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NH RE Exam 3
| Question | Answer |
|---|---|
| This is what describes the property and is recognized by law: | Legal description The legal description is what describes the property and is sufficient to locate and identify the property. It is recognized by law. |
| A value created according to a government formula intended to reflect the true annual cost of borrowing expressed as a percentage is called: | APR Annual Percentage Rate, otherwise known as APR, is a value created according to a government formula intended to reflect the true annual cost of borrowing expressed as a percentage. |
| If a property is leveraged 70%, what percentage is the owner’s equity? | 30% If a property is leveraged 70% it means a debt on the property is 70% of its value. The owner’s equity in this case would be 30%. |
| What is the doctrine of “caveat emptor”? | “Let the buyer beware” Caveat emptor is a Latin phrase meaning “let the buyer beware”. Essentially it proclaims that the buyer must perform their due diligence when purchasing an item or service. |
| This type of deed transfers without warranty, whatever interest or title a grantor may have at the time the conveyance is made: | Quitclaim deed A quitclaim deed transfers without warranty, whatever interest or title a grantor may have at the time the conveyance is made. Usually used by family members, divorcing spouses, and people well-acquainted with each other. |
| If a mortgage has an adjustable rate but has limitations on how much the mortgage rate may adjust over a six-month period, an annual period, and over the life of the loan, this would be called: | A cap A cap is when an adjustable rate mortgage has limitations on how much the mortgage rate may adjust over a six-month period, an annual period, and over the life of a loan. |
| Under a reverse mortgage insured by the FHA, the term “permanently leaves home” refers to: | 365 days of continuous absence The term “permanently leaves home” under a reverse mortgage insured by the FHA refers to 365 days of continuous absence. |
| A delinquent mortgage payment occurs when: | The payment is not paid when due A mortgage payment becomes delinquent when the payment is not paid when due. |
| A parcel of land was purchased in 1985 and subdivided into four separate lots. Five years later, each lot sold for $200,000. The adjusted basis for each lot was $10,000. What was the capital gain on these transactions? | 760,000 $10,000 x 4 lots = $40,000 adjusted basis. $200,000 x 4 lots = $800,000 total selling price. $800,000 - $40,000 = $760,000 capital gain. |
| Referral fees are legal to be paid if they are given to: | Licensed brokers Referral fees are legal to be paid only to licensed brokers. |
| The National Association of Realtors (NAR) is affiliated with which of the following: | All of these The NAR is affiliated with nine institutes, councils, and societies. The American Institute of Real Estate Appraisers, The Institute of Real Estate Management, and the Farm and Land Institute are three of these affiliates. |
| In New Hampshire, information that is equally available to all real estate practitioners and/or parties in a transaction is referred to as: | Common source Information is information that is equally available to all real estate practitioners and/or parties in a transaction. |
| The Federal National Mortgage Association is also known as: | Fannie Mae Fannie Mae is also called the Federal National Mortgage Association. |
| The source of a real estate agent’s compensation does not determine: | Agency representation Agency representation is not determined by the source of a real estate agent’s compensation. |
| If a deed includes a promise that the owner will build a fence, this is one example of a(n): | Affirmative covenant An affirmative covenant in a deed is a promise that the owner will do something. The opposite of an affirmative covenant is called a negative covenant which promises that the owner will NOT do something. |
| The usefulness of property relating to its ability to satisfy a potential buyer’s need or desire such as to provide shelter or income is termed: | Utility Utility, as in terms of real property, is the usefulness of property relating to its ability to satisfy a potential buyer’s need or desire such as to provide shelter or income. |
| When Mark has legal access over Hugh’s property as a right-of-way, Mark has an: | Easement An easement is a legal term which gives people other than the owners of the property access to or over the said property. |
| A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller is called a: | Sale-leaseback When a seller makes an arrangement with a buyer to allow the seller to lease the property in question after the sale is made, this technique is called a sale-leaseback. |
| Financing costs usually rise on loans with: | Both of these A loan with easy terms and low down payment must be secured and this usually will raise financing costs. |
| An additional individual who is both obligated on the loan and is on the title to the property is called: | A co-borrower A person that is added to the loan becomes obligated for the loan and is also on the title to the property is called a co-borrower. |
| The party that accepts the endorsed note from the original payee without knowledge of any defects is known as: | Holder in due course The party that accepts the endorsed note from the original payee without knowledge of any defects is known as the holder in due course. |
| If a married couple purchases property as tenants by the entirety, neither can obtain a court order for: | Partition Neither person can obtain a court order for partition when a married couple purchases property as tenants by the entirety. This is different than other forms of ownership by a married couple. |
| Water rights adopted based on riparian rights are generally in states: | With ample supply of water States with ample supplies of water, in general, have adopted water rights based on riparian rights. |
| If Matt is a preferred customer at his bank and he obtains a mortgage loan, what interest rate is he likely to be charged? | The prime rate The prime rate is the rate of interest that banks charge to their preferred customers. The same factors that influence the prime rate also influence the rates of mortgage loans. |
| What does an appraiser do? | Establish market value The primary task of an appraiser is to establish an estimate of market value through the analysis of data. |
| A table or chart that shows how much of each mortgage payment that is applied to interest and how much is applied to the principal is called: | An amortization schedule An amortization schedule is a table or chart that shows how much of each mortgage payment that is applied to interest and how much is applied to the principal. |
| Someone who negotiates and transacts the sale of real estate can most commonly be called a(n): | Real estate agent The term “real estate agent” is the most commonly used term for a person that negotiates and transacts the sale of real estate. |
| Some mutual funds and real estate investment trusts can acquire real estate assets as: | Debt assets Debt assets, also known as mortgage assets, are one type of real estate asset that mutual funds or real estate investment trusts can acquire. Another is called equity assets (or ownership assets). |
| Yin Lee is an owner of several properties as well as a relatively high profile individual. In order for Yin Lee to attempt to avoid a possible foreclosure from becoming a matter of public record by being recorded, Yin Lee would want to give the lender a: | Deed in lieu of foreclosure A deed in lieu of foreclosure may prevent having the documents to a foreclosure from becoming a matter of public record. In some cases this is beneficial to individuals. |
| What are the two categories of “closing costs”? | “Non-recurring” and “pre-paid” Closing costs are divided into two categories: “Non-recurring” and “Pre-paid.” |
| If Jonathan, a realtor, slanders the business practices of another realtor, Janice, saying that she deals unfairly with clients and steers people to neighborhoods she thinks they can afford, this would be: | A violation of the National Association of Realtor’s Code of Ethics by Jonathan “The Realtor shall not publicly disparage the business practice of a competitor”. In this case, Jonathan would be in violation. |
| The bulk sales law is included in: | The Uniform Commercial Code “Bulk sales” laws are intended to prevent business owners from defrauding or evading creditors by transferring all (or a substantial portion) of the assets of the business to another individual or entity. |
| Encumbrances against properties in a particular area that are benefited by improvements are also called: | Special Assessment Liens When a particular area is benefited by improvements such as for streets, water, and sewers, encumbrances against properties may be created which are also called Special Assessment Liens. |
| A lease that allows a landlord to collect money based on the amount of sales the tenant store produces is: | Called a percentage lease A percentage lease is a lease in which there is a base rent as well as a percentage of the gross sales is due to the landlord after a certain threshold is met. |
| A borrower conveys legal title to the property to a third disinterested party for safekeeping in order to secure a loan. The required document in this type of situation is called: | A trust deed involves a third party that holds the deed to the property until the loan requirements have been fulfilled for a lender. Once the loan has been fulfilled, the third party holder of the trust deed will reconvey the deed to the purchaser. |
| The right of survivors, in joint tenancy, to acquire the interest of the deceased tenant is called: | The right of survivorship In a joint tenancy, if one of the tenants dies, the other inherits the property by means of the right of survivorship. |
| The IRS requires the escrow agent in charge of the closing of a real estate transaction to report the sale on Form 1099-S, which lists: | The seller’s name, Social Security number, and the gross sale proceeds Form 1099-S is required by the IRS to be filed by escrow agents to report every sale of real estate. The form lists the seller’s name, SSN, and the gross sale proceeds. |
| This is a type of ownership where individuals actually own the building or unit they live, but common areas are owned jointly (not an undivided interest) with the other members of the development or association: | Planned unit development This differs from a condominium in that there is an undivided ownership in the common elements, meaning that everyone is part owner but no one owns a certain percentage like in a PUD development. |
| If a homeowner obtains a home equity line of credit, they have obtained: | A mortgage loan A home equity line of credit is a mortgage loan that is typically in the second position that allows the borrower to obtain cash drawn against the equity of the home. |
| In order to set commission rates, the contract between the principal and broker should: | Be in writing stating that rates are negotiable Commission rates are not set by statute. The commission rates between the broker and principal are negotiable. To establish this and avoid lawsuits, this should be in writing. |
| A lease constitutes in part an x contract between the x and the X. | Executory, landlord, tenant A lease constitutes in part an executory contract between the landlord and the tenant. |
| Franklin’s home has a fair market value of a certain amount and he still owes a certain amount with two other additional liens. The difference between the fair market value and the amount still owed plus the two additional liens is called: | Equity When a home has equity, it is calculated by the difference between the fair market value and what is still owed on the mortgage with any additional liens. |
| Which federal government agency guarantees residential mortgages made to eligible veterans? | The VA The Veteran’s Administration (VA) is the agency of the federal government that guarantees residential mortgages made to eligible veterans. |
| A buyer produces a cash amount for earnest money deposit. The agent informs the seller after the seller has accepted the offer. In this case, it would not be valid because: | The form of earnest money deposit must be disclosed to the seller before acceptance of the offer |
| A condition on a title to a property that is revealed by a title search that adversely affects the title is called a: | Cloud A cloud on a title is a condition revealed by a title search that adversely affects the title. These conditions can come in a variety of forms. |
| If a lender is issuing an FHA or VA loan, where does the funding originate? | From the lender Ginnie Mae is the name for the Government National Mortgage Association. It provides guarantees of funds for FHA and VA loans. The funds for the loans themselves come from the lender. |
| A general agent has full authority to: | Bind the principal to all agreements A general agent is a representative of a principal that has the full authority to bind the principal to all agreements. |
| Which of these are considered a protected class under the Fair Housing Amendments Act of 1988? | A child Of the listed choices, the presence of children in a family were added to the Fair Housing Amendments Act of 1988. |
| A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby is called: | An appraisal An appraisal is a written justification of the price paid for the property. |
| Government loans are guaranteed by: | VA The Veteran’s Administration (VA) is one of the institutions that guarantees government loans. The other is the Rural Housing Service (RHS). |
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