WHAT I NEED TO KNOW Flashcards Preview

Real Estate Course Chapter 1 > WHAT I NEED TO KNOW > Flashcards

Flashcards in WHAT I NEED TO KNOW Deck (370):
1

What are the 3 general phases of real estate:

1) Land acquisition and development 2) Subdividing and development 3) Construction

2

The 3 general categories of residential construction are:

1) Speculative-purchasing one or more lots and constructing a home (or homes) without a buyer in advance of construction
2) Custom homes - A custom builder constructs homes under contract with a buyer, often using building plans provided by architects or buyers
3) Tract homes - a type of speculative building. A subdivision will pre-build several style model home types. They buyer select the floor plan from the models and a lot on which to build in the new subdivision

3

Deed restrictions refer to a

single parcel of land. Deed restrictions are placed by an owner who has created a restriction on future owners of the parcel of real estate

4

Restrictive Covenants impose limitation on the use of land in

an entire subdivision

5

Chapter 475 is divided into 4 parts:

1) pertains to real estate brokerage
2) pertains to real estate appraisers
3) Commercial Real Estate Sales Commission lien act, pertains only to commercial property
4) Commercial Real Estate Leasing Commission Lien Act, give a broker lien rights for earned commission associated with a brokerage agreement to lease commercial real estate

6

What does Fla Statute 455 define?

the general legal practice and procedure for the Dept of Business and Professional Regulation (DBPR)

7

What chapter of the Fla statutes define the procedural process by which regulatory agencies decide and implement agency action?

Florida Statute 120

8

Name the particular chapter pertaining to the administrative rules developed by the FREC, pursuant to the rulemaking process outlined in Chapter 120 Fla Statutes.

Chapter 61J2

9

Define a Florida resident

A person who resided in Florida continuously for a period of four calendar months or more within the preceding year - whether they lived in a recreational vehicle, hotel, rental unit or temporary or permanent location.

10

Define Moral Turpitude

Conduct contrary to honesty, good morals, justice, or accepted custom. Embezzlement and crims of larceny, including writing bad checks, are considered moral turpitude.

11

What is the broker experience requirement?

They must have held an active real estate license for at least 24 months during the the five-year period preceding application to become a Broker

12

Define Prima Facie

evidence that is good and sufficient on its face to establish a given fact or prove a case

13

Define Real Estate Services

Any real estate activity involving compensation for performing the service for another

14

What are the 8 services of Real Estate?

A Advertise real estate services
B Buy
A Appraise
R Rent
S Sell
A Auction
L Lease
E Exchange

15

Who appoints the commission members of the FREC?

The Governor, subject to confirmation by the state Senate. Each member of the commission is accountable to the Governor, not the DBPR for proper performance

16

The FREC’s powers and duties fall into what three general areas?

Executive powers - to regulate and enforce the license law.

Quasi-legislative-the power to enact and revise administrative rules.

Quasi-judicial-the power to grant or deny license applications, to determine license law violations, and to administer penalties.

17

Who appoints the Director of the DRE?

The Secretary of the DBPR subject to approval by majority vote of the FREC.

18

What are the perks for military veterans?

Fee waiver of the initial application fee, biennial license fee, and unlicensed activity fee are waived for military veterans who apply for a real estate license within 24 months after honorable discharge.

19

involuntary inactive –

a) If a licensee fails to renew an active or voluntary inactive license (other than the first renewal).
b) suspended
c) revoked

20

When does a license become void?

a) after 24 months of inactive status
b) when it is cancelled
c) revocation

21

When a license becomes VOID it

NO LONGER EXISTS

22

Ineffective -

the license exists, but can not be used.

23

Examples of INEFFECTIVE are

a) voluntary inactive
b) fails to renew a license prior to expiration date (other than first renewal) and is involuntary inactive (that two year period before becoming void).
c) when an associate's broker is suspended or revoked but they are not
d) Suspended. The license is "ineffective" during the period of suspension.

24

Are there any exceptions to permanent revocation?

YES, A license may reapply AFTER FIVE YEARS when they: A) filed for renewal but did not comply with the education requirement. B) Filed an application for a license that contained false or fraudulent information

25

Cease to be in force -

That period when a sales associate leaves one brokerage firm and is not yet registered under another or a school changes address and has not yet notified the state after 10 days.

26

Armed Forces exemption -

A license in good standing who is a member of the U.S. armed forces is exempt from the renewal provision during the licensee's period of active duty and six months after discharge from active duty. If the military is out of state, the exemption also applies to a licenses spouse.

27

When was dual was revoked in the state of Florida?

1997

28

Duties of a no brokerage relationship

( DDA)

1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds

29

What are the duties of a Transaction brokerage relationship

(DDAUPEP)
1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds
4) Use skill, care and diligence
5) Present all offers and counteroffers
6) Exercise limited confidentiality
7) Perform additional duties that are mutually agreed to

30

What type of broker provides limited representation to a buyer, a seller, or both, but who DOES NOT represent either in a fiduciary capacity or as a single agent

A transaction broker

31

What type of broker is defined as a broker who represents, as a fiduciary, the buyer or seller but NOT both in the same transaction.:

A single agent.

32

What are the duties of a Single Agent Brokerage Relationship

(DDAUPCOLD)
1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds
4) Use skill, care and diligence
5) Present all offers and counteroffers
6) Confidentiality
7) Obedience.
8) Loyalty
9) Disclosure (Full)

33

What circumstances terminate a seller buyer relationship?

1) Fulfillment of the brokerage relationship
2) Mutual agreement to terminate the brokerage relationship
3) Expiration of the agreement
4) The broker renounces the single agent or transaction broker arrangement by giving notice to the principal (single agent) or customer (transaction
5) The customer or principal renounces the single agent or transaction broker arrangement by giving notice to the agent or broker. (they also maybe liable for damages)
6) Death of seller's/buyers broker before they find a property.
7) Destruction of the property
8) Bankruptcy of the principal or customer

34

Which disclosure notice must be signed by the buyer and the seller in certain nonresidential transactions?

Request to use designated sales associate representation.

35

Which brokerage disclosure notice must be signed or initialed by the buyer or seller before implementation?

Transition to transaction broker disclosure. If the customer refuses to sign or initial the transition form, the licensee must stay as a Single Agent.

36

Must the NO BROKERAGE notice be disclosed in writing BEFORE showing the property?

Yes, However, the customer does not need to sign. If they refuse to sign or initial, the agent can put the form in the customer's file with a note advising they refused to sign.

37

In a single agent agreement, a person who gives or delegates authority to another is referred to as the ___________ while the person who accepts the authority is referred to as the _________

PRINCIPAL; AGENT

38

authorized to perform all acts for a fiduciary (i.e. attorney handling trust agreement for disabled child)

UNIVERSAL AGENT

39

authorized to perform acts associated with the continued operations of a particular job or a certain business.

GENERAL AGENT

40

authorized to handle only a specific business transaction or perform a specific act

SPECIAL AGENT

41

What is required on a brokerage sign?

Name of brokerage company, broker name, and title “licensed real estate broker.”

42

What is a blind ad?

Fails to disclose the license name of the brokerage firm

43

Which laws prevent conspiring to fix commissions or fees?

The Sherman (Sherman-Clayton) Antitrust Law and Florida antitrust laws

44

What are the allowable Broker fund amounts for escrow accounts:

Property: $5000, Sales escrow: $1000, Combined: $5000

45

Advertising rental property info that is materially inaccurate is a

first-degree misdemeanor.

46

When must the broker notify the FREC of good faith doubt?

15 BUSINESS DAYS

47

Brokers must institute of the four settlement procedures (MALE) within how many business days of receiving conflicting demands or having a good-faith doubt.

30 BUSINESS DAYS

48

If a request to issue an escrow disbursement order is made to the FREC and the issue regarding the dispute was settled by the parties prior to the EDO being issued, the broker has how many days to notify the FREC?

10 BUSINESS DAYS

49

What are the 3 excepts related to the notice and settlement procedures for sales escrow agents?

1) If HUD sale, you have to follow their guidelines
2) If a condo, buyer can notify licensee of their intent to cancel within a period of time
3) Buyer can’t get financed.

50

For the recovery fund to pay,the agent must not have been an owner, buyer, landlord, or tenant in the transaction or an owner of a corporation who was an owner, buyer, landlord, or tenant in the transaction

TRUE

51

For the recovery fund to pay,the person who caused the wrong must have been a real estate agent at the time

TRUE

52

For the recovery fund to pay, the agent must have been acting solely in the capacity of a real estate licensee in the transaction.

TRUE

53

For the recovery fund to pay, a civil suit needed to be filed, a final judgment issued against licensee, and an attempt made to collect on the judgment

TRUE

54

Can punitive damages and interest be reimbursed from the recovery fund?

NO

55

Can a broker who complies with an EDO and is later sued may be reimbursed from the recovery fund without penalty?

YES

56

What is the time limit for a claim for the recovery fund?

A claim must be make within two years of either the alleged violation or discovery of the alleged violation. However, in no case may a claim for recovery be made more than 4 years after the date of the alleged violation

57

Violation of USPAP =

5 year suspension up to revocation

58

the breaking of a promise or obligation either by an act of commission or omission, default, nonperformance.

Breech

59

The Seven steps of a complaint of alleged violation:

1) Complaint filed
2) Investigation of the complaint
3) Probable cause determination
4) Formal complaint is issued if probable cause is found
5) Informal or formal hearing is conducted
6) Final order is issued
7) Judicial review (appeal) of the final order

60

When administrative complaint is mailed to licensee, the licensee also receives an

ELECTION OF RIGHTS

61

Purchaser of subdivided land of 25 or more lot has the right to cancel the purchase agreement within

SEVEN DAYS

62

What act prevents a lender from refinancing a loan to the same borrower within the first 18 months of making a loan, if doing so does NOT reasonable benefit the borrower.

FLORIDA FAIR LENDING ACT

63

Under RESPA what must be given to the applicant within 3 days of making an application.

SERVICING DISCLOSURE STATEMENT and GOOD FAITH ESTIMATE

64

What law prohibits mortgage lender from paying a real estate broker an earned referral fee

RESPA

65

Under the truth in lending act, give examples of triggering terms

amount or percentage of down payment, number of payments, term of repayment, amount of any payment, finance charge.

66

If any triggering terms are advertised, there must be a disclosure of the following:

Amount or percentage of down payment
Terms of repayment
APR and if this rate may be increased in the future

67

This act protects applicants from discrimination based on whether they receive income from public assistance programs.

EQUAL CREDIT OPPORTUNITY ACT

68

Land developers with subdivisions over 100 lots must register the subdivision with

HUD

69

What court case upheld Civil Rights Act of 1866

Jones vs. Mayer

70

The FAIR HOUSING ACT is found in

Title VIII of Civil Rights Act of 1968

71

Multi-Family Housing is defined as

Multi-Family Housing of five or more units OR Multi-Family Housing of four or fewer units IF THE OWNER DOES NOT RESIDE IN ANY OF THE UNITS.

72

What the cooling off period on condo sale between a owner is

3 BUSINESS days

73

What is the cooling off period on condo sale between a developer is

15 CALENDER days

74

What is the cooling off period on Timeshares sales

10 days

75

What are the four unities of a joint tenancy?

PITT
(1) possession, (2) interest, (3) title, and (4) time

76

Joint tenancy is different from Tenancy in common in what way?

A right of survivorship (when one co-owner dies, the deceased's share goes to the surviving co-owner).

77

The only type of Concurrent ownership where there can be unequal ownership interest?

Tenancy in Common

78

In what type of type of Concurrent ownership does right of survivorship NOT exist

Tenancy in Common

79

What is an estate in severality?

It is created when title to property is in one person's name (sole owner)

80

Describe the attributes of Tenancy in common.

Each owner has an undivided interest in the entire property. This interest can be left in a will or pass to heirs if there is no will

81

What are the 3 types of leasehold estates

Estate for years
Tenancy at will.
Tenancy at sufferance

82


What is an Estate for years?

A nonfreehold estate. A tenancy with a specific starting and ending date. ( a one year lease)

83

What is a Tenancy at Will?

A nonfreeehold estate. A tenancy with a lease agreement that has a beginning date but no fixed termination date.

84

What is a Tenancy at Sufferance?

A nonfreehold estate. It occurs when a tenant retains possession of the property beyond the ending date of a legal tenancy without the consent of the landlord (tenant holds over).

85

What is concurrent ownership?

Ownership by two or more persons at the same time

86

What is Equitable title

beneficial interest in real estate that implies that an individual will receive legal title at a future date.

87

In a will, REAL property is ________ and the recipient of the gift is a _________.

DEVISE; DEVISEE

88

In a will, PERSONAL property is ___________ and the recipient of the gift is a ____________.

BEQUEST; BENEFICIARY

89

What are the conditions of Adverse Possession?

HOT CAN
H - Hostile possession of Property
O - Open Possession with no attempt to conceal occupancy
T - Taxes were paid during all years the adverse possessor was on the property
C - Claim of title, even an imperfect one exists
A - Adverse possession must continue for 7 or more consecutive years
N - Notorious and flagrant public possession of property.

90

Define Eminent Domain

taking for just compensation. Taking through condemnation as long as for public use. It is a public restriction.

91

What are the 2 types of notice:

Actual and Constructive (legal notice)

92

Certain elements must be present in a deed. They are

C - Consideration (valuable or good)
E - Execution (signed by a competent grantor/2
witnesses.
D - Description of property
D - Delivery and acceptance
I - Interest or estate being conveyed (habendum
clause)
N - Names of a grantee and grantor
G - Granting and other appropriate clauses

93

Premises section of deed lists

the parties and date of the deed

94

Habendum clause is indicated by

“to have and to hold” If “forever” noted means fee simple. If “for the life of the grantee” is noted it is a life estate.

95

Granting clause contains

the necessary words to convey title

96

Covenant of Seisin

promise that the grantor owns the property and the right to convey title

97

Covenant against encumbrances

states property is free from liens or they are noted there.

98

Name the 4 types of statutory deeds

quitclaim, bargain and sale, general warranty, special warranty

99

Name the 3 special purposes deeds

Committee (mental), Guardian (children), Personal Representative (deceased)

100

Name he 3 most important subcategories of public/governmental limitations:

PET police action, eminent domain, taxes

101

Name the 4 most important subcategories of private limitations

DELL deed restrictions, easements, leases, liens

102

What is an Easement appurtenant?

lets an owner use of the neighbor’s property, such as the right to cross parcel A to reach parcel B.

103

What is an Easement appurtenant

lets an owner use of the neighbor’s property, such as the right to cross parcel A to reach parcel B.

104

What is an Easement in Gross?

benefits an individual or a business entity, not related to specific adjacent parcel. Your typical utility easement

105

What is an Easement in necessity?

used to remedy landlocked scenarios

106

What is an Easement by prescription?

created by longtime usage. They must be recognized after 20 years of open and continuous interrupted usage.

107

What is the agreement called when the holder of prior lien allows a junior lien holder’s interest to move ahead of the prior lien.

Subordination agreement

108

What promise is unique to a general warranty deed?

Further assurance.

109

substitution of a new party and/or new terms to an existing obligation (contract)

Novation

110

Mutual Assent is

The making and acceptance of an offer. a meeting of the minds in a contract. They must reach an agreement

111

the courts force a party in a contract to the terms of a contract.

Specific Performance

112

what must be paid if a buyer defaults in a contract

Liquidated damages

113

the amount of money equal to the extent of loss suffered

Compensatory damages

114

What is Statute of limitations for written contracts?

5 years

115

Statute of limitations for Parol ( oral) contracts ?

4 years

116

Which element is NOT required of a valid real estate contract?

Acknowledgement

117

Time period to give a seller a copy of the listing agreement

24 hours

118

Lead paint disclosure must be given to all tenants and buyers of homes built prior to

1978

119

Is an Automatic renewable clause is not allowed in real estate listing contracts?

NO

120

Vendor is the _______. Vendee is the __________

Seller; buyer

121

What is the famous court case requiring disclosure of material defects?

Johnson vs Davis

122

Name The law that requires that all real estate contracts be in writing and signed by both parties?

Statute of frauds.

123

An offer is terminated when any of the following happens?

WILDCARD
Withdraw by offeror
Insanity
Lapse of time
Death
Counteroffer
Acceptance
Rejection
Destruction of Property

124

Valuable consideration = _____ Good consideration = ______

money ; love

125

The 4 essential elements of a valid contract are

COLC Competent parties, offer and acceptance, Legal purpose, Consideration.

126

A contract is terminated when any of the following happens:

PMILBB Performance, Mutual rescission, Impossibility of performance, Lapse of time, Bankruptcy, breech.

127

An employment contract given to any number of brokers who work simultaneously to sell the owner's property

Open listing

128

Employment contract given to one real estate broker, but the seller reserves the right to sell the property without paying a commission

Exclusive-agency agreement

129

the seller agrees to a specific amount, the broker retains the proceeds above this amount as commission. This can also apply to an exclusive-agency agreement.

net listing

130

On VA loans, borrowers are charged a

FUNDING FEE (or user’s fee) instead of a mortgage insurance premium.

131

VA Total monthly obligation ratio (TOR) =

41%

132

What are the HOUSING EXPENSE RATIO (HER) AND TOTAL OBLIGATION RATIO (TOR) for FHA loans?

HER = 31%
TOR = 43%

133

In a mortgage, a mortgager is the

Homeowner and owns the home

134

In a mortgage, a mortgagee is the

is the lender and owns the mortgage

135

Open-end clause permits a borrower to

increase the loan amount as long as the total debt does not exceed the original total amount of loan.

136

What is the clause when the lender requires payment of mortgage in full if property is sold or transferred without the lenders consent.

DUE ON SALE CLAUSE

137

This clause allows the mortgagee, in the event of default, to require the entire balance be paid in full.

ACCELERATION CLAUSE

138

What is it called when title to the real property remains with the seller. The buyer receives equitable (legal) interest in the property

LAND CONTRACT (also called a contract for deed):

139

In this type of mortgage each year the monthly payments are increased and the additional amount goes toward the principal.

GROWING EQUITY MORTGAGE

140

What is the clause that allows another mortgage created at a later date to take priority.

SUBORDINATION CLAUSE

141

Prior to foreclosure, a home owner has the right to repay the amount owed plus interest and prevent foreclosure. This is called

EQUITABLE RIGHT OF REDEMPTION

142

the process of transferring a mortgage from one lender to another

ASSIGNMENT OF MORTGAGE

143

In TITLE THEORY the borrower retains

equitable title

144

The interest rate on an ARM is calculated by the adding the index rate to the

MARGIN

145

1 Discount point will increase the lender’s yield by _____ of a point. However, the initial cost to the buyer will be ____ the loan amount.

1/8; 1%

146

True or False: The discount rate IS NOT discount points

TRUE

147

What is the discount rate?

The Discount rate is the interest rate the Federal Reserve charges banks.

148

TRUE OR FALSE: State chartered commercial banks DO NOT need to display the word “national” somewhere in their name.

TRUE

149

The DEPOSIT INSURANCE FUND insures

federally chartered savings associations

150

Who regulates federal savings associations?

The OFFICE OF THRIFT SUPERVISION

151

FANNIE MAE (FEDERAL NATIONAL MORTGAGE ASSOCIATION) is a

secondary lender

152

the process of consolidating many small savings accounts belonging to individual depositors and investing the funds into larger, diversified projects

INTERMEDIATION

153

INTEREST is

the rent paid for the use of money

154

The mortgage market is tied to the law of

Supply and Demand

155

The Federal Reserve (Central Bank of the United States) was founded by

Congress

156

What are the calculations to determine the DOC STAMPS ON DEED:

70 cents for every $100 of FULL SALE PRICE. Remember to round up on stamp amount. eg: $79,950 ÷ $100 = 799.5 (round up to 800) 800 x .70 = $560. Note: last digit must be a 0)

157

The Fed uses three tools (or methods) or monetary policies. They are:

ORD
1) Open-market operations – the Fed’s purchase and sale of securities. A drop in funds causes interest rates to rise.
2) Reserve Requirements – the required amount banks must hold in reserve against deposit liabilities.
3) Discount Rate – the rate the Fed charge member banks for borrowing money.

158

DOC STAMPS ON DEED:

70 cents for every $100 of FULL SALE PRICE. Remember to round up on stamp amount. $79,950 ÷ $100 = 799.5 (round up to 800)

159

What are the calculations to determine the DOC STAMPS ON THE NOTE:

35 cents for every $100 on the face value of any NEW OR ASSUMED NOTE. Remember to round up on the stamp amount. eg: $64,950 ÷ $100 = 649.50 (round up to 650). 650 x .35 = $227.50. note last digit must be a 0 or 5)

160

What are the calculation to determine State Intangible tax:

(ONLY ON NEW MORTGAGES): .002 PER DOLLAR of debt. $100,000 x .002 = $200

161

Property taxes are paid in ________ arrears using the ____________ day method.

ARREARS; 365

162

Profit is

how much you make over and above your cost

163

TRUE OR FALSE It is customary when transferring title to have all pro-rated items determined as of the midnight before the date of closing. In some areas it can be the day of close.

TRUE

164

To convert into a decimal you:

divide the denominator into the numerator. (3/4) 3 ÷ 4 = .75

165

30 day method (statutory month method):

1) Determine yearly cost of item
2) Divide by 12 to find the cost per month
3) Divide by the monthly cost by 30 to determine the cost per day
4) Add the monthly rate by how many PREVIOUS months have passed (example: a closing on july 15th would have six previous months so you would add 6 x the monthly rate + the daily rate x 14 ( note: you don’t count day of close) to get your amount

166

The 30 day method is also called the

statutory month method

167

365 day method:

1) Divide 365 into the yearly cost of the item to obtain the daily rate
2) Multiply the number of days with the daily rate (don’t count day of close)

168

An exact duplicate of the structure is called

Reproduction cost

169

the amount of money required to replace a structure having the same use and functional utility as the subject property is called

Replacement cost

170

The four characteristics of value are


DUST
1) Demand
2) Utility (the ability to provide useful benefits)
3) Scarcity (supply and demand
4) Transferability

171

What is the formula to determine Present Value?

Net operating Income (NOI) ÷ Overall Capitalization Rate (OAR)

172

What is the formula to determine Net operating Income (NOI)?

Overall Capitalization Rate (OAR) X Present Value

173

What is the formula to determine Overall Capitalization Rate (OAR)?

Net operating Income (NOI) ÷ Present Value

174

Comp better =

subtract (CBS) (note: subtract from the comparable).

175

Comp inferior =

add (CIA) (note: add to the comparable)

176

The 3 methods of estimating building replacement costs are

1) Quantity survey method
2) Unit-in-place method
3) Comparative Square-foot or cubic-foot method ( also called the Comparative unit method or Unit Comparison method

177

Which method of estimating building replacement costs is a detailed inventory of all labor, materials, profit. The number of items is then multiplied by the cost per item.

Quantity survey method

178

Which method of estimating building replacement costs is where the cost of materials and labor is calculated for each component of structure. The base cost is then multiplied based on the total square feet.

Unit-in-place method

179

Which method of estimating building replacement costs is where the cost of reproducing a recently built property similar in size and function to the subject property. Square foot or cubic-foot costs are obtained for standard benchmark software.

Comparative Square-foot or cubic-foot method ( also called the Comparative unit method or Unit Comparison method)

180

maximum value of property is measured by determining cost to acquire an equivalent site to reproduce a structure as if new, and then subtracting accrued depreciation.

Cost Depreciation Approach

181

TRUE OR FALSE The Lump sum age method uses a properties EFFECTIVE age, NOT chronological age

TRUE

182

The total expenditure required to bring a new improvement into existence plus the cost of the land is also called

The cost

183

The amount of money (or its equivalent) for which a good is actually sold is called

The price

184

Income ÷ Interest Rate =

Value. (Example Pamike III $1600 monthly rent x 12 = $19200 ÷ 12% = 160,000).

185

Combining two or more adjoining properties into one tract

Assemblage

186

the ADDED value as a result of assembling two or more properties into one large parcel.

Plottage:

187

Gross Rent Modifer (GRM)

Sale price ÷ Gross monthly rent = GRM

188

The value of an income-producing property characterized by a significant operating history is also called the .

Going Concern

189

an adjustment on an appraisal in cases when a seller was under abnormal pressure to buy or sell or if there was a special relationship between the parties in the transaction is also called

Conditions of sale

190

an investor or buyer will pay no more for a property than the cost of acquiring, through purchase or construction, an equally desirable alternative property. This is also called

Principle of Substitution

191

the loss in value caused by things such as wear and tear, poor design, or the structure’s surroundings is called

Depreciation

192

the total depreciation that has accumulated over the years is also called

Accrued Depreciation

193

What is the Accrued Depreciation Formula?

Effective age ÷ Total economic life X Reproduction cost new. ( Example: 4 years ÷ 60 years X $225,000 = $15,000)

194

when a building component has been added or repaired and the owners are able to get their money back in added value

Curable Depreciation

195

when a building component has been added or repaired and the owners are NOT able to get their money back in added value

Incurable Depreciation

196

Depreciation can be attributed to 3 major causes:

Physical deterioration, Functional Obsolescence, External Obsolescence.

197

The total estimated number of years that the structure is expected to contribute to the property’s value is also called

Economic Life

198

the total annual income a property would produce if were fully rented and no collection losses were incurred

Potential Gross Income (PGI)

199

when vacancy and collection losses are deducted from the Potential Gross Income PGI and any income from other sources (parking, vending machines) are added in.

Effective Gross Income (EGI)

200

the income remaining after subtracting all relevant operating expenses from the EGI. Note: you deduct fixed and variable expenses and reserve for replacements but NOT mortgage or income tax payments.

Net Operating Income (NOI)

201

Gross Rent Modifier (GRM)

Sale price ÷ Gross monthly rent

202

Gross Income Modifier (GIM)

Sale price ÷ gross ANNUAL income

203

GRM uses _______________ to calculate its formula, whereas GIM uses ________________

GROSS MONTHLY RENT; GROSS ANNUAL INCOME

204

CMA’s contain information concerning 3 major categories of properties. They are:

those sold within the last 12 months, those on the market, properties that have expired within the last 12 months

205

the principle that the value of an superior property is adversely effected by its association with an inferior property of the same type.

Regression

206

people’s preferences, both physical and economic, for a certain area owing to factors such as weather, job, opportunities and transportation facilities

Situs

207

Duct systems include two sets of ducts. They are called

the supply and return

208

the studs extend continuously to the ceiling of the 2nd floor

Balloon frame construction

209

the wall framing is assembled on the concrete slab and then hoisted into place and anchored.

Platform construction

210

These type of windows can be opened up completely, providing maximum ventilation

Casement windows

211

a projection that extends out of the roof to provide additional light and ventilation

Dormer

212

Regarding Plumbing: The _______________ pressure plumbing system carries wastewater away from the home. The _______________ pressure portion carries water to the house

LOW; HIGH

213

They protect an electric circuit from damage caused by too much current

Circuit Breakers

214

They attach to the utility service cable and prevents water damage to wiring

Weather heads

215

a type of frame construction that allows for large spans between supporting side walls.

Post-and-Beam- Construction

216

Electricity travels in a closed loop referred to as a

Circuit

217

A type of window used solely for light and can not be opened

Fixed windows

218

This type of lot allow extra space in the backyard and are considered more quiet

Cull-de-Sac

219

These long skinny lots often bounded with five or six other lots

Key lots

220

The Black wire is normally the _____ wire. If there are two hot wires, the 2nd hot wire would be _____..

Hot; Red

221

This type of roof has one plane at a steep angle

Shed roof

222

Slab on grade construction, the pouring the slab directly on the ground with the footers is also called

Monolithic construction

223

The purpose of a U shaped flap (pipe) under a kitchen sink is to prevent

combustible gases from entering the home

224

Chapter 475 defines Business Opportunities as

any interest in business enterprises or business opportunities.

225

A type of risk that arises from the continual change in the business environment – it can not be transferred to an owner.

Dynamic Risk

226

When the benefits of borrowing exceed the costs of borrowing

Positive Leverage

227

When borrowed funds cost more than they are producing

Negative Leverage

228

One of the ways business brokerage is different from real estate brokerage – the assumption by the purchaser of ________ liabilities.

short-term

229

the entire resources of a business, including tangibles, intangibles, notes, cash, inventory, equipments, real estate, goodwill.

Assets

230

All income and expenses of a business for a stated period of time.

Balance Sheet

231

the difference between a company’s total current assets and total current liabilities.

Is called Working Capital

232

Which characteristic apply to BOTH Business Brokerage and Real Estate Brokerage.

Long-term liabilities

233

A concise summary of all income and expenses of a business for a stated period of time

The income statement

234

If given an amount and told it is a percentage of an unknown variable and then told to figure this unknown variable, it is done this way:

Divide the amount into the percentage. Example: you know that 3% is $900. To find out what the total amount was $900 ÷ .03 = $30,000

235

The total amount of money generated from an investment after the expenses are paid.

Cash Flow

236

What risk is associated with the ability of a property to pay operating expenses from funds provided from operations, borrowing, and equity sources

Financial Risk

237

______________ properties include service industries that support the needs of a local community, such as local repair shops, barbershops, banks etc.

Destination

238

What is the breakdown and amount for homestead ?

owners are entitled to a $25,000 exemption for city, county, and school board taxes. Owners with assessed values greater than $75,000 are entitled to an additional $25,000 tax exemption from city and county taxes only. Owners with assessed values between $50,001 and $75,000 receive a prorated amount of exemption in addition to the $25,000 base exemption.

239

A mill is one ____________________. There are 1,000 mills in ________. One mill can be written as _____.

one-thousandth of a dollar (or one-tenth of a cent' one dollar; .001

240

Ad valorem means

according to value

241

Special assessments are a _______ tax levied on properties to help pay for some public improvement that benefits the property

one-time

242

.TRUE OR FALSE. Special assessments are ad valorem taxes—they are levied according to the value of a property

FALSE. They are the opposite. Special assessments are NOT ad valorem taxes—they are NOT levied according to the value of a property.

243

Usually, special assessments are levied on a ___________ for items such as sidewalks and street paving. They are often levied on a _____________for utility and sewer improvements.

front-foot basis; per hookup basis

244

The IRS useful asset life of nonresidential income-producing property is ____ years for calculating depreciation allowance. ______ years on residential income-producing property

39; 27.5

245

Veterans must be at least ___ percent disabled by military service-connected misfortune to be entitled to an additional $______ exemption on homesteaded property

10 PERCENT; $5000

246

It was designed to protect farmers from having taxes increased just because the land might be in the path of urban growth and therefore well suited for development.

Florida's Green Belt Law

247

The IRS requires that buyers withhold ____percent of the gross sale price from foreign investors. The buyer must report the purchase and pay the IRS the amount withheld

10

248

For tax purposes, real estate commission is classified as ________ income

ACTIVE

249

Points are deductible in the _____, unless they are paid when refinancing a loan. In such cases, the points must be deducted _______________.

YEAR PAID; OVER THE ENTIRE LIFE OF THE MORTGAGE LOAN

250

The holder of a tax certificate can force a public auction of the property after _____ years (but no later than ______ years) by requesting a tax deed

TWO; SEVEN

251

Tax advantages of homeownership include:

A) a tax deduction of the interest paid on a home equity loan that does not exceed $100,000. B)exclusion of gain from the sale of a principal residence up to $250,000 for a single adult and $500,000 for a married couple. Note: THE EXCESS GAIN WILL BE TAXED AT THE CURRENT APPLICABLE CAPITAL GAINS C) up to $10,000 in penalty-free withdrawals from an IRA if used as a down payment on a personal residence for first-time home buyers.

252

The Value Adjustment Board is composed of

one school board member, two county commissioners, and two citizen members

253

Regarding Property Taxes: A) They become a lien on all real estate in Florida on _______ each year. B) Property taxes are due for the current year. _________.
Because of this, they are paid in _________

January 1; November 1 ; arrears

254

Exempt properties include property belonging to .

churches and nonprofit organizations

255

Immune properties are

city, county, state, and federal government buildings

256

TRUE OR FALSE You CAN NOT deduct the loss from the sale of a principal residence.

TRUE

257

Market indicators include

price levels, vacancy rates, and sales volume

258

TRUE OR FALSE The real estate market is unusually slow to respond to changes in supply and demand

TRUE

259

As defined by the Census Bureau A household, as defined by the Bureau of the Census, U.S. Department of Commerce, is .

ANY PERSON OR GROUPS OF PERSONS occupying a separate housing space

260

TRUE OR FALSE As occupancy rates increase, rental rates tend to increase

TRUE

261

TRUE OR FALSE Heterogeneity is a term that DOES NOT refers to the uniqueness of land

FALSE. Heterogeneity is a term that DOES refer to the uniqueness of land

262

The variables that influence SUPPLY are

(SCLM)
1) availability of skilled labor
2) availability of construction loans and financing
3) availability of land
4) availability of materials

263

The variables that influence DEMAND are

(PPIMT)
1) Price of real estate
2) Population numbers and household composition
3) Income of consumers
4) mortgage credit (availability)
5) tastes or preferences of consumers.

264

The barometer of the real estate market is considered to be the

cost and availability of credit

265

The MOST important cause of population increase in Florida has been

the IN-MIGRATION OF NEW RESIDENTS

266

TRUE OR FALSE The company who does the producing is the most efficient producer of a comparable quality product

TRUE

267

Building codes protect the public health and safety from

inferior construction practices

268

TRUE OR FALSE Zoning ordinances authorize segmentation (dividing) of a community into districts or zones in keeping with the character of the land and structures and with their suitability for particular uses and uniformity of use within each zone

TRUE

269

The purpose of commercial zoning is to regulate _________ . The purpose of residential zoning is to regulate _________.

INTENSITY; DENSITY

270

Intensity is determined by the type and amount of

pedestrian and vehicular traffic generated by a commercial enterprise

271

Density is

the number of buildings per acre

272

A strip of land separating a higher density land use from a lower density use is called

A buffer zone

273

There are three areas of responsibility for which city planning commissions are commonly delegated final authority. They are

(1) subdivision plat approval, (2) site plan approval, and (3) sign control.

274

Allows a property owner to vary from strict compliance with all or part of a zoning code. It is permission to build or use to relieve a hardship not caused by the owner

A Variance

275

Florida's Growth Management Act of 1985 requires that the infrastructure be in place before new development is allowed. This is called the

CONCURRENCY PROVISION.

276

TRUE OR FALSE Developers of large new building projects that affect more than one county must prepare an environmental impact statement

TRUE

277

Zoning ordinances control

UTILIZATION

278

Building codes control ________ . Health ordinances control _____________________ .

construction and materials; maintenance and sanitation

279

Permission to build or use in apparent conflict with existing zoning ordinance is called

Special exception

280

Permission to continue to use in spite of enacted zoning ordinance is called

Nonconforming use

281

Thoroughfare studies are normally a

COOPERATIVE PROJECT

282

The MOST basic of all the background planning studies is the

POPULATION STUDY

283

Physiographic studies study the

soil drainage percolation load bearing capacity

284

Economic base studies study the

effect of base industries employment in the area.
Base industries attract outside money to an area.

285

What is a thoroughfare study?

Traffic circulation

286

what is a special use land use classification?

public schools, churches, parks

287

The legal right to enact zoning laws is derived from

POLICE POWERS

288

In municipalities with planning commissions, the final authority in planning matters is the

ELECTED CITY GOVERNMENT OFFICIALS – not the planning commissions.

289

_______________ used to describe the positioning of a structure on a lot so that one side rests directly on the lot's boundary line (no setback requirement).

Zero lot line

290

______________________________is a self-contained development planned under special zoning ordinances that allow maximum use of open space by reducing lot sizes and street sizes.

A planned unit development (PUD)

291

__________________________handles appeals and requests from property owners for zoning changes.

The Zoning Board of Adjustment

292

The act of failing to pay money to a person entitled to receive it

Failure to account for and deliver

293

An outline of the charges against a licensee that must be answered within the statutory time limit; also referred to as an administrative complaint.

Formal Complaint

294

The official placement of a real estate business or individual into the records of the DBPR

Registration

295

The withholding of information

Concealment

296

A plea of no contest entered in a criminal court of law. The defendant does not admit or deny the charges.

Nolo contendere

297

A legally binding contract that the law will recognize

Enforceable contract

298

Sufficient to be legally binding; enforceable

Valid

299

An agreement that obligates both parties to perform in accordance with the terms of the contract

Bilateral contract

300

A transfer of rights and duties under a contract

Assignment

301

The chain of events that results in a sale

Procuring cause

302

An agreement that obligates only one party to perform

Unilateral contract

303

How is the HOUSING EXPENSE RATIO (HER) calculated?

Monthly Housing expese (PITI) ÷ Monthly Gross Income = HER

304

How do you calculate the TOTAL OBLIGATION RATIO (TOR)?

Monthly housing expenses (PITI, credit cards, loan payments, child support payments,etc) ÷ Monthly Gross Income. = TOR

305

What is the FUNDING FEE for a VA loan?

2.15% of the loan amount with no down payment for first=time users. They may also be added to the loan amount and financed over the life of the loan

306

Can the FUNDING FEE be waived on a VA loan?

Yes. If the veteran has a service-connected disability.

307

Does the VA set loan limits?

No, however, the loan may not exceed the Certificate of Reasonable Value (CRV). The CRV is based on the property value estimated by a VA approved appraiser.

308

Do VA loans have due on sale clauses?

No. They are assumable - even to non-veterans.

309

VA loans prior to this date are non-qualifying assumable; after this date, they are not.

March 1, 1988

310

On VA loan assumptions after March 1 1988, the buyer must pay a ______________ fee to the lender plus an _________________ fee to the VA. After this, the seller is relieved from liability

Assumption or transfer fee; Assumption

311

The Total Obligation Ratio (TOR) for a conventional loan is

36%

312

This clause permits the lender to increase the interest rate

Escalator clause

313

What is the date that the tax exemption filing period ends for homestead

March 1

314

When do the for the PREVIOUS year become delinquent?

April 1

315

A provision in a mortgage allowing the borrower to surrender the property to the lender without personal liability for the loan

Exculpatory Clause

316

What is the formula to determine profit?

Profit Made
______ = _______
Cost Paid
Eg: Purchase of $140k Sold for $180 40 ÷ 140 = 28%

317

What is alienation?

The act of transferring property. It can be voluntary (in a will) or involuntary (foreclosure/eminent domain).

318

The General Warranty deed contains three unique covenants. They are:

Further assurance, quiet enjoyment, warranty forever.

319

Five types of leases

Gross (fixed amount), net (fixed amount plus building expenses), percentage (based on gross sales), variable (tied to an index), ground (land only, tenant will construct own building).

320

Disintermediation is when

normal people borrow money from sources other than financial institutions

321

A Florida Real Estate License expires in

4 years

322

A flat roof is also called a

Built up roof

323

The ratio between a property's gross income and its selling price is

The Gross Rent Modifier.

324

The maximum time a real estate license can be suspended is

10 years

325

The tax reform act of 1997 created

the $250k/500k exclusion on sale of primary residences.

326

The money from the recovery fund comes from

it is collected from licensee's

327

The recipient of a power of attorney is called a

attorney in fact

328

In a Limited Partnership, are the limited partners required to register with the DPBR?

NO

329

The three approaches to estimating value are

1) sales comparison approach 2) cost-depreciation approach 3) income approach

330

The intent to misrepresent material fact or to deceive in order to gain an unfair advantage or harm another person

Fraud

331

An outline of allegations of facts and charges against the licensee

Administrative omplaint

332

A disciplinary hearing heard by an administrative law judge if the licensee-respondent either requests a formal hearing or if the licensee disputes the allegations

Formal hearing

333

A disciplinary hearing that is an expedited way of resolving a disciplinary case provided that the licensee does not dispute the alleged facts stated in the complaint

Informal hearing

334

An administrative law judge's findings, conclusions, and recommended penalty

Recommended order

335

A piece of information that is relevant to a person making a decision and that affects the value of the real property

Material fact

336

Reasonable grounds (sufficient facts and evidence) to warrant prosecution

Probable cause

337

The entity that employs administrative law judges to conduct formal hearings of administrative complaints against licensees

Division of Administrative Hearings (DOAH)

338

Issued by the DBPR for a first-time, minor rule violation that does not endanger the public health, safety, and welfare.

Notice of noncompliance.

339

An alleged violation of a law or rule

Complaint

340

What is an Estate in Reversion?

When the property returns to the grantor in a Life Estate.

341

What is a Remainder Estate?

When the property goes to a third party in a Life Estate

342

Who is a Vested Remainderman?

someone whose legal name is Specified in a Life Estate

343

Who is a Contingent Remainderman?

someone whose legal name is NOT specified (such as a first-born child).

344

Does the DBPR investigator have the authority to immediately issue a citation?

YES

345

Which type of alienation is voluntary?
A) Descent
B) Eminent domain
C) Deed
D) Escheat

C) Deed

346

A roof design that incorporates an overhang on all sides is called a

Hip Roof

347

Gable roofs are cost effective because they use a

Single Truss Design

348

A type of roof characterized by what appears to be a gable roof that then steeps sharply on one side

Saltbox

349

Another name for a barn style roof

Gambrel

350

A French Style Roof

Mansard

351

The lender's estimated overhead plus profit is what part of the calculated interest rate of an adjustable-rate mortgage?

Spread

352

With respect to the Fair Housing Act, are age, occupation, marital status or sexual orientation protected

NO

353

An agreement between two states that allows a real estate licensee who holds a valid real estate license in one of the states to practice real estate in both states is known as

Reciprocity

354

Does Florida have Reciprocity with any another state?

NO. They would need to utilize mutual recognition and take a take a 40 question state test (they don't need the prr-licensing education requirement)

355

What type of value is associated with a rapid sale?

Liquidation value

356

_________ value is the estimated amount for which improvements can be sold at the end of a structure's useful life

Salvage

357

What is the primary difference between Lien Theory and Title Theory?

Lien Theory = Borrower retains title, Lender is protected with a lien
Title Theory = Property is conveyed to the Lender through a mortgage deed and the Borrower retains Equitable Title.

358

What type of lumber is processed with chemicals to make the wood resistant to rot and termites?

Pressure-treated

359

How many days notice is required to terminate a week-to-week tenancy at will?

Seven

360

True or False: Regarding the Homeowner's Association Disclosure Summary, the contract for sale must state that if the disclosure summary is not provided to the buyer before executing the contract, the contract is voidable.

TRUE

361

True or False: Regarding the Homeowner's Association Disclosure Summary, the contract for sale must state that to void the contract, the buyer must give the seller or the seller's agent written notice of the buyer's intention to cancel the contract within 3 calendar days after receipt of the disclosure summary or prior to closing, whichever occurs first.

TRUE

362

What is the minimum cash investment on an FHA loan?

3.5%

363

A friendly foreclosure (nonjudicial procedure) in which the mortgagor gives title to the mortgagee.

Deed in lieu of foreclosure

364

Allows a receiver to be appointed to collect income from the property to ensure that it is used to make mortgage payment in the event of default

Receivership clause

365

A written statement signed by the borrower verifying the amount of the unpaid balance, the rate of interest, and the date to which the interest has been paid prior to assignment; also, often requested by a closing agent to verify the payoff amount for the seller prior to conveying a property

Estoppel certificate.

366

any new mortgage accepted by the seller as part of the purchase price.

Purchase-money mortgage

367

Allows the mortgagor to redeem a foreclosed property for a specified period after the foreclosure sale. Note: it is not available in Florida

Statutory Redemption Period

368

Demand deposit are also called

Checking accounts

369

A listing given to one broker who is assured of a commission who sells the property

Exclusive Right of sale listing

370

An employment contract with a purchaser

Buyer Brokerage Agreement