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PRACTICE
Georgia Real Estate Final Exam 3
| Question | Answer |
|---|---|
| Seller financing that involves taking back a loan secured by a mortgage that is in the amount of the seller's existing loan, plus all or a portion of the seller's equity, is known as a: | wraparound mortgage: Explanation: The wraparound mortgage wraps the seller's existing loan(s), plus that portion of the seller's equity that remains after the buyer's downpayment. |
| 102. A buyer seeking an FHA loan should apply to: . . | a mortgage banker: Explanation: FHA-insured loans are made by FHA-approved lenders, so a prospective borrower should apply to an approved bank, thrift (S&L), credit union, or mortgage company (mortgage banker). |
| A loan not backed by a government agency is called: | conventional loan: Explanation: An institutional loan that is not insured or guaranteed by a government agency is a conventional loan. |
| The Real Estate Commissioner: | is appointed by the Real Estate Commission: Explanation: The Real Estate Commission appoints a Real Estate Commissioner. The Commissioner is not a member of the Commission itself |
| A fixture is created: | when personal property is attached to a building: Explanation: When personal property is permanently attached to real estate, it becomes a fixture and part of that real estate. |
| A written affiliation agreement between a broker and a licensee must include: | the licensee's compensation: during the period of employment for any unfinished transaction when leaving the brokerage what listings, materials, and clients the licensee may take when leaving the brokerage ** All of the above |
| All of the following are potential sanctions available to the Real Estate Commission, except: | imprisonment for up to one year: Explanation: The Real Estate Commission is not empowered to sentence licensees to jail terms. The Commission may ask a county's prosecuting attorney or the state Attorney General to prosecute a licensee |
| Buyers are unlikely to pay more than $80,000 for H's property if another property just like it is offered for sale at that price. This illustrates the principle of: | substitution: Explanation: The principle of substitution holds that the value of a property is limited by how much it would cost to obtain a suitable substitute (unless obtaining the substitute would involve a significant delay). |
| A quarterly summary statement given by a property manager to her client would contain all of the following, EXCEPT: | a recent appraisal of the property: Explanation: The property manager would presumably want to share with the owner the conclusions of a recent appraisal, but it wouldn't be done in the summary statement. |
| An interest in real estate that is or can become possessory is called: | estate: Explanation: Someone who has an estate has the right (present or future) to possess the property. This is more than just the right to use the property for a particular purpose; |
| In the absence of a law that stipulates whether the buyer or the seller bears the loss if an uninsured home is destroyed by fire between the date of sale and the date of closing, what would you refer to in order to determine which party is liable? | The sales contract: Explanation: The sales contract will spell out which party bears the loss in the event that the property is destroyed. In most cases, the liability for loss would rest with the seller until the transaction closed. |
| Denise, an out-of-state broker, would like to receive a commission split for selling a property in Georgia. She may do so, if she: | uses a written agreement to affiliate with a Georgia broker for the transaction: |
| A temporary, revocable right to use another's land is called: | license: Explanation: A license is revocable, non-assignable permission to use another person's land for a particular purpose. |
| What is the longest period of time that a license may remain on inactive status? | Indefinitely: Explanation: There is no time limit on how long a license may remain on inactive status. Additional education is required to reactivate a license that has been inactive for two years or more |
| 115. A city can pass a law requiring private property owners to meet certain standards in constructing buildings on their property because of: | the state's police power: Explanation: The state government delegates its police power to local governments. The police power allows a government body to adopt and enforce regulations for the protection of the public health, safety, morals, and general w |
| Which of the following persons would need a real estate license? | Real estate auctioneer: Explanation: A person who auctions real estate needs a real estate license. Attorneys at law, full-time community association managers, and referral agents who do not work for a fee are exempt from licensing requirements. |
| Which of the following statements about trust accounts is FALSE? | Separate trust accounts must be maintained for each branch office of a brokerage: Explanation: Branch offices of one brokerage do not require separate trust accounts. |
| A contract with an unlawful purpose is: | void: Explanation: A contract that lacks one of the essential elements, such as a lawful objective, is considered void. |
| B gave a life estate to S for the life of Z. S died. Title to the property goes to: | S's heirs: Explanation: A life estate remains in force as long as the measuring life has not terminated. Until Z dies, the estate belongs to S or (if S dies before Z) to S's heirs. |
| According to a listing agreement, the seller is able to sell the property himself without being liable for a commission, but only one broker is appointed to act as the seller's agent. This is: | exclusive agency listing: Explanation: An exclusive agency listing lets the seller sell the property on his own without being liable for a commission, but the seller will be liable for a commission if the broker designated as the seller's agent finds a bu |
| W, age 17, enters into an installment contract to purchase a five-year-old car from S. From a legal point of view, the contract is: | B. voidable by W only: Explanation: The contract is voidable by the minor, but not by the other party. |
| The highest price a buyer will pay for a property that is offered for sale on the open market under normal conditions is referred to as its: | market value: Explanation: This describes the property's market value. |
| An adverse possessor's possession of the property must fulfill all of the following requirements, EXCEPT: | B. It must include occupancy of improvements: Explanation: Adverse possession does not necessarily involve occupancy of improvements; for example, taking control of a piece of land by fencing it might be sufficient. But in every case, the possession must |
| An adverse possessor's possession of the property must fulfill all of the following requirements, EXCEPT: | It must include occupancy of improvements: Explanation: Adverse possession does not necessarily involve occupancy of improvements; for example, taking control of a piece of land by fencing it might be sufficient. But in every case, the possession must be |
| In the closing of a residential mortgage, the Uniform Settlement Statement (HUD-1) form required by federal law will contain the name and address of the buyer, the seller, and the: | C. lender: Explanation: On the first page of the Uniform Settlement Statement required under RESPA, there are spaces for the names and addresses of the borrower/buyer, the seller, and the buyer's lender. (The name of the broker may appear elsewhere on the |
| A licensee who commingles personal and trust funds commits: | a misdemeanor: Explanation: Commingling is a violation of the license law. License law violations are misdemeanors. |
| A borrower buys a $200,000 house, taking out a $180,000 loan. The seller pays a 6% commission ($12,000). The intangibles tax will be based on the: | $180,000 loan: Explanation: Georgia's intangibles tax is based on the loan amount. In this case, the amount of the intangibles tax would be $1.50 per $500 of the loan amount, or $540. |
| In appraising an owner-occupied single-family home, which two approaches are the most reliable? | Sales comparison and cost: Explanation: The sales comparison approach is given the most weight in the appraisal of a single-family home, and the cost approach is also used. Since the property is not a rental, the appraiser is unlikely to use the gross r |
| It would violate fair housing laws to specifically advertise housing to: 131. Which of the following settlement charges is usually a buyer's cost exclusively? C. Recording fees for new mortgage: Explanation: | B. one particular minority group: Explanation: It is a discriminatory act to use advertising that indicates a preference or an intent to discriminate |
| An appraiser should not use a property as a comparable if: | the sale was not an arm's length transaction: Explanation: A property should not be used as a comparable if the sale was not an arm's length transaction. If the buyer and the seller were relatives or associates, there's a good chance that the sales pri |
| Which action could lead to sanctions imposed by the Commission against a licensee? | Guaranteeing that a property will appreciate in value by at least $20,000 in the next year B. Intentional failure to disclose a latent defect in a property C. Offering property for sale on terms different than those authorized by the owner D. |
| 131. Which of the following settlement charges is usually a buyer's cost exclusively? | Recording fees for new mortgage: Explanation: The seller usually pays the commission, the cost of releasing her existing mortgage, and at least part of the escrow fee. The buyer is responsible for the cost of recording his own mortgage. |
| In the middle of his lease term, Tenant W transfers possession of the property to N, who enters into a new lease agreement with the landlord. The landlord releases W. This is an example of: | novation: Explanation: In a novation, a new contract is created and the old contract is extinguished. |
| Our federal income tax is a progressive tax. This means that the tax rate: | increases as income increases: Explanation: A progressive tax means that the tax rate increases as the amount of taxable income increases |
| In order to qualify for the $250,000 exemption from the capital gains tax, a seller of real property: | must have used the property as his principal residence for two of the last five years: Explanation: An independent contractor establishes his own hours and schedule. He is completely responsible for paying his own taxes; his broker doesn't withhold taxes |
| If a real estate salesperson wants to be an independent contractor, he should ask his broker to: | allow him to set his own hours and work schedule: Explanation: An independent contractor establishes his own hours and schedule. He is completely responsible for paying his own taxes; his broker doesn't withhold taxes from his commissions. |
| A broker has signed a buyer brokerage agreement with the buyer. As part of a transaction, the broker helps the seller find an attorney and a title insurance company. The broker: | is performing ministerial acts: Explanation: A broker may perform ministerial acts (which do not require professional judgment or skill) for other customers without breaching fiduciary duties to his clients. |
| According to contract law, which of the following is required for a valid contract? | The offer must be accepted: Explanation: Any type of contract requires offer and acceptance. Only certain types of contracts have to be in writing to be enforceable. (The question didn't say it was a real estate contract.) None have to be acknowledged |
| When advertising a property, a brokerage must include: | the name of the brokerage firm, as registered: Explanation: Any advertisement for a listed property must include the broker's name as registered with the Commission. |
| Closing takes place on April 16th. For how many days will the buyer be responsible for prepaid interest? | 15 days: Explanation: The buyer will be responsible for prepaid interest from the 16th to the 30th of April. Including the day of closing (the 16th), this is 15 days. |
| A buyer closes her new loan on September 2nd. Her first payment will be due on: | November 1st: Explanation: Generally, a buyer will not be responsible for a mortgage payment until a full month has elapsed following the month of closing. In this case, the buyer will pay interim interest at closing that will cover the rest of the month |
| How is the premium for a standard policy of title insurance paid? | Once, at closing: Explanation: A title insurance premium is a one-time charge that is paid at closing. |
| A mortgage loan's annual percentage rate will be higher than the interest rate stated in the note, because the APR includes: | loan fees and other financing costs: Explanation: The APR takes into account loan fees and other financing costs, as well as the nominal interest rate (the rate stated in the note). |
| A parcel of land has dimensions of 940 feet by 1,660 feet. Twenty-two percent of the parcel is to be dedicated to the public for schools and roads. The remaining land is subdivided into one-quarter acre lots. How many lots would there be? | 111 Explanation: 940' × 1,660' = 1,560,400 square feet. 1,560,400 – 22% = 1,217,112 (square feet after dedications). 1,217,112 ÷ 43,560 (square feet in an acre) = 27.94 (acres) × 4 (lots per acre) = 111.76 lots. |
| The Commission may: | deny a license to an applicant who made false statements on the license application: Explanation: One possible sanction for violations of the license law is refusing to grant or renew a license. |
| Which of the following has the most impact on the value of property? | Local economic conditions: Explanation: Local economic conditions have the most impact. |
| A developer buys 35 acres for subdivision, making a 30% downpayment and giving the seller a purchase money mortgage for the balance of the purchase price. In order for the developer to obtain future construction loans for the individual lots, what provisi | Subordination clause: Explanation: The developer couldn't obtain a construction loan if the lender wasn't assured of a first lien position, so the purchase money mortgage must include a subordination clause, subordinating it to a construction loan to be o |
| 147. A gift of personal property by means of a will is a: | bequest: Explanation: A gift of personal property (such as furniture or a car) by will is called a bequest. A devise is a gift of real estate by will. |
| An easement can be terminated by all of the following, EXCEPT: | destruction of the servient tenement: Explanation: An easement does not have to be mentioned in the deed to remain in existence. |
| Without the seller's permission, the seller's broker discloses to a potential buyer that the seller has received several offers on the property, all of which are at least $15,000 less than the asking price. In making this disclosure, the broker: | is violating the fiduciary duty of loyalty to the principal: Explanation: The fiduciary duty of loyalty requires the agent to refrain from revealing confidential information to third parties unless authorized to do so by the principal. |
| A broker receives more than one bona fide offer on a property, at approximately the same time. The broker should present: | all offers: Explanation: One of an agent's fiduciary duties is to promote the client's interests, which includes presenting all offers. |
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Mz Jade
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