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RE STATE/Nat Exam
National
| Term | Definition |
|---|---|
| real estate | consists of land, improvements attached to land, benefits, rights, and ownership interests. |
| appurtenance | used to describe rights, privileges or improvements that belong to and pass with land |
| improvements | man's additions to land such as buildings and landscaping |
| personal property | right or interest in something of temporary nature and includes anything not classed as real property. |
| personalty | personal property |
| chattel | personal property |
| bill of sale | used to transfer property |
| fixture | item that was personal property and has been attached in such a way that is now real property. |
| annexation | the process of attaching personal property to become a fixture. |
| severed | the process of real property becoming personal. The fixture is removed and becomes personal property again |
| T or F In residential leasing, fixtures installed by tenants are usually considered to have become part of the real property. | True |
| Trade fixtures | fixtures installed by tenant in order to do business and they may be removed from leased property prior to the termination of lease. If not removed they become property of landlord. |
| Emblements | Crops cultivated annually. They are considered personal property. They are not automatically part of the sale. Farmer can make arrangements to come back and harvest 1 time. |
| Characteristics of Real Property | Nonhomgeneity, Immobile, Indestructible, Scarcity, Modification, fixity, and situs SNIFIMS |
| non-homogeneity | no two pieces are exactly alike. Each piece is unique. |
| Immobility | land cannot be moved |
| indestructibility | durable, it will always be there |
| scarcity | in short supply where demand is great - a lot in Manhattan is more valuable than a lot in upstate NY. |
| Modification | land use and value are greatly influenced by improvements made by man |
| fixity | land and buildings and other improvements to land are considered fixed or permanent investments. |
| Situs | location preference or location from an economic rather than a geographic standpoint |
| legal description | determined by surveyor. It is a necessary part of contract or deed, listing sales contract, etc. in order for that document to be enforceable. |
| Methods of legal Real Estate description: | Metes and bounds, lot, block and subdivision, rectangular survey system |
| Metes and bounds | use terminal points and angles and always have a point of beginning. used in 13 orig colonies and today. They use monuments and permanet markers as POB. |
| lot, block and subdivision | derived from a recorded map, called a plat. This is the most common description used in res listing agreements. |
| Rectangular Survey System | known as gov survey system, takes into consideration base lines and meridians, townships and sections. |
| one township = how many sections? | 36 |
| Each section = how many acres | 640 |
| how many acres are in a mile | 640 |
| how many square feet are in a mile | 5280 |
| What encumbrances can the Gov impose? | (P.E.T.E.) Police power, Eminent Domain, Taxation and Escheate |
| Police power | power given to municipality to regulate and control the character and use of property of the health, safety and general welfare of the public. Allows gov to establish bldg. codes, specific construction requirements, etc |
| What is the most common example of police power? | zoning. This is local laws to control land use. For EX.; R-1 zoning means residential, single family only. |
| Non-conforming use | Use was permissible under former rules but new rules prohibit it. Allowed to continue as it is grandfathered in. If bldg. is destroyed, non-conforming use may not be rebuilt without permission. |
| variance | if your property violates zoning you may request a variance. may also be requested prior to construction. |
| Where do you request a variance? | with the zoning committee |
| What happens to the variance on a property when it is sold? | It goes with the property |
| PUD | Planned unit development. Allows for higher population density with houses clustered together, leaving more green area open for parks and recreation |
| How do zoning committees decide on zoning changes? | public hearings must be held but the ultimate decision rests with the zoning committee |
| buffer zone | an area of land separating one land use from another, such as residential from commercial. |
| Eminent Domain | the right of the government to take private property for public use through the action of condemnation. This is the only time the Gov must compensate property owners. |
| Inverse Condemnation | When an individual forces the government to buy his or her property. |
| Taxation | Property taxes are the highest priority lien on real property. Property taxes are ad valorem, or according to value. |
| T or F Unpaid taxes create an automatic lien on the property? | True |
| What is always paid first at a foreclosure | property taxes |
| Escheat | Property reverts to the state when someone dies leaving no will and no heirs or kindred. Escheat can also be used if property is abandoned. |
| What is the purpose of Escheat? | That no land remains unowned |
| CCR's | covenants, conditions and restrictions - most common private controls of land use. HOA and POA regulations are like deed restrictions, apply to condo complexes and subdivisions. |
| Deed restrictions | imposed to control land use, development and methods and materials for construction. Style and appearance requirements can also be enforced. (which way garage faces) |
| Where are deed restrictions found? | in a recorded document called declaration of restrictions. |
| Injunction | used to enforce the deed restrictions if violated |
| What if zoning and deed restrictions both exist, which one takes precedence? | Whichever is most restrictive or limiting must be obeyed. |
| How long do deed restrictions last? | In most cases, they are permanent. |
| Reservation | imposed by the grantor, withholds title to a part of the land described in the deed. (ex. an easement or mineral rights) |
| encumbrance | limit on a property or a limit on property's owners rights that may or may not also be a cloud on the title. |
| Examples of encumbrances: | encroachment, easement |
| easement | allows limited use or enjoyment of another's land. It is the right in land and should be created in writing and recorded. Use without possession |
| What is the difference between express and implied easements? | Express (written) or implied (verbal by actions) |
| What does government take easement generally for? | utilities, railroads |
| How can easements be terminated? | merger, release, or abandonment |
| Dominant and Servient Estates | If 2 properties and owner crosses over the other's land, they are dominant. The dominant estate is landlocked. |
| Easement Appurtenant | When land owner is land locked and easement is necessary to access land. Goes with property when transferred. |
| Easement in Gross | Belongs to a person or corporation. Ex. is a utility easement. No matter who owns the land, the easement still belongs to the utility company. |
| License | permission to do a particular act upon the land or property of another. (A theater ticket is a license to sit in a seat at an event) |
| Adverse Possession (squatter's rights) | Occupancy must be hostile, visible or open, actual or notorious, continuous and distinct for a statutory period. Time differs from State to State. Can be mon of 3 yrs - max of 25 yrs. 10 yrs ins TX. |
| Lis pendens | recorded notice filed against a specific property, meaning that some form of lawsuit has been filed, but not yet resolved in court. Can become the responsibility of new owner if not settled prior to closing. |
| estate in severalty | Sole ownership This can be buying individual or buy a business such as a Corporation or partnership |
| tenancy in common | Ownership by 2 or more without rights of survivorship |
| Which type of ownership is the most common | tenancy in common |
| What is a good example of Tenancy in common? | Condominium is a multi unit housing with individual ownership of apartments with Tenancy in common ownership of common areas. |
| T or F You may share your right In Tenancy in common Without the permission of other owners? | True |
| Can tenancy in common have an equal shares? | yes |
| Joint Tenancy | Ownership by 2 or more with rights of survivorship. upon death, your share goes to surviving Co owners immediately. |
| Poor Mans will | Show me Tenancy |
| Which one overseed the other joint tenancy or a will? | Joint Tenancy |
| Four unities that are required for joint tenancy | time, title, interest & possession |
| Partition | A procedure to divide the CO tenant interest in real property by court action, Involuntary alienation Or by agreement of the parties or voluntary alienation |
| What does partition do to joint tenancy? | ends it |
| Tenancy by entirety | specific type of joint Tenancy where the CO owners are married to one another: husband/wife spouse/boss. one advantage of this type of ownership is that it avoids probate |
| trust | one party holds property for another |
| syndicate | When 2 or more parties go in together to create and operate a real estate investment |
| Why is it important for licensees to understand the types of ownership? | So they will know what signatures are required on the document |
| timeshare | Gives an individual partnership of a property coupled with the right to exclusive use of it for us Supplied number of days per year without the responsibility of full ownership- this is tenancy in commom |
| cooperative | Investment for residents. Real estate owned by corporation. Residents own shares in exchange for a unit. |
| Horizontal property act | Establish laws for condominiums. |
| How are taxes handled for condominium for the common areas ? | Each month These are collected From owners for maintenance of the complex And the salary of the manager. taxes are assessed on each unit separately. |
| estate | an interest in real property |
| Freehold estate | Ownership, all the legal right that attach to the ownership of real property right to sell lease, encumber, use, enjoy, exclude, will to heirs, etc. |
| bundle of rights | all the legal right that attach to the ownership of real property right to sell lease, encumber, use, enjoy, exclude, will to heirs, etc. |
| fee simple or fee simple absolute | Ownership with the greatest bundle of rights The best type of ownership |
| fee simple defeasible | Ownership with conditions are terms with it violated could cause the ownership interest to be defeated or terminated. |
| Fee simple defeasible - determinable | Violation of a condition or termination of The condition use result in reversion to the grantor - this is automatic |
| Fee simple defeasible - condition subsequent | the grantor takes steps to reclaim property within a reasonable period of time if the condition is violated or condition is terminated. |
| Life state | Ownership for the duration of someones life the owner is called the life tenant. Life tenant has all rights and duties of an owner except the right to choose who will get the property upon their death. |
| remainderman | The person the property goes to after the life estate has ended. |
| life estate pur autre vie | If the life estate is based on a life of someone other that the life tenant. This is an estate to care for someone. |
| life estate with revision | life estate is set up so that the end of the life estate the property goes back to the original owner. |
| leasehold estates | lease agreements. Gives right of possession of real property |
| 4 types of lease hold estates | Estate for years, Periodic tenancy, Estate at will, Tenancy At sufferance |
| Estate for years | Lease with specific starting and ending date. This survives death and/or sale of a property. No notice required to terminate |
| Periodic Tenancy | fixed period that automatically renewed unless tenant or landlord acts to terminate. Month to Month, termination notice is required.(usually 30 days) |
| estate at will | lease that can be terminated by either party at will without notice |
| tenancy at sufferance | lease expires and tenant refuse to leave. |
| Holdover tenant | has no right to be in property. Stayed pass lease time. |
| Holdover tenancy | If holdover tenant pays rent and landlord accepts it, holdover tenancy is created. |
| Gross lease | landlord pays all expenses of property and tenant pays rent only |
| net lease | tenant pays rent plus some of the expenses of property |
| percentage lease | lease where all or part of the rent amount is based on the receipts of the tenant's business. |
| graduated lease | scheduled rent increases often based on expected business growth |
| ground lease | tenant is usually making long-term commitment, up to 99 yrs, Lease is more often for industrial or commercial land use. Tenant will build on leased property. |
| oil and gas lease | gives the tenant the right to extract oil and gas from specific property |
| covenant of quiet enjoyment | landlord is usually prohibited from entering leased property unless there is a need for maintenance, inspections or emergency response. |
| right of first refusal | tenant has the right to match or better any offer before the property will be sold to someone else |
| Subletting | the transfer of some or all of the rights and or leased space under the lease to another with liability remaining with the original tenant. |
| assigning a lease | transfer of all rights and liabilities to a new tenant under the existing lease. |
| forcible entry and detainer or action of forcible detainer | eviction |
| contract rent | rental income as stipulated by the parties in a contract |
| economic rent | the rent the property could currently command on the open market |
| expiration | when the lease comes to end of negotiated term |
| termination | when the time period of lease ends or is cut short |
| mutual recission | When the lease is terminated by agreement of the parties |
| constructive eviction | when landlord is aware or property condition and allows deterioration to the point that the building is uninhabitable and the tenants are forced to leave |
| lien | a charge against property for the security of debt. Lien is an encumbrance in that it limits your rights. |
| how is a lien a cloud on title? | title cannot be conveyed or transferred to another until the lien is removed. |
| How do you remove an encumberance? | with release apply for release |
| voluntary lien | crated by the borrower's actions. (mortg) |
| When does a mortgage become enforceable? | When it is recorded |
| involuntary lien | created by law and can be statutory or equitable (common law). |
| which has precedence statutory or equitable (common law)? | Statutory |
| Examples of Statutory liens: | federal tax liens, ad valorem tax liens, judgment liens, mechanics and materialmens' liens (M&M liens). |
| example of equitable (common law) liens: | selling financing, buyer has paid but has not received the deed. Foreclosure sale or contract for deed. |
| how can liens be classified? | specific or general |
| specific lien | attaches to one or more specific or named properties |
| general lien | attaches to all property of the debtor, not exempt from forced sale. EX: judgment or irs lien |
| What is required for judgement to become a lien? | recording |
| writ of execution | from the courts to enforce payment of the lien |
| what determines lien priority? | date of recording with the first recorded lien having first priority. Recorded liens are only paid after the property tax lien is paid |
| Where does land begin? | at the center of the earth and extends above the earth. So there are subsurface, surface and air rights.. |
| mineral rights | consist of rights to subsurface land and profits. They may or may not be included in the sale of the property |
| What can be done with air rights? | They can be sold or leased. They can also be transferred by easement as in elevated highways. They can be taxed separately from the land |
| What kind of water rights are there? | riparian or littoral |
| Riparian | right to use water from river or stream that borders your property |
| Littoral | right to use water from lake or ocean |
| What are some don't when it comes to water rights? | flow can not be interrupted and cannot be contaminated |
| who owns most water rights? | states |
| when can owners own water and to what end? | for non-navigable waterfront property landowners own to the middle of the body of water |
| what do owners own if their property waterfront is navigable? | to the vegetation line |
| prior appropriation | theory of water law based on the idea that first in time is first in right. the first landowner to claim water rights has the exclusive right to take all the water for specific beneficial uses. nearby properties cannot claim water rights |
| The terms littoral, riparian and appropriative all refer to what? | water rights |
| alienation | a change of real property ownership |
| voluntary alienation | owner transfers title to another |
| conveyance | written document to transfer title or real property |
| ownership of real property is most often transferred by what? | deed, patent, power of attorney or will. |
| Involuntary alienation | usually happens in court as foreclosure, bankruptcy, condemnation, escheat, adverse possession, reversion of defeasible fee, partition or inheritance without a will. |
| accreation and reliction | result in an increase in property size and may lead to involuntary alienation |
| erosion and avulsion | a loss of land and may lead to involuntary alienation |
| requirements of a valid deed | grantor and grantee, consideration, words of conveyance, execution, delivery, legal description |
| t or f deeds do not have to be dated signed by the grantee or recorded | true |
| general warranty deed | guarantees and protects against defects. Offers buyer the best protection. Warrants title to the sovereignty of the soil. |
| what is the most common type of deed to convey real property? | General warranty deed |
| special warranty deed | guarantees title only against defects arising under the grantor's period of ownership. defects existing before that time are not covered. |
| bargain and sale deed | deed with one covenant. (trustees, executor4s, sheriffs, and officers of the court use this) deed does not provide any warranties about the condition of the title but a promise that the grantor has the right to sell. |
| quitclaim deed | No warranties or guarantees and offers the least protection. It is used to clear a cloud on the title or to cure a defect in title. |
| Covenant of Seizen | grantor claims to be the owner with the right to sell property |
| quiet enjoyment | grantor promises the new owner will not be disturbed with claims against the property |
| further assurance | grantor is responsible for any documentation needed to ensure title is transferred to grantee |
| covenant against encumbrances | grantor promises all encumbrances have been disclosed. guarantees that the owners will not suffer or be disturbed by any claims to property |
| covenant or warranty forever | grantor promises no expiration date |
| How does government transfer title to individuals? | using a patent |
| dedication | when a developer turns over streets in a subdivision to the local gov. This is accomplished by recording a plat plan. |
| t or f real property can also be transferred to a new owner as part of the estate of the deceased? | true |
| testator | party who makes a will |
| testate | one who has a valid will |
| executor | one named in will to settle estate |
| title by devise | Inheritance by will |
| devise | property in a will |
| devisee | heirs in a will |
| intestate | without a will |
| administrator | court appointed to settle estate of someone who dies with no will. |
| laws of descent | heirs will inherit real property according to this law when there is no will |
| title by descent | given for property to heirs when there is no will |
| who has priority under the laws of descent? | spouse and children |
| probate | the judicial process to prove or confirm a will or to settle the estate of a party who dies intestate. |
| how long before title transfer is final when it passes at probate? | 30 days |
| foreclosure | legal process instituted by a trustee, lien holder or creditor after a debtor's default on his pmts. |
| Deficiency Judgment | In the event of a shortage to lender after a foreclosure, the lender can sue using a deficiency judgement |
| what happens to junior loans at foreclosure? | they are wiped out |
| deed in lieu of foreclosure | called friendly foreclosure or voluntary deed. lender accepts deed from borrower./ Lender mus also accept any jr. liens on property |
| what is the fastest way for a lender to get the title? | thru deed in lieu of foreclosure |
| redemption, equity of redemption or equitable redemption | any time up to the moment of foreclosure the borrower ha the right to pay and reclaim his property |
| which would a lender prefer, deed in lieu of foreclosure or equity of redemption | equity of redemption |
| what must a lender do for a foreclosure? | Lender MUST send notice of foreclosure by CERTIFIED mail 21 days before foreclosure sale. No requirement for borrower to get the letter only that it be sent. Lender must also post at court house door and file with county clerk |
| lis pendens | with a traditional mortgage the foreclosure is recorded as lis pendens |
| when are foreclosure sales held in TX? | the first Tues of the Mo. at courthouse. |
| how is foreclosure done with a deed of trust? | non-judicial, due on sale clause. |
| what can a lender require at a short sale? | brokers ajust their commissions, appraisal and survey. |
| Which is better, short sale or foreclosure for the lender? | Short sale |
| who can own REO's | banks and government agencies |
| How doe REOs become property of the bank or gov? | unsuccessful sale at the foreclosure auction., foreclosing beneficiary will typically set the opening bid for the least outstanding loan amount. If there is no bidders they repossess the property |
| Is recording a requirement for a valid deed? | no |
| what does recording a deed do? | gives public constructive notice of who owns the property. prevents fraudulent sales. |
| What can be done beside recording the deed to give the public constructive notice about ownership? | possession of property |
| What must happen before deed can be recorded? | Must be acknowledged. It must be in English |
| Deed Acknowledgment | Declaration to a notary authorized to take oaths that the signature is a free and voluntary act. An acknowledgment verifies the signature. |
| Title | ownership and legal evidence of that ownership - deed |
| Types of Real Estate Title | clear and good , marketable title, equitable title |
| clear or good title | can be transferred to another. |
| Marketable title | title that a reasonable buyer would accept as clear |
| equitable title | an interest created by a legal document, such as that held by a buyer with a signed sales contract who has not yet gone to closing. |
| title insurance | policy agrees to compensate or reimburse the insured against any losses sustained as a result of defects in the title, other than those exceptions listed in the policy. |
| what types of things does title insurance cover? | forgery, illegal acts of trustees, guardians or attorneys, false claims of ownership and human error in copying and recording. loss or destruction of records. |
| What will a standard title insurance policy NOT cover? | survey or boundary problems. Additional coverage can be purchased for these issues. |
| How is the premium paid for title insurance? | at one time usually at closing. |
| When is a new title insurance policy needed. | When title changes hands. |
| Title policy subrogation clause | allows the title co. to assume the rights of the buyer with respect to any claim against the seller if the title co. has made payments to the buyer to satisfy that claim |
| How is title insurance different from other types of insurance? | It is only for the past not the future |
| A property owner has decided to do some landscaping work on his yard, He has planted a tree surrounded by some shrubs. The tree and shrubs are an example of what? | improvements |
| A property owner has a waterfront lot on a stream. He has the right to use water from the stream. What is the right called? | Riparian |
| Commercial tenant is aware that his lease will expire at end of mo. He has begun to disassemble his display cabinets and shelves. What are the shelves considered? | Fixtures |
| A seller is attendding closing on his property. The title co. has discovered an unsatisfied M&M lien on the property. What would cause this lien? | contractor work that was not paid for |
| A listing agent went to inspect a seller's property hoping to list it for sale. Seller told LA that his neighbor's satellite dish trespasses on his property. What is this called? | Encroachment |
| Father gives his son a life estate on property. The son leases the property. The tenant dies. What happens to the property? | It goes back to the son until he dies. |
| A man leaves his second wife a life estate in their home after which the property goes to his children from first marriage. What are the children referred to? | Remaindermen |
| T or F an easement is a benefit to the servient property owner | false |
| t or f - an easement is a benefit to the dominant property owner | true |
| A, B, And C are joint tenants. C dies. B sells to D. What type of ownership do A & D have? | Tenants in Common |
| Under what right can the government change property use from commercial to residential | Police Power |
| Ownership of the common areas of condominiums is most likely to be what? | Tenancy in common |
| What should a buyer do to ensure that he is getting the best title to real property? | get a general warranty deed |
| Which covenant in a deed guarantees that the owners will not suffer or be disturbed by any claims on the Property? | Covenant of quiet enjoyment |
| Excess money at a foreclosure sale goes to who? | the borrower |
| After defaulting on a real estate loan, a borrower is able to pay off the loan prior to the foreclosure sale, What is this called? | Redemption, right of redemption, equity or equitable redemption |
| The required distance between buildings and a federally protected endangered species wetlands, two incompatible uses, is called what? | buffer zone |
| a couple purchase a condo. The complex has an exercise room for all residents. The couple does not use the room and does not want to pay the mo. fee. What can they do to avoid fee? | nothing, they must pay fee as they have a tenancy in common interest in all common areas. |
| Which of the following is personal property? Lease, fixture, easement, or freehold | lease |
| landlord leased space in his retail property to an inexperienced business person. based on location and type of business landlord believes it will be sucess. What type of lease can he enter with tenant that will benefit from tenants success? | percentage lease |
| A buyer has bought a property and after closing the seller will continue to live in property. what is this called? | sale and leaseback |
| Clients will qualify for loan in 6 mo after reducing debt. They want to buy now. What can they do? | Use lease with option to buy |
| tenants have 3 yr lease. In yr 2, the owner dies and his heirs inherit the property. They tell tenants to vacate? What is true? | Lease is valid until the end of their contract and they can legally stay |
| a develop;er decides to build a commercial property in the middle of a residential subdivision. What is required | variance |
| If a person dies without a will, who receives their estate: | spouse and children |
| abstract of title | title search is done. The examination of public records. This is a complete history of the title |
| chain of title | included in the abstract of title this is a list of all owners from the first until today. |
| how is attorney involved with abstract of title? | attorney views abstract and give opinion of title |
| title report or commitment | this obligates the title insurance co. to issue a title policy when any curative requirements have been met. This owners policy protects the buyer up to purchase price. |
| When is title policy received? | At closing |
| Who set the premiums for title insurance? | The state board of insurance |
| cloud on title | any claim or encumbrance that may superficially injure the title to a property or cast doubt on the title's validity. |
| what happens if there is a cloud on title? | The property cannot be conveyed or transferred |
| quit claim deed | sometimes used to fix a cloud on title. |
| quiet title suit | used to clear a clouded title |
| Different types of value | Tax assessed value, book value, insurance value, rental value, replacement value and market value |
| The most significant type of value used in real estate | Market value |
| Market value | The price of willing seller is willing to sell for it and the price a willing buyer will pay for it When neither is acting under pressure; the most probable price |
| 4 characteristics of value | (DUST) demand, Utility, scarcity, Transferability |
| demand | There must be a demand for the item and the purchasing power to acquire it |
| Utility | item must be needed or wanted |
| scarce | There must be a limited supply |
| Transferability | Item must be able to be sold, ownership rights must be transferable |
| appraisal | In opinion. it is the estimate of value. the accuracy of an appraisal depends on the integrity and competency of the appraiser in the availability of the needed information. |
| What principles do appraisers use to help them arrive at their final opinion? | Highest and best use, principle of subs, of conformability, of increaasing and decreasing returns, principle contribution, principle regression, principle of competition, principle change, principle anticipation, principle balance |
| highest and best use | The legal use that gives the greatest return in money. |
| What Is the most important detail considered by an appraiser | Highest and best use |
| Principal of substitution | Set an upper limit on price. maximum value of a property is set by the cost of acquiring a similar substitute property |
| Principle increasing and decreasing returns | Invest in a property whenever each dollar invested where we turn a dollar or more of increase value and stop when each dollar investment returns less than a dollar in value. Do not over improve a property |
| facebook conformity | Save the maximum value is found when puppies are the same or have a reasonable degree of similarity in price range, amenities, sized, IK cetera |
| Principle of contribution | the value of a part is determined by the property rather than by its cost |
| principle of regression | The presence of lower valued or declining valued property In the neighborhood leave to a decline in the value of your property. Conversely the presence of higher value properties will increase the value of your property and is called progression |
| progression | The presence of higher valued properties will increase the value of your property |
| principle of competition | An increase in competition will result in decrease profits for current providers Competition lowers prices |
| Principle of change | appraisers must make adjustments for changes in market conditions, and for time. An appraisal Is only considered to be good for 6 months. |
| Principle of anticipation | Purchase price is affected by the expectation of future appeal and benefits |
| principal of balance | process used should result in maximum value for all properties involved master planned communities demonstrate this principle |
| What else In addition to Value principles should an appraiser be aware of that can affect Property values? | Market cycles, political actions, economic forces Like rising interest rates can lower prices, physical or environmental forces, and sociological forces. |
| What is the appraisal process? | State the purpose of the appraisal, Collect and verify information, Estimate value using all 3 approaches, Reconcile the estimates By determining weighted averages, Prepare the report. |
| FIRREA | Financial institutions reform recovery and enforcement act. was passed to regulate the appraisal industry nationwide. |
| What does the FIRREA act Require? | State certified appraiser to perform any appraisal use in connection with a federal related transaction of property valued at $250,000 or more. |
| USPAP | Uniform standards of professional appraisal practice - all appraisers must adhere to this practice |
| When must an appraisal be done? | Those properties involving the courts And those meeting FIRREA guidelines. For example, cases heard to settle an estate when a will is challenged, challenges to eminent domain awards, and cases of partition. |
| BPO | Broker price opinion basically the same as a CMA |
| 3 basic approach To appraisal | Market data or sales comparison, income or capitalization, replacement or reproduction cost approach |
| market data appr | Primarily in residential appraisals. it involves comparisons with known sales in the same area. |
| How many Sales Should an appraiser use when doing the market data approach? How old should these sales be? | 3 to 5 sales, no more than 6 months old. |
| when making an adjustment, do you adjust the subject or comparable property? | Always the comparable property |
| Cost approach | Use for unique properties such as churches or government buildings. It is also used when there are no comparables for a particular property. |
| How is cost approach calculated? | Land value plus building reproduction cost minus depreciation equals value |
| Reproduction cost | the cost to exactly duplicate a building |
| Replacement cost | Cost to build a building of similar size and usefulness using today's methods and materials |
| What 3 types of depreciation in the cost approach will an appraiser consider? | Physical deterioration, Functional obsolescence and economic or external obsolescence |
| Physical deterioration | Ordinary wear and tear. It is curable. This has the least impact on the appraisal because all Building have it, like chipped paint or worn flooring. |
| Functional obsolescent | Brought about by factors in the property. it is often or mostly curable Like inferior materials to cut costs, curb appeal, not enough bathrooms bedrooms, or unpopular floor pan plan, property that lacks updating for modern technology |
| Economic obsolescent | Loss of value due to outside factors. this is also called external obsolescent And is incurable like zoning, air pollution, noise, traffic, jobs, etc. It is also called environmental obsolescence |
| income approach | Capitalization method is used for income producing properties To determine value |
| what is the formula for the income approach? | Net income = rate of return times market value |
| How is potential gross income for an investment property determined? | it is the total rental income at 100% occupancy |
| effective gross income | Actual gross income Is the actual rent collected after subtracting 4 vacancies and uncollected rent |
| net rent or net operating income | Actual growth less expenses |
| If an investor is buying a property to produce cash what appraisal approach is most often use? | Income approach |
| Capitalization | The conversion of income stream or rent into an indication of value |
| Capitalization rates | Help an investor determine interest |
| GRM | gross rent multiplier, this number When multiplied by the monthly rent gives an estimate of value of the property So GRM X mo. rent = sales price |
| how do you calculate GRM? | By taking the property value and dividing it by the monthly rent. If a property is valued at $175K and charges $1000 in monthly rent, GRM Would be 175. |
| GIM | The GIM is based on annual rent rather than monthly rent for commercial properties. |
| CMA | Comparative market analysis, is a tool used by licencees to help sellers determine realistic price for their property. It compares a subject property to current listings recent sales and even expired listings of unsold properties |
| What are the 2 names for CMA? | Comparative market analysis And Competitive market analysis |
| When is A BPO used? | By attorneys Or relocation company Rather than by a principle to a transaction. BPOs can also be used by a lender involved in a short sale of a distressed property. broker user will receive a fee for preparing BPO |
| assessed value | Value of your property for tax purposes period the tax rate times the assessor value will tell you yearly taxes. |
| Assessment rolls | values for all properties in a taxing district |
| tax valuation | $/hundred=$2.50 for every $100. Mill valuation is % mills means $25 for every $1000. |
| State sales tax | also called transfer or deed tax. Can be in mills or rate per hundred. Based on full sales price of property |
| Special assessment tax | If local government is providing a benefit to a limited number of property owners such as curbs and sidewalks The tax may be levied only for those property owners |
| municipal improvement district | property improvement district; the property owner will receive a tax bill similar to special assessment until the improvement is paid for or the improvement district designation is removed |
| contract can be one of 2 ways what are they? | express or implied |
| express contract | Written or stated A written sales contract a verbal lease agreement a written listing of verbal buyer representation agreement |
| implied contract | contract by actions or evidence, neither it written nor discussed; it is simply performed. Examples are: taking a taxi oordering from the menu, filling your gas tank and paying at pump |
| Unilateral contract | Binds only one party; If then contract. If something happens Then the other person will perform |
| option contract | Option contract is unilateral. It is the right to purchase a property within a definite time. at a definite price |
| Bilateral contract | this is an exchange of promises by all parties |
| required elements of a contract to be enforceable | (COLIC) Competent parties, offer and acceptance, Legal purpose, in writing, consideration |
| Executed contract | All the terms and conditions of the contract have been met and carried out. it is considered performed or discharged |
| Executory contract | a contract that has been signed but has not yet been carried out |
| Valid versus void contract | valid contact meets the requirements of A contract As far as competent parties, offer and acceptance, legal purpose and consideration. |
| void or invalid contract | Has no binding effect on the parties who made it for example in agreement with someone who is Documented as insane |
| Voidable versus unenforceable contract | Voidable one party has the right to withdraw Unenforceable Means They agreement is one that violates the statute of frauds and will not be enforced by the courts |
| terminated contract | May be terminated for any of several reasons including bankruptcy or foreclosure, new laws making it illegal, destruction of property. |
| What happens to a contract at one of the party Dies? | The contract will be binding for the parties heirs. |
| Mutual rescission | is the parties to a contract agreed to cancel |
| Default | Non performance of a duty under a contract. when one of the parties to a contract is in default come up the agreement has been breached periods |
| liquidated damages | Money damages layed out in the contract. |
| punitive damages | Punishment of the defaulting party, compensatory damages are set to cover the actual injury or economic loss |
| Statute of frauds | All contracts at relay to the transfer of any interest in real estate must be in writing to be enforceable. |
| When does a lease for a property Not have to be in writing? | For a year or less is the exception to the law |
| Time is of the essence | A clause in a contract that allows each party to hold the other to a strict performance by the date specified |
| Offer | Completed form with a price Less than, equal to, or more then the asking price and signed by the buyer. The purpose is to open negotiations between buyer and seller. |
| what can a seller do with an offer? | Accept, reject, or counter |
| counter offer | Rejection of the original offer and the presentation of a new offer. The purpose of a counter offer is to continue negotiations and work toward an agreement. |
| Earnest money | Earnest money is not necessary in a sales contract. the amount of earnest money is determined by agreement of the parties. in the usual real estate sales contract earnest money will be the liquidated damage is If the buyer default. |
| Equitable title | Interest created by a legal document. a document that is held by a buyer with a contract who is not yet gone to closing |
| Contingency | A condition in the contract which has not yet been met and must be met to move forward. |
| Common real estate contract contingencies | Financing, Sale of another property and inspections |
| Escape clause | Used by the seller in the contract to limit The amount of time A buyer has to To fill a contingency |
| What happens if a contingency is not Met? | The contract is terminated |
| how many years can you depreciate a residential property? | 27.5 years |
| When can you depreciate land? | Never |
| what formula does the IRS use to depreciate property? | Straight line formula, property value divided by economic life Equals yearly depreciation amount. Example $275,000 To be divided by 27.5 years Equals $10k/year |
| 1031 tax exchange | Real estate investors candy for taxation of capital gains by making a property exchange. |
| Boot | additional capital or property included in a transaction to even out the 1031 exchange, the boot is taxed at same time as exchange |
| How long is an investor required to hold a 1031 exchange property? | One year |
| What time frames pertain to a 1031 exchange? | Must bind an exchange property within 90 days and close within 180 days |
| How much Capital gains Can be waived if you own a property and lived in it 2 of the last 5 years? | $250,000 for an individual and $500,000 for a married couple |
| What can a homeowner deduct On his IRS return For his property? | Property taxes, interest, Discount points And prepayment penalty |
| installment sales contract | Contract with the sales price is paid in installments and at least one of the payments is to be received after the close of the taxable year in which the sale occurs |
| who regulates accounting for all individuals including real estate? | IRS |
| What governs the relationship between broker and his principle? | Common law of agency |
| Employment contract | Agency agreement- could be a listing Agreement a buyers representation agreement Or a property management agreement |
| What are the 2 levels of responsibility all real estate agents have? | Public responsibility and Fiduciary responsibility |
| Public responsibility | Honesty, integrity, fairness disclosure of material facts, and accounting of funds held. |
| What does Fiduciary responsibility look like? | Put the interests of your client first, give your time, give Full disclosure to your client, Advice and opinions In addition to disclosing all pertinent facts both material and other, Be loyal to your principle and be competent |
| Ratification | Occurs when a principle accept actions that he did not authorize |
| attorney in fact | a person with the power of attorney |
| 3 levels of agency | Universal, general, And special or limited |
| Universal agency | gives the agency authority to represent everything and is it very rare in real estate |
| General Agency | Give the agent power to bind his principle in a particular trade or business, power to sign a legally binding agreement in the name of your principle. |
| special Agency | gives the agent power to perform a specific act. |
| What legal document Is used to give authority for universal agency? | Durable power of attorney |
| single agency broker | single agency is the practice of representing buyer or seller but never both in the same transaction |
| transactional broker | Facilitator is a licensee who assist the buyer and seller in reaching an agreement in real estate transaction but doesn't have an agency relationship with either party |
| other terms for transactional broker | Transaction coordinator, a finder, or a middle man |
| Dual agency | Broker is practicing under the common law of agency and agrees to represent both parties with their written permission. |
| In Texas how can a broker represent both parties? | Must Do so as an intermediary. The broker may appoint associates to work with the parties. one to work with one seller And the other to work with the buyer. |
| what are a principal's duties to the real estate agent? | (CRIP) Compensation, reimbursement, Indemnification, performance |
| Indemnification | to hold the agent harmless |
| agents responsibilities to the principle | (OLD CAR) Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care |
| Negligence | Failure to use ordinary or reasonable care |
| who is the only one that can earn a commission in real estate? | The broker. |
| What is needed for a broker to have a claim for a commission? | Be the procuring cause of the sale, produce a purchaser who is ready willing and able to buy. He must have a employment agreement In writing to enforce it. |
| What must a broker do to be entitled to a commission Specifically in Texas? | licensed by TREC, advise purchaser in writing to have the abstract examined by attorney or obtain title insurance. be the procuring cause of the sale. |
| Division of commissions is up to whom? | the listing broker |
| What must happen when you have agency coupled with an interest? | When the agent is also the buyer or seller. this must also be disclosed. |
| What are the 4 requirements for real estate to have value? | Demand, utility, scarcity, transferability |
| what principle of value defines the most important factor for an appraisal | High is the best use |
| What approach would an appraiser most likely use to value residential rent house in a neighborhood where the majority of homes are rentals? | Income approach |
| A license broker is advertising that he will perform a free appraisal if you contact him for a listing appointment He is not in violation of the law If... | If he is a licensed appraiser |
| What are some examples of functional obsolescence? | Unpopular floor plan, property that lacks updating for modern technology, curb appeal |
| According to the statute of frauds, What Leases must be in writing? | A lease greater than a year |
| Your client is an investor who would like to have the right to purchase a commercial track for $5,000,000 for the next 6 months what type of contract should you enter into with the seller? | An option contract |
| A signed sales contract That has not yet gone to closing is... | Executory |
| when does an offer become a contract? | When it is accepted and acceptance is communicated |
| T or F - an agent must treat both clients and with honesty and fairness question mark | true |
| A property manager is hired and signs a management agreement with the owner. at this time, the property manager is what type of agent? | A general agent |
| Parties have negotiated a contract with the closing set for 6/14 Time is of the essence. On June 12 the listing agent calls the buyers agent and tells the seller Is unable to close on the 14th. The seller can close on the 16th. At this time, what is true? | The contract is voidable by the buyer |
| A listing agent is showing his listing to a buyer customer and notices a problem with the exterior OF the property that he missed when he listed the property. What should he do? | Point it out to the buyer as it is a material fact |
| A buyers agent has accidentally forwarded confidential information about his buyers financial background to the listing agent what is true? | The buyers agent Is guilty of negligence And the listing agent must disclose the information to the seller |
| what is the difference between replacement cost and market value? | Appreciation |
| economic life is defined as? | years of profitable use |
| A buyer is interested in purchasing a home. Upon inspection he finds the house has 60 amp service. The inspector says that 100 amp service is usual and customary. The inspector has identified an example of what? | Functional obsolescence |
| an underage college students signed with a landlord. what is true? | The contract is voidable at the minors option |
| A seller comes into the office to sign a contract. the seller is stumbling and smells of alcohol. How do you proceed? | Send the seller home in a cab and tell them to return at another time. |
| area of competence | agents should practice what they know |
| what is the best way for an agent to become competent in a new area? | Hands on training. |
| Due diligence | Fair proper into degree of care an activity period. A buyer exercises Due diligence When having inspectors look at the property before closing. |
| due diligence is called what and done when? | Also called option., This is a time when the buyer has to inspect the property and can back out of the contract if he finds things that are unacceptable here |
| How would a real estate agent be considered Practicing law? | By giving legal advice, Interpreting legal documents, Preparing legal documents Such as well, deeds, deeds of trust, Advising a client on how to take title, Discouraging clients from seeking An attorney period |
| If a client wants to add terms to a contract, what should you do? | Advise them to seek Out the advice of an attorney. |
| When should a client seek the advice of an attorney? | Before signing anything they don't understand. |
| What is the federal do not call registry and what agency administers it? | This is administered by the Federal Trade Commission. |
| Can- spam act | Consumer privacy for emails falls under this app |
| what does an agent need to advertise a clients property on social media? | written permission |
| T or F - all laws that apply to print and broadcast advertising do not apply to social media. | False |
| requirements of a valid listing: | Signatures about owners, property description, list price, Definite starting in termination date, broker compensation |
| 4 types of listing agreement | Exclusive right to sell, exclusive agency, open listing, Net listing |
| Exclusive right to sell Listing agreement | broker is the exclusive agent and receive payment regardless how it is sold |
| Exclusive agency | Broker is exclusive agent and received commission unless the seller sells property himself |
| Open listing | Owner reserved the right to list with as many brokers as he chooses. he also reserved the right to sell the property himself and avoid paying commission. |
| Are open listings listed on the M LS question | No |
| Net property listing | All money over the amount the owner wants for the sale of the property is treated as the brokers commission |
| who owns the MLS? | The MLS is owned by The board of Realtors. |
| what happens if a seller does not want his property on the MLS? | The real estate agent must Follow the sellers wishes. |
| Who do listing belong to? | the broker |
| How are listing agreements terminated? | By fulfillment of purpose, Abandonment or cancellation by broker, Revocation by Principle, mutual consent, Acts of law including: bankruptcy, death, destruction of property, change in property Like outside forces changing zoning |
| Although sales contracts survive death, what happens to service contracts like a listing or buyers agreement? | They terminate |
| broker protection period | during the protection period, even though the listing. has expired, the broker may still be entitled to a commission if all the criteria is met |
| general agent | A property manager is a general agent. He has a broad scope of responsibilities and liabilities. |
| management agreement | Used to create this relationship between owner and a general agent And defines the role and responsibility of the agent and the owner |
| What topics are covered in the management agreement? | Accounting for funds, Maintenance, leasing, collecting rents, security deposit and budgeting. |
| T or F often a property manager will have access to a cash Or checking account to pay operating expenses And deposit rents and a separate trust account to hold tenant security deposit period | True |
| What is a property manager job? | Preserve the value of an investment property while generating income as the agent for the owners. the key responsibility of the property manager is to generate income for the owner. |
| net income for real estate | Gross income Minus operating expenses |
| Operating expenses | (recurring costs) taxes, insurance, utilities, payroll, repairs, replacement, maintenance. |
| T or F operating expenses include mortgage payments Debt reduction depreciation and capital improvement expenditures | False |
| What kind of insurance is necessary to compensate any individuals injured on a property? | Property and casualty insurance. |
| if you have contractors or employees, what should you have on them? | bonded under a surety bond |
| civil rights act of 1866 | Prohibits Discrimination based on color or race. |
| What does the federal fair housing act known as title 8 of civil rights act of 1968 do? | forbids discrimination on bases of color, race, national origin or religion |
| Is LGBTQ community Is covered by Civil Rights Act? | No |
| Familial status | Means a minor living with parent or Guardian, includes pregnant women |
| Handicapped includes who? | Mental or physical impairment, Alcoholics or recovering drug users and aids victims are included also. |
| When can modifications be made to an apartment By the tenant Always? | When handicapped they may modify to meet their needs At their own expense but must be willing to restore the apartments before moving out again at his own expense If the landlord requires it |
| how do senior housing properties Rent only to seniors? | There sometimes described as having a familiar status exemption. there are 2 ways that a community can qualify for senior housing. 100% Must be 62 or older. 80% must be occupied by 55 or older pier |
| When was TRELLA established | 1939 |
| When was TREC established | 1949 |
| Is there a protection for people having a certain occupations? | no |
| When is it NOT illegal to deny Renting to a handicapped person? | when the individual is a threat to himself or others. |
| Blockbusting | Causing panic selling by homeowners, also known as panic peddling |
| Steering | Directing buyers in 2 or away from certain areas because of their race color color, ect. this is also known as channeling. |
| equal housing opportunity poster | The law requires that every broker must display prominently. This poster is from HUD. By not having poster displayed is evidence of discrimination. |
| Prima facie | Evidence of discrimination |
| What does the Equal housing symbol look like? | House with equal sign inside |
| What are the penalties if a broker Practices discrimination? | Economic and non economic damage is, Junctions, Attorneys fees and civil penalties. There are no criminal penalties. The penalty for the first violation is up to $75,000. for each additional violation Up to $150,000. |
| What is a licencees best defense Against Complaints For discrimination? | Written records of interactions with clients and prospects. |
| Equal housing at is administered by whom? | HUD |
| What happens when HUD get a discrimination complaints? | First, try mediation To resolve the problem before pursuing the matter in court. |
| How long do victims have to seek mediation through HUD When discriminated against? | They have up to one year to seek mediation through HUD and up to 2 years to file a complaint with the court |
| ADA-what is it and when was it established? | americans with disability act. Passed in 1992 prohibit discrimination against individuals with special needs. The full and equal enjoyment of goods, facilities, accommodations, services and privileges. |
| in 1992 in an attempt to help the disabled, some of these changes were made: | ramp installations, curb cuts in sidewalks, repositions shelves and phones, flashing alarm lights, Braile markers on elevator control buttons, wider doors, elimination of turnstiles, alternate path for travel, levered door handles |
| Who is exempt from the ADA mandatory installations? | Single family homes, private clubs, historic buildings, religious organizations |
| Who can be punished in commercial buildings If ADA requirements Are not met? | Both the landlord and the tenants Renting the building. |
| What is the fine for non compliance of ADA? | Up to $50,000 for the first violation and $100,000 for each violation after |
| True or false, individuals with a history of mental impairment have been declared recovered, continue to be protected under ADA. | True |
| According to the IRS, an independent contractor status Must have 90% or more Income from what? | Commissions |
| What form is used to report to the IRS income for an independent contractor? | 1099 MISC |
| money conversion | broker uses a client's money or commingled funds for his or her own purposes. |
| How long should a broker keep copies of documents involved in his or her business? | A minimum of 4 years. |
| He sign in you UETA | 2 federal laws confirming the use of electronic documents and E signatures as being valid and binding on the parties to a transaction, As long as the parties have agreed to their use |
| vicarious liability | Created not because of the brokers actions But because of the brokers relationship with the liable party Who sponsored agents. |
| antitrust laws/ Sherman and Clayton antitrust act | Pass to preserve business competition by prohibiting monopoly Call me, monopolistic practices, and re string of trade. |
| True or false, competing broker to broker commission discussions are prohibited. | True |
| MLS requirement for minimum commission on listings | This would be a violation. any attempt to price fixed is a violation |
| Is boycotting discount brokers allowed question mark | No this is prohibited |
| what must be disclosed by an agent about the property? | Material facts. . Anything that influences the sale. Death on property due to material defect must be disclosed, due to violent crime must be disclosed. not required to disclose death by natural causes /suicide. never disclose death due to aids/HIV |
| stigmatized property | A property where there has been a murder or alleged haunting. It can also be considered stigmatized if it is in the vicinity of a known sexual offender. |
| megan's law | Federal law requiring all states released information to the public about known convicted sexual offenders when necessary to protect the public safety. Licensees are not required to disclose this information |
| Puffing | Puffing is marking. It uses adjectives in opinions rather than details and facts. Example: The most beautiful landscaping. |
| Latent defects | Hidden defects, this includes things like encroachments or zoning or deed restriction |
| what types of insurance should be carried by all brokers | errors and omissions insurance and general liability insurance |
| errors and omissions insurance | E&O ins protects both broker nad sales licensees from legal claims or liability for mistakes, errors and negligence in usual listings and selling activities. |
| General liability insurance | may include bodily injury, your property damage caused by direct or indirect actions of the insured. This protects a company's assets if someone is injured on company property |
| where does general liability insurance show up for the homeowner? | in the homeowners insurance policies obtained by individual homeowner |
| what does a homeowners insurance policy protect against generally? | Property damage due to a variety of reasons including but not limited to Fire, storms, smoke, and a list of other perils |
| How does general liability insurance work for a condominium complex question ma | Each unit owner will have their own policy to cover their unit in the complex will have a policy to....ors hallways parking lot sick several |
| who enforces environmental regulation? | EPA (Environmental Protection Agency ) |
| Lead | Found in paint in pipes and soil. Use of lead based paint disclosure for all properties before 1978 is required by law . |
| When is Lead hazardous? | When eaten or when inhaled or in dust particles . |
| How long must the seller keep record of disclosure for lead based paint? | 3 years |
| Landfills or waste disposal site | When improperly constructed they can lead to groundwater contamination. know locations, and disclosed. recommend water testing. |
| What can be the problem with Underground storage fuel tanks? | Leaking, can cause groundwater contamination. sometimes found on both commercial and residential properties these are commonly known As USTs. Recommend water testing . |
| Farming Herbicides and pesticides | Source of groundwater contamination. Recommend water testing |
| Asbestos | Asbestos Insulating material. Problems arise with removal. Can be friable, or easily crumbled. Dust is extremely hazardous. Seller must disclose the presence of a Asbestos. |
| Friable | Easily crumbled |
| ACM | Asbestos containing material |
| Asbestos abatement plan | |
| Radon | naturally occurring colorless and odorless gas produced by the decay of radioactive materials in rocks under the ground. |
| How does Radon enter the home? | Through the foundation. |
| Where is Radon more likely to exist? | In colder climates |
| How can Radon be mitigated? | through the installation of pipes and fans. |
| What does mold need to grow? | water, oxygen, nutrients and the right temperature. |
| How can newer, tighter built home avoid mold growth? | by adding fans to wet areas |
| What is a good source of nutrients for mold? | paper-this is why paper faced gypsum board, sheetrock, should never be used in shower or tub areas. |
| Greenfields | land that has never previously been developed |
| greyfields | land able to be redeveloped (ex: empty walmart) |
| Brownfields | Land know to be hazardous - most likely a hazardous industrial site. |
| Wetlands | are link between land and water. Areas where water covers the soil, or is present either at or near the surface of the soil all year or for varying periods of time during the year, incl during growing season. |
| Where are wetlands usually located? | Adjacent to or tributaries to navigable waters. |
| Who regulates the wetlands | EPA |
| What are other names for Wetlands? | mire, swamp, or marsh |
| Who oversees flood insurance? | FEMA oversees National Flood ins program in US. |
| How can you find where flood zones are? | On maps prepared by Army Corp of Engineers. |
| Why is it important to know where flood plains are located? | Property located in flood plain will be required to have flood insurance in addition to homeowner's policy if federally related financing was used to purchase the property. |
| clean air and water acts | guidelines for emissions of hazardous air pollutants and sets wastewater standards for industry |
| Who administers the clean air and water acts | EPA |
| Where does the water act apply? | Sets water standards for the industry. applies to all navigable waters incl. adjacent wetlands. |
| What does the EPA do? | Environmental Protection Agency is charged with administering all environmental laws in US. Also administer CERCLA. |
| CERCLA | Comprehensive Environmental Response, Compensation and Liability ACT. passed in 1980. created to super-fund and pay the cleanup for hazardous spills and waste. |
| Who has the authority to spend CERCLA money? | ONLY Federal, state regulatory agencies and Indian tribes |
| Who is ultimately responsible for hazardous waste spills | those who made them are responsible for the cost and clean up both past and present |
| Phase 1 ESA | should be recommended for any commercial property or any property where there is reason to believe there might be a hazardous materials on site. They prepare a report for the buyer of potential contamination |
| Environmental Impact Statement (eis) | For Gov projects, is done to determine the effect of the project on the community. Gives detailed report of the project |
| buffer zone | space between wetlands and construction |
| What should be considered when disclosing material facts? | land/soil condit., pest infes., toxic mold, other envir. hazards, structural issues (roof, doors, foundation, windows), condit.of elec. & plum. sys, nuclear plants, landfills, flood plns, endan. species, uninsurable prop. known alterations & additions. |
| What public controls, Statutes and Utilities must be disclosed? | zoning and planning, school districts, utility districts, tax districts, HOA |
| What does an inspection report show? | results of a thorough visual survey of a property. |
| What are some additional inspections that could be done? | boring insects, termites, lead-based paint, structural and mechanical systems, sewage facilities, radon and/or toxins. |
| Red Flag issues | something that would warn a reasonably observant agent that there may be an underlying problem. The listing agent is required to mention this to the seller and any poten. buyers. Ex: water bubbling up from under the ground at the site of fuel tank. etc. |
| What are a broker's liability considerations concerning a property listing? | courts have decreed that it is a broker's responsibility to discover and disclose that there may be problems on a property. |
| A high rise condominium property is advertised as having the most beautiful view of the city. This ad is best described as: | puffing |
| which of these facts must be disclosed? death due to structural issues? death due to HIV? suicide on property? Sex offender lives next door? | death due to structural defects |
| a lead paint disclosure is required for all properties build before | 1978 |
| True or false, The lead paint disclosure is required for all properties built before 1978 | True |
| True or false, the lead paint disclosure allows an inspection for 10 days after the date of the contract? | true |
| true or false, the lead paint disclosure allows a buyer to waive the right to an inspection | true |
| true or false, the property owner must remediate the presence of lead? | false, they must only disclose it |
| CERCLA is administered by: | EPA |
| which of the following used in 1978 is both extremely hazardous and friable? lead? Asbestos? Radon? or EMF's? | asbestos |
| which of he following properties would be the least desirable neighbor? landfill? greenfields? brownfields? or blackfield? | brownfields |
| A seller must keep a copy of the lead-based paint disclosure provided to the buyer for how long? | 3 YEARS |
| It has been found that mold can develop due to: | air tight windows and doors found in new construction |
| General liability insurance will: | protect a company's assets if someone is injured on company property |
| A condo owner's policy will most likely cover the owner if: | a guest slips in the owners kitchen |
| accurate record keeping is the responsibility of all brokers. If a broker's computer are stolen what steps could have been taken to protect records? | Offsite cloud storage |
| A license holder has just attended a training seminar about tech in real estate and is excited about using social media. What must an agent do before using social media? | get written permission from client before using |
| A sales agent is showing a property. He trips in the house causes major damage to property of the owner. What type of ins. will cover this? | liability ins |
| Prior to its amendments, the Civil Rights act of 1968, prohibited discrimination based on : | national origin |
| a agent working with immigrant buyers must be careful not to: | steer the buyers to a neighborhood based on the language they speak |
| An agent is accused of discrimination. What will HUD do? | Try mediation followed by a lawsuit if mediation fails |
| a mobility impaired tenant has leased an apartment in a complex with unassigned parking. He has requested an assigned reserved space near to his unit. What must be done? | The landlord must provide an assigned reserved space for the tenant near to the tenant's unit. |
| An investor has 15 rent houses. He has hired an agent to lease the houses. Would refusing to show houses to applicants 75 Yrs+ be a violation to fair housing laws? | No |
| which would not be an operating expense included in property management operating budget? taxes? mortgage pmts? insurance? reserves for repairs? | Mortgage payments |
| Who would most likely hire a property manager? | An Association |
| A broker is running short of funds to meet this month's operating expenses. He places a client's earnest money money in his business acct. and uses it to pay rent. After his next closing he put earnest money in a trust acct. The broker is guilty of: | Conversion |
| What are examples of due diligence? | Seller orders the deed to be prepared and agrees to pay for title policy, buyer obtains survey, buyer has property inspected |
| If property owner is going through a divorce and wished to sell, what signatures does listing agent need? | signatures of all owners on the listing agreement |
| wetlands typically contain what? | saturated soil |
| what is the maximum amount of time allowed for a victim to file a fair housing complaint with the courts | 2 years/24 months |
| A property manager notices the building stucco needs repair. He notifies the landlord and recommends a contractor. Landlord used contractor who does not do a good job. The new stucco leaks and mold grows. Who is responsible? | Landlord |
| An apartment bldg owner has renovated and modified several units to be handicapped accessible. Can he advertise this accommodation? | Yes |
| Another term for wetlands | mire, swamp |
| what is the purpose of a property management trust account? | to hold tenant security deposits |
| What is the most common choice for financing real estate? | Mortgage loan |
| mortgage loans fall into 2 categories what are they? | Conventional and non conventional loans |
| conventional loan | One that is neither federley Insured nor guaranteed. it is not an FHA or VA loan. |
| non conventional mortgage loan | In an effort to encourage homeownership, the federal government in ins. and guarantees these lns. through FHA the VA Department of Agriculture. all federal back mortgage loans feature relax lending guidelines and payment terms |
| contract for deed | also called installment contract, land contract, real estate contract this is an instrument for financing the sale of real property. This is seller financing that transfers title when paid in full. |
| title retention | Protects the seller. if the buyer defaults, the seller can regain possession. All Money up to that point is considered rent. contract for deed benefits the seller. |
| who does title for deed benefit? | seller |
| what type of contract is a contract for deed? | executory. |
| the titles in a contract for deed of the parties are: | vendor and vendee |
| what happens if a buyer is late or misses a payment in a contract for deed? | It can erase all previous payments |
| mortgage | A pledge of real property as security for promissory note. |
| hypothecation | the act of pledging real property as security for debt |
| mortgagor | borrows money and give the mortgage as a pledge to the lender |
| mortgagee | lender |
| what creates the lien? | Mortgage when recorded with the county |
| note or promissory note | instrument for the debt. personal promise to pay. It is not recorded. |
| what does promissory note include? | terms, rate, and amortization schedule. |
| lien theory state | mortgage loan is used for purchase, at closing the buyer receives title and lender has the lien. |
| title theory state | at closing lender gets title and will hold until lien is satified or paid off. (like a car title) |
| deed of trust | used in tx instead of traditional mortgage. The deed contains a power of sale clause. This allows for a non judicial foreclosure. |
| What does power of sale clause do? | allows for a quick foreclosure |
| what type of foreclosure is preferred by lenders? Why? | non-judicial. It is quicker and costs less. |
| The deed of trust involves three parties, who are they? | borrower/trustor, lender/beneficiary, and trustee |
| what are the two functions of trustee in a deed of trust? | Release lien when note is paid. Will foreclose in event of default |
| Name sources of financing for real estate | primary and secondary markets. |
| Primary market financing | where consumers go to borrow money. Mortgage bankers, mortgage brokers, banks, credit unions, etc. or self financing |
| Secondary Market | where lenders go for money. Exists for the purchase and sale of existing mortgages. Provides greater liquidity by supplying a steady flow of funds from investors. |
| conforming loans | mortgage loans qualified to sell on tge secondary market. written on uniform docs and meets the standard of fannie mae and freddie mac. |
| what type of loan would not be a conforming loan? | one that does not meet secondary market guidelines. Loans like sub-prime loans would not qualify. |
| Who are the secondary market warehousing agencies? | Fannie Mae, Freddie Mac, Ginnie Mae. |
| whose forms do lenders use to ensure their loans can be sold on the secondary market? | Freddie Mac forms |
| fixed amortized loan | equal regular pmts of principal and interest until the loan is repaid. Interest is paid in arrears at the end of each payment period |
| term loan | interest only until end of term, when the entire principal is repaid. This is a zero amortization loan. |
| Straight loan | same as term loan, zero amortization, interest only |
| blanket loan | covers more than one piece of property. Several lots on one note. May have a release clause |
| release clause | allows borrower to obtain partial releases of specific lots by making require lump sum payments |
| package loan | incl real property and personal property like a furnished condo |
| Why do builders use blanket loans? | to save on closing costs |
| budget loan | incl, principal, interest, taxes and insurance in the monthly pmt known as PITI. lns including FHA, VA and most amortized fixed rate lns are budget mtgs. |
| escrow account | used to hold taxes and insurance pmts. |
| what are other terms for an escrow acct? | impound, trust, or reserve account |
| loan servicer | party managing escrow account |
| PITI | includes principal, interest, taxes and insurance |
| balloon loan | partially amortized loan with final pmt substantially larger than others. |
| Benefit/disadvantage of balloon loan | lower interest rate. disadvantage is high cost of refi |
| participation loan | 2 or more lenders invest in one loan. Lenders share the little risk. Lenders also share profitability of the property, In addition to collecting principle and interest on a loan |
| Shared appreciation mortgage | if lender collects principle and interest and Shares in the profits when the property is sold |
| Open end mortgage | Permits additional borrowing on the same note. Sometimes called a credit card mortgage. Or Home equity line of credit HELOC |
| ARM | Adjustable rate mortgage . Loan with an interest rate subject to change as conditions in the market changed. Rate is tide to index such as Treasury bills, And will be stated as the index plus a fix percent. |
| To cap rates for an ARM | Annual and lifetime limiting The amount of change in the interest rate each year over year and life of the loan |
| Margin on an ARM | The percentage added to the index |
| When would an ARM be a poor choice for a loan? | When the buyer is on a fixed income . |
| Construction loan | Short term loan with funds advance periodically during the stages of construction . this isn't term loan, interest only. the interest rate on the loan is higher than the rate of a permanent loan |
| Reverse annuity mortgage | Allows homeowners 62 years or older for all borrowers involved to borrow against the equity without making any payments on the amount borrowed. Lender makes payments to borrower. The loan is due when the last surviving borrower leave the property due to d |
| What is the most expensive home equity loan? | Reverse annuity mortgae |
| Subprime loans | Loans with risk based pricing , the rates are not published. Borrowers will pay one to 5% higher than those with good credit. Loans Will likely have a repayment penalty to protect the lender from loss of interest |
| Prepayment penalty | Protect Lender from borrowers paying loan off early and losing interest. |
| Most important government or non conventional programs Include who? | FHA insured and VA guaranteed loan |
| What type of appraisers Do FHA and VA loans need? | FHA/VA approved appraisers |
| FHA | Federal Housing Administration, insure the loan. Insurance protects the lender. It ensures the whole amount. Insurance is paid for by the borrower. |
| MIP | Mortgage insurance premium , Insurance on the FHA loan . Paid monthly In addition to PITI payment |
| Who overseas FHA? | HUD |
| What are 2 advantages to FHA loans | Ratios are slightly more lenient allowing borrowers to have more debt and still qualify, Loan to value are very high allowing buyers with little money for down payment to purchase a property |
| Who can pay points on FHA loans? | Either buyer or seller |
| PMI | Private mortgage insurance, Required by lender if the borrower has less than 20% down. This is the same as MIP but on a conventional loan |
| How does the VA handle loans for military? | Depart of Vet affairs, GUARANTEES repayment of the loan. guarantee is for top 25% of loan. Free to Veteran and protects the lender. |
| VA has a required funding fee, who pays this? | can be the buyer or seller |
| how does a veteran get his entitlement restored after allowing his loan to be assumed | the buyer assuming the loan must be a qualified veteran and use their own entitlement. Vet would also need release of liability. |
| Does the buyer have to be a veteran to assume a VA loan? | No, but the vet's entitlement will not be restored is buyer in not a qualifying vet using their own entitlement |
| parents and siblings are entitled to VA loans? | False |
| certificate of eligibility | from VA. Gives Veteran ability to use VA loan |
| what is the certificate amount for a veteran shown on certificate of eligibility? | certificate amount X 4 = approved maximum loan amount. |
| what must happen before a VA loan can be foreclosed on? | Va must be notified. |
| Serviceman's readjustment act (GI Bill) | states that foreclosure for active vets must go through VA |
| True or false Both FHA and VA loans require owner occupancy and both types of loans are assumable ? | true |
| What are the 7 mortgage clauses? | Acceleration clause, alienation clause, Defeasance clause, Escalation cause, Prepayment clause, Subordination clause, Assumption clause |
| Acceleration clause | A provision in a written mortgage stating that In the event of default the whole amount of principle becomes due and payable |
| Alienation clause | Due on sale clause states that the balance of secured debt becomes due if the property is sold By the mortgagor or without the mortgagees approval |
| Defeasance Clause | States that the lien is defeated when the debt is repaid |
| Escalation clause | Allows the lender to raise the existing rate. an escalation clause is usually found in and ARM |
| Prepayment clause | A statement in a mortgage that states can pay the entire amount or the stated amount prior to the due date in the note. When the loan is prepaid the borrower is responsible for the interest up to and including the date of payoff |
| How is a prepayment penalty calculated? | The penalty is generally calculated as a percent of the loan balance |
| Subordination clause | Allows the lender to move or to take a lower lien position. This clause would be found in a second mortgage, a home improvement loan, or a home equity loan |
| Assumption clause | Allows a new borrower to take over the payments On an existing loan under specified terms and conditions |
| Straight assumption | New buyer is approved, and takes over payments and liability. This is also called lone novatian . this will not impact the sellers credit rating |
| Subject To | The buyer takes over payment. But is not liable for the loan. So original borrower remains liable. This can have an impact on the sellers credit rating . |
| who coordinates the loan from the application to closing for the lender? | loan processor |
| lenders typically require what? | at least appraisal, credit report, job history, and evidence of down payment funds. |
| what are lenders qualifying debt ratios | 26-38 % would be typical debt ratios for conventional. loans |
| front ratio | amount of monthly gross income that can be used to pay PITI - 28% |
| back ratio | 36% - percentage of monthly gross income that can be used cover all consumer debt including PIT |
| LTV | loan to value - ratio is the loan amount as a percent of either the price or the appraised value, whichever is lower |
| discount points | Prepaid interest in taxable deductible. they raise the return or yield to the lender |
| Origination points | Loan processing fees. they are not tax deductible. points are paid at closing |
| How much is An origination point? | 1% of the loan |
| There are 2 types of Point , what are they? | Discount and origination |
| Equity | The difference between the market value of a property in the outstanding debt. at closing, the buyers equity is the amount of the down payment. The sellers equity is the sale price minus the loan on the property |
| Truth in lending act , reg z, TILA | At is administered by the Consumer Financial Protection Bureau CFPB , covers RE loans any value, & RE loans up to $25,000. It allows consumers to understand the True cost about borrowing money. Regulate Broadcast come up print and Internet advertising |
| APR | Annual percentage rate, tell the borrowers the total cost of borrowing, Effective rate of interest borrower actually pays. it is usually higher than the interest rate because it includes all charges not just the interest |
| trigger terms or trigger words | credit terms - they tell a buyer financing is available without giving enough information. They trigger a need for full disclosure. |
| examples if trigger words | monthly pmt, interest rate, term |
| RESPA | Real Estate Settlement & procedures, regulates closing on 1-4 family residential property with federally related financing. (apt complexes not covered) |
| who administers RESPA? | Consumer Financial Protection Bureau |
| What does RESPA actually do? | Allowed any party to choose title company, And any party can pay for the title policy . Prohibits kickbacks. Rebates are OK with our RESPA |
| Rebate | A return of a portion of a commission to a client with in a transaction in may be in the form of cash, gift certificates, appliances, frequent flyer certificates, etc. |
| Referral | Commission may only be paid to another license Holder. a small referral gift can be given to an unlicensed person who provide a referral to a license Holder. Texas limits this amount to $50 But not cash |
| What is the limit In TX referral fee to an unlicensed person? | $50 but not in cash. |
| What is the RESPA restriction For tax and insurance escrow account? | No more than 2 months in advance . |
| Dodd Frank act | Directed the CFPB 2 give the truth in lending cost of financing disclosure and RESPA good faith estimate of closing costs into one form-Loan estimate form |
| When must the loan estimate form be provided and by whom? | Must be provided by the mortgage broker or lender to the consumer upon receipt of application or with in 3 business days of a loan application period Business days are Monday through Sat. |
| What must the Buyer do when he receives the loan estimate form? | Must acknowledge receipt of the form. the borrower has 10 days after he received the form to respond to the lender in indicate whether he wants to continue with the loan application or cancel. |
| Closing disclosure form CD | Must be received by the consumer at least 3 business days before closing and the lender must have proof of receipt |
| what happens if APR or loan product is changed at the last minute? | The 3 business day that consumer must received before closing starts again! |
| ECOA | Equal credit opportunity act. This law prohibits discrimination by lenders on the basis of sex, marital status, race, religion, age, participation in public assistance . |
| When is the only time lenders can deny credit? | If your sole source of income is Alimony, child support or pension plan. Child support is the most likely reason for denial as it ends. Lenders can also deny financing if income is commission based. |
| Who administers The equal credit opportunity Act? | CFPB Consumer Financial Protection Bureau |
| community Reinvestment Act? | law states banks must meet needs of community which they are chartered to do business. No matter their income. |
| Redlining | refusal to lend in a particular geographic area - this is prohibited |
| who are the only ones that can be guilty of redlining under the Community Reinvestment Act? | Only banks |
| who administers the Community Reinvestment Act? | Consumer Financial Protection Bureau. |
| What Prevents Redlining By insurance companies ? | Federal Housing laws |
| Predatory lending | Unscrupulous lender takes advantage of consumers lack of knowledge regarding lending practices. This includes steering, too high rate loans, falsifying loan documents, forging signatures, changing terms at closing and requiring Credit |
| usary | charging an interest rate higher than the legal limit. |
| two financial closing processes | 1. closing of the loan between buyer and lender 2. closing on the property |
| consummation | closing on or settlement on the property |
| what is the purpose of the closing disclosure? | to present divided charges between the buyer and seller. |
| how are things on the CD usually prorated? | through the closing day of the property |
| what does prorating mean? | this means dividing up items to pay to the buyer and seller like taxes, HOA fees, rent etc. |
| who normally pays for closing day in prorated expenses? | seller |
| whose responsibility is it to record the deed with the county once the sale is completed? | Escrow agent at the title company |
| Reg z applies to? | all real estate loans |
| the main purpose of Reg Z? | To notify borrowers of the cost of credit |
| What is a requirement of CFPB, Consumer Financial Protection Bureau REGARDING LENDING COSTS? | Lenders must provide loans with the LE form at the time of or written Within 3 business days of the application |
| Which of these Closings would be covered by our RESPA? Mobile home, retail shopping center, apartment complex, condominium | Condominium |
| When does the buyer under contract for deed get title To the property ? | When the final loan payment is made |
| What is another Name for contract for deed? | Installment contact |
| What department of the government overseas be FHA insurance program | HUD |
| A buyer is aware that interest rate should go down over the next few months period what type of loan should he get to enable him to buy now and take advantage of the declining rates in the future? | ARM |
| Which of the following will not harm or negative impact a sellers credit score? Short sale, foreclosure, straight assumption, An assumption subject to? | Straight assumption |
| In rental properties, increased demand can be the result of what | High mortgage interest rate |
| Who would not be eligible for a VA loan? Disabled that, Parents or siblings of a vet, Active duty Vet, retired vet? | Parents and siblings of a Vet |
| What is required of a loan servicer before foreclosing on a VA loan ? | The VA must be notified before the foreclosure |
| Who must be notified to take money out of a trust account in a real estate transaction ? | Both buyer and the seller |
| What type of mortgage loan would allow the property owners to borrow additional funds at future dates? | Open loan |
| AREA FORMULA | L X W |
| FORMULA TO CHANGE SF TO SQ YARDS | DIVIDE BY 9 |
| 1 ACRE = HOW MANY FEET | 43,560 |
| 1 MILE = HOW MANY FEET | 5280 |
| WHAT IS THE FORMULA FOR TAX RATE FORMULA FOR MILLS? | TAXABLE VALUE DIVIDE BY 1000 X MILLS |
| WHAT IS THE FORMULA FOR MONTHLY PRINCIPAL AND INTEREST AMOUNT | LN AMT DIVIDED BY 1000 X LOAN FACTOR |
| What is the market value COST of PROPERTY FORMULA | LAND+BUILDING REPLACEMENT COST-DEPRECIATION=MARKET VALUE |
| POTENTIAL GROSS RENT | MONTHLY POTENTIAL RENT OF ALL UNITS X's 12 |
| ACTUAL GROSS RENT BEING MADE | OCCUPANCY RATE X's POTENTIAL ANNUAL RENT |
| Take back | seller financing |
| The fact that an indiv must go to the land describes which or the physical characteristics of land? | Immobility |
| John and Mary are co-owners of a property. John 60% interest an Mary has 40% what type of freehold estate do they have? | Tenancy in Common |
| a property is surveyed to determine the legal description. The surveyor works from a point of beginning and measures terminal points and angles. What method of land description is he using? | Metes and bounds |
| Mary and John are married with grown children. Both are intestate. If John dies and Mary immediately becomes the owner of their home, what type of ownership did they have? | Tenancy by entirety |
| the local gov. needs your land to build a new high school. They have the right to take you land for the public good. This is called: | Eminent domain |
| You have recently purchased property in an area regulated by zoning. It has come to your attention that you have a zoning violation on the property. What should you do? | Request a variance from the zoning board |
| one of the property owners in a subdivision is violating the deed restrictions. What can the other owners do to get him to comply? | seek a injunction from the courts |
| your property borders a non-navigable waterway and you have reparian rights. You have built a 10-foot pier at the water's edge. How do you measure your property? | to the middle of the waterway |
| Mary, a single woman, has no children. She owns real property and dies intestate. What happens to her real property? | The court will appoint an administrator and it will be distributed to her heirs by the law of descent. |
| a property owner has a gas station on his land. The zoning committee changes the zoning to R-1. What must the owner do? | nothing - his property is automatically considered a non-conforming use. |
| a property owner receives a notice that his land is in an improvement district. What does this mean? | He will receive an additional tax bill. |
| Owner install chain link fence on his property. He has received an official notice requiring the removal of this type of fence. This fence is most likely a violation of what? | Deed restrictions or deed covenants |
| a single property is regulated by building codes, zoning and deed restrictions. The rules are in conflict with one another. Which must the property owner obey? | Whichever rules are the strictest or most limiting. |
| which of the following conveys title to real property and insures a good title? General warranty deed, policy of title ins, title commitment, attorney's opinion of title. | General warranty deed |
| buyer found defect in title and suffers loss due to defect. Title co. has compensated buyer for loss. Buyer is also awarded a judgment against the seller. The title co. is entitled part of the judgment as reimbursement. This describes: | Subrogation |
| a landowner wants to sell his property. A title search uncovers a cloud on the title. There is no one available to sign a quit claim deed to clear up the cloud. What can the owner do? | Pursue the action to quiet title in court. |
| appraiser are most often asked to determine what? | market value |
| a builder is using inferior siding and paint in a effort to construct affordable housing. This would be an example of : | functional obsolescence |
| a builder is successful in new subdivision. Homes are selling and he is making good money. 2 bldrs arrive and sell in same subdivision. All experience a lower level of profit. This demonstrates whate principle? | The principle of competition |
| When measuring gross area the appraiser measure the what? | All area under the roof |
| What is the definition of market value? | The most probable price. |
| In preparing an appraisal which of the following would have the least impact on the appraiser's estimate of value? physical deterioration, functional, economic or external obsolescence? | physical deterioration |
| An appraiser has been hired to value a commercial office building that is fully leased. What approach to appraisal will he use to determine his opinion of value? | Income approach |
| What is the least important factor for a license holder preparing a CMA? | The information from expired listing of unsold property in the area |
| When using a market data approach, an appraiser should use what? | 3-5 comps, comps no more than 6 months old, best comp is on with few adjustments |
| what expenses of home ownership can a buyer deduct on his income tax? | Interest and taxes |
| mark has an option to purchase Bob's property. The option expires at the end of the month and Mark would like to extend the option. What does he need to do? | Pay an additional option fee |
| Mark has OPEN listing on property. He bring same buyers 3 times to property. He talks with seller. Seller says not to show any more that the property is sold. Later he learns they sold to the couple he took 3 times. What commission is he entitled? | None, because it is an open listing and he did not present an offer. |
| The best description of a counteroffer is: | A rejection of an offer and a new offer is made |
| which of the following is voidable? contract for cash, verbal lease for 7 mo, contract with minor, contract to sell illegal drugs? | contract with a minor |
| which of the following terms is used to describe a situation where a buyer and seller agree to terminate a contract? Mutual rescission, novation, assignment, default | mutual rescission |
| Seller's property is listed for $399k, the get offer of $389k. They counter with $393k. Buyers do not respond and get another offer for $395k. Can the accept new offer? | Yes, they must first withdraw their counter offer. |
| What does a broker owe customers? | honesty and fairness |
| what are an agent's duties to his principal? | Care, obedience, accountability, loyalty, confidentiality, disclosure |
| An agent has acted without authority to do so. His principal has found out about the actions and accept them. What kind of agency does this describe? | agency by ratication |
| a broker has written permission to represent both the seller and the buyer as dual agent. Under these circumstances, which of the duties of the agent would be the easiest for him to fulfill? | Accounting |
| Property at 123 main has been listed by Mary, at ABC Realty for several weeks. Last week, Mary died. What effect will her death have on the listing agreement? | None |
| Which of the following is not a duty of an agent? Obedience, care, trust, loyalty | trust |
| Assigned employment agreement is necessary to what? | sue for a commission |
| a listing agent would probably not disclose: death by natural causes, structural defect, presence of LBP, presence of endanger species? | death due by natural causes |
| which death on a property should never be disclosed? murder, suicide, HIV/Aids, Natural causes | HIV/Aids |
| which of the following properties would be the least desirable neighbor? Brownfields, greenfields, landfill, water disposasl treatment facility | brownfields |
| How long must a seller or landlord keep a copy of the Lead paint disclosure? | 3 years |
| all of the following are hazardous that a license holder should be aware of except: radon, asbestos, Electromagnetic field, acrylic paint | acrylic paint |
| If buyers agent is concerned about the possible presence of Radon, what should he do? | Recommend an inspection for hazardous materials. |
| a chemical manufacturing co. purchases a plant. After closing they discover previous owners had spilled hazardous material on the land. According to CERCLA, who is liable for the cost of the cleanup? | Both the new and the old owners. |
| Who is responsible for providing a lead paint disclosure? | The seller |
| a property has lbp in the interior and the exterior. What is true? | the seller has no duty to remediate the paint, only to disclose it. |
| Agent has home built to resemble Antebellum mansion. She would like to market it. How can she work it? | Antebellum style mansion |
| Under a new construction Owner Warranty policy, would the AC unit be covered? | No, this type of policy covers improperly built itmes. |
| In a senior housing community, as least one person 55 and older must be living in what percent of the units? | 80% |
| after several years of selling residential property a license holder wishes to sell industrial real estate. He should what? | Align himself with a broker or sales license holder who has experience in industrial property in order to learn about and become proficient in industrial sales. |
| seller covers up foundation problems by painting over cracks and does not disclose. Buyer purchases and finds later. Who is liable? | The broker will be protected by the E&O insurance because the problem was not able to be detected by visual inspection and the seller misrepresented the property. |
| T or F - E signatures or Electronic signatures are valid for parties that have agreed to their use with the consent of other parties. | True |
| A practice of trying to induce homeowners to sell by convincing them to a minority group is moving into the area causing property values to drop is called? | blockbusing |
| The main goal of the ADA is to remove barriers. What type of things are required? | wheel chair access, Braille markers on elevator and control buttons, levered door handles |
| According to Reg Z, what is the Letters APR considered? | a trigger term |
| T or F - The owner-occupant of a three-family house can discriminate in renting a unit in the house. | TRUE |
| T or F - A FSBO who owns no more that four homes can discriminate when selling a home? | FALSE |
| T or F - Churches can restrict occupancy of church owned rental property to church members only. | TRUE |
| T or F - Private clubs can prevent non-members from staying in club run properties | TRUE |
| Young couple wants to buy a home in a high risk neighborhood. Their loan is approved but insurance co. will in insure in that neighborhood. What is the ins. co. guilty of? | redlining |
| what form must the lenders provide the consumer and when must it be provided? | CD at least 3 business day before closing |
| which of he following does NOT pledge property as security for a debt? Mortgage, deed of trust, contract for deed, note | Note |
| which of the following instruments is the promise to repay a debt? mortgage, deed, deed of trust, note | note |
| What is the advantage to the borrower of a VA Loan? | The guarantee on a VA Loan is free |
| John has a loan with equal pmts of principal and interest. Before the debt is satisfied, the balance is due in a pmt substantially larger than the others. This best describes what? | Balloon loan |
| for what group of buyers would the ARM be the least desirable? subject to job transfer, first time buyers, fixed income, those seeking low mo pmts | fixed income |
| What is a point? | 1% of loan amount |
| where does the secondary market get its funds | from investors |
| a retired couple on fixed income and own their home. They are having a hard time financially but do not want to sell their home. What type of loan should they consider? | reverse annuity mortgage |
| When a landlord allows the property condition to deteriorate so much that the tenants are forced to leave it is called: | Constructive eviction |
| An investor has borrowed money to build shopping ctr. His lender has provided a good rate, but when property is completed and sold the lender will collect the amount borrowed plus a % of the developer's profits. What is the loan type? | Shared appreciation loan |
| John leased commercial property and pays rent based on the receipts of his business. what type of rent does he pay? | Percentage rent |
| Which of the following is an operating expense? Mo. mortgage pmts. interior painting of apartments, depreciation, construction of new wing of the building? | interior painting of apartments |
| the property management agreement creates what kind of agency? | General agency |
| who would use a remedy of forcible entry and detainer? | the landlord |
| the landlord pays the expenses of the property. The tenant pays rent and utilities. What kind of lease is this. | net lease |
| Investor has borrowed money to build shopping ct. He has great rate from lender. But when property is done and sold lender will collect an amount borrowed plus a percent of profits. What type of loan is this? | Shared appreciation loan |
| When a landlord allows the property condition to deteriorate so much that the tenants are forced to leave it is called what? | constructive eviciton |
| a couple is moving to a new city and would like time to learn the city before the purchase of a home. What type of lease should their agent recommend. | periodic tenancy |
| couple lease apt for 1 year. During the year, they are concerned about crime and ask for permission to install alarm. The landlord says yes. When the lease is up what happens to the alarm? | The system stays as it is now a fixture. |
| what type of verbal lease agreement is enforceable? | lease for less than 1 year. |
| John has 3 yr office space lease. In 2nd year, the landlord dies. His heirs inherit the property. They do not want it and they sell it. The new owner wants John to move out. Does John have to leave? | No, because he has a lease. |
| what type of business entity is owned by shareholders, but avoids "double taxation"? | An S Corp |
| What is the difference between a general and limited partner? | A general partner has full liability and a limity partner has limited liability. |
| a one on one relationship between a broker and client is called what? | agency |
| a license holder sponsored by a broker must have a written agreement for what? | to work as an independent contractor |
| Broker has a trust account set up to hold client funds. He has earnest money deposits from several clients in the account at the same time. Is this acceptable? | Yes, acceptable as long as he has written records. |
| which of the following actions of a broker could jeopardize indep contractor status of the license holders he sponsors? making work full time, pay their own income taxes, work scheduled hours, keep their license active. | requiring license holders to work scheduled hours. |
| a buyers agent is working with a buyer to buy a property. Buyer is concerned about location of fence as it appears to be encroaching. What should buyers agent do? | Recommend a survey |
| a couple is buying a home and ask their agent how they should take title so that if one spouse dies, immediately the surviving spouse will be the sole property owner. The agent should what? | tell them to talk to an attorney, because the agent is not permitted to give advice on how to take title. |
| Agent is representing a couple purchasing their first home. She shows them many properties until they find one. They have some concerns about the contract and ask to speak to an attorney. Agent should: | Send clients to an attorney of their choice before they sign. |
| Agent advertised a listed property as having the most beautiful landscaping in the neighborhood. This is called what? | puffing |
| Agent is showing her own listing to buyer customer. While showing the property she notices that there is a serious slope to the porch floor. What should she do? | She must point it out to the buyers. |
| which of he following is false about property manager? Universal agent to owner, should have mgmnt agreement to define role, He should have E&O ins., He works to preserve value while generating income? | He is a universal agent to the owner |
| Leased property is for sale. Tenant has a 4 yr. lease. Tenant has the right to match or better any offer before it is sold to anyone else. What agreement between the landlord and tenant gave the tenant this right? | A lease with a Right for first refusal |
| t or f - The broker is only legally liable for the acts of a license holder who is an employee | false |
| t or f - the broker is only legally liable for the acts of a license holder who is an independent contractor? | false |
| t or f - the broker is legally liable for the acts of all license holders, independent contractors and employees alike. | true |
| t or f - the broker is not legally liable for the actions of license holders he sponsors. | false |
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delorya
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