Alice tenders $500.00 earnest money to Bill's agent. What must Bill do with the earnest money?
A. Do whatever the contract says to do with the earnest money
Absent a clause to the contrary, earnest money must be deposited into a broker's trust account. However, if the contract says to do something else with the earnest money, then the terms of the contract must be followed.
The Real Estate Settlement and Procedures Act is administered by:
B. The Department of Housing and Urban Development
HUD administers RESPA rules and compliance.
Cindy Agent wishes to leave her company, ABC Real Estate, owned by Bob Broker. She currently has 3 sales " pending" and 4 active listing. What will happen to these
B. The active listings belong to Bob, and she will be paid for pending sales as per her contract with the office
Unless stated otherwise in her agreement with the office, all listing belongs to the office. Handling of pending sales (ones that have sold and not yet closed) should be covered in her employment agreement.
What is the form of co-ownership in which two or more persons each have an undivided interest in the property but no right of survivorship?
B. Tenancy in common
A and B both include a right of survivorship; tenancy at sufferance deals with leasehold estates
The seller lists her house with New Age Realty. The next day, the seller goes to work and mentions listing her house. A co-worker expresses interest in the listing. What kind of listing would make the broker entitled to a commission if the co-worker makes an offer acceptable to the seller?
D. Exclusive right to sell
Only the exclusive right to sell listing agreement entitle a broker to a commission no matter who brings the buyer
A borrower pays off his loan. However, the lender refuses to cancel the mortgage. Which of the following clauses of a mortgage has the lender violated?
A. Defeasance clause
A defeasance clause states that when the loan is paid, the mortgage is void. The bank's failure to cancle the mortgage of record is a violation of this clause. The habendum clause is the "to have and to hold" clause. The conveyance clause states that the property is being coveyed in a deed, not a mortgage. The notarial clause is signed by the notary, stating that the mortgage was signed freely and voluntarily by the borrower.
Of the following, which is not an encumbrance?
Since a license is revocable, it cannont burden the property owner's title. A license does not create an interest in another's land.
What is holder in due course?
C. One who acquires a negotiable instrument in good faith and for consideration
A secondary market investor will only buy negotiable instruments as a hoder in due course.
"Net income" best describes
C. Income after expenses
Expenses such as trash removal, repairs, and maintenance subracted from gross income equals net income.
What power does the government exercise when it takes private property for public use
B. Eminent domain
Condemnation, or appropriation, describe the act of taking the land. Eminent domain is the power that makes it possible.
Bob and Jerry take title together. Bob owns one half and jerry owns one half of the same property. What form of co-ownership does the law presume?
C. Tenancy in common
Severalty is not a form of co-ownership. Estate by entireties applies to husband and wife with right of survivorship. Tenancy in common would be the presumed form of ownership, since the question does not st ate whether the two owners take property with or without the right of survivorship. If the property is equal without the right of survivorship, it is tenancy in common. If it is equal with the right of survivorship, it is joint tenancy.
Tom, Rick, and Harry own a house. When Rick dies, his heirs receive his 1/3 interest. What type of co-ownership did they have?
A. Tenancy in common
When an ownership interest is inheritable, the only allowable kind of co-ownership is tenancy in common.
Which of the following is a general lien?
D. Judgment lien
A judgement lien is a lien, acquired in a court of law, which attaches to all the defendant's property (both real and personal). A Mortgage is a specific lien against real property only. The property taxes are a lien against the property being accessed, and a mechanic's lien is specific to a certain property. An easement is not a lien, but it is an encumbrance on the use of property. The phrase to remember. "while all liens are encumbrances, not all encumbrances are liens."
The mortgagee is:
B. The lender
The lender is receiving the mortgage, so it is the mortgagee.
All of the following are examples of specific liens except:
Judgment liens are general; they can attach to any property a debtor owns.
What regulation under the Truth-in-Lending Act requires a lender to disclose credit costs?
A. Regulation Z
Regulation Z of the Truth-in-Lending Act does ot set a limit on what lenders can charge for interest, but does require all charges to buyer to be disclosed.
What title policy gives the holder of the right to use someone else's land?
The holder of the right to use another's land under an easement policy in the title.
What law creates an automatic lien on a commercial property, subject to the listing agreement?
A. Broker lien law
In some states, an automatic lien attaches to the commercial property to secure the payment of the broker's commission.
An appraiser has selected three comparable sales for the property she is appraising. After making adjustments, she has adjusted sales prices of $100,000, $107,000 and $110,000. How does she reconcile these three different number?
B. Use a weighted average, giving the most weight to the most similar property
There is no "magic" formula. The appraiser must use her best judgment. Usually, the most weight is given to the comparable with the least adjustments.
A sales person commits racial steering if:
D. All of the above
Racial steering refers not only to directing clients to or away from certain neighborhoods, but also to directing clients to agents of the same race, religion, etc.
The money to fund FHA loans is provided by
A. Lending institution
Lending institution provide the money for all loans. FHA insures that a loan will be repaid to a lending institution, while VA guarantees the fact that a loan will be repaid to a lending institution.
What document lets buyer and seller see the costs involved with closing the transaction?
C. HUD-1 statement
The good faith estimate is for buyers. The escrow and purchase agreements only illustrate the agreement.
The Doctrine of "Caveat Emptor" implies which of the following
A. A buyer is responsible to examine a property thoroughly, rather than relying on the seller to point out potential problems
The Doctrine of Caveat Emptor puts the duty on the buyer/customer to inspect the property regardless of the seller's assurances.
What accounts holds 1/12th of the taxes and insurance to be paid when those items are due?
The escrow or reserve account is a separate account from the transaction, used for the payment of accrued items.
Which of the following would be the best example of functional obsolescence?
C. Walking through one bedroom to reach another
Functional obsolescence is a result of faulty design or a feature rendered inferior because of advances in construction techniques. It would not include broken or damaged parts of the property or anything.
In regards to settlement statements, the initials RESPA stand for
A. Real Estate Settlement Procedures Act
The other three choices are all finctional
A closing conducted by a disinterested third party best describes a/an
D. Escrow closing
A closing conducted by a disinterested third party is an escrow closing. The roundtable closing involves all of the parties to the transaction signing documents at the same place at the same time.
A right that runs with the land is said to be
C. An appurtenance
Appurtenance literally means "runs with the land." The "bundle of rights" are appurtenances in property, as they run with the land forever.
Prorated taxes would be shownon teh settlement statement as a
B. Credit to buyer, debit to seller
Prorated taxes are a credit to the buyer and a debit to the seller. The seller is responsible for taxes payable through the date of closing. Since (in most states) homeowners pay taxes in arrears of one year, the seller would have bring the taxes current and give that money to the buyer as a credit.
Which of the following is not a protected class under the Federal Fair Housing Act?
Under the Civil Rights Act of 1866 (and some states) ancestry is included in the protected groups. The Federal Fair Housing Act does not designate ancestry as a protected group.
Negligence that causes harm is a/an:
Breaching the duty of reasonable skill and care is considered to be tortuous behavior; both broker and agent can be held liable. It is not actual fraud because there is no intent to cause harm.
How many square feet are in an acre?
There are 640 acres in a square mile and 43,560 square feet in an acre
Genuince assent means:
D. Consent must be freely given before a contract can be legally binding
A contract entered into under fraud, undue influence, or duress is not legally binding.
The salesperson entered into a buyer-broker contract with her brother. A week later, the salesperson takes a new listing and prepares an offer for her seller from her brother/client. What disclosure does the salesperson owe to the buyer and seller?
A. Disclose the material relationship with the buyer on the dual agency disclosure
If one agent represents both clients in the same transaction, then a material relationship exists that both sides of the transaction are entitled to know about. This should be disclosed before seeking consent to dual agency.
The typle of legal description that references monuments and landmark best describes
A. Metes and bounds
The metes and bounds system describes property by starting at an easily identifiable point of beginning, and ends up back at the same point.
A "credit" is
B. A sum of money that is to be received
money that is to be received must show up on a balance sheet as a credit.
A broker takes a listing and onw of his non-management level licensees represents a buyer that makes an offer acceptable to the seller. Which agent is the dual agent?
In an "in-company" transaction, the broker is a dual agent. When the broker is the listing agent the broker needs to declare dual agency before presenting the offer.
To emphasize the timely performance as an essential part of the contract, a contract would use the words:
B. Time is of the essence
If the words, "time is of the essence," are included, the lack of timely performance can be a material breach of contract.