Real Estate Flashcards
(188 cards)
1
Q
Appurtenant means?
A
Permanent easement
2
Q
Seisin
A
Possession of land by freeold
3
Q
Grantor?
Grantee?
A
Grantor? = Seller Grantee? = Receiver/Buyer
4
Q
1886 Civil Rights act prohibits using what?
A
Race
5
Q
What is in a HUD 1?
A
Closing costs etc of closing
6
Q
If a building is 3 stories and built before handycap laws, how many floors need to be compliant?
A
Just the 1st
7
Q
What is Exclusive Agency?
A
Seller can sell on own and not bay broker commission. Of if the broker does then he gets paid.
8
Q
What is Steering?
A
Pushing certain type of people to a particular naighborhood
9
Q
How long do you have to file a lawsuit with department of housing and development?
A
1 year, but can do civil even after.
10
Q
What does Void Contract mean?
A
Not legally enforceable.
11
Q
Homested Rights?
A
is a legal regime designed to protect the value of the homes of residents from property taxes, creditors, and circumstances arising from the death of the homeowner spouse. Protects 50k in California
12
Q
What is Equitable title?
A
“Equitable title” means that the prospective buyer has obtained the right to acquire ownership of a property currently owned and occupied by another.
13
Q
The discount points charged by a lender on a federal VA or FHA loan are a percentage of the
A
loan amount.
14
Q
In an installment land contract, what type of title did the seller retain?
A
Legal. In this type of contract, the BUYER doesn’t receive legal title to the property until the final payment is made. The BUYER receives equitable title at closing, and upon final payment to the seller receives legal title.
15
Q
True or False: Second mortgages have higher interest?
A
True. Second mortgages carry higher risk for lenders because they’re “second” in line after the first mortgage holder. In case of foreclosure, that means the first mortgage holder is paid in full before any remaining monies are distributed. This added exposure typically results in higher interest rates.
16
Q
Usury MOST nearly means
A
illegal interest.
Each state sets its own ceiling for the maximum interest rate lenders may charge. Rates above that ceiling are considered usurious and illegal. No reputable lender exceeds those rates and those that make a practice of it are commonly known as loan sharks.
17
Q
Define Amortized loan?
A
This question is a formal description of amortized loans–the most common form of mortgage where monthly payments include both principal and interes (as opposed to balloon or interest-only seconds). Typically, monthly payment amounts remain constant, while the interest portion is higher in the earlier years, giving homeowners a larger tax deduction with higher percentages of principal paid in the later years.
18
Q
Under RESPA, a copy of Real Estate Settlement Costs And You must be given when?
A
The intent of RESPA–the federal Real Estate Settlement Procedures Act–is to make borrowers more aware of costs and charges. Accordingly, it should be given at the time of application and no later than three days after that.
19
Q
Who may make withdrawals from a broker’s trust account?
A
The broker or a designated other. As long as the person has the broker’s written authorization, a licensed salesperson or broker may make withdrawals. Additional, an unlicensed employee of the firm may also make withdrawals if he or she has a fidelity bond at least equal to the maximum amount to which that person has access.
20
Q
The secretary in Betsy’s real estate office was able to sell one of the company’s listings. As an unlicensed staff person, how much commission can she receive?
A
Betsy’s secretary can receive no payment for selling real estate. “ No unlicensed person may receive any compensation for selling real estate except individuals selling their own home or that of a family member.
21
Q
What is the maximum amount that can be paid from the Real Estate Education, Research and Recovery Account on behalf of a licensee in a judicial action? Assume there has been a series of judgments against an individual licensee.
A
$250,000 “ Intended as a last resort, the Recovery Fund reimburses consumers for losses suffered because of fraud or other acts of misconduct committed by a licensee. It’s important to note that the ceiling is $50,000 per transaction, up to a combined total of $250,000 per individual licensee.
22
Q
The continuing education requirement in California is ______________ to renew any real estate license.
A
45 hours every four years “ The 45 CE hours must be fulfilled by attending courses, seminars, or conferences approved by the Commissioner for continuing education credit.
23
Q
A broker who changes his/her main office address must forward a written notice to the BRE in Sacramento
A
By next business day!
24
Q
Define Assign a contract:
A
Transfer to Another
25
Property Manager is...
owners eyes and ears
26
When are contracts valid?
when both parties accept
27
How long does a homeowner have to recend a loan after acception?
3 business days until midnight
28
Seller under a land contract is called...
Vendor
29
True or False? Recording fees & title insurance premium not included in truth in lending statement
True, Because these are legal fees
30
A standardized yardstick expressing the true annual cost of borrowing is expressed as the what?
APR
31
Describe RESPA
RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited. The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974.
32
In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called?
Statutory right of redemption " This right of redemption is called "statutory" because it is legally mandated by law, as opposed to a custom lenders could follow or not at their option.
33
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan?
Monthly payments " Graduated payment mortgages are aimed particularly at young families who expect to see their earnings rise over the next five to ten years. As such, payments for interest and principal are less than the actual costs in the early years and gradually rise to make up the difference.
34
The maximum permissible "loan to value ratios" are
based on sale price or appraised value, whichever is lower. " Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used.
35
Regulation Z?
Regulation Z requires disclosure of all financing terms and conditions if a low interest rate, downpayment or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies only to institutions, not individuals selling their own property.
36
warehousing
Warehousing refers to the process whereby banks and other lenders make mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market. The "warehousing" occurs when individual loans are bundled, often with a common element such as the size of the mortgage or credit worthiness of the borrowers, and sold as a single unit.
37
Why is the RESPA closing statement allowed to be examined on or before closing?
To check for mathematical errors "
38
Describe ECOA?
ECOA. " Passed in 1992, the Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (e.g., public assistance) and other factors.
39
Describe Novation
Essentially, novation means to substitute a new contract for an old one; thus the holder of the original is relieved of his or her responsibilities.
40
Who is the largest purchaser in the secondary market?
Fannie Mae stands for the Federal National Mortgage Association (FNMA). It was established by the National Housing Act specifically to start the secondary mortgage market, thus attracting more investors and funds to help support home ownership.
41
Seller Jolita lists her house with Broker Fred. Fred then buys Jolita's house and collects the agreed-upon commission. This is an example of
Fred is taking advantage of his position to collect a commission. Self-dealing qualifies as intentional misrepresentation.
42
Describe Restrictive covenants
They are placed by private parties in a deed. " Restrictive covenants are most commonly associated with subdivisions and community management associations and are intended to maintain consistency within the neighborhood. While viewed as a benefit by most, they do limit the owner's use of the property and are binding on future owners.
43
If someone dies intestate, leaving a large estate and no heirs. What is the most likely disposition of the property?
It will escheat to the state if no claims are made by possible heirs within five years. " "Escheat" means to revert, which is what will happen if no heirs come forward and establish a valid claim within the 5 year period.
44
What is a the Recovery Fund
The Recovery Fund is an account established as a last resort for a consumer who has obtained a final civil judgment or criminal restitution order against a real estate licensee based on fraud or certain other grounds. The consumer, who has suffered financial loss due to the wrongful act of a licensee in a real estate transaction, can receive payment of damages and arbitration from this fund.
45
What happen if a real estate agent cant pay back what recovery fund paid out because of a screwup?
Bianca's license is suspended until she pays the Recovery Fund back (with interest). "
46
A veteran purchases a home under the Cal-Vet program. In such transactions, to whom is the deed issued?
To the California VA " Under the Cal-Vet program, funded through bond sales, the department of Veteran's Affairs pays cash to the seller and receives a grant deed in return. The department then sells the property to the approved veteran using a land sales contract.
47
What is Statutory right of redemption?
In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called?
This right of redemption is called "statutory" because it is legally mandated by law, as opposed to a custom lenders could follow or not at their option.
48
True or False?
| The maximum permissible "loan to value ratios" are based on sale price or appraised value, whichever is lower.
True, Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used.
49
When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it?
"Trustor" is another name for the borrower and "trustee" is a "supposedly" neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it's the lender who requires the insurance to protect his/her position, it's the borrower who pays for it.
50
The first step in an appraisal is?
Define the problem. Appraisers can legitimately come up with different values for the same property depending on the purpose of the appraisal. For example, an appraisal for a second mortgage generally would be more conservative than one for a competitive market analysis for the purpose of selling the home. Additionally, an appraisal for insurance purposes focuses more on the costs of replacing the structure rather than what the house, land and intangibles, such as curb appeal, would be worth on the open market.
51
A recorded subdivision plat is used in the lot and block system. What is a lot and block system?
Lot and block is the "final" survey of property being readied for development and identifies each individual parcel in a subdivision. Soft of like a subdivision map that JTS has of the community they are gonna build. (this map is called a plat)
52
An appraiser is paid base on his time and effort. Why?
There are two fundamental reasons for the "time and effort" rather than valuation method. First is the fact that the differences between any two properties make it impossible to relate the complexity of the task to the value of the property. A high-end property could be a relative "no brainer" while a particular mid-market home could have dozens of variables to be analyzed. The second reason is that basing fees on value places an obvious incentive on appraisers to estimate high, thus distorting reality.
53
what is a principal meridian?
The primary survey line running north and south in the rectangular survey system is the a principal meridian.
54
What is Aesthetic zoning?
Aesthetic zoning helps ensure consistency within a neighborhood or area, thus raising its visual appeal and, very often, its desirability and value as a place to live..
Like China Town or and historic area.
55
The appraisal approach most likely to be used in valuing a public library building would be....
The cost method is most often used for buildings where actual income or comparative commercial value are unavailable--such as schools and libraries.
56
Physical deterioration is considered curable whenever....
it costs less to correct than the resulting value increase.
For example, let's say an older office building needs to update electric and add bathrooms, repartition offices and fire safety features to meet code for resale. The cost to complete the work is estimated at $2.2 million. However, the building is fully paid for and can easily be sold for $4 million. In this case, curing the defects makes sense. However, if those numbers were reversed, as is often the case, demolishing the building and starting over with a new structure or different use (e.g., retail space, a parking garage, etc.) would be the wiser choice.
57
A feature found in a comparable property that is not present in the subject property will result in
a reduction adjustment to the comparable's selling price. "
It's important to remember that adjustments are made to the comparable, not the subject property. For example, let's assume two homes are identical in every respect, except the comparable property has a swimming pool the subject home lacks. If the subject property is on the market for $175,000 and a swimming pool typically adds $8,000 to the selling price of homes in that area, the appraiser would deduct $8,000 from the sale price of the comparable rather than adding it to the subject property to make his comparison.
58
What is Effective age?
Effective age is a combination of many factors, including location, quality of construction and maintenance, architectural style, actual age, climate and so forth. A well-built building in a desirable location will have a much longer effective life than a cheaply constructed space in a poorly maintained office park setting.
59
What is regression?
The regression principle is the reason people are cautioned against owning the most expensive house in the neighborhood. It's an observation of the fact that lower priced homes (and commercial buildings) have a much greater downward pull on the value of higher end properties than the other way around.
60
what is gross rent multiplier?
Gross Rent Multiplier is the ratio of the price of a real estate investment to its monthly rental income before expenses such as property taxes, insurance, and even utilities for vacation rental properties.
61
True or False: Restrictive covenants that run with the land apply to and bind all successive owners of the property.
True. Often put in place to maintain the consistency and desirability of a neighborhood, restrictive covenants have withstood court tests and prohibit all future owners from certain actions or modifications of their property, such as adding out-buildings or creating additions above a certain height, putting up lights to illuminate a sports court, changing the architectural style of a home and so forth.
62
What is arm length transaction?
An "Arm's length transaction is defined as one in which the parties are dealing from equal bargaining positions. Parties are said to deal "at arm's length" when each stands on the strict letter of his or her rights and conducts the business in a formal manner without trusting the other's fairness or integrity and without being subject to the other's control or dominant influence as would be the case in the divorce.
Non arm length transaction is considered a higher risk transaction.
63
Define nonconforming use
This is an example of "grandfathering" that's common when new zoning rules are put into place. Basically it means that businesses and buildings that were in compliance before the new code was established may continue to operate or exist under their present owners. However, if Lois want to sell her business, it must be to an enterprise that meets the new requirement.
64
1988, the Fair Housing Amendments Act added which two protected classes?
1988 amendments added handicap and familial status (married, kids, single etc) to the list of protected classes.
65
What is a restrictive covenant?
There is some soft of restriction, registered on title by individual or HOA etc. It transfers to next owner.
66
True or False? Neighborhood analyses help licensees understand the underlying "reasons why" behind the values of the various neighborhoods in the communities they serve.
True
67
What does The term depreciation mean?
loss of value in real estate from any cause. "
Generally, depreciation involves tax and accounting calculations on commercial properties. However, it can also apply to residential properties, especially those in older neighborhoods where updates and maintenance haven't kept pace with consumer expectations or where some event, such as rezoning or highway construction, has had an impact.
68
A property was assessed at 25% of value with a tax rate of $12 per hundred. If the taxes totaled $11,400, what was the value?
To arrive at this sum, you would divide the total taxes ($11,400) by the rate per hundred ($12) for a total of 950. Multiply that by $100 (remember, the earlier "rate per hundred") for a total of $95,000, which is 25% of the value. Divide $95,000 by 25% to obtain 100% value, and get the total value of $380,000.
69
Why would the COST APPROACH require the value of the land to be calculated separately from the value of the improvements?
The land is figured as a separate item because it already exists and wouldn't have to be reconstructed.
70
what is external obsolescence?
Bad location. Airport near, built on wrong zone, busy street.
A law requiring the building to be retro-fitted with fire sprinklers
External obsolescence is caused by events outside of the owner's control, such as a zoning change that makes the building's current use non-conforming.
71
Define metes and bounds?
is used to describe irregular pieces of property.
Using natural features and known boundaries of adjacent properties, metes and bounds is used when a lot and block survey isn't available as well as for defining irregular properties.
```
Metes = Distances
Bounds = Direction
```
72
how many acres in square mile?
640
73
How big is "A Section"?
1 square mile
74
Under California law, Easement by Prescription is what time period?
Easement by prescription is when the claimant has used the land for the time period set by law. Under California law, this time period is 5 years of continuous use. If this time required has been fulfilled, the claimant can claim the right to use the land forever.
75
What is the main duty of a county assessor?
The assessor calculates the amount of taxes owed but does not determine the manner in which they're assessed. The current levy system is based on an assessment of 1% of the cash value of the home at time of last sale. Reassessments may occur if the homeowner makes structural additions. In addition, other local taxes may be added and the rate may increase by up to 2% per year.
76
In regard to the three types of private deed restrictions in California, CC&R refers to
covenants, codes, and restrictions.
77
bilateral, what is it?
bilateral contract is a is a reciprocal arrangement between two parties where each promises to perform an act in exchange for the other party's act. Each party is an (a person who is bound to another) to its own promise, and an obligee (a person to whom another is obligated or bound) on the other party's promise.
78
Undue influence or duress applied to one party to a contract makes the contract
voidable.
Because all parties must enter a contract willingly and believe that doing so is in their best interests, attempts to influence an unwilling or reluctant participation can render the contract void. The court must be petitioned and agree before the contract becomes void.
79
Define Police power?
"Police power" refers not just to criminal law enforcement, but all powers of federal, state and local governments to enact and enforce laws for everything from parking to where, what and for what purposes people may construct buildings.
80
What is life estate?
In common law and statutory law, a life estate is the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death when ownership of the property may revert to the original owner, or it may pass to another person.
81
What is An easement in gross?
an easement in gross. "
An easement in gross grants a company or individual limited rights to access another's property for a specific purpose--in this case, installing, maintaining and repairing telephone lines.
82
What is severalty?
the condition of being separate.
"Severalty" means sole ownership. Legally, a corporation is considered to be an individual; so, in order for multiple people to create "sole ownership" of a single property, they must create a corporation.
83
Know diff between less-than-freehold estate and freehold?
Freehold and various forms of fee simple estates mean ownership, while a leasehold estate means renting.
84
Talk about how tenants in common works?
Tenants in common have flexibility in how they divide ownership and assign survivorship rights. Joint tenants, on the other hand, own property in equal shares while a general partnership is a business unit serving other shareholders. Severalty, as stated previously, is sole ownership.
James Smith and Bill Ross purchased a property together for their business venture with stated proportionate interest of 1/3 and 2/3 respectively without the right of survivorship. Each of them wants his share to be inherited by his wife. They are a partnership and not a corporation. James and Bill most likely took title as tenants in common
85
tenancy at will, at sufferance and for years are various forms of......?
rental arrangements.
tenancy in common is a form of ownership
86
What is intensity of usage?
Commercial zoning regulates the intensity of usage, by limiting the area of store or office per site area.  Intensity regulation is further achieved by minimum parking requirements, setbacks, and building height restrictions.Â
87
Easements by prescription is?
Easements by prescription must be ordered by a court. They mean essentially the same thing as adverse possession and have the same or similar requirements, depending on jurisdiction. Usually, they involve issues of right-of-way.
88
A recorded valid deed must contain What?
A) signature of the grantor.
C) granting clause.
D) an acknowledgment.
89
The National Environmental Policy Act of 1969?
The National Environmental Policy Act of 1969 helps to ensure that the proposed project will not have a negative impact on the environment.
90
Title to real property is conveyed by deed when the deed is...
delivered to and accepted by the grantee. "
Conveying title is different than recording and must be both signed and delivered by the grantor to the grantee and accepted and signed by the grantee.
91
What is a mill (mills?)
A mill is one one-thousandth of a dollar ($.001)
92
What is Spot zoning?
Spot zoning refers to the practice of reclassifying one piece of property in a manner inconsistent with the surrounding properties. When it occurs, it is often widely criticized and often overturned, except in circumstances that benefit the surrounding area, such as a corner grocery store or recreation area.
Five acres of land were zoned residential and were surrounded by other properties that were also residential. The owner wanted to re-zone the 5 acres so that a commercial building could be built.
93
Property owner Olivia does not like how much she pays in property taxes. What may she object to (and have a chance of winning)?
The assessed value of her property "
Assessed values of properties may be challenged. The market value is irrelevant with taxation. Tax rates cannot be objected. There is no national tax rate.
94
Typically a listing broker is usually considered to be
a fiduciary (agent) of the seller. " A "fiduciary" relationship involves more than just acting on the behalf of a client. It is a set of responsibilities that can be summed up as safeguarding the client's best interests as if they were one's own.
95
Legally, what is the nature of agency relationships between brokers and principals?
Specific agency " "Specific agency" means that a licensee may act on a principal's behalf only in limited ways for a limited time. For example, an agent can show a potential buyer a client's property, but he cannot make the decision to accept an offer.
96
Who administers license law in California?
The real estate commissioner " The commission is the chief executive officer of the California Bureau of Real Estate and, as such, is responsible for administering the rules and regulations governing real estate practices. It should be noted that while the commission does not pass laws, per se (that's the responsibility of the legislature), his or her rulings have the effect of law.
97
Who sits on the Real Estate Advisory Board?
They are a combination of real estate professionals and public members. " The advisory board is comprised of six brokers and four public members appointed, as mentioned, at the discretion of the commissioner. The board and commissioner meet at least four times a year with the aim of achieving maximum protection for consumers as well as serving the industry.
98
While Nick was completing the course work for his real estate license, his neighbor asked him for help selling his house and offered a 5% commission. Nick agreed, found a buyer and the transaction was completed two days after he received his license. However, the neighbor now refuses to pay the agreed-upon commission. Can Nick sue?
No, Nick had to have been licensed at the time of the agreement to win any compensation. " A person must hold a valid license before he or she undertakes any real estate activity on behalf of a third party for compensation.
99
If a contract for sale provides that the owner is selling his home in an "as-is" condition, then
hidden and latent defects must still be disclosed to the purchaser. " By definition, "hidden and latent" are defects not obvious to the untrained observer. They must be disclosed so that potential buyers know exactly what "as is" constitutes for this particular property.
100
Who is responsible for filling out the property disclosure form?
The seller " Real estate licensees are not responsible for filling out the disclosure form. That responsibility belongs to the seller. But it's important for the licensee to understand all the legal aspects of the disclosure form, so that he or she can help the seller by answering any questions the seller may have in filling out the form.
101
In a typical Exclusive Right To Sell Listing Agreement, there is a clause stating that if the listing period expires and a buyer that was shown the property during the term of the listing becomes the purchaser, the broker is entitled to compensation. If the property is listed by another broker this clause is inoperative. This clause is known as the
broker protection clause.
This practice recognizes that a broker's first function is to "bring buyers and sellers together" and allows for the possibility of a bonafide commission to the broker for bringing in a qualified buyer--during the listing period--who later becomes the purchaser. Stay away from any answer that implies that any "extension" is "automatic." If you see this answer appear in a question on your Exam, eliminate it!
102
If a person believes that he or she is a victim of illegal discrimination in housing, he or she should file a complaint with....?
file a complaint with HUD. " Although there are multiple agencies with various responsibilities for enforcing civil rights legislation, HUD, the department of Housing and Urban Development, is the governing body when it comes to real estate.
103
a listing on a residential property is signed, which type of agency relationship is usually created?
Special agency " Special agency is usually created because it means the broker is representing only one person (the seller) on one property (his home) for only one transaction (the sale of that one property).
104
What type of listing does an owner agree to that: allows the listing broker to sell his/her property; pays the listing broker should a different broker sell it; and does not allow the seller the right to sell the property himself/herself without paying a fee?
Exclusive right to sell " Remember, "exclusive right to sell" entitles the broker and his or her salespeople to a commission regardless of who finds the buyer. "Exclusive agency," on the other hand, means the owner does not owe a commission if he or she finds the buyer.
105
The owner of an apartment building has just signed a management contract with a real estate firm. In this situation, has an agency been formed?
Yes, because an agency is formed whenever one party delegates to another the right to act on their behalf in certain business transactions. " Whenever a real estate firm acts on behalf of another on any kind of transactional or relationship basis, agency is formed with all of the duties and responsibilities it implies.
106
In doing a neighborhood analysis of a client's property in Tuxedo Estates, an appraiser notes that the subdivision is exclusive, very large, and the residents are wealthy. If the client's property is at the center of Tuxedo Estates, which of the following is true?
It is less likely to lose value than houses on the perimeter of the subdivision if adjacent neighborhoods begin to decline. " The farther removed from a negative influence a property is, the less likely it is to be affected. If that influence is a one-time event, such as a highway, it's possible it will have little or no impact on the interior lots. However, if it's more pervasive, such as the general decline of a substantial surrounding urban area, there could be a "domino effect," with all properties ultimately feeling the impact.
107
economic obsolescence
Because it has to do with factors outside the owner's control--such as zoning or regulatory changes--economic obsolescence is almost always incurable.
108
A promissory note is
the lender's evidence of a debt (loan). " By signing a promissory note, the borrower is acknowledging the debt and agreeing to pay it back as agreed. Thus it serves as the lender's proof of the loan and its terms.
109
In order to determine exactly what portion of a mortgage loan the VA will guarantee on behalf of a qualified veteran, he must apply for a
certificate of eligibility. " There are strict requirements for obtaining a VA loan and the first step is obtaining a certificate of eligibility. It can be obtained from VA centers, online or from many lenders.
110
A veteran has paid her VA guaranteed mortgage in full and has sold the originally mortgaged property. The veteran now holds no interest in any real property, mortgaged or otherwise. Can the veteran obtain another VA-guaranteed mortgage at this time?
Yes, because a veteran's entitlement is fully restored if that veteran has paid off all prior VA mortgages. " Other than qualifying military service, the only stipulation for acquiring a VA loan is that any previous loans be fully paid off.
111
If the current conventional interest rate is 5 3/4%, how many points would have to be charged on a 5% VA loan to offset the difference for the lender?
6. In banking math, eight discount points increase the percentage yield from one point spread to the next. Thus six discount points would increase the percentage yield 3/4 of a point.
112
What is Constructive eviction?
Constructive eviction occurs when a rental property is not habitable, thus forcing the tenant to live elsewhere and effectively "evicting" him or her. In order to claim constructive eviction the tenant must notify the landlord in writing and give him reasonable time to correct the defect(s) in order to lawfully withhold rent.
113
When a trust deed is used to pledge real property as security for a loan, the lender is the
beneficiary. " The beneficiary, because he will "benefit" by receiving the property to satisfy the loan in the event the borrower defaults.
114
How often must trust fund account be reconciled?
Every month
115
In California, licensees who work under the supervision of the broker are designated as
associate licensees. " Even though the term "agent" is often used interchangeably with the terms licensee, broker or salesperson, in California an agent is defined as a person licensed as a real estate broker. Licensees who work under the supervision of the broker are designated asassociate licensees.
116
Broker Bridget did not know the roof leaked and therefore did not disclose this fact to someone who bought the property. Which of the following is true?
This is a material fact Bridget should have known and disclosed. She could be held liable.
117
TRUE/FALSE: hidden and latent defects must still be disclosed to the purchaser. "
True
118
A lease that goes from month to month is known as:
an estate from period to period " An estate from period to period is an interest in a leased property that goes from period to period, be it week to week, month to month, or year to year. Don't confuse this with fee simple, which is the highest degree of ownership; a life estate, which expires over time; or an estate at will, which is indefinite in length.
119
what is estate at sufferance?
In an estate at sufferance, the tenancy is by a lessee who lawfully occupies the landlord's property, but then continues to occupy the property improperly after his rights have expired. Think of it this way: the landlord and the estate are SUFFERING because rent is not being paid. The other types of estates mentioned here are actual lease agreements, but this is a situation of one party being unwilling to abide by the terms of any agreements previously reached.
120
The sealing off of disintegrating asbestos is one method of asbestos control. This is known as:
encapsulation " Encapsulation is one method of asbestos control that is usually preferable to removal. Don't confuse this with the other means of controlling environmental hazards - removal of tanks, for USTs; capping, for landfills; and irradiation, for radon.
121
The environmental hazard found mostly in electrical equipment is known as:
PCBs
122
the remainder estate
The remainder estate is that which is left from a life estate. Don't confuse this with reversionary interest, which is the future interest that reverts to a grantor or his heirs, or reversionary right, which is the return of the rights of possession of the property to the lessor at the end of a lease. Right of survivorship doesn't involve leases at all, but joint ownership.
123
What is a quitclaim deed?
A quitclaim deed is one in which NO guarantees are offered about past claims to the property, with the exception of those held by the grantor. Deed restrictions can impose various limitations and conditions on the uses for which a property can be utilized; and the granting clause and words of conveyance are the same thing - this grants the intention to transfer or convey the property's ownership.
124
The income approach is also called....
also called capitalization
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index lease?
An index lease allows for increases OR decreases in the rent dependent on the cost-of-living index. Don't confuse this with a graduated lease, which only allows for INCREASES in rents; assignment leases, which is subleasing; or a percentage lease, which provides for a minimum fixed rental fee plus a percentage of the tenant's business income.
126
In a lease, the lessor's interest is known as the:
leased fee interest
127
What is A writ of execution
A writ of execution authorizes the sale of the property. Don't confuse this with writ of attachment, which is an action taken by a creditor in which the court simply retains custody of the property while a lawsuit is being decided. Remember that both constructive and actual evictions deal with LEASED, not owned properties.
128
What is a writ of attachment
Remember, a writ of attachment is an action taken by a creditor in which the court simply retains custody of the property while a lawsuit is being decided. This is easily confused with a writ of execution, which authorizes the sale of the property. Remember that both constructive and actual evictions deal with LEASED, not owned properties
129
The buyer or purchaser under a land contract is also known as the:
A vendee is a buyer in a land contract; the vendor is the seller. Neither a leaser nor a leasee has anything to do with land contracts.
130
What is wraparound mortgage?
Remember that a wraparound mortgage "wraps around" -- in other words, another lender, usually the seller, finances a borrower by lending an amount over and above the existing first mortgage amount without disturbing the first mortgage. Remember that a voluntary lien refers to ALL liens undertaken voluntarily by the owner (mortgages are only ONE type of such lien), while a writ of attachment and writ of execution are legal actions taken by the courts regarding a particular property.
131
What is cooperative
Remember that with a cooperative, or co-op, the person is actually a tenant with stock in the company - not to be confused with a condominium, in which the person actually OWNS the unit. Community property is a system of property ownership only valid in certain states, while time sharing is the undivided ownership of real estate for only a portion of a year
132
The parts of the property that are necessary or convenient to the existence, maintenance and safety of a condominium and are normally in common use by all of the condo residents are known as:
common elements " Each condo owner has an undivided ownership interest in the common elements. Examples are: the pools, tennis courts, game rooms, parking areas and exterior of the building.
133
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from the whole is called:
contribution " Contribution says that the value of any component of a property is what its addition contributes to the value of the whole. Don't confuse this with the other principles of value - conformity, which says that the maximum value is realized if the use of the land conforms to existing neighborhood standards; anticipation, which says that the value can increase or decrease in anticipation of some future benefit/problem affecting the property; or competition, which says that excess profits will attract competition.
134
The process of changing a property's status from rental to condominium is known as:
conversion " Remember, conversion is "CONVERTING" a property's status from rental to condominium. Contribution, anticipation, and competition are all principles of value, and not related to conversion.
135
What is testate?
Testate is WITH a will; intestate is without a will. Don't confuse this with reversionary interest, which is the future interest that reverts to a grantor or his heirs, or reversionary right is the return of the rights of possession of the property to the lessor at the end of a lease.
136
What is Reversionary rights?
Reversionary rights REVERT back to the lessor at the end of the lease. Don't confuse this with reversion, which is the PROCESS by which the remnant reverts to the grantor; reversionary interest, which is the future interest that reverts to a grantor or his heirs; or remainder estate, which is that which is left from a life estate.
137
What is reversion?
Try to remember reversion is in regard to the remnant reverting to the grantor, or reverter. Don't confuse this with reversionary interest, which is the future interest that reverts to a grantor or his heirs; reversionary right, which is the return of the rights of possession of the property to the lessor at the end of a lease; or remainder estate is that which is left from a life estate
138
What is covenant of quiet enjoyment?
Covenant of quiet enjoyment basically means that the grantee has the right to enjoy his property without being challenged. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it ; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant against encumbrances, which offers protection against encumbrances.
139
naked title
a title without the usual rights of ownership.
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partial release
A partial release clause provides that as payments are made on an accelerated or greater than pro rata rate, specific lots in the subdivision will be partially released from the mortgage.
A subdivision developer obtained a loan to purchase twenty lots. What type of clause might she/he be required to agree to in the security instrument (mortgage or deed of trust)?
141
agency coupled with an interest.
An agency coupled with an interest is an agency relationship in which the agent has an interest in the property that is being sold. This type of agency cannot be revoked by the principal, nor is it terminated if the principal dies.
142
How long must developers give purchasers of properties offered for sale across state lines a right of rescission?
Seven days
143
What is datum?
The datum is a measurement that applies to elevations. While "points of beginning" also deal with measurements, these concern surface measurements. Both townships and sections involve property surveys, too, but do not concern elevations.
144
What is government survey?
The government survey system, or rectangular survey system, is the form of survey that uses principle meridians and base lines -- think of lines forming rectangles. Don't confuse this with the metes-and-bounds survey system, which describes boundaries and measurements, or the lot-and-block system, which involves the lots and block numbers specified on a recorded subdivision plat. Remember that anticipation is an APPRAISAL principle, not a survey method.
145
Latent defects
"Latent defects" refer to hidden structural flaws that are both known to the owner and not readily obvious to the buyer. Further, they are "material facts" which both the owner and, especially, the broker or salesperson are obligated to disclose.
146
Which of the following must be disclosed to be in compliance with Regulation Z?
A) The cost of credit
Regulation Z (Truth In Lending) creates a disclosure device only, and does not establish any set interest rates or required charges for credit such as closing costs or broker's commissions.
147
What is a blankt mortgage?
A blanket mortgage, as the name implies, is a single loan for a number of properties. The release clause allows the builder to make additional or accelerated payments and thus release or partially release some of those properties as security on the loan.
148
What is estoppel certificate?
Basically, by issuing the estoppel certificate, the bank attests to the accuracy of the borrower's remaining debt and certifies that it will not at some future point attempt to change that position to its advantage.
149
Which of the following is true regarding the useful life of a property?
The physical life is generally greater than the economic life.
This is primarily an accounting concept used for tax and valuation purposes. For example, an office building could have reached the end of its useful life and, theoretically, have been worth more as scrap than an existing structure. However, it may still suit the needs of its owner who would prefer to continue using it in its current state rather than absorb the high costs of demolition and new construction.
150
What is puffing?
An exaggerated or superlative comment about a property's is called?
An example of puffing is "This home has the most efficient floor plan of any of the homes in this neighborhood."
151
What is homestead?
A property owner generally qualifies for a homestead exemption if they are head of a family and resides on the property for a required length of time.
152
How do you calculate the tax base of an area?
tax base = assessed values - exemptions. Market value is not used for taxation questions.
153
An ad valorem tax?
An ad valorem tax (Latin for "according to value") is a tax based on the vazlue of real estate or personal property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT).
154
On May 7, 2010 Senate Bill 183 was signed into law requiring the placement of __________ in all California dwelling units.
carbon monoxide detectors
155
Government Code Section 65589.5 sets forth the critical problem of ________ in California.
Lack of housing
156
Are net listings legal in Cali?
Yes! Net listing are illegal in many states but not California. However, they are not that common due to conflicts of interest for licensee. A change of price or terms of a listing, such a change must NEVER be made on the original contract form, but MUST be made on a price change or extension form.
157
Does A real estate secretary who hosts open house weekends need a real estate license?
YES!
158
Which of the following deeds is the most commonly used in the United States?
Warranty deeds guarantee that the seller is giving the buyer a "clean" title with no other claims on it. It should be noted, however, that the period covered by the warranty can vary. In some cases, the warranty is made all the way back to the original deed, which can be hundreds of years. In others, the warranty may go no further back than when the seller first acquired the property.
159
What is Ostensible agency?
Ostensible agency is the same as implied agency and means that the relationship is created by the actions of the parties rather than written contract. Even in those states that recognize implied agency as binding, a written agency agreement should be obtained as soon as possible to clarify the understandings of all parties and protect interests.
160
The major intent of zoning regulations is to
ensure the health, safety and welfare of the community.
Zoning regulations are, in fact, an example of police power. And they do protect residential neighborhoods from commercial encroachment. However, this is an effect of zoning regulations. They are established and enforced to protect the "good of the community" in the broadest, fairest way possible.
161
True or False: A joint tenancy with right of survivorship may be created by deed or will?
True, Joint tenancy can never be presumed or established by default; it must be specifically declared to be the chosen form of ownership.
162
True or False: A land contract provides for the conveyance of legal title at a future date. "
True, This is also known as an installment sale. The person acquiring the property usually occupies it and makes payments to the owner but doesn't take title until (often) the final payment is made.
163
What is inclusionary zoning?
Inclusionary zoning, also known as inclusionary housing, is an American term which refers to municipal and county planning ordinances that require a given share of new construction to be affordable by people with low to moderate incomes.
164
What is holden act?
The Housing Financial Discrimination Act, or the Holden Act, is the California State law prohibiting financial institutions from engaging in discriminatory loan practices. This law attempts to prohibit redlining. Redlining, as you may recall, is the illegal loan practice under which a lender refuses to grant a housing loan in a certain geographic area, based on the neighborhood trends, and without regard for any merits of the borrower or the home itself.
165
In California, anyone who wishes to sell real estate investment type security must FIRST obtain a
Commissioner's Permit.
166
What is the best way to ensure that there are no encroachments and verify the boundaries of a parcel of land?
Get a spot survey " In fact, spot surveys are often the only way to discover encroachments, since they are accidental by nature.
167
What is abstract of title?
Abstracts give an at-a-glance history of all the recorded documents associated with a property, including changes in title, liens, mortgages taken out and paid off, transfers through death and so forth.
168
A property owner lists his property for sale with a broker. During the negotiations, the owner told the broker that the owner wanted $138,000 for the property, and anything above that amount the broker could keep as his commission. The listing with this type of provision is known as the...
Net listing agreements are illegal in many states, and frowned upon in the others. That's because of the potential for unfair advantage and conflict of interest they create. For example, let's say a seller believes his home is worth $138,000 and is happy with that amount. However, the broker thinks he can get $175,000 and does. That means that, instead of a more typical $9,500 or so in commissions, the broker realizes $37,000. Of course, it can also work the other way. The homeowner may have been right and the home sells for only $138,000--leaving the broker with a commission of $0 for his costs and efforts.
169
What is the difference between client and customer?
There's an important distinction between client and customer. Unless there is a specific agreement to the contrary, licensees represent only one side in a transaction. In this case, it's the buyer who is the client and it's the licensee's obligation to negotiate a deal that's in that person's best interests, not the one that's "fairest" to both parties.
170
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The discount points charged by a lender on a federal VA or FHA loan are a percentage of the
A) sales price.
B) appraised price.
C) loan amount.
D) down payment.
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C - loan amount. " Like points, discount points are one-time charges equal to one percent of the loan amount for each point charged.
171
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Learn the following:
A house sold for $420,000. The buyer made a 20% down payment. Monthly interest on the loan was $1,400. What was the interest rate on the loan?
A) 4%
B) 7%
C) 5%
D) 9%
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With a 20% down payment of $84,000, the buyer had a mortgage of $336,000. Since interest is expressed in annual terms, multiply the monthly payment of $1,400 times twelve. That yields an annual interest cost of $16,800, divided by the principal balance of $336,000, yields an annual rate of 5%.
172
True or False: The maximum permissible "loan to value ratios" are based on sale price or appraised value, whichever is lower.
True: Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used.
173
What is Regulation Z?
Regulation Z requires disclosure of all financing terms and conditions if a low interest rate, downpayment or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies only to institutions, not individuals selling their own property.
174
What is warehousing?
Warehousing refers to the process whereby banks and other lenders make mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market. The "warehousing" occurs when individual loans are bundled, often with a common element such as the size of the mortgage or credit worthiness of the borrowers, and sold as a single unit.
175
The primary purpose of Truth in Lending is to...
disclose the true costs of obtaining credit. " Truth in Lending, otherwise known as Regulation Z, is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of contract disguised as an "incidental" acquisition fee.
176
A square is 1/8 of a mile by 1/8 of a mile. How many acres is this?
One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres
177
Physical deterioration is considered curable whenever
it costs less to correct than the resulting value increase.
178
Apartment houses in an area were selling for $100,000 and a buyer offered $100,000 for an apartment building. The buyer is operating on the principle of
substitution
179
What is effective age?
Effective age is a combination of many factors, including location, quality of construction and maintenance, architectural style, actual age, climate and so forth. A well-built building in a desirable location will have a much longer effective life than a cheaply constructed space in a poorly maintained office park setting.
180
How does one determine the gross rent multiplier?
Property value divided by the monthly rent "
This is used as a quick, short-hand "guesstimate" for a property's approximate value. Sometimes this calculation produces a positive cash flow; other times a negative one--and one is not necessarily better than the other. Far more detailed calculations are necessary to determine a property's real market value and attractiveness as an investment.
181
How often must trust accounts be reconciled?
Trust accounts must be reconciled monthly, except in months when there was no activity.
182
In California, licensees who work under the supervision of the broker are designated as
associate licensees. " Even though the term "agent" is often used interchangeably with the terms licensee, broker or salesperson, in California an agent is defined as a person licensed as a real estate broker. Licensees who work under the supervision of the broker are designated asassociate licensees.
183
Any person who is selling a one-to-four-unit property must provide the buyer with a(n)
written disclosure statement that describes the condition of the property.
" This Real Estate Transfer Disclosure Statement is a two-page statement that includes the following sections: Part A - Identifies the items contained in the home and whether or not they are operational. Part B - Describes any significant defects or malfunctions in the home. Part C - Identifies miscellaneous items such as known environmental hazards, easements or encroachments, improvements or alterations to the property, zoning or neighborhood concerns.
184
What is blind ad?
Any ad that does not identify the advertiser as a broker is known as a blind ad. Blind ads are illegal in California. The other 3 are acceptable. Even though the property of C is not close to San Jose, it is still legal.
185
The standard title insurance policy in California is the
A - California Land Title Association(CLTA) policy. " The standard policy in California is the CLTA policy. It may be issued to a lender only, a buyer only or jointly to lender and buyer (called a joint-protection standard coverage policy). The buyer and seller negotiate who pays for the CLTA policy.
186
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What is one of the most frequently used organizational forms for real estate syndicates in California?
A) Limited partnership
B) General partnership
C) A mortgage corporation
D) An equity company
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The Limited Partnership offers many of the advantages found in both of the above syndication forms: the corporate advantages of limited liability and centralized management, and the tax advantages of a partnership. Because of this, the limited partnership form is one of the most frequently used organizational forms for real estate syndicates.
187
Does california have a inheritance tax?
While the federal government sometimes taxes the estates of deceased persons, California has ELIMINATED inheritance taxes altogether.Â
188
How should Sara handle the trust account portion of her record-keeping?
In columnar (of, relating to, resembling, or characterized by columns) form, with separate records for each beneficiary in each transaction
