Test Flashcards

Question

Which of the following is NOT one of the 3 requirements for eminent domain to be enforced? A. The owner must be in full agreement with the reasons for the enforcement. B. The property owner must be paid compensation for the property. C. The property must be for the public good. D. The owner must have due process in the courts.

Answer 1

A. The owner must be in full agreement with the reasons for the enforcement. Eminent Domain is the right of the government (federal, state and local) to take private property for a necessary public good. To take property from an owner, 3 things must take place: the property owner must be paid compensation for the property.; the property must be for the public good; the owner must have due process in the courts.

Answer 2

D. Either A or C If the Planning board determines a proposed site does not conform with existing land use plans and zoning ordinances, the board may authorize a variance and/or hold a public meeting to authorize the change

Answer 3

D. Because the ordinances of the area might impose restrictions Zoning ordinances regulate the use of real property by specifying allowable and prohibited uses in order to protect the interests of property owners and provide an aesthetically pleasing community. There are 4 general types of zones: residential, commercial, industrial, and agricultural. Municipal zoning laws govern use and appearance of each zone, and a buffer zone typically separates different zones. Zoning ordinances can be changed and areas can be rezoned by amendment.

Answer 4

D. Disclosure of the community A prospective parcel owner in a community must be presented with a disclosure summary before executing the contract for sale.

Answer 5

B. 10 The following statement in a conspicuous font must be located immediately prior to the space in the contract reserved for the signature of the purchaser: You may cancel this contract without any penalty or obligation within 10 days after the date you sign this contract.

Answer 6

C. $2,254 Taxes would be calculated as follows: $150,000 - $1,000 for widower and blind = $149,000 - $25,000 homestead for schools = $124,000 X .007 mils for school taxes = $868.00; $149,000 - $50,000 homestead = $99,000 X .014 (city and county taxes)= $1386 tax for city and county. Total Tax is $2,254.00

Answer 7

D. $767.50 Savings for school tax would be $25,000 X .0085 = $212.50 savings; Savings for City and County tax = $50,000 X .0111 mils = $555.00 savings. Total tax savings are $767.50

Answer 8

A. Court costs and attorneys' fees may be reimbursement from the Recovery Fund. The maximum aggregate payment from the Recovery Fund for multiple claims against a single licensee is $150,000. Claimants must have a judgment from the appropriate court in order to be eligible for payment from the Recovery Fund, and any monies already received as damages must be applied to reduce the payment from the Fund. Treble damages, court costs, attorneys' fees, and interest cannot be recovered from the Fund.

Answer 9

B. $50,000 The maximum payment from the Recovery Fund to 1 person or from 1 transaction is $50,000, or an amount equal to the judgment against the broker or sales associate, whichever is less.

Answer 10

B. All of his affiliated licensees will become involuntarily inactive. When the Commission suspends or revokes a broker's license, all licensees under that broker become involuntarily inactive pending their affiliation with a new broker or until the broker's license is reinstated.

Answer 11

A. The Real Estate Recovery Fund is expressly limited to only actual, not punitive damages. Therefore only $12,500 would be available for recovery in this case. The Real Estate Recovery Fund only reimburses actual damages, not punitive awards. Treble damages, court costs, attorney's fees, and interest shall not be recovered from the fund.

Answer 12

D. Beth may dispute the citation within 30 days of being served. Florida Real Estate law provides for a licensee to dispute a citation within 30 days of receiving the served citation. After the 30-day limit the citation becomes a final order and constitutes discipline.

Answer 13

B. The broker does not represent the one of the parties in the transaction. A "No Brokerage Relationship" is when the broker does not represent one party in the transaction. This type of relationship may occur when the seller is a FSBO, or the buyer/seller do not wish to be represented on one side of a deal where a single agency exists. There is no fiduciary responsibility, however the requirement for disclosure of material defects and accounting for all funds are still required.

Answer 14

D. Because no brokerage relationship was established in writing with his niece, Ang was operating as transaction broker. Florida statutes states that "all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established, in writing, with the customer."

Answer 15

A. A broker represents a seller or buyer as an agent in any capacity - the sales associates and broker associates under the broker are automatically considered sub-agents to the principals. A Subagent is one works under the agent (who is always the broker) for the principal. They assume all of the fiduciary responsibilities of the agent

Answer 16

B. Limited Confidentiality A transaction broker does not owe fiduciary to a customer and must provide limited confidentiality to both sides (if representing such) in a real estate transaction.

Answer 17

D. Transaction brokers are not entitled to commissions over 5%. Florida statutes presume that, in the absence of a signed agreement for single agency or no brokerage relationship, all sales associates are working as transaction brokers serving to represent all parties in a limited manner and produce a sale between the buyer and the seller. Transaction brokers provide limited representation to both parties, and a sales associate originally working as a buyer's agent or seller's agent can, with the written consent of both parties, transition to a transaction brokerage relationship in order to assist both parties.

Answer 18

D. The broker must get the property owner's permission to do so. A broker who wishes to place a "For Sale" sign on a listed property must first obtain the owner's permission.

Answer 19

B. Specifying that the tenant has the right to request a refund of 75% of the fee if the tenant does not find a rental; and the right to request a refund of 100% of the full fee if the information is inaccurate. When a broker maintains a list of rental property and acts as an information broker to a tenant, the FREC requires that he give the tenant a 1 page contract specifying that the tenant has the right to request a refund of 75% of the fee (if requested within 30 days) if the tenant does not find a rental; and the right to request a refund of 100% of the full fee (if requested within 30 days) if the information is inaccurate.

Answer 20

C. Yes, it is against Florida real estate statutes to do so. A sales associate depositing a buyer's down payment into his or her personal bank account is in breach of the law and may face discipline form the FREC.

Answer 21

D. No, because no Florida real estate broker may act as a dual agent. Disclosed dual agency (representing both buyer and seller at the same time with the consent of both) is forbidden in Florida.

Answer 22

D. Both B and C The broker has a duty to disclose this Material Defect, and the seller will be responsible as they did not disclose the leaky roof themselves.

Answer 23

B. Yes. However, each party MUST sign a consent to transition to transaction broker or one party sign a non-representative agreement. The seller and buyer each MUST sign an agreement to transition to Transaction Broker or one must sign a no brokerage relationship agreement. Then, the broker may act for both sides.

Answer 24

D. An agreement that no brokerage relationship exists As the listing agent, Rory represents the seller as principal. Although it's possible for Rory to represent both buyer and seller as a transaction broker (with the seller's written agreement), because Ben prefers to manage his own negotiations, Ben is therefore a customer with whom no agency relationship exists. Dual agency is not allowed in Florida. At the first substantial contact - in this case, the open house - the real estate sales associate is required to provide a written notice of disclose that they do not represent the buyer's interests.

Answer 25

B. Tell the Yorks that the house previously had a termite infestation which has been treated and corrected. A salesperson working as a transaction broker provides limited representation to both parties in a transaction. The licensee owes both parties the duties of honesty and fairness, accounting for all funds, skill and care, disclosure of all known material facts, timely presentation of offers and counteroffers, limited confidentiality, and any additional duties specified in the agency agreement. Unless the buyer or seller waives their right to limited confidentiality, salespersons must keep confidential any information regarding a buyer or seller's willingness to pay more/accept less, motivation for buying/selling, and any other information the parties would wish to remain confidential.

Answer 26

D. Both B and C When changing the registered name of a real estate brokerage, it must first reflect with the Secretary of State, Division of Corporation as a name change. Upon the change of name with the Division of Corporations, the name change must be registered with the Division.

Answer 27

A. 3 business days When a broker receives money to be deposited in an escrow account, he must deposit it immediately within 3 business days.

Answer 28

D. Because Ben wrote the check Sunlight Real Estate, Ralph should simply follow procedure and deliver the paperwork and the check to his employing broker. The purchase and sale contract indicates how the buyer's check should be made out before it is written. Any check made out incorrectly should be remanded to the escrow company

Answer 29

B. She must notify the Commission within 10 days of her change of address by sending the required form along with a list of licensees no longer associated with the firm. Upon change of address, a broker must send a change of address form to the Commission within 10 days of the move. The broker must also include a list of licensees no longer associated with the brokerage in order to fulfill the change of address notification requirement for licensees who remain with the brokerage. Failure to comply will cause the broker's and all associates' licenses to expire.

Answer 30

A. An old house needs a lot of refurbishment including updating fixtures, exterior and interior painting and repairs to flooring. Valencia lists this property in the bargain section of her website, calling it a "fixer upper - perfect for an owner with home repair skills." Intentionally misleading or misrepresenting properties in the course of selling or leasing real estate violates Florida statutes. Leading prospective buyers to believe incorrectly that a property falls within the boundaries of a certain school district, misrepresenting a residential property as a commercial gem, or promising a quiet student atmosphere in what is renowned as a noisy area are all intentionally misleading to facilitate a sale.

Answer 31

C. Broker Alana has her office in her condominium. The condo association prohibits owners from displaying any materials on their doors, so Alana has her business sign posted on the inside of her condo door, which is visible to clients as soon as they enter. Office signs are required by law rather than rule. Signage must be visible to anyone about to enter the broker's office and must clearly state the name of the agency, broker's name, and the broker's designation as licensee (either "Licensed Real Estate Broker" or "Lic. Real Estate Broker"). Since Alana has the sign posted in the interior of her condo, clients won't be able to view the sign before entering her office and so she is in violation of the law.

Answer 32

A. Prosecuting a real estate assistant for engaging in unlicensed activity. Engaging in the practice of real estate without a license is a third-degree felony, which is a criminal case and not under the oversight of the FREC. However, the FREC can discipline licensees for license law infractions, including suspension and revocation of licenses and the imposition of fines. It also has jurisdiction over the Recovery Fund and may levy special fees, and the FREC may also specify circumstances under which a broker is allowed to disburse funds from escrow accounts.

Answer 33

D. The Department of Business and Professional Regulation. The agency is charged with licensing and regulating businesses and professionals in the state of Florida. The Department of Business and Professional Regulation. The agency is charged with licensing and regulating businesses and professionals in the State of Florida.

Answer 34

C. No, because Paula did not meet the conditions for payment of commission before the cancellation of the agreement. Paula did not earn the commission for bringing a ready, willing and able buyer. As a broker, depending on the terms of the listing, Paula may be entitled to damages for out-of-pocket expenses incurred while marketing the apartment complex before Mario cancelled the agreement. Such expenses include advertising.

Answer 35

C. No, because No listing agreement existed to pay the listing side. A listing agreement is a contract that defines the relationship between the real estate brokerage and the seller, specifying the services to be provided by the brokerage, and the amount of commission to be paid at closing. There may be a problem with paying a buyer commission as well as the listing agreement would show compensation for the buyer or cooperating broker as well - unless the buyer brokerage agreement allowed for payment.

Answer 36

C. A subdivision developer has included restrictive covenants in the deeds for all properties that limit ownership to persons with Latino heritage in order to advance the ethnic culture of the community. Restrictive covenants, also known as deed restrictions, limit the use of land in certain ways. For example, legal restrictive covenants may specify the size or type of improvements that an owner is allowed to make on the property. However, restrictive covenants that violate laws are illegal, and a covenant that specifies the ethnicity of future owners violates the Fair Housing laws.

Answer 37

C. Newspaper ad aimed at childless couples. Licensees may NOT discriminate against any particular race, color, religion, national origin, sex, handicap, or families with children in advertising. All advertising must be done in the name of the real estate firm and may not imply that it is the ad of a private party. Although eloquent verbiage is allowed, an ad may not misrepresent the property in any way that would not be obvious to potential buyers. Regulations requires full disclosure of loan terms if any information about credit terms, beyond APR and price of property, are given.

Answer 38

A. This is a RESPA violation and Jerri and Summer's company may be fined and punished as the law allows. Jerri may be disciplined for putting such a clause in her standard contract as Title Services are shoppable by a buyer and cannot be mandated. In addition, the RESPA prohibits title companies from paying referral fees, so everyone is in the wrong on this.

Answer 39

C. Guaranteeing a high pass percentage on the state exam A real estate school is allowed to advertise in connection with an affiliated broker and advertise a pass-fail ratio on the state exam. All advertising and publicity must be factual and supported by evidence. Misleading or exaggerated claims and guarantees of success on exams or offers of employment violate the law.

Answer 40

C. Register the name change with the Secretary of State, Division of Corporation When changing the registered name of a real estate brokerage, it must first reflect with the Secretary of State, Division of Corporation as a name change. Applying for a new registration with the Division of Corporation is a new registration with the DBPR, Division of Real Estate and NOT a name change.

Answer 41

B. Yes, applicants with a 4-year real estate degree are exempt from both the sales associate and broker pre-licensing courses. Individuals with a 4-year real estate degree are exempt from the 63-hour pre-licensing sales associate course and the 72-hour pre-licensing broker course, but must make application and take the state exam. Applicants with a 4-year real estate degree must include an official transcripts with their application.

Answer 42

B. Has sold at least $850,000 in real estate value during the preceding 5 years. Applicants wishing to upgrade from sales associate to broker license must show proof of 1 of the following: has been registered as an active sales associate for at least 24 months during the preceding 5 years; has held a current and valid real estate sales associate's license for at least 24 months during the preceding 5 years in the employ of a governmental agency for a salary; has held a current and valid real estate broker's license for at least 24 months during the preceding 5 years in any other state, territory, or jurisdiction of the United States, or in any foreign national jurisdiction.

Answer 43

A. Under no circumstances A sales associate may be affiliated with only 1 broker in Florida. A group license only allows a sales associate to work under a developer who operates under different corporate names.

Answer 44

C. 14 hours of continuing education with 3 hours of ethics and 3 hours of law, where attendance at a FREC meeting may count for specialty training. Sales associates and brokers are required to complete 14 hours of continuing education with 3 hours of that education covering real estate law, and 3 hours of that education covering ethics. Either may also attend a FREC meeting (provided they have made arrangements and receive 3 hours of specialty credit for continuing education.

Answer 45

A. Real estate sales associate or broker associate Revisions to the Florida statutes changed the designation of "salesperson" to "sales associate" and those who are licensed as brokers but choose to work under a managing broker as "broker associates" so licensees are referred to in those terms.

Answer 46

D. A due-on-sale clause Florida law stipulates that mortgages may not contain BOTH a prepayment penalty clause and a due-on-sale clause. Including both clauses would effectively cancel each clause out.

Answer 47

C. Eve automatically has 100% interest/ownership in the principal residence. She may also file for an elective share of the investment property. Rex would be entitled to the investment property by reason of the will. Eve, as the surviving spouse, is already entitled to a life estate in the homestead. An elective share consists of 30 percent of the decedent's net estate. Florida is a common law state, NOT a community property state. Testate means to die WITH a will.

Answer 48

D. Once the monthly rent was established in the lease, and signed by the parties, Miller cannot raise the rent before the end of the year's term, regardless the nature of the emergency. Miller is obligated to provide fresh running water to the property, by code. John not only could file with the county to mandate the enforcement of the code regarding running water, he could also sue Miller in civil court.

Answer 49

B. Adding value to existing real estate in a particular area The goals of planning and zoning include: savings of tax money by preventing urban sprawl; adequate provisions of services such as fire, police and libraries; providing for road right-of-ways and set backs; protection against costly drainage, flooding or environmental problems; protection for the public from harm in building; reduction in political and equity problems in landfills, prisons etc.; reduction in cost for major catastrophes such as earthquakes, tornados and fire.

Answer 50

B. Government interference called P.E.T.E. Private home ownership in Florida is subject to government interference called P.E.T.E., an acronym for: Police Power, Eminent Domain, Taxation, Escheat.

Answer 51

B. The bookcases do not convey with the property. According to the parol evidence rule( which excludes any prior verbal or written evidence not specified in the contract) the bookcases will not convey with the condo. This would be a circumstance in which neither the real estate sales associate nor the buyer was careful in constructing and approving the contract.

Answer 52

C. Scientific property The 5 major zoning classifications of property are: residential; commercial; industrial; agricultural; special purpose property.

Answer 53

A. A property manager preserves the value of an investment (by an owner) while generating income as an agent for the owner. Property managers are licensed Florida real estate brokers who, under law, have certain specific duties and services to the owner. A property manager is defined as one who preserves the value of an investment (by an owner) while generating income as an agent for the owner.

Answer 54

B. $2,660 Stamp taxes on the deed are calculated as 70 cents per $100. 380,000 ÷ 100 X .7 = $2,660.00

Answer 55

A. $1,013 New Note at $255,000 at 60% = $153,000; $153,000 plus $49,000 = $202,000 ÷100 X .35 = $707.00 stamp tax on the mortgages, intangible tax on the new mortgage $153,000 X .002 = $306.00. Total Taxes = $1013.00

Answer 56

B. The licensee may appeal within 30 days to the District Court of Appeals. The licensee may appeal to the courts if the FREC did not rule in his favor. The licensee must appeal within 30 days to the District Court of Appeals. While the case is under appeal, the licensee may receive a stay enforcement (stop enforcement) against the FREC.

Answer 57

C. If probable cause is found the case will be made public after 10 days. A complaint is not made public until 10 days after the finding of probable cause. If probable cause is not found the case will remain confidential.

Answer 58

A. Report the criminal conviction within 30 days to the Department. Failure to report a criminal conviction, a plea of nolo contrendere or a misdemeanor conviction within 30 days may result in disciplinary actions against the licensee. The licensee must report to the department if convicted regardless of adjudication. This applies to action by any jurisdiction.

Answer 59

D. A $100 fine and completion of a 4-hour escrow management course If a broker fails to reconcile an escrow account properly, but the account balances, the broker is subject to a $100 fine and must take a 4-hour escrow management course.

Answer 60

B. $50,000 Payments from the Recovery Fund for claims arising out of the same transaction are limited, in total, to $50,000 or the unsatisfied portion of a judgment claim, whichever is less, regardless of the number of claimants or parcels of real estate involved in the transaction.

Answer 61

D. Yes, as long as the listing sales associate provides a non-representative disclosure. A sales associate must provide a non-representative agency disclosure which states he or she does not represent the buyer.

Answer 62

D. Neither party is required to sign the broker disclosure notice if the broker is acting as a transaction broker. Transaction brokerage is the default relationship between a broker and buyer or seller In Florida. If another agreement is entered into by written agreement, that will supersede the default. There is no requirement to sign any disclosure or form if the role is transaction brokerage.

Answer 63

B. The sales associate must disclose the fact that he is a real estate licensee. Even though the sales associate chooses to sell his property without a broker, he is still a licensed agent in the real estate industry and he is required to disclose to disclose that he is a licensee.

Answer 64

B. The sales must disclose their license status at the first meaningful discussion and all advertisements must include the brokerage name. The sales associate must disclose her status as a real estate agent. In addition, since she is listing the property through her broker, the broker's name must appear as well.

Answer 65

D. No, Jose is violating the rules of a transaction broker. Since Jose is working as a transaction broker, he cannot work for one party to the detriment of the other.

Answer 66

A. Dave, a licensed broker, has established his registered in a commercial mobile home that is in the middle of a shopping center. Florida laws require licensed brokers to maintain an office of at least 1 enclosed room in a building of stationary construction and to post a sign at the entrance which contains the name of the broker, trade name (if any), and the words "licensed real estate broker". Brokers who have registered offices outside Florida must notify of the office location either through a change of address or branch office approval. Changes of address must be supplied to the commission within 10 days of the change.

Answer 67

A. At an open house, answer questions concerning a listing and provide subjective advice NOT obtained from the licensed employer-approved printed information Under FREC guidelines an unlicensed assistant at an open house may NOT answer questions concerning a listing from which the answer must be obtained from the licensed employer-approved printed information and is objective in nature (not subjective comments).

Answer 68

D. A licensee under a suspended broker continuing to list and sell houses during the broker's suspension period, as a subcontractor of the broker's brokerage firm. When a broker's license is suspended or revoked, all licensees under that broker are placed on involuntary inactive status until they find a new employing broker. A real estate school may advertise in connection with an affiliated broker and advertise a pass-fail ratio on the state exam. A real estate assistant who does not engage in the act of selling, listing, purchasing, renting or leasing real estate for a fee or commission is not in violation of the law.

Answer 69

A. Maintaining good employer-employee relationships with the licensees in their office. Real estate sales associates and broker associates are considered subcontractors of an employing broker, not employees. Thus, employing brokers do not have employer-employee relationships with the licensees in their brokerage. However, qualifying brokers' responsibilities entail supervising all licensees' real estate activities, ensuring legal compliance of all transactions, and assuming accountability for the consequences of any licensee's acts or omissions that violate the real estate law.

Answer 70

B. A sales associate MAY be an officer, director, member, manager, or partner of the company. A sales associate may NOT be an officer, director, member, manager, or partner of a real estate company.

Answer 71

A. A sales associate deposits $1,000 of personal funds in his broker's sales escrow account. The statutes allow brokers to maintain up to $5,000 of personal or brokerage funds in a property management escrow account or up to $1,000 in a sales escrow account. In the case of errors, brokers are provided a reasonable time to correct errors and authorized disbursements may still occur.

Answer 72

A. Once per month, at the Division of Real Estate offices in Orlando, Florida The Florida Real Estate Commission meets once per month, usually on the 3rd Tuesday and Wednesday of each month. The Commission meetings are held at the Division of Real Estate offices in Orlando, Florida.

Answer 73

B. Report Marta promptly to the unlicensed activity section created by the DBPR. Although Martha does NOT need a license if she is paid a salary, she DOES need a license if she receives commissions. The DBPR has created an unlicensed activity reporting system whereby any unlicensed activity may be reported and the state attorney's office notified.

Answer 74

D. While the owner was restaining his deck, the staircase crumbled due to termite activity. The fact that a property was, or was at any time suspected to have been, the site of a homicide, suicide, or death is not a material fact that need be disclosed in a real estate transaction. A material defect such as termite activity MUST be disclosed.

Answer 75

B. The amount the seller will accept Listing agreements in Florida must include a definite expiration date, proper identification of the property, price, terms and conditions, fee or commission to be paid and the owner's signature. An automatic renewal clause for extension of the listing is in violation of Florida Law. The seller's acceptance is based upon the offer, not the listing agreement.

Answer 76

D. Listing agreements must include a definite expiration date, include a description of the property, and specify the fee or commission. According to Florida real estate law, listing agreements must include a definite expiration date, a description of the property, price and terms, and fee or commission. There is nothing, however, that states listing agreements must be in writing.

Answer 77

B. No, this is a violation of federal law. RESPA (The Real Estate Settlement Procedures Act) states that a licensee participating in a sale may NOT accept any type of referral fee another participant in that sale.

Answer 78

C. The law says the seller may not accept an offer from the buyer unless both the Lead-based Paint Disclosure and EPA pamphlet have been given. If the seller fails to give the disclosure and pamphlet to the buyer, the broker is responsible for doing so. The Lead-based Paint Hazard Reduction Act requires that sellers and landlords of homes built prior to 1978 give the disclosure form and pamphlet. If the buyer does NOT receive the disclosure, the buyer is not bound by the purchase agreement and both seller and agents are in violation of the law.

Answer 79

D. Paige is violating the law because she is agreeing to pay compensation to an individual who is not licensed. Paige could have paid a flat fee for the list of FHA foreclosure properties, but because she tied the compensation to transactions that close, she is in violation of Florida law. A broker cannot pay a referral fee to anyone who is not licensed, regardless of the FHA's permission.

Answer 80

C. Yes, Alejandro and Daytona Diligent Realty are in violation of Florida's real estate license law. Alejandro may only be compensated by his broker, Rococo Real Estate, so any offer of commission or fee made directly by Daytona Diligent Realty must be refused. Both parties are in violation of Florida's real estate license law.

Answer 81

D. Electronic fingerprints Electronic fingerprinting allows applicants to have their fingerprints scanned and electronically submitted to the Florida Department of Law Enforcement and Federal Bureau of Investigation. Electronic fingerprinting is the only allowable method of background checks for licensure in Florida (Unless the potential licensee is out of country and away from a digital fingerprinting source).

Answer 82

C. Anyone who has continuously resided in Florida for 4 calendar months in the preceding year. A Florida resident is anyone who has resided in Florida continuously for a period of 4 calendar months or more in the preceding year or, anyone who presently resides in Florida with the intention to reside continuously in Florida for a period of 4 months or more.

Answer 83

B. Yes, but she cannot be licensed until she receives her high school diploma. To be eligible for licensure a candidate must be at least 18 years of age and hold a high school diploma or its equivalent.

Answer 84

D. Pass the Florida State Exam on Real Estate Law and send in a current certification of license history from Georgia with the Florida application and the required fee. Florida has mutual recognition with other states allowing individuals with active real estate licenses to receive a Florida Real Estate license by passing a state examination on real estate law. Applicants with experience from one of the other states need to attach a current certification of license history from the licensing agency of jurisdiction to the Florida application and submit the required fee.

Answer 85

D. Kelly could. There is no restriction to prevent a licensee from preparing a CMA for a buyer or seller. Only Kelly could. There is no restriction under Florida Real Estate law to prevent licensees from preparing a CMA for a buyer or seller. CMAs are outside the scope of office administration, so Jilly could not.

Answer 86

C. O.P.A.T.C.H. Adverse possession is based on the common law which says that all owners should be aware and in possession of their property at all times. For Adverse Possession to take place (adverse to the owner's title), certain items must be in place. The acronym is O.P.A.T.C.H. - Open, Possession, Actual, Taxes, Continuous, Hostile. 7 years is the minimum requirement for adverse possession.

Answer 87

D. takes 20 consecutive years without interruption before the easement may be terminated. By prescription, an easement may be created or terminated after 20 consecutive years. Further, the easement may be cancelled by the new owner since the easement was not in writing. Title to adverse possession requires 7 years of hostile possession in addition to other specific requirements.

Answer 88

C. A guaranteed return of their deposit Security deposits are held in trust until a tenant vacates. Upon confirmation that there was no damage other than wear and tear, the tenant's deposit must be returned during the appropriate timeframe.

Answer 89

D. The Growth Management Act The Florida Growth Management Act of 2011 requires local governments to create planning consistent with a statewide land-use plan to reduce urban growth.

Answer 90

B. Enabling Acts The right to make laws to control property use is called Enabling Acts.

Answer 91

B. This is agricultural property, since it has more than 10 acres. The property in this example would be considered agricultural.

Answer 92

A. The amount of space between the lot line and the building line Zoning ordinances regulate and control the use of a property in a municipality and govern such issues as land use, building heights, setbacks, and density. Zoning regulations have no effect on the price of improvements or appurtenances, restrictions on ownership, or property rights.

Answer 93

A. The law allows brokers and sales associates to provide valuation services for compensation as long as they do not represent The law to allows brokers and sales associates to provide "valuation services" for a fee including giving price opinions, conducting comparative market analyses, and giving values of the opinion of real estate as long as they do not represent themselves as certified, licensed, or registered as an appraiser.

Answer 94

C. Yes, because his property falls under the Florida Green Belt Law. In order the preserve Florida's farming community, the legislature in 1959 passed the Green Belt Law. This taxes agricultural land at a lower rate than the encroaching cities around the land, and preserves the land for future agricultural use. Without this protection, owning farm land and paying taxes would be prohibitive. John's property would qualify

Answer 95

D. No, Both Britt and Miller must have lived in and used the home to qualify for the $500,000 exclusion. Tax law states that tax deferral of gains is eliminated because the gain may no longer be rolled over into a new home. However, gain of up to $500,000 is excluded when Britt and Millie file a joint return IF they meet the residence and ownership tests. IRC section 121 allows a taxpayer to exclude $250,000 ($500,000 for joint filers) of gain on the sale or exchange of a home if it was owned and used as the taxpayer’s principal residence for 2 of the 5 years preceding the sale. To qualify for the $500,000 exclusion on joint returns, only 1 spouse must meet the ownership test, but both spouses must meet the use test. Since they lived apart, they would not meet the use test and therefore not qualify.

Answer 96

D. Place penalty points on the licensee's license If a licensee fails to provide or adhere to the provisions of disclosure, the Commission may: deny an application for licensure or renewal; may place the licensee on probation; may suspend a licensee; may impose an administrative fine of $1,000 for each count; may issue a reprimand; or any or all of the above.

Answer 97

D. Commission disputes are a civil matter. However, if a judgment is obtained and the licensee fails to pay the judgment, a complaint can be filed against the licensee with the FREC. FREC disputes are a civil matter. If a judgment is obtained and the licensee fails to pay the judgment, a complaint can be filed against the licensee for failing to pay a judgment.

Answer 98

C. A claimant, Diana, was a licensed real estate sales associate when a broker representing her failed to protect her interests in a commercial real estate transaction. No one with an active real estate license at the time of an alleged act is be eligible for damages from the Real Estate Recovery Fund. In order to be eligible an individual must have a final judgment from a civil court against a licensee, and must make the claim within 2 years from the actual act or discovery of the act (as long as no more than 4 years have elapsed since the act). Additionally, the claimant must have notified the Commission by certified mail at the time the action against the licensee was initiated. Any monies already recovered from other sources must be applied to the court-awarded damages.

Answer 99

D. The broker must notify the Commission within 15 business days that he has a good-faith doubt. Good-faith doubt exists when the closing or consummation date of a sale has not passed, but 1 or more of the parties has expressed intention not to close. In addition to that fact, the broker must not have received conflicting or identical instructions from all parties concerning disbursement of escrowed funds. After realizing he has good-faith doubt (which is not spelled out as a specified amount of time), the broker must notify the FREC within 15 business days.

Answer 100

C. The FREC may collect fees until the Recovery Fund reaches $1 million. If the balance of the Recovery Fund falls below $500,000 special fees can be assessed against all issued licenses. If the Fund exceeds $1,000,000 the collection of fees is discontinued at the end of the licensing cycle and cannot be reinstated until the Fund drops below $500,000. Generally the fees are $1.50 per year assessed to new and renewed sales associate licenses and $3.50 per year assessed to new and renewed broker licenses.

Answer 101

B. not legally enforceable. In order to be enforceable, real estate contracts must meet the legal requirements for contracts in general. For example, a contract signed by a minor or a "seller" who doesn't own the property in question was never legal to begin with and is thus "void."

Answer 102

B. notarized signatures. A contract sets forth the terms and conditions of a real estate transaction, but does not itself transfer ownership. Thus it does not need to be notarized.

Answer 103

D. relieved of his original offer. Offers are "one-time-only" events that must be accepted or rejected. Once the seller made a counter-proposal, he rejected the buyer's offer and no contract exists. The buyer is under no obligation to continue and is entitled to have any earnest money that accompanied the offer returned immediately.

Answer 104

A. requires the optionor to complete the transaction. It is up to the optionor (seller)to finish the transaction IF the optionee (buyer) decides to exercise the option. The optionee does not have to exercise the option, but would lose whatever option monies that have been deposited.

Answer 105

D. buyer receives equitable title to the property. "Equitable title" means that the prospective buyer has obtained the right to acquire ownership of a property currently owned and occupied by another.

Answer 106

C. transfer one's rights under the contract. Assigning a contract means to transfer it to another.

Answer 107

B. He must exercise his option under the terms of the option contract. Options are generally concerned with only two things: time and price. Whatever the parties agree to in those regards defines the terms of the option and the obligations of the parties.

Answer 108

B. Legal In this type of contract, the BUYER doesn't receive legal (i.e. statutory) 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.

Answer 109

A. The $150 is valuable consideration if the seller accepted it. "Valuable consideration" is a necessary component of all contracts. It is the benefit one party receives in exchange for granting benefit to the other. Generally it is money in any amount both parties agree to, though it can take other forms such as personal property, work or refraining from an act.

Answer 110

C. loan amount. Like points, discount points are one-time charges equal to one percent of the loan amount for each point charged.

Answer 111

B. a balloon payment. Typically, mortgages with balloon payments are used as a creative financing tool in which buyers plan to refinance the balance in three to five years with better terms than they can qualify for now.

Answer 112

D. to better inform the buyer about the financing of a real estate transaction RESPA has two main purposes. One is to better inform the buyer through mandated disclosure statements. The second is to prohibit some settlement practices like kickbacks and referral fees.

Answer 113

B. Paying of kickbacks RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited.

Answer 114

B. Short sale the property Short sales avoid the delay and expense of a foreclosure sale. The lender usually forgives the mortgage balance owed after the sale.

Answer 115

D. deficiency judgment. A deficiency judgment enables the lender to attach and foreclose a judgment lien on other real or personal property the borrower owns.The lender's ability to pursue such a judgment may be limited, however.

Answer 116

D. recording fees and title insurance premiums. These are considered legal, not financing fees and therefore are not part of the Truth in Lending statement.

Answer 117

A. arranges loans between borrowers and investors. Mortgage brokers function much like independent insurance agents and represent a variety of lenders. Their role is to match the circumstances of individual buyers with the mortgage program best suited to their needs.

Answer 118

D. part (junior) purchase money mortgage. Also known as a "purchase money second," this is a streamlined and often cost-effective financing option.

Answer 119

D. 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.

Answer 120

A. Amortized loan 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.

Answer 121

B. The lender Also known as escrow accounts, impound accounts accumulate funds from closing costs and monthly payments to ensure that property taxes and homeowner's insurance are kept current.

Answer 122

C. a statement of actual charges and adjustments. The Closing Disclosure (CD) is a standard form in use which is used to itemize services and fees charged to the borrower by the lender. The form is called for in the TILA RESPA Integrated Disclosure (TRID).

Answer 123

D. the veteran agrees to live there. Although the rules and terms can fluctuate, the low down payment and below market interest features of VA loans come with the condition that the borrower live in the property.

Answer 124

C. APR APR stands for "Annual Percentage Rate" and expresses the true cost of the loan by factoring fees such as points, recording fees, appraisal fees and such into the interest rate. For example, a mortgage that showed an interest rate of 4.85% on the promissory note might have an APR of 5% when associated costs are factored in.

Answer 125

B. Paying of kickbacks RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited.

Answer 126

B. Secondary market Many homeowners are surprised the first time they receive a letter from a lender they've never heard of informing them that they now hold the mortgage on their home and that future payments should be sent to them. This secondary market is where lenders buy and sell mortgages to balance their portfolios according to market conditions and their internal needs and objectives. It should be noted that the terms of mortgages bought and sold cannot be changed by the new note holders.

Answer 127

C. Commercial bank's 15 year loan Though 30 year loans are more common, 15 year loans are considered standard, conventional loans. Options A and B are part of various government programs to help low and moderate income families as well as veterans find affordable home financing.

Answer 128

C. The qualification requirements are uniformly fixed by state law. Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender. There are no state-mandated qualifying requirements for conventional loans.

Answer 129

A. any approved lending institution such as a bank or savings and loan association. Lenders must be approved by the Federal Housing Authority before they can offer FHA loans. Part of the approval process includes waiving fees customarily charged on conventional mortgages.

Answer 130

B. It binds the new owner. Tenancy for years is the common form of rental agreements and binds all future owners for the term of the lease.

Answer 131

A. The broker has failed to display a HUD Equal Opportunity poster. Included among Fair Housing regulations is the requirement that the HUD Equal Opportunity signage be prominently displayed.

Answer 132

B. The property is sold on the condition that the new owner lease it back to the seller at the time title passes. A sale-leaseback is usually used for the purpose of creating cash flow from a commercial property. As the name implies, the owner transfers title to the buyer in exchange for cash, then leases the property back at a monthly rate while continuing to run his business from that location or otherwise use the property.

Answer 133

D. principal meridian. Crossing a base line, the principlal meridan is the primary reference point for locating and describing land falling within its boundaries.

Answer 134

A. make the ground floor handicapped accessible. Because the building was constructed before the 1991 standards went into effect, only the first floor needs to be modified.

Answer 135

C. A salesperson could use two standard forms, fill in the blanks and request that his or her broker review the forms before signing. Generally speaking, salespeople may complete standard forms so long as they are reviewed by and with the approval of their broker.

Answer 136

B. June 15th Listing contracts set forth the terms and conditions under which a broker will sell a property for his or her client. When the closing takes place, the terms of the contract have been fulfilled and it expires automatically.

Answer 137

A. an attorney in fact. "Disinterested" means being able to act in an objective manner without any hidden motivation or prospect of gain. For example, a person who made a secret deal to sign a contract contrary to his client's best interests in exchange for an under-the-table payment would not be "disinterested."

Answer 138

A. Advise the owner immediately. Again, the property manager is the owner's "eyes and ears" for protecting the owner's best interests. Anything that can impact the property's value in either a positive or negative way should be communicated immediately.

Answer 139

C. Submission by the agent of two offers at the same time Submitting offers doesn't end the relationship--only the owner's acceptance of one and ultimately closing on the transaction.

Answer 140

D. The Federal Government There are no federal taxes on real property. The Constitution of the United States specifically prohibits such taxes. The federal government does, however, tax income derived from real property and gains realized on the sale of real property. The federal government can impose a tax lien against property for failure to pay any tax due the Internal Revenue Service.

Answer 141

A. Yes. The land was taken for public use by eminent domain. Governments and municipalities can only seize property (other than in criminal cases) for the public good and through eminent domain, which is a process, not an arbitrary action. Part of that process involves determining fair compensation to the owner.

Answer 142

C. 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.

Answer 143

D. Aesthetic 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.

Answer 144

B. 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.

Answer 145

A. A nonprofit church that denies access to its retirement home to any person because of race The private club is exempt because its preferential treatment is based on its membership; the home owner is exempt, so long as he is selling his home without a broker; the warehouse is exempt because it's not a housing unit.

Answer 146

B. Interest rates would go down. Just like most things in a free market economy, mortgage loans are subject to the laws of supply and demand. Thus, when there is more mortgage money in the market place "looking for a home," borrowers have more choices, which leads to increased competition among lenders, which leads to lower interest rates.

Answer 147

C. redlining. Loans may only be approved or denied on the basis of whether a specific individual and property meet established standards. Thus lenders are well within their rights to deny a loan to a particular person because he or she lacks sufficient income or has poor credit. Additionally, a loan for a partially completed home or one that doesn't meet code can also be denied. However, "macro" issues such as race or neighborhood cannot be considered.

Answer 148

B. "Christian home" If a licensee creates an ad which is explicit in its preference for or limitation of any particular religion, the ad is discriminatory. It is probably safe to say that any advertising that describes the property would be considered acceptable, while advertising that describes buyers could be considered discriminatory, especially if the buyers are from a protected class.

Answer 149

C. 1 year If the complaint is not filed within one year, a person may still file a civil suit in a Federal Court.

Answer 150

C. Selling shares in Fannie Mae Even though Fannie Mae is a mortgage-based business, its shares sell just like any other stock and only people with a securities license may offer them for sale.

Answer 151

C. Judgment lien Most liens are against a specific property, such as a primary residence. Thus, a contractor seeking payment for a new deck cannot have a homeowner's car attached in settlement. A judgment lien, however, is a decision directed by the courts and can apply to whatever assets it deems appropriate.

Answer 152

A. option It's important to note that options generally give flexibility to only one side of the transaction. For example, let's say Barney is expecting a big promotion in six months and wants to buy Fred's house for $300,000 if it comes through. In exchange for keeping his home off the market for six months and agreeing to sell it to Barney for $300,000 at Barney's option, Barney gives Fred $3,000. The $3,000 is Fred's to keep no matter what. However, Barney is not obligated to buy Fred's house; it's his choice. Further, if he does get the promotion and wants to exercise his option, Fred must sell Barney his home for $300,000, even if market conditions have now made it worth more.

Answer 153

C. must give a parking space near the door to the handicapped person, if one is available and a need is demonstrated. The "equal access" aspects of fair housing legislation do not necessarily mean equal treatment. "Reasonable accommodation" must also be made to meet the needs of handicapped people, including exceptions to standard policies such as convenient parking and guide dogs.

Answer 154

C. inform the buyer of the seller's instructions. Following an owner's lawful instructions is not only allowable, but a responsibility of the licensee. However, if the owner instructed the broker to tell minority buyers that he was out of town when he was not in order to avoid selling to a minority, the broker would be in violation of the law if he acted as the owner requested.

Answer 155

C. a Form-1099. The responsibility for filling out and submitting the 1099 generally falls to the person who conducted the closing.

Answer 156

D. 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.

Answer 157

B. fee simple estate. Fee simple estates have the entire bundle of rights for the property so they have complete control.

Answer 158

C. the vendor. The seller of the land is the grantor. They buyer is the grantee.

Answer 159

D. Table Lamps The concept of personal property typically comes into play at the time of sale. Things that are part of the house--bathroom fixtures, fireplaces, carpeting and such--go with the sale. (Unless specifically excluded, as can happen in the case of a dining room chandelier or one or two other objects with which the owners have an emotional attachment.) Furniture, rugs, lamps and other portable items that are not "nailed down" constitute personal property and are not included in the sale.

Answer 160

D. scarcity. Scarcity is a fundamental economic concept that holds that the rarer and more desirable something is, the more valuable it will be. For example, professional athletes are highly paid because only the smallest percentage of people have the ability to perform at that level. Land is "scarce" because there is a finite amount available and, as Will Rogers once said, "They ain't making any more of it."

Answer 161

B. A time-share Time-shares are most common with vacation and resort properties. Time-share arrangements provide for equal sharing of the property's expenses among the owners.

Answer 162

C. encroachment. The principal attributes of an encroachment are: 1) It is accidental and 2) it involves only part of a structure. Typically, the issue would be resolved by selling Wendell an easement or a lease or, if practical, actually moving the structure.

Answer 163

B. A license to enter and claim a seat for the duration of the game Easements grant access, not use. Commercial licenses, such as those required to sell beverages, souvenirs or services, cover extended periods. Although tickets to sporting events, concerts, shows and the like are technically licenses, they differ from most in their degree of restriction. For example, a concert ticket does not give the bearer the right to sit anywhere he or she chooses or wander backstage to meet the performers.

Answer 164

C. The easement is terminated. "Dominant" and "servient" tenements involve two adjacent properties in which an easement is involved. For example, let's say Bridle Creek Farms and Barnstable Farms are separate parcels divided by a country lane that provides access to the county road system. The lane is owned by Bridle Creek, but the deeds of both properties stipulate that Barnstable Farms shall have unrestricted access for the purpose of accessing county roads. That access is an easement. Thus, if the owner of Barnstable Farms buys Bridle Creek Farms, the need for the easement disappears.

Answer 165

D. cooperative. This is the distinguishing characteristic that differentiates cooperative from condominium ownership. Although often confused, a condominium owner holds title to his individual unit. A co-op owner, on the other hand, is technically a renter. It's his stock in the corporation holding title to the property that gives him the right to lease the unit as well as sell that right to another.

Answer 166

D. Tenants in common In order to create joint tenancy, some form of relationship must exist between the parties involved, whether business, spousal or other. Because their interests were acquired as a gift, the parties in this instance become tenants in common, with all the ownership benefits of joint tenancy, but not the survivorship rights.

Answer 167

B. Real estate tax lien The requirement for individuals to record liens is due in part to the necessity of correctly identifying the complainant. For example, not just "Jones Contracting," but the specific Jones Contracting that performed the work and is owed the money. Because they bear the authority of government and are easily identified, liens by taxing authorities do not need to be recorded.

Answer 168

B. Allodial "Allodial" is the modern form of ownership and is often contrasted with "feudal" in which land is held on the condition of rent or service due the government. For example, a medieval knight held property subject to coming to his baron's service when called. Similarly, the baron's land holdings were conditional on his raising an army and fighting for the king in times of conflict. Failure of any party to "perform as promised" was cause for holdings to be confiscated, often as a preliminary step to more extreme actions.

Answer 169

A. Both are encumbrances. Liens are, of course, serious in that they indicate the owner has failed to pay a debt secured directly or indirectly by the property. Easements, on the other hand, are generally a practical necessity for most residential properties.

Answer 170

B. 23,625 sq feet Calculate the back yard sq footage (125 x 150 = 18,750 sq feet). Calculate the side yard square footage (195 x 25 = 4,875). Then add those two values (18,750 + 4875 = 23,625 square feet).

Answer 171

D. $36,225. Debit the seller. Commissions are paid based on the actual selling price, not the listing price. Additionally, since the broker represented the sellers in this transaction, the commission is debited from their side of the ledger.

Answer 172

C. $510,000 One point equals one percent; thus two points are two percent of $500,000, or $10,000, which becomes part of the buyer's total obligation to the lender.

Answer 173

A. $1,130.14 debit the seller and credit the buyer The seller would owe money, and the buyer would receive money, because the seller has not paid the taxes. $2,500 divided by 365 is $6.849315 times the actual days of 165 is $1,130.14.

Answer 174

D. Loan balance $170,000; interest due $425 Although many types of loans can become more complex in their calculations of remaining principal and interest at a particular point in time, in this case the interest portion of the payment is calculated simply by multiplying $170,000 by 6% and dividing by twelve. That results in monthly interest of $850, with half that amount, or $425 added to the principal payment at closing.

Answer 175

C. possession, time, interest, and title. This essentially means that all parties to the agreement share equally in all aspects of the property, including the length of time it's been held. That means if one party sells or transfers interest in a joint tenancy relationship, his or her place is taken by another in the same capacity.

Answer 176

C. 15% Congress passed the Foreign Investment in Real Property Tax Act (FIRPTA) to eliminate the problem of collecting delinquent taxes from foreigners who owned and sold property in the US and left the country without paying the taxes due on the sale. The IRS currently keeps this 15% to ensure that any capital gains on the sale are paid.

Answer 177

C. deed in lieu of foreclosure With the deed in lieu option, a borrower voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. The transfer, however, does not terminate any existing liens on the property. For this reason, some jurisdictions (e.g., judicial foreclosure states) frown on the usage of deeds in lieu of foreclosure.

Answer 178

C. List of things not insured in the policy Almost no title insurance policy protects against all conceivable events. As the name suggests, the Schedule of Exceptions is a specific list of items not covered and can include things such as unrecorded mechanic's liens, assessments, water rights and mining claims.

Answer 179

C. covenant of seisin. Another outgrowth of the feudal system, "seisen" derives from the French meaning to "sit upon or own" and gives owners the right to sell or transfer property at will.

Answer 180

B. gives constructive notice of the ownership of real property. Recording a deed does not convey, insure or warrant ownership. However, it does protect the owner's interest in a property by serving notice that the recorded owner is the only recognized holder of title. This places a larger burden of proof and process on someone trying to assert a prior ownership interest and/or claiming a deedholder's title is clouded.

Answer 181

B. Title insurance Title insurance provides the best assurance of marketable title.

Answer 182

C. buyers to buy by comparing one house to another. The market data approach allows buyers to compare different properties to determine which best meets their needs in terms of price, features, quality, condition, and other factors.

Answer 183

A. neighborhood analysis. This involves more than just driving around. It is a formal process of identifying, measuring and analyzing the influences that help determine a neighborhood's vitality and desirability.

Answer 184

B. Sales comparison approach The sales comparison approach would be used because it is the most reliable indicator of a home's true value. Since it is a single family residence rather than a multi-unit investment property, the fact that it is rented, as well as the amount of rent, is irrelevant to the calculations.

Answer 185

C. A house with no electricity or running water "Functional obsolescence" typically shows itself in one of two forms: first, in poor initial design, as in this case; second, when the features and design of the home have become outdated compared with competing properties.

Answer 186

B. to 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.

Answer 187

B. a fee based on the amount of time and effort. 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. It is a violation of the appraiser's Uniform Standards to charge a fee based upon a percentage of value.

Answer 188

B. cost. The cost method is most often used for buildings where actual income or comparative commercial value are unavailable--such as schools and libraries.

Answer 189

C. 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.

Answer 190

B. the time over which value generated exceeds cost of operation. Just like cars, buildings and their systems deteriorate over time and require repairs. Additionally, code changes can trigger expensive upgrades. At some point, those repairs begin to exceed the income generated and the building has reached the end of its economic life.

Answer 191

A. 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.

Answer 192

C. 6% over 15 years The shorter the term of a loan, the more quickly principal is paid down and the faster equity builds. A 15-year loan at 6% interest rate would provide the LARGEST and FASTEST reduction in the principal. Interestingly, the payments on a 15-year loan are often not that much higher than the same loan with a 30-year payback.

Answer 193

B. Fannie Mae 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.

Answer 194

D. FHA The FHA encourages lenders to make these low-interest, low-down payment loans by insuring them against default. It does not actually lend money itself.

Answer 195

D. Yes, because it was his own home. Broadly speaking, an individual homeowner is free to sell his/her own home as he/she chooses and is not subject to Truth in Lending or real estate practice restrictions.

Answer 196

D. Minority background The Equal Credit Opportunity Act, Fair Housing Act, and other anti-discrimination legislation doesn't force lenders or others to abandon sound business practices (such as denying loans to unqualified borrowers), merely to be fair and equally accessible to all people.

Answer 197

D. $ 248,400. Credit the buyer only. Mortgage monies are credited to the buyer's side of the ledger as a portion of the funds he or she will use to complete the transaction. Once all the funds have been accounted for, the monies (less appropriate deductions) transfer to the seller.

Answer 198

D. It is usually issued at a higher rate of interest. 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.

Answer 199

B. a VA loan. VA loans are zero-down instruments, while FHA loans permit low down payments in the 5% range.

Answer 200

B. 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.

Answer 201

A. 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.

Answer 202

C. No. Owners are not covered by Regulation Z. Regulation Z requires disclosure of all financing terms and conditions if an 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.

Answer 203

C. If the parent was relying on the income for repayment of the loan Income of any type--whether alimony, child support, freelance work or a second job--only needs to be disclosed if the applicant is relying on it to qualify for the loan.

Answer 204

C. "No down payment required." "No down payment required" triggers the Truth in Lending disclosures because it is a specific statement about only one aspect of the financing. "Easy terms" does not trigger the regulation because it's non-specific.

Answer 205

B. Yes. This is acceptable as long as the seller agrees. This is a form of owner financing and is perfectly acceptable, so long as both parties agree to the terms and conditions.

Answer 206

C. To check for errors This is not a step that should be dismissed. With the increased volume in home mortgages, the fact is a significant amount of closing statements do contain errors and it's easer and better to correct them before closing than after.

Answer 207

B. Novation (or "full assumption) 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.

Answer 208

C. Notify the owner immediately of the suspicious activity The property manager is the owner's agent, but not his "proxy." That is, he must inform the owner but not act on his behalf without authorization. For example, while calling the police to investigate might be appropriate, if the manager's suspicions were groundless and he called the authorities without authorization, the tenants might be able to sue the owner.

Answer 209

D. If the tenant has loud parties, makes too much noise, and is constantly disturbing other tenants The law requires "reasonable accommodation"--for example, allowing a guide dog for a blind person even if there's a "no pets" policy. However, that does not mean that all rules are suspended. Noise, safety, and "use of premises policies" may still be enforced.

Answer 210

D. To assure the property value is sufficient to cover the loan Appraisals are third-party valuations of a property based on a wide range of variables. Lenders generally insist on this independent assessment to make sure the value of the property is at least sufficient to pay off the loan amount in case of default. While B is technically correct, D is the better choice.

Answer 211

D. securing tenants of a particular ethnic origin in accordance with the owner's wishes. Except in certain circumstances regarding the rental of space within one's personal residence or unit, owners, landlords and their agents are not permitted to discriminate against people based on race, gender, creed, handicap and other personal characteristics.

Answer 212

D. Mr. Smith must restore the wide doorways, that were installed for him, to the original size. Since the width of the door will not in any way be detrimental to future tenants, there is not a requirement for the original width of the doors to be replaced by the handicapped tenant. All of the other issues must be restored to original status.

Answer 213

A. A 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.

Answer 214

C. A pending or recent zoning change A zoning change is a "material fact"--something that can have a direct impact on the property's value or desirability. For example, if the zoning in a middle class neighborhood on the edge of a growing city was changed from residential to mixed use, it means that a number of homes could be turned into businesses, which will make the property less desirable to people seeking a quiet place to raise a family.

Answer 215

C. provide legal advice. Brokers should not provide legal advice unless they are also a lawyer.

Answer 216

A. There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer. Since each broker represents separate sides in the transaction, no relationship exists.

Answer 217

A. prorated Any item that is prorated is shown on the settlement statement as a debit to one party and a credit to the other party for the same amount.

Answer 218

A. A broker selling a single-family home Civil rights laws apply to owners of residential property, rental units, hotels and virtually any other building offering housing or accommodations to the general public.

Answer 219

A. was valid even though the owner did not know about it. Easements grant only access, not ownership, use or occupancy rights. Further, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks. As such, they "attach" to a deed or lease and remain in effect, until specifically lifted. This type of easement is known as an easement-in-gross.

Answer 220

"Littoral" and "prior appropriation" are different kinds of water rights: in the first case, navigation rights to an ocean or other large body of water; in the second, the right to use a water source for irrigation. A hereditament is any inheritable property.

Answer 221

D. statutory lien. A "statutory lien" is one that arises out of specific law (otherwise known as statutes). By contrast, an "equitable lien" has its roots in common law or custom. A "voluntary lien" is one entered with the property owner's knowledge and consent, such as a mortgage. A "general lien" grants a creditor the right to file a claim against all of a debtor's assets, not just a particular property. Liens are often categorized as more than one type. A mechanic's lien is statutory AND involuntary, for example.

Answer 222

A. 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.

Answer 223

A. A magazine ad A magazine ad, although significantly more expensive than newspaper advertising, could be just what a firm needs to attract wealthy clients to their upscale offerings. Or a specialty magazine could be the appropriate venue for a particularly unique property. Alternatively, advertising on social media can allow relatively inexpensive, targeted marketing.

Answer 224

D. Exclusive agency Open listings mean that if the owner or any other broker or salesperson produces the buyer, the broker will lose his or her commission. Exclusive Right to Sell gives the broker his or her commission regardless of who actually sells the property, even if it is the owner. Exclusive Agency allows the seller to appoint an exclusive agent, but retain the right to sell the property himself.

Answer 225

A. steering. "Steering" is driving people towards particular neighborhoods, and is the correct answer to this question. On the other hand, "blockbusting" is the opposite side of the same coin. Synonymous with "panic peddling," it refers to trying to generate panic selling in a neighborhood dominated by one race or ethnic group by representing that another group is about to start moving in.

Answer 226

A. Private mortgage insurance (PMI) A buyer has to pay private mortgage insurance if they did not have a 20%+ down payment (unless they have a VA or FHA loan). The others are paid by the seller.

Answer 227

A. The broker's commission The seller pays from the broker's commission. All the other expenses are the buyer's.

Answer 228

C. when a hinge is off the door. Home inspectors are hired to find significant and often hidden property defects, such as signs of a leaking roof, termites, foundation cracking and so forth. Hinges and other "wear and tear" items are obvious and not among the reasons for hiring an inspector.

Answer 229

D. self-dealing. Fred is taking advantage of his position to collect a commission. Self-dealing qualifies as intentional misrepresentation.

Answer 230

A. title closing At the title closing: the buyer completes his or her financing arrangements (referred to as closing the loan), the seller transfers the title, and both the buyer and seller pay the necessary taxes, fees and other charges.

Answer 231

A. Yes. He may do this if he does not use a broker or discriminate in advertising. Although laws vary by state as to number of units that fall under this type of provision, if a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination. The view is that a person's dwelling (which includes units such as duplexes and triplexes) enjoys a degree of "sanctity" and the person may choose whom he or she brings into their "home." Therefore, the owner could claim an exemption from federal Fair Housing laws.

Answer 232

D. accretion. Accretion means the addition to a parcel of land by sand or soil deposits due to the action of a river or other body of water over time. Avulsion refers to the loss of land as a result of its being washed away by sudden or unexpected action of nature, such as a flash flood that re-routes a river.

Answer 233

A. Race Although surprising to many, the original civil rights legislation was passed in 1866--by one vote over the veto of President Andrew Johnson.

Answer 234

C. Personal property Personal property differs from "real property" in a number of respects, most importantly its portability. Cars, furniture, clothing, paintings, jewelry, appliances and just about any other non-food item one buys are examples of personal property.

Answer 235

D. apply to and bind all successive owners of the property. 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.

Answer 236

B. the right to exclude the utilities meter reader. This right to enter and work on a property is granted to utility companies (water, sewer, gas and electric) as well as telephone and cable companies. Essentially, if a company provides a service and owns the equipment (e.g., phone and cable lines), they are usually granted an easement.

Answer 237

D. Tenancy by the entireties Tenancy by the entireties is a form of ownership that husbands and wives can choose or create by deciding to do so and declaring it as such in contracts and deeds. Tenancy in common is put in motion by state law. Community Property is a law of ownership that exists in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and some other states. Tenancy by the Entireties is an estate that is recognized in some states between husband and wife, who have equal right of possession and enjoyment during their joint lives and with the right of survivorship--that is when one dies, the property goes to the surviving tenant. (In many states, if couples do not specify "Joint Tenancy," this form of ownership will be automatically assumed.) Tenancy in Common is a type of joint ownership by parties NOT married, that allows a person to sell his share or leave it in a will without the consent of the other owners. If a person dies without a will, his share goes to his heirs, not to the other owners.

Answer 238

D. fixtures. "Chattel" is a legal term that means personal property. Emblements and fructus industriales refer to profit from crops that are grown as a result of a person's labor, such as corn, as opposed to those that occur naturally, such as grass or minerals. By the custom of English common law, they are considered personal property. By contrast, a fixture is considered attached to a property and thus part of the structure.

Answer 239

D. License Granting the use of property for a defined period for a specific purpose is almost always a form of licensing. Easements grant only access, not ownership, use or occupancy rights. Further, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks.

Answer 240

B. An appurtenant easement Appurtenant easements afford the most protection since they are generally a permanent feature of the property. Thus, in the case of sale, the lake access passes to any new owners. By contrast, an "easement in gross" is between two individuals, which would severely limit the attractiveness and value of the property if the original owner wished to sell.

Answer 241

B. in severalty. Joint tenancy means that two parties have an undivided interest in a particular property and, upon the death of one party, full ownership automatically goes to the survivor. Despite the way it sounds, "in severalty" means as sole owner.

Answer 242

D. When the lease expires, if the items are not taken by the tenant Kim is free to move these fixtures at the end of her lease. However, if she chooses to leave them behind, they are considered a permanent part of the structure (just like a dining room chandelier in a home) and revert to Tom.

Answer 243

D. remain joint tenants owning a two-thirds interest. Because joint tenancy must be declared, Jim and Manny remain joint tenants with a two-thirds interest while Wendell, because of his passive acquisition of his share of the property, becomes a tenant in common with Jim and Manny. The difference between the two forms is that Jim and Manny's share retains the right of survivorship provisions but Wendell's does not. Note that some states have laws that supercede the answer to this question.

Answer 244

B. The refrigerator is the personal property of the tenant. The seller had no right to offer it to the buyer. Plugging in an appliance does not constitute installation. Thus it is personal property that belongs to the tenant.

Answer 245

C. trade fixtures. The term "trade fixture" refers to an item installed by a tenant in a rented commercial property that he or she removes at the end of the occupancy.

Answer 246

C. chattel The term "chattel" refers to personal property.

Answer 247

C. 5% 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%.

Answer 248

A. 10 acres 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

Answer 249

C. 42 months Eight percent of $6,071 is $486 per year or $40.50 per month. $1,700 divided by $40.50 means the borrower held the loan for forty-two months.

Answer 250

A. $14,040 A loan for 90% of the $780,000 purchase price results in a $702,000 mortgage. Since the origination fee is based on the amount of the mortgage, not the price of the home, the fee is 2% of $702,000 or $14,040.

Answer 251

D. $375,000 At $10 per square foot, the tenant's base rent is $30,000. Since the total rent was $60,000, that means the remaining $30,000 was due to the gross sales percentage. Since that figure is 8%, simply divide $30,000 by .08 to arrive at $375,000.

Answer 252

B. transfer title. A deed is the instrument by which ownership of a property is transferred from one person to another, while a title is evidence of that ownership.

Answer 253

A. applies only to a definite limited time. The more common deed in most states is the general warranty, because it establishes the ownership trail and validity of title going back to the original recorded ownership (for example, the purchase of Manhattan Island and all subsequent divisions, subdivisions and resales). Under a special warranty deed, an owner transfers property guaranteeing the quality of title only during the period of his or her ownership, leaving subsequent buyers vulnerable to prior claims.

Answer 254

C. may note the exceptions in the deed of conveyance. Most commonly known as "restrictive covenants," such deed restrictions are often used to maintain the consistency of a neighborhood by, for example, stipulating that only traditional home style so f a particular size and painted in traditional colors may be constructed and occupied within the subdivision. These are encumbrances on the property since they limit current and future owners in how they use the property.

Answer 255

D. Subrogation For example, let's say Amanda buys a property and the seller provides a general warranty deed stipulating clear title. However, that turns out not to be the case and a third party provides a valid claim to a share of the property. Since Amada took out title insurance, the title insurance company negotiates and pays a settlement with the claimant on Amanda's behalf. Amanda's right to sue the seller then transfers to the title insurance company, which will take action to recover the amount they paid on Amanda's behalf.

Answer 256

C. A suit to quiet title A owner might bring a "quiet title" action to correct a minor mistake in the property description or to remove an easement that's been unused for years. Additionally, they are used when a third party tries to asset some right to the property through a dubious claim. The suit "quiets the mouth" of that person and establishes a clear title.

Answer 257

B. encumbrance. Anything that limits a person's use of a property is an encumbrance. Easements limit use in that they generally prohibit any kind of permanent structure on the area in question. For example, if a homeowner wanted to build a swimming pool in an area of his back yard and the local sewer company had an easement for pipes running under that area, he would have to find another location for his pool, even if it was not as desirable.

Answer 258

C. If both sides agree, return the entire amount to H. Brokers and salespeople only earn their commission when a transaction closes. Since the transaction was never completed, no commission is owed. Additionally, H is entitled to have all his earnest money returned since it was the seller, not he, who defaulted on the contract. This return requires consent from all principals. Otherwise, the earnest money must be maintained in escrow until a court order dictates where the money should go.

Answer 259

A. chain of title. The "chain" links together the successive owners of a property from the most recent to the original recorded title holder. In addition, it notes other relevant information such as mortgages, judgments, liens, death of title holders, inheritors and so forth.

Answer 260

D. reconciles the differences according to the type of property being appraised and the quantity and quality of data available. In order to maintain accuracy and "transparency" of his calculations, an appraiser reconciles differences and does not average comparable sales to arrive at a final value.

Answer 261

C. substitution. An appraisal principle, "substitution" holds that the maximum value of a property is that price for which a comparable, equally desirable property can be purchased in a timely manner. For example,if two 4-bedroom homes with equal features, age, condition, lot size and desirability are on the market at the same time, buyers would not pay $250,000 for one when the other is available for $240,000. However, if the $240,000 is on the market now, but the owner wants to delay closing for six months while the other is available for immediate occupancy, there may well be buyers willing to pay the premium.

Answer 262

B. the age of the property based upon its condition. 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.

Answer 263

A. the comparable properties. The objective of an appraisal is to arrive at a fair estimate of the subject property's value based on what comparable properties have actually sold for. The most reliable way of achieving this is to make additions and subtractions from the comparables rather than the other way around. In the example of a 3-bredroom ranch, property A might have sold for $225,000, but features a two-car garage instead of the subject property's 3-car garage. If the value of the extra garage space is $5,500, the first comparable is raised to $230,500. If the next property is identical to the subject, except it had a brand-new, high-end kitchen that added approximately $25,000 to the selling price and the home sold for $257,000, that comparable's price would be reduced to $232,000.

Answer 264

B. Property value divided by the monthly rent This is used as a quick, short-hand "guesstimate" for a property's approximate value. Far more detailed calculations are necessary to determine a complex property's market value (e.g., shopping center.)

Answer 265

B. Yes, because of economic obsolescence. Economic obsolescence occurs when factors unrelated to the property itself and outside of the owner's control diminish its value. A quick way to judge whether or not a property has become economically obsolete is to analyze whether, under the new circumstances, the location would still be chosen as a home site and, if yes, at what value compared with the current property.

Answer 266

A. 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.

Answer 267

C. 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.

Answer 268

D. No--because of the divorce it was not an "at arms' length" transaction. An appraiser should not use this sale as a comparable sale. 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.

Answer 269

A. 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.

Answer 270

C. The trustor "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.

Answer 271

D. 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.

Answer 272

C. 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.

Answer 273

C. To force a division of property without all the owners' consents Partition suits are typically pursued when a co-owner of a property wants to sell his or her share and the other owners are opposed. Since it is a legal action involving the courts, it is an expense with often unsatisfactory results.

Answer 274

B. delivered and accepted. Fundamentally, real estate transactions only involve two parties--the buyer and the seller. All that's necessary to create a legal sale is for one party to make an offer the other accepts. Recording, escrow, real estate licensees, mortgage companies and the like facilitate and support the transaction process but are not requirements of a

Answer 275

B. an agreement between the parties. Earnest money is a demonstration of sincerity on the part of the purchaser and provides preliminary evidence that he or she is financially capable of completing the transaction. While it should be substantial enough to meet these two criteria, there is no set or customary amount or percentage.

Answer 276

C. Friday, midnight Because agreement was reached and SIGNED documents were provided on TUESDAY, Friday midnight ends the THREE-business-day period

Answer 277

D. Enforceable Since there were no contingency clauses, and no restrictive covenants of record. If the buyer cannot secure a change of zoning , the contract is perfectly valid as stands and is enforceable between the parties.

Answer 278

B. No acceptance has been given. It has not been presented to or accepted by the owner. Remember, contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker will generally be entitled to his or her full commission.

Answer 279

D. sue the broker for non-performance. While brokers and salespeople are responsible for bringing people together, they cannot be expected to know every detail of their circumstances or intent. Thus, if a buyer cannot get clear title or a seller is unexpectedly transferred, it is not the broker's fault the transaction failed and he or she bears no responsibility or liability.

Answer 280

B. she was under undue duress from her son and daughter-in-law, and, therefore, the contract is voidable. "Duress" is the application of coercion or pressure to influence a person to act in a way contrary to his/her best interests. Further, since voluntary participation is a key condition of any contract, Mrs. D could well be successful in such an action. A voidable contract is one that is able to be voided because Mrs D was under duress or undue influence.

Answer 281

C. returning it to the buyer. A contract only exists when it is both offered by the buyer and accepted by the seller. Since the second part of this requirement was never fulfilled, the buyer is entitled to have his earnest money returned.

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