Quick Quiz 6 Flashcards
(34 cards)
A property that is referred to as “turn key” is
A) parcels on which the planning is complete and ready for building.
B) government-subsidized low-income housing projects.
C) an illegal ranch subdivision.
D) a contractor’s package that is complete and ready for occupancy.
D) a contractor’s package that is complete and ready for occupancy.
Smith buys an apartment building for $100,000. He keeps it for 10 years and sells it for $100,000. He had depreciated the improvements $40,000 over his period of ownership. As to his income tax position
A) his gain may be deferred.
B) he has no recognized gain.
C) his gain is taxable as ordinary income.
D) he has to pay capital gains on the amount of the depreciation.
D) he has to pay capital gains on the amount of the depreciation.
Depreciation reduces the original cost basis, thereby increasing the difference between the selling price and the new (or “adjusted”) cost basis. That difference is a long-term capital gain on which the taxpayer will pay taxes. In this case, Smith’s gain equaled the depreciation taken.
The most common listing agreement allows the broker to
A) guarantee the purchaser will accept.
B) find a purchaser, fill out the deposit receipt, obtain an offer, and present the offer.
C) find a purchaser, obtain an offer, and bind the principal to that offer.
D) convey title.
B) find a purchaser, fill out the deposit receipt, obtain an offer, and present the offer.
The broker does not have the authority to bind the principal to an offer. However, the broker may “obtain an offer” in order to “present it to the principal” for acceptance or rejection.
In the absence of court approval, a minor or incompetent can
A) do all of these.
B) convey property through a guardian.
C) encumber real property through a power of attorney.
D) receive a deed to a property through gift or inheritance.
D) receive a deed to a property through gift or inheritance.
A minor can receive property through gift or inheritance, but because a minor is incapable of appointing an agent, such delegation of authority as appointing a power of attorney is void. Negotiating in real property with or for a minor is permitted through a court-appointed guardian (parents if living). Each transaction requires court approval.
In California, estates at will are created by
A) either express agreement or operation of law.
B) operation of law.
C) a properly written and executed document.
D) express agreement.
B) operation of law.
Under common law, an estate at will is one that can be terminated at the will of either party without advance notice. The Civil Code of California, however, requires that any estate created by agreement except an estate for years requires advance notice to terminate. Therefore, an estate at will can be created only by operation of law in California.
A lender, speaking of a loan in his portfolio, said it was “seasoned.” The lender was referring to the
A) pattern of payments of the trustor.
B) type of market in which the loan could be sold.
C) quarter of the fiscal year in which the loan was taken out.
D) maturity date of the loan.
A) pattern of payments of the trustor.
A seasoned loan is one that has been on the books for a time and the payment record of the borrower is a known quantity.
All of these are exemptions from local real property taxes EXCEPT A) senior citizens' tax exemption. B) low-income homeowners' exemption. C) veterans' exemption. D) homeowners' exemption.
B) low-income homeowners’ exemption.
Under state law limited exemptions from local real property taxes for individuals who qualify are senior citizens (and blind and disabled persons), who may defer their taxes; Veterans, who receive $4,000 off assessed value; and homeowners, who receive $7,000 off assessed value.
Discount points on financing under the California Farm and Home Purchase Act are paid by A) the seller. B) the state. C) no one. D) the buyer.
C) no one.
No discount points are charged on a Cal-Vet loan.
Which of these are NOT liens? A) Trust deeds B) Private restrictions C) Judgments D) Taxes
B) Private restrictions
Restrictions on the use of property are encumbrances, but not liens. Taxes, trust deeds, and judgments are all examples of liens.
Interest paid on original principal and also on the accrued and unpaid interest that has accumulated is A) multiple interest. B) compound interest. C) simple interest. D) accumulative interest.
B) compound interest.
Compound interest is interest paid on the original principal and also on the accrued and unpaid interest that has accumulated. Simple interest is interest paid on the unpaid principal balance only.
A seller’s transfer disclosure statement provides that a broker
A) physically inspect inaccessible areas and report findings to the buyer.
B) visually inspect the property and advise of any pertinent information.
C) pay for the pest control inspections.
D) inspect condominium common areas.
B) visually inspect the property and advise of any pertinent information.
Ms. Johnson owns two personal residences. If she sells one residence, under what circumstances could she defer her gain?
A) She could defer her gain only if the property sold was her principle residence.
B) She could defer her gain on the residence of greater value.
C) She must sell both residences to defer the gain.
D) She could defer her gain if she sold either residence.
A) She could defer her gain only if the property sold was her principle residence.
All of these are secondary benefits of the Federal Housing Administration as established by the National Housing Act of 1934 EXCEPT
A) elimination of short-term financing.
B) establishment of improved building standards.
C) a loan amount appropriate for the borrower’s income.
D) mortgage guarantee insurance with low premiums to protect the borrower.
D) mortgage guarantee insurance with low premiums to protect the borrower.
FHA insurance is for the benefit of lenders, not borrowers. A loan amount appropriate for the borrower’s income, elimination of short-term financing, and establishment of improved building standards are all advantages developed by the FHA plan.
An agency contract can be created by all of these EXCEPT A) appointment by the principal. B) a voluntary offer by the agent. C) an oral contract. D) an implied contract in law.
B) a voluntary offer by the agent.
An offer is not a contract; it is an expression of willingness to enter into a contract. While the existence of agency is a question of fact and is not dependent on the existence of a contract, this question asks about an agency contract. A voluntary offer by the agent would not create an agency contract; the offer would have to be accepted in order for a contract to be created.
A tenant would be justified in abandoning a property in all of these situations EXCEPT when
A) excessive or unwarranted changes or alterations in the property are made by the landlord.
B) dilapidated conditions are created by the tenant.
C) property is taken by eminent domain or condemnation.
D) the landlord threatens expulsion.
B) dilapidated conditions are created by the tenant.
A mortgage loan is identified as
A) any recorded instrument related to financial transfer.
B) a promissory note.
C) a loan collateralized by real property.
D) an unsecured note.
C) a loan collateralized by real property.
Collateral is marketable real or personal property that a borrower pledges as security for a loan. Thus, a mortgage loan is a loan collateralized by real property.
A deed made and delivered, but not recorded, is
A) valid as between the parties and invalid as to subsequent recorded interests without notice.
B) valid as between the parties and valid as to subsequent recorded interests.
C) invalid as between the parties and valid as to third parties with constructive notice.
D) invalid as between the parties.
A) valid as between the parties and invalid as to subsequent recorded interests without notice.
Recording a deed gives constructive notice to the world of the contents of the deed. The recording laws were enacted to protect innocent third parties. In this instance, the grantee did not record the deed; therefore, he or she cannot expect the courts to protect the title against third parties or subsequent recorded interests that have no knowledge of the document. The deed itself is valid between the grantor and the grantee, but invalid as against an innocent purchaser without notice.
An individual is employed by a lending institution to procure first deed of trust loans and is compensated on a commission basis by the lending institution for each loan he procures. This requires
A) an active real estate broker’s license.
B) a $5,000 surety bond.
C) none of these.
D) a real property securities dealer license.
C) none of these.
Any person or employee doing business under any law of this state, or any other state relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, or insurance companies are not required to have a license.
There are several reasons why a contract can be voidable. However, a voidable contract is binding on the parties until it is A) qualified. B) discovered. C) rescinded. D) invalidated.
C) rescinded.
Voidable means the contract is binding until some action is taken to rescind the contract.
A lessor is renting a furnished apartment from period to period. Under the Fair Housing Act, the lessor may do all of these things EXCEPT
A) check with former landlords for references.
B) require only single tenants to have a co-signor for the lease.
C) obtain credit checks on married couples.
D) collect the first, second, and last month’s rent.
B) require only single tenants to have a co-signor for the lease.
A lessor may not discriminate based on marital status as would be the case in requiring a single tenant to have a co-signor.
Wall studs are placed on and secured to A) joists. B) girders. C) subflooring. D) sole plates.
D) sole plates.
A sole plate is a member (piece of lumber), usually a 2 × 4, on which wall and partition studs rest.
Which expense on a personal residence may be deducted from ordinary income for tax purposes? A) Property taxes and mortgage interest B) Wear and tear C) Depreciation D) General upkeep
A) Property taxes and mortgage interest
For income tax purposes, property taxes and mortgage interest on a personal residence are deductible from ordinary income. Depreciation, upkeep, and wear and tear are not allowable deductions on a personal residence.
For federal income tax purposes, a taxpayer could adjust the cost basis of the personal residence on income tax records for which of the following items? A) The addition of a concrete patio B) Fire insurance premiums paid C) Interest on a loan D) Depreciation
A) The addition of a concrete patio
Cost basis is the same as tax basis. The addition of a capital improvement would constitute an increase to cost basis.
With respect to easements appurtenant, which statement is correct?
A) If the grantor conveys title to property, the easement passes automatically with the land.
B) The dominant tenement is the land burdened and benefited by the easement.
C) An easement always gives the rights of ingress and egress.
D) All encumbrances are liens but all liens are not encumbrances.
A) If the grantor conveys title to property, the easement passes automatically with the land.
Easements pass automatically upon transfer of the dominant tenement. The first statement is incorrect, as the dominant tenement is benefited, not burdened, by the easement. The second statement is incorrect, as an easement can include, besides rights-of-way, the right of receiving air, light, or heat; the right of using a wall as a party wall; or the right of flooding land, among other things. The third statement is incorrect, as an easement is an encumbrance but not a lien.
