment and the full restoration of his rights? (a) file a suit with the Federal Attorney General (b) go to HUD with a complaint because HUD will try mediation (c) file a suit with the State Attorney General in his state of residence (d) file a suit with the real estate commission in his state of residence

(b) go to HUD with a complaint because HUD will try mediation

What is the primary reason that broker-client money commingling is illegal? (a) the accounting of commingled funds is too difficult for the average broker (b) a creditor of the broker could seize the account if it held broker funds (c) funds held in a trust account are too difficult to release and that could cause the broker to become delinquent in meeting financial obligations (d) conversion of commingled funds for broker obligations is too difficult to determine and could lead to broker abuse of the trust of clients

(b) a creditor of the broker could seize the account if it held broker funds

Under an exclusive right to sell listing, a license holder has the authority to take which of the following actions on behalf of a seller? (a) make price adjustments based on feedback from showings (b) refuse to present offers that the salesperson feels are too low (c) advertise the property for sale (d) offer a lease purchase arrangement to a prospective buyer

Which of the following is NOT a contributing factor in mold growth? (a) Adequate ventilation (b) A leaking septic system (c) Newer homes with tighter construction (d) Excess Moisture

(a) Adequate ventilation

A listing salesperson must disclose what information to potential buyers? (a) Any zoning changes that occurred after the property was listed (b) The sellers are facing bankruptcy (c) A death due to natural causes occurred on the property (d) A suicide occurred on the property

(a) Any zoning changes that occurred after the property was listed

When a prospective buyer asks about a property’s location regarding flood zones, the license holder should direct the buyer to: (a) ask about this at the local police department (b) ask about this at the local fire department (c) ask the seller of the property about this (d) obtain an up-to-date floodplain map from FEMA

(d) obtain an up-to-date floodplain map from FEMA

The presence of government-regulated wetlands on a building lot: (a) is a material fact that must be disclosed (b) does not have to be disclosed (c) can only be determined by a surveyor (d) renders the property uninsurable

(a) is a material fact that must be disclosed

An agent is showing a property and notices several problems with the property which he feels are “red flag” issues. Which of the following would NOT be a “red flag”? (a) Discolored water bubbling up from under the ground at the site of a buried fuel tank (b) An iridescent sheen on the surface of a pond on the property (c) The seller’s disclosure of the existence of a buried fuel tank (d) Doors and windows that will not close properly accompanied by cracks in the wall extending from the ceiling to some of the door and window frames

What hazardous substance is colorless, odorless, and most likely to be found in colder climates? (a) Lead (b) Asbestos (c) Mold (d) Radon

(d) Radon

Which of the following statements about the lead-based paint disclosure is true? (a) The seller must keep a copy of the disclosure for 4 years (b) The disclosure allows the buyer to waive the right to a lead inspection (c) It must be provided for all properties built before 1979 (d) It gives the buyer the right to have an inspection within 14 days of the effective date of the contract

(b) The disclosure allows the buyer to waive the right to a lead inspection

Gently used water from bathroom sinks, showers tubs and washing machines is called: (a) white water (b) greywater (c) clear water (d) blackwater

(b) greywater

In a contract for deed, the seller is the: (a) guarantor (b) offeror (c) vendor (d) trustee

A builder has a blanket loan on a parcel of land and sells a lot from the parcel. How can he deliver a deed to the buyer at closing? (a) He pays off the cost of the lot (b) He gets a new mortgage on the lot (c) He refinances the existing mortgage (d) He gets a package mortgage

(a) He pays off the cost of the lot

Who in a transaction would be the borrower? (a) vendor (b) vendee (c) trustee (d) mortgagor

(d) mortgagor

What type of mortgage loan allows the borrower to obtain additional funds at a later date? (a) blanket mortgage (b) wraparound loan (c) open end loan (d) subprime loan

In an amortized loan, which of the following describes the loan payment during the life of the loan? (a) With every payment made, interest increases and principal decreases (b) With every payment made, interest decreases and principal increases (c) With every payment made the division of principal and interest remains the same (d) For the first year every payment is interest only

(b) With every payment made, interest decreases and principal increases

A property is advertised for sale on the radio. What part of the advertisement involves a trigger term? (a) the house is in a neighborhood of beautiful homes (b) the house is close to schools and churches (c) easy financing is available to qualified buyers (d) the seller offers an interest rate of only 5% on purchase mortgages

(d) the seller offers an interest rate of only 5% on purchase mortgages

A buyer purchases a home for $250,000. He secures a loan with an LTV of 100%. Which of the following types of loans did he most likely procure? (a) conventional loan with PMI (b) FHA loan with MIP (c) non-conforming loan (d) VA guaranteed loan

(d) VA guaranteed loan

A home has a current market value of $225,000. MLS data from the last five years shows that home values have appreciated 6% per year. If this trend continues, what will be the value of the house 5 years from now assuming compound appreciation? (a) $301,101 (b) $284,057 (c) $267,979 (d) $252,810

(a) $301,101

A landlord rents a 6-unit apartment complex for $450/unit per month. The property manager receives a 10% management fee. The mortgage for the complex is $1800/month and repairs are $180/month. What is the landlord’s net income per month? (a) $450 (b) $900 (c) $2,700 (d) $2,250

(d) $2,250

An investor owns a 10-unit duplex complex containing 20 apartments. Each apartment in the complex rents for $1500 per month. Last year all the apartments were occupied for 6 months. One apartment was vacant for 5 months and two apartments were each vacant for one month. What was the occupancy rate for the property last year? (a) 92% (b) 94% (c) 97% (d) 99%

An office building has potential gross rent of $24000 a month. The property has a vacancy rate of 12%. Operating expenses for the property are $110,000. The property has sold for $956,000. What is the rate of return based on this information? (a) 15% (b) 12% (c) 17% (d) 11%

(a) 15%

An investment property has actual gross rent of $320,000 per year. The building currently has a 5% vacancy rate. The net annual income from the property is $212,000. The investor has an 11.5% capitalization rate on the property. What is the market value? (a) $2,643,478 (b) $1,751,304 (c) $1,843,478 (d) $939,130

A broker has received $4387.50 in commission after paying his agent 70%. The listing commission was 6% split evenly between the listing and selling broker. What was the sale price of the property? (a) $146,250 (b) $487,500 (c) $243,750 (d) $478,500

(b) $487,500

Exam 3 Flashcards

(80 cards)