National Real Estate Exam Prep with complete solutions

Unilateral Contract - ANSWER Contract containing ONE promise given in exchange for completing an act. NO obligation to act. Bilateral Contract - ANSWER Contract containing TWO promises. Example: A listing agreement is ...

Unilateral Contract - ANSWER Contract containing ONE promise given in exchange for completing an act. NO obligation to act. Bilateral Contract - ANSWER Contract containing TWO promises. Example: A listing agreement is a bilateral contract Client/Principal - ANSWER A person who has entered into an agency relationship w/ a licensee & with whom there is a written contract Customer - ANSWER Any 3rd party w/ whom a licensee works In-Company Transaction - ANSWER Transaction in which the buyer and seller are both represented by the same brokerage. Management-Level License - ANSWER A licensee who is employed by or affiliated w/ a brokerage who has supervisory responsibility over other licensees. Statute of Frauds requires the following: - ANSWER 1) Certain contracts be in writing to be enforceable, 2) All real estate contracts for the sale of LAND & ALL LEASES for more than one year, options for more than 6 months, must be in writing & signed by all parties. Novation - ANSWER Substituting a new obligation for an old one. Also, a transfer of rights and/or duties under contract. If the original party to an agreement is replaced due to novation, are they liable? - ANSWER No Mailbox Rule - ANSWER Acceptance that becomes effective as soon as it is sent in the mail, unless the contract specified a certain means for delivery. Grantor is the - ANSWER Owner Grantee is the - ANSWER Buyer Optionor is the - ANSWER Seller Optionee is the - ANSWER Buyer Lessor is the - ANSWER Landlord Lessee is the - ANSWER Tenant Vendor is the - ANSWER Seller Vendee is the - ANSWER Buyer Mortgagor is the - ANSWER Buyer Mortgagee is the - ANSWER Lender Trustor is the - ANSWER Buyer Trustee is the - ANSWER 3rd Party to the transaction Regulation Z dictates - ANSWER Disclosure Requirements in Credit Transactions, including the disclosure of the Annual Percentage Rate (APR) Regulation Z applies to: - ANSWER ALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000. The Cooling Off Period is a condition of: - ANSWER Regulation Z. It gives the customer the right to rescind the transaction for up to 3 business days following the transaction for liens placed on a principal residence. RESPA stands for - ANSWER Real Estate Settlement Procedures Act RESPA requirements include: - ANSWER 1) Lenders must give borrowers a good faith estimate of closing costs. 2) Lenders must give borrowers a HUD booklet describing closing costs, settlement procedures & borrowers rights. 3) Closing agent must prepare a HUD stmt detailing how much was paid to what companies for what services 4) Borrower must be given right to inspect HUD stmt 1 day before close. 5) Lenders & other parties must give full disclosure of all business relationships. 6) Lender must disclose to borrower if the loan is likely to be sold to another investor. RESPA prohibits: - ANSWER 1) Kickbacks & fees for services not performed in connection w/ the closing 2) It limits the amount of escrow reserves a lender can hold 3) The sale may not be on the condition on the use of a certain title co or escrow co. chosen by the seller. Annexation is - ANSWER the act of bringing something or putting something on the land. When determining annexation, value of the item is RARELY considered. The RELATIONSHIP if the parties is more important. Doctrine of Emblements - ANSWER says that a TENANT farmer may return to pick the 1st crop after the land has been sold. Fixtures - ANSWER Man made attachments Bundle of Rights - ANSWER 1) Right of use 2) Right of enjoyment 3) Right of disposal Riparian Rights - ANSWER Rights of the landowner ADJACENT to a river Remember "R" - riparian/river Littoral Rights - ANSWER rights of a landowner adjacent to a lake Remember "L" - Littoral/Lake Appurtenances are rights that go along with real estate and include: - ANSWER Air Rights, Water Rights, & Mineral rights to name a few. Fee Simple (also called Fee Absolute) - ANSWER The best interest in real estate recognized by law; it represents the most complete ownership. Life Estate - ANSWER The estate CANNOT be passed on to the life estate holder's heirs. Pur Autre Vie - ANSWER A life estate that is dependent up the life of another. Estate for Years is a type of leasehold that: - ANSWER Has a specific expiration date or specific term. Period to Period is a type of leasehold that: - ANSWER Has no specific expiration but the length is specified (like a month to month lease) Joint Tenancy - ANSWER 2 or more ownership holders own a fraction of UNDIVIDED interest. Rights of survivorship apply. The types of deeds are: - ANSWER 1) Warranty Deed 2) Special (or limited) Warranty Deed 3) Quitclaim Deed 4) Special Purpose Deed 5) Transfer on Death Deed. Warranty Deed - ANSWER Offers the greatest protection that a deed can give. Special Warranty Deed (Limited warranty deed) - ANSWER 1) Owner warrants only that he has not done harm to the title 2) Covers only the period of time when the sellers owner the property. Quitclaim Deed - ANSWER The seller agrees to convey whatever interest, IF ANY, they have in the property. The reason a deed is recorded is - ANSWER for protection against a third party. Elements necessary to a valid deed: - ANSWER 1) signed & acknowledged by grantor 2) Lists marital status of the grantor 3) Use words of conveyance - also called a granting clause 4) Names & addresses of grantees 5) Acknowledged by Grantor in front of Notary Public 6) Signed in front of two witnesses (in most states) 7) Legal description 8) Delivery & acceptance of deed Lot & Block System - ANSWER Subdivision Township - ANSWER 36 Square Miles Eminent Domain - ANSWER The RIGHT of the government to condemn & take the property. Condemnation - ANSWER The PROCESS of the government taking a property by eminent domain. Escheat - ANSWER The state takes property upon an owners death if there is no will & no heirs exist. Adverse Possession - ANSWER A person takes possession & use of a property belonging to another. Possession must be open, notorious, hostile & uninterrupted for a certain period of time. Abstract of Title - ANSWER A complete history of ownership. Encumbrance - ANSWER A claim or liability that attaches to the land & is held by one who is NOT the fee owner. Examples of Specific Liens - ANSWER real estate taxes, mortgages, mechanics liens Easement - ANSWER Right to use a property for a specific use Easement in Gross - ANSWER An entity's personal right to use property. The receiver DOES NOT own the adjoining property. Example: utility easement Easement Appurtenant - ANSWER Runs with the land. Easement by Necessity - ANSWER Created when no other access to land exists...right of ingress & egress Easement by Prescription - ANSWER Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public. License - ANSWER A privilege granted to an individual for a specific purpose. It is NOT assignable to others. Accretion - ANSWER Physical addition to the land by natural forces. Alluvium (also Alluvion) - ANSWER The soil on a shore or bank of a river Lis Pendens - ANSWER A pending notice of a lawsuit giving notice of a possible claim to the property Writ of Attachment - ANSWER A document filed during a lawsuit that prevents a debtor from conveying the property Fixtures - ANSWER items of personal property attached to real property that are not removed by the seller Trade Fixtures - ANSWER Personal property used in a business and can be removed by the lessee when the lease terminates. Appraisal - ANSWER is an estimate or an opinion of value Market Value - ANSWER An estimate of probably price on the date of the appraisal. Market Price - ANSWER What the property actually sells for The 3 approaches to value are: - ANSWER 1) Market Data Approach (single family homes) 2) Cost Approach (commercial property) 3) Income Approach (income producing property) Blockbusting - ANSWER Encouraging owners to sell their properties because minorities are moving into a neighborhood Steering - ANSWER Trying to influence a buyer's housing choice using race, religion, ethinicity, national origin, or ancestory factors as the reasoning. Redlining - ANSWER Denying loans in certain areas due to race, religion, sex, familial status, or a disability. The Civil Rights Act of 1866 Covers: - ANSWER 1) Race 2) Color 3) Ancestry (it's the only act that covers this) It applies to all property (Real & Personal) There are no exceptions The Federal Fair Housing Act Covers: - ANSWER 1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Disability 7) Familial Status It applies ONLY to housing & land for housing Exceptions: 1) FSBO 2) FSBO - 4 plex 3) Religious Groups 4) Private Clubs The Federal Equal Credit Opportunity Act applies to: - ANSWER 1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Age 7) Marital Status 8) Receipt of Public Assistance A real estate broker is a - ANSWER Special Agent Dual Agent - ANSWER One broker representing both the buyer & the seller in a single transaction A salesperson - ANSWER is a subagent of the client, has no direct relationship to the principal, is only responsible to the broker. Puffing - ANSWER an opinion or exaggeration of the property's benefits. Fraud - ANSWER Intentional misrepresentation of facts Violations of the Sherman Antitrust Act include - ANSWER 1) Price Fixing 2) Allocation of the market Exclusive Right to Sell Listing - ANSWER 1) Only one broker is authorized to sell 2) the broker receives a commission no matter who finds the buyer Exclusive Agency Listing - ANSWER 1) Only one broker is authorized to sell 2) If the owner finds a buyer, no commission is owed Open Listing - ANSWER 1) Any # of brokers may be retained 2) The broker who sells the property receives the commission. After a purchaser signs a sales contract, the salesperson must do which of the following? 1 Keep the original contract & give the purchaser a copy the next day. 2. Give the purchaser a copy immediately 3. Mail the purchaser a copy after the statutory 3 day cooling off period 4. None of the above - ANSWER Answer: 2, Give the purchaser a copy immediately Which one of the following is NOT real property? 1 Wall to wall carpeting installed over plywood subfloor 2 Built-in dishwasher 3 drapes 4 sump pump - ANSWER Answer: 3, Drapes An unlicensed admin for a property manager can ONLY do which of the following tasks? 1 Collect rents 2 Publish a listing 3 Take a listing 4 Negotiate a contract - ANSWER Answer: 1, collect rents All of the following are examples of a specific lien, except: 1 Property Taxes 2 Judgment 3 Mechanic's lien 4 Mortgage - ANSWER Answer: 2, Judgment Baker conveys a life estate to her grandson & stipulates that upon her grandson's death the title will pass to her nephew. What is the nephew's interest called? 1 Estate in reversion 2 Estate for years 3 Estate in Remainder 4 Periodic estate - ANSWER Answer: 3, Estate in Remainder If a spouse owns a parcel of land separately, the spouse is said to own it: 1 As a joint tenant 2 As a tenant in common 3 As a tenant by the entireties 4 in severalty - ANSWER Answer: 4, in severalty Taxes are levied on a property owner to pay for improvements that benefit only that property are called: 1 Fees 2 General Property Taxes 3 Special Excise Taxes 4 Special Assessments - ANSWER Answer: 4, Special Assessments The market price of real estate is generally the same as: 1 Sales Price 2 Appraised Value 3 Highest and best use 4 Mortgage loan value - ANSWER Answer: 1, Sales price A mortgage note must be: 1 a negotiable instrument 2 Signed by the mortgagor 3 Signed by the mortgagee 4 Recorded to be valid - ANSWER Answer: 2, Signed by the mortgagor (the borrower) The Federal Truth in Lending Law: 1 Requires a lender to estimate a borrower's approximate loan closing costs before accepting a loan. 2 regulates advertising that contains information regarding mortgage terms 3 prevents brokers from using a phrase like "FHA financing available" in any ad 4 Dictates that mortgage applications be made on specific government forms - ANSWER Answer: 2, regulates advertising that contains information regarding mortgage terms