Sales Associate State Exam Preparation Flashcards
This deck was created to help me (& you) prepare for the FL Real Estate Sales Associate state exam. All of this information comes from the class I took at Climer School of Real Estate in March 2013, and my first go-round with the state exam. http://www.climerrealestateschool.com/ (172 cards)
1
Q
Who signs the contract?
A
Buyer & Seller
2
Q
Who signs the deed?
A
Grantor (seller) & 2 witnesses
3
Q
The Consumer Credit Protection Act (Regulation Z)
A
Requires an advertiser to reveal the APR and gives the consumer the right to rescind a mortgage secured by his homestead.
4
Q
If a broker is obeying an EDO, and gets sued, what will the real estate recovery fund pay?
A
Both attorneys fees, court costs, and the judgment.
5
Q
What is an Exculpatory Clause?
A
This is a clause in a mortgage or note which prevents a bank from suing a borrower in the event of a default.
6
Q
Certificate of Title
A
This is what you get at a foreclosure auction purchase.
7
Q
Opinion of Title
A
What you get when you buy a house with an abstract at closing. (A formal statement by an attorney after studying the abstract of title.)
8
Q
Estoppel
A
A principle of law that stops people from defending themselves against their own acts, or lack of action.
9
Q
Prima Facie Evidence
A
Sufficient to prove, requiring no further proof.
10
Q
Homestead
A
Declaring one’s primary residence as their “homestead” entitles them to certain protections & benefits.
11
Q
Protection of Homestead does what?
A
The homesteaded property is protected from forced sale for debts owing to personal loans, credit cards, etc.
12
Q
Protection of Homestead does NOT do what?
A
The protection does not prevent foreclosure for non-payment of property taxes, special assessments, mortgages, vendor’s liens, or construction liens secured with the property. It also does not protect a widow against eminent domain.
13
Q
Homestead Tax Exemption
A
Current homestead tax exemption is up to $50,000 for qualifying homesteads, and is deducted from the assessed value.
14
Q
Homestead Size
A
Restricted to 160 acres outside a municipality/city, or up to one half acre if it is located within the city limits.
15
Q
Homestead Family Protection (with children)
A
If a married person dies, and the family homestead was only in that deceased person’s name, the surviving spouse receives a life estate and the children receive a remainder estate.
16
Q
Homestead Family Protection (w/o children)
A
The surviving spouse receives a fee simple estate in the homestead.
17
Q
What are “Specific Liens?”
A
These are liens against a specific property, such as
- Property Tax & Special Assessment
- Mortgage Lien
- Vendor’s Lien
- Construction Lien
18
Q
Caveat Emptor
A
Buyer Beware
19
Q
What are the transaction broker’s limited duties?
A
No responsibility for confidentiality nor obedience, and limited responsibility for loyalty & disclosure.
20
Q
USPAP on Appraiser’s Compensation
A
Appraiser’s are paid a FLAT FEE. Anything else would be unethical.
21
Q
VA Loans
A
The VA does NOT loan money or insure loans, they simply guarantee loans. No max loan limit, and no down payment. Seller usually pays closing, b/c it is not included in the loan.
22
Q
How many sections are in a township?
A
36
23
Q
Legally Non-Conforming Use
A
The “grandfathered” use of land that is no longer in compliance with the new zoning.
24
Q
Assignment of Mortgage
A
This changes ownership of the mortgage.
25
Landlords: Deposits & Advance Rents
The landlord must notify the tenant w/in 30 days of receipt the manner in which the money is being held:
1. Separate Non-Interest Bearing Account
2. Separate Interest Bearing Account (where 75% of the interest is paid to the tenant)
3. Commingle (if the landlord posts a surety bond with the clerk of courts)
26
Planning Commissions have Final Authority on:
1. Subdivision Plat Approval
2. Site Plan Approval
3. Sign Control
27
Functional Obsolescense
Cause for depreciation, such as a "Dumb Floor Plan" which is unpopular, but not deteriorating.
28
Duties of the Federal Reserve
1. Conduct the nation's monetary policy
2. Protecting credit rights of consumers by supervising and regulating banking institutions
3. Maintaining the stability of the financial system
29
Homestead Filing
Must happen on, or before, March 1st.
30
Hypothecation
The pledging of property as security for payment of a loan w/o surrendering possession of the property.
31
Condemnation
The taking of real property at a fair price, by way of "eminent domain," for a public purpose.
32
First Degree Criminal Violation of Chapter 475
Rental List Scam: Failing to provide accurate and current information for a fee.
33
Escrow Dispute Escape Procedures
M Mediation
E Escrow Disbursement Order (EDO)
A Arbitration
L Litigation
34
Tenancy in COMMON
2 or more persons sharing ownership of a single property with undivided interest. If one person dies, that share goes to the deceased's heirs. SHARES CAN BE SOLD OR WILLED.
35
JOINT Tenancy
This is a brother & sister, an engaged couple, or 2 friends and is characterized by the right of survivorship & must have the 4 unities of Possession, Interest, Title, and Time (PITT). ALL tenants must take ownership at the same time.
36
Tenancy by the ENTIRETIES
Husband and Wife only, characterized by the right of survivorship & must have the 4 unities of Possession, Interest, Title, and Time (PITT).
37
Static Risk
This is a risk that CAN be insured against, like fire or vandalism.
38
Dynamic Risk
This is risk that CANNOT be insured against, like changes in the business environment.
39
Lead Based Paint
The presence of lead based paint must be disclosed for any property, for sale or lease, built prior to 1978.
Sales contracts must provide a written disclosure and an EPA pamphlet must be given and signed for by the tenant/new owner.
40
Exempt vs. Immune
Churches are exempt, and the government is immune.
41
RESPA requires loan officers to give what to the applicant?
1. HUD Special Information Booklet
2. Good Faith Estimate (GFE) of Closing Costs
3. Servicing Disclosure Statement
42
Effective Gross Income (EGI)
Potential Gross Income (PGI)
- Vacancy & Collection Costs
+ Other Misc. Income
= EGI
43
Stipulation
An agreement between the DRE attorneys and a broker's attorney.
44
1 Acre
43,560 square feet
45
1 Section
640 Acres
46
5 Things that influence DEMAND in real estate.
```
Price
Population
Paycheck
Paper/Credit
Preferences
```
47
Characteristics of VALUE
D demand
U utility
S scarcity
T transferability
48
Title Conveys from Buyer to Seller When?
When the deed is delivered to, and accepted by, the grantee.
49
Deductible Expenses
Operating Expenses
Financing Expenses
Depreciation
50
Foreign Sellers
The IRS requires the buyer to withhold 10% of the sale price.
51
Ginny Mae
(Part of gov't HUD)
Ginny Mae does NOT purchase loans, they simply guarantee them.
*"Full Faith & Credit Guarantee"*
52
Breach of Contract Remedies
1. Specific Performance
2. Liquidated Damages (expressed in the contract)
3. Recission (cancellation)
4. Compensatory Damages (NOT expressed in the contract)
53
Statute of Frauds
Requires contracts affecting title to real property to be in writing in order to be enforceable.
54
Chapter 475, Part III
Governs the FREC Lien Act.
55
IRS Straight Line Depreciation Deduction
Commercial Properties = 39 years; Residential Properties = 27.5 years
Price + Acquisition x %Building Value = Building
Building divided by years = Deduction
56
What information is required on the brokerage sign?
Trade Name, Broker's Name,
| "Licensed Real Estate Broker"
57
Proprietary Lease
Gives the owner in a co-op the right to occupy their particular unit.
58
Residential Property (Chapter 475)
4 or fewer improved residential units, or agricultural property of 10 or fewer acres.
59
How does the Federal Reserve influence the money supply?
1. Open Market Operations (buying or selling securities)
2. Discount Rate
3. Reserve Requirement
60
Intangible Tax
$0.002 x NEW Mortgage Amount
61
Escrow Dispute Time Frame
FREC must be notified w/in 15 days & action must be taken w/in 30 days.
62
Net Operating Income
PGI - V&C + Misc. Income = EGI
EGI - Operating Expenses = NOI
63
Earnest Money
This binder deposit is shown on the closing statement as a *credit* to the buyer
and has no effect on the seller.
64
Bargain & Sale Deed
Has a warrant of *seisin*, which is a promise that the seller owns the property and has the right to convey the title.
65
Quitclaim Deed
Does NOT have a warrant of seisin. This type of deed is used to clear clouds on the title & cure title defects.
66
Elements of a valid Real Estate Contract
```
C Competent parties
O Offer & acceptance
L Legal purpose
I In Writing
C Consideration
```
67
Recommended Order
Punishment that the administrative law judge thinks is deserved, and the FREC usually turns it into a final decision.
68
Mutual Recognition
*NON-RESIDENTS* from certain states can apply for their FL R.E. License based on mutual recognition.
69
Lien Theory
Seller deeds the house to the buyer and the bank has a lien.
| FL is a Lien Theory state.
70
Title Theory
Seller deeds the house to the new lender through a mortgage deed, or to a trustee through a deed of trust.
71
Offer vs. Counteroffer
An offer to buy a piece of real property is terminated by a counteroffer.
72
Base vs. Service Industries
A BASE industry attracts "outside" money.
| A SERVICE industry attracts "local" money.
73
CBS-CIA
Comp Better Subtract - Comp Inferior Add
| NEVER adjust the subject property.
74
Fair Housing Act (Civil Rights Act of 1968)
Prohibits discrimination, such as *blockbusting, steering, or redlining* on the basis of race, color, religion, sex/gender, and national origin when selling or renting residential property. (1988 amendment added in handicap or familial status.)
75
Investor's Equity
This is an investor's own money instead of borrowed money.
76
Who insures, and who guarantees mortgages?
FHA insures
| VA guarantees
77
Habendum Clause
"To Have and to Hold..."
| This part of the deed tells HOW you own the property.
78
Broker Applicants
Must have 24 out of the last 60 months worth of experience working for a broker (in any state).
79
Compute Percent of Profit
Made over Paid
Made
---------
Paid
80
Prorate
proration is a shared expense between the buyer and the seller.
81
Vacancy & Collection Loss
Rent per month x 12 months = PGI
| PGI - % (given) = V & C
82
Monthly Principal Payment on a Mortgage
X Multiply: Mortgage X Annual Interest Rate = Annual Interest
/ Divide: Annual Interest / 12 months = monthly interest
- Subtract: Monthly Payment - Monthly Interest = mo. Principle
- Subtract: Mortgage - Mo. Principle = mortgage reduction
83
Housing Expense Ratio
Monthly Housing Expenses divided by Monthly Gross Income (Remember, it should be no more than 0.31)
84
Doc. Stamps on Deed
$0.70 per $100, based on purchase price alone.
85
Doc. Stamps on Note/Mortgage
$0.35 per $100 of all new and assumed notes, not on "subject to" mortgages.
86
Formula for Interest
```
Interest = Payment X Rate X Time
*OR*
I over (P)(R)(T)
```
87
Index Lease Calculation
New Index - Old Index = Index Change
Change divided by Original Index = % of change.
Original Rent x % change = Increase in Rent.
Increase in Rent + Original Rent = New Rent.
88
Acknowledged
Notorized
89
Abstract of Title
Condensed history of title to real property.
90
Ad Valorem
according to the value of
91
"At Arm's Length"
Conducting business/negotiations on your own behalf w/o being subject to the other party's control or influence. This is NOT a fiduciary relationship.
92
Base Lines
Surveyors use these EAST to WEST imaginary lines to locate property.
93
Blanket Mortgage
One mortgage covering 2 or more parcels.
94
Civil Rights Act of 1866
This federal act prohibits any type of discrimination based on race in any real estate transaction, without exception.
95
Culpable Negligence
Inadequate attention to duties by someone who should know better.
96
Defeasance Clause
A mortgage provision that lays out the specific terms and conditions that need to be met in order to avoid default. (Once the debt is repaid, the title is conveyed or the lien is released.)
97
Encumbrance Clause
A provision in a deed to real property that warrants that no liens, claims, or liabilities exist on the property being conveyed, except as specified.
98
Escheat
Reversion of property to the state when an owner dies without leaving a will or heirs are unknown.
99
Fannie Mae
A private institution on the secondary mortgage market that buys and sells mortgages.
100
Fee Simple Estate
Most common type of estate; Absolute and Complete Ownership - the most comprehensive and complete interest anyone can have in real property. (AKA Fee Simple, or Fee Simple Absolute)
101
Freehold Estate
This estate/tenancy means there is no foreseeable termination date, and it can be inherited by heirs.
102
"Highest and Best Use"
A principle of value that focuses on the most profitable, legal use for a specific property.
103
Date of First License Law
1923
104
Date FREC was Created
1925
105
Fair Housing Act (Title VIII)
1968
106
Lead Based Paint Date
1978
107
Ineffective
A license status when it is inactive, or has been suspended.
108
Kickbacks
Payment for something other than the 8 services of real estate.
RESPA prohibits kickbacks for closing services, title searches and insurance, attorney services, surveys, credit reports, and appraisals.
109
Seisin
A promise that the seller owns the property and has the right to convey the title.
110
Escrow Disbursement Order (EDO)
A course of action which determines what is to happen with a contested deposit.
111
Time-frame for a landlord to return a security deposit...
15 Days, if the landlord has no plans of making a claim on the money.
112
Time-frame for a landlord to notify a tenant he plans to keep part, or all, of the deposit...
30 Days
113
Real Estate Services
A B A R S A L E
Advertise
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
114
Deed Restrictions
A provision included in a deed that controls future use of the property.
115
Situs
People's location preferences (physical & economic) due to job opportunities, weather, transportation, etc.
116
Office of Thrift Supervision (OTS)
Charters & regulates member federal savings associations.
117
Comparative Market Analysis (CMA)
An informal estimate of market value performed by a licensed real estate agent to assist the seller in appropriately pricing his property, or to assist the buyer in making an appropriate offer.
118
Prospectus
A document that summarizes the major points in the detailed condo documents. A developer is required to give a prospectus to purchasers if the development consists of 20 or more units.
119
"Subject to" the Mortgage
A buyer makes regular payments on the mortgage, but is not responsible for the note.
120
Net Lease
Renter pays rent + tax + insurance + utilities.
121
Purchase Money Mortgage (PMM)
Any new mortgage accepted by the seller as part of the purchase price.
122
Gross Rent Multiplier (GRM)
The ratio between the monthly rent and the selling price.
123
Quiet Enjoyment
General Warranty Deed promise that guarantees peaceful possession undisturbed by claim of title.
124
Home Equity Loans (HELOC)
HELOC's are popular because the interest is usually tax deductible.
125
Easement by Prescription
An easement created through a court of law after a long time of uninterrupted use.
126
Riparian Rights
Rights associated with land that abuts the banks of a river, stream, or other watercourse.
127
Plottage
Added value due to combining 2 or more properties into one large parcel.
128
Littoral Rights
Legal rights associated with land that abuts large bodies of water such as the ocean, sea, or a lake.
129
Conversion
A licensee's personal use/misuse of a client's money.
130
Subagent
Has the same duties as the agent and is authorized to assist and represent the agent.
131
Estate in Severalty
Title to property is held by one person.
132
Option Contract
Unilateral contract to keep an offer open, to sell or lease property, for a specific period of time.
133
Novation
Substitution of a new party or new terms to an existing obligation. (contracts)
134
Survivorship
The remaining interest or share of a property after a person has died goes to the other co-owner, NOT HEIRS.
135
A licensee must notify FREC if s/he moves out of state w/in what time frame?
60 days; but they have only 10 days to notify the DPBR of a change in address.
136
Void License
A license becomes void (no longer exists) if it has been in involuntary inactive status for more than 2 years.
137
Involuntary Inactive Status
A result of failing to renew a license, active or inactive.
138
Ineffective License
The license exists, but the licensee cannot use it. (Voluntary Inactive)
139
Rental List Provision
States that if the potential tenant does not obtain a rental, s/he is entitled to 75% of the fee paid in return (provided they request it w/in 30 days of the contract/receipt).
140
Larceny
Theft
141
Amount of personal or brokerage money a broker can deposit into a sales escrow account:
$1,000
142
Amount of personal or brokerage money a broker can deposit into a property management escrow account:
$5,000
143
Protected classes under the Civil Rights Act of 1968 (The Fair Housing Act)
```
Race
Color
Religion
Sex/Gender
Handicap Status
Familial Status
National Origin
(Ron says: "Don't ADD to the list!")
```
144
Truth In Lending Act (TILA)
"Regulation Z" is part of the Consumer Credit Protection Act intended to inform borrowers of the true cost of obtaining a loan. All lenders must use the same terminology and rate expressions. Lenders must reveal the APR.
145
RESPA
Real Estate Settlement Procedures Act
(Informs buyers of the amount and type of fees they will pay at closing, and requires the 3 disclosures of Special Info Booklet, GFE, and Servicing Disclosure statement.)
146
Non-freehold Estate
Known duration of real property rights (like a rental)
147
General Property Rights
```
D U P E
Disposition (sell, mortgage, dedicate, etc.)
Use (control)
Possession (occupy)
Exclusion (quiet enjoyment)
```
148
Life Estate
A freehold estate whereby the owner only owns the property for their life span. When the life estate ends, the property returns to the original grantor or goes to a 3rd party remainderman as specified in the deed.
149
MATH: Mr. Developer bought 16 acres of land. He wants to turn the land into 30 lots. 10% of the land is wasted on common areas, and the roads are 21 ft. x 600 yds. How big is each lot?
1 acre = 43,560 sq. ft. x 16 acres = 696,960 sq. ft. x 0.10 common = 69,696 wasted. So, 696,960 - 69,696 = 627,264 minus the streets 37,800 (21 x 1800 = 37,800) = 589,464 sq. ft. of usable land, divided by 30 = 19,648 sq. ft. per lot.
150
Homestead "Elective Share"
Protection for a surviving spouse who was excluded from the deceased's will, which must be filed w/in 120 days/4 months to grant the survivor a 30% claim in the estate. The survivor is also entitled to homestead property.
151
Alienation
The transfer of title, ownership, or an interest in real property from one person to another.
152
Voluntary Alienation
Uses a deed {sale} or will (testate) to transfer ownership of property.
153
Involuntary Alienation
DESCENT: When a person dies intestate (w/o a will), the property owned by the deceased passes to the legal descendants.
ESCHEATED: Gov't takes property of the intestate deceased person if there are no known heirs.
154
Elements of a Deed
C E D D I N G
1. Consideration
2. Execution (signed by grantor & 2 witnesses)
3. Description of property
4. Delivery & Acceptance
5. Interest or estate being conveyed (Habendum Clause)
6. Names of Grantor & Grantee
7. Granting & other appropriate clauses
155
Statutory Deeds
These are basic deeds used to transfer ownership: Quitclaim, Bargain & Sale, Special Warranty, General Warranty.
(FL Law requires that if a sale contract does not specify the type of deed to be given the seller, they are to be given a general warranty deed.)
156
Special Purpose Deeds
These are for when the owner cannot sign the deed: Personal Representative's Deed, Guardian's Deed, Committee's Deed.
157
If an adult enters a contract with a child...
this contract can be enforced in court by the child.
158
"Price Fixing"
is a violation of Sherman-Clayton antitrust law
159
To become the chairman of the Florida Real Estate Commission...
...a member is elected by his peers.
160
Florida real estate licensee cannot promise to re-purchase property back in the future,
unless...
a guaranteed re-purchase agreement has been approved by the State of Florida.
161
Assemblage
Combining of two or more adjacent properties into one tract to increase the USABILITY and value of the resulting consolidation.
162
DBPR issues an emergency suspension...
so that a license can be suspended immediately.
163
Real Estate Recovery Fund pays when...
the Florida Real Estate Commission has been proven wrong in a court of law.
164
A Florida real estate license expires in:
4 years
165
A real estate license can remain voluntary inactive for
the rest of the licensee’s life.
166
A real estate salesperson can draw up a lease
only if he uses a particular form in residential transaction.
167
Net Worth
When evaluating a business, this is the difference between asset and liabilities.
168
How many square miles in a section?
1
169
The maximum time a Florida real estate license can be suspended...
10 years
170
The planning commission is part of local government and the members are...
appointed.
171
If a real estate brokerage is arranged as a limited partnership, then...
the limited partners are not required to register with the department of Business
and Professional Regulation.
172
Capitalization Rate
Net Income (after expenses) DIVIDED BY the sale price.
