Michigan Real Estate Exam Practice Already Graded A

Michigan Real Estate Exam Practice Already Graded A When land is conveyed to a trustee, what may a trustee do? ✔✔Whatever is permitted under the trust agreement. What is true of both special assessments an ad valorem ...

Michigan Real Estate Exam Practice Already Graded A When land is conveyed to a trustee, what may a trustee do? ✔✔Whatever is permitted under the trust agreement. What is true of both special assessments an ad valorem taxes? ✔✔Delinquent payment is grounds for sale of the property. At the time of harvest, crops that require annual plantin gare generally considered to be what? ✔✔Personal property. A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement _______? ✔✔Appurtenant Two lots of the same size are sold on a street. The lot on the corner sells for $20,000 more than the lot in the middle of the street. What characteristic MOST likely explains the price difference? ✔✔Situs. A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have? ✔✔Holdover Tenancy. Legal descriptions using the government survey system are NOT generally used where? ✔✔the original 13 states A deed restriction is applicable to the activities of who? ✔✔present and future owners. A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. What would MOST likely be used to obtain permission for this store? ✔✔Conditional use permit or zoning variance. If conditions for purchase are included in a deed and these conditions are violated, what is the penalty? ✔✔Return of the property to the original owner. An environmental impact statement typically describes the effects of a proposed project on factors such as what? ✔✔public health and safety. Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of ______________ _____________ ? ✔✔prior appropriation. A lawsuit for inverse condemnation may be brought by whom? ✔✔a homeowner When a sewer line is installed down a rural road, the cost will probably be shared by whom? ✔✔all current owners of real estate fronting on that road. All of the following are methods to calculate the reproduction or replacement cost of a building EXCEPT what? ✔✔straight-line method. If all other factors are equal, in which location is a parking lot likely to bring the highest sales price? ✔✔Business district zoned for a six-story office building. An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than what? ✔✔$250,000 A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of ________ . ✔✔anticipation A competitive market analysis is MOST often used for what? ✔✔setting a listing price. Which rule-of-thumb version is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? ✔✔GRM When preparing a market data estimate of value, what category of adjustment is NOT essential? ✔✔The original cost of the building. Federal Truth-in-Lending laws are also known as ✔✔Regulation Z When is flood insurance REQUIRED in order to obtain a loan? ✔✔When the property is located in a Flood Hazard Zone. A buyer made an offer on a property that was listed at $350,000. She wanted to put $35,000 down and make payments to the seller, allowing the seller to retain title until the principal was paid off. The seller accepted, and the buyer became a ______. ✔✔Vendee Usury laws were enacted to protect the ________ . ✔✔borrower A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to do what? ✔✔demand immediate payment of the entire note A loan which requires the borrower to pay interest only until the maturity date (or due date), and then to pay the entire principal on the maturity date, is called a ____ ____ . ✔✔term loan True/False Discount points are computed as a percentage of the selling price. ✔✔False What does the FHA function like? ✔✔an insurance company A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when what happens? ✔✔the seller accepts the offer. What event would AUTOMATICALLY cancel a listing agreement? ✔✔Property owner's death The relationship in which the agent is placed in the position of trust and confidence to the principal is known by what term? ✔✔fiduciary. The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that ✔✔he is no longer the listing agent. During the listing presentation, the seller questions the amount of commission to be paid and is told what? ✔✔the amount of commission is negotiable In an exclusive right-to-sell listing, an owner lists the property for sale with how many brokers? ✔✔one A broker lists a property, with a listing contract allowing subagency and dual agency. One of the broker's salespersons shows the property. The salesperson would be classified as what? ✔✔a subagent of the seller. A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? ✔✔Agency coupled with an interest. When a principal authorizes an agent to perform a particular act or transaction, it is an example of a ✔✔special agency. An example of a fiduciary relationship is one which exists between the listing broker and ✔✔her client. A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? ✔✔Seller. The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, require what? ✔✔the buyer to acknowledge disclosure of the presence of any known lead paint. The real estate broker who is listing a house for sale should personally verify what? ✔✔the number of square feet in the building. A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should tell the seller to do what? ✔✔disclose the termite treatment on the property disclosure. At the time of listing, the seller tells the listing agent they are moving because the neighbor has loud parties every weekend. The agent should do what? ✔✔tell potential buyers about the parties. Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of what? ✔✔misrepresentation. A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called a ________ ? ✔✔a contract. The document used in a real estate sale that establishes the legal rights of the buyer and seller is the called what? ✔✔purchase contract An amount of money, agreed to in writing by buyer and seller, that will serve as full compensation if one party does not live up to a sales contract is called what? ✔✔liquidated damages. The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of what? ✔✔impossibility of performance. An example of a contract terminated due to inability to perform would be one in which what happened? ✔✔The seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. A couple signed a lease on an apartment for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term? ✔✔No notice is required. A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called what? ✔✔an option contract. The purpose of requiring an earnest money deposit in a real estate sales contract is to ✔✔provide evidence of the buyer's intention to carry out the contract. A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if ✔✔the owner withdraws the counteroffer before it is accepted. Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? ✔✔Both contracts are valid. MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and what? ✔✔the sale price. At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? ✔✔Debit seller $300; credit buyer $300. For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? ✔✔Mortgage loan interest, local property taxes, mortgage loan origination fees. The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing? ✔✔Credit buyer $110,000; debit seller $110,000. What is NOT usually prorated at closing? ✔✔Special tax assessments. A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given what? ✔✔constructive notice. A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given ✔✔ When someone has living heirs but dies without leaving a will, the estate is distributed according to what? ✔✔that statute of descent. A managing broker can be held responsible for what? ✔✔all real estate activities of salespersons. Errors and Omissions insurance covers the broker for what? ✔✔unintentional misrepresentations. Earnest money should be deposited into a trust account how? ✔✔in a timely manner, according to state laws. Why was the Jones vs. Mayer decision of 1968 important? ✔✔By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing. According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, what disclosures don't have to appear in the ad? ✔✔prepayment penalties and rebates. A broker says, while showing a rural property, "This property has the world's purest well water." This would be an example of ✔✔an expression of opinion, or puffing, which could lead to misrepresentation A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is what? ✔✔there is no dollar limit on damages paid. Under the Federal Fair Housing Law, give an example of discriminatory advertising. ✔✔"Catholics preferred." Antitrust laws don't prohibit what? ✔✔receiving compensation from both the buyer and the seller. The buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyer's agent who is drawing up the contract should do what? ✔✔suggest the buyer ask a lawyer to furnish the wording. A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) ✔✔$409.20. If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month? ✔✔$1,150. The sellers of a house have a 300-gallon fuel oil tank that is two-thirds full at closing. Fuel oil at closing costs $2.53 per gallon. What is the seller's credit for oil proration? ✔✔$506 A major reason for buying and owning a condominium rather than a detached single-family home is what? ✔✔a condominium tends to be more affordable. A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes cash flow or income over the maintenance of value? ✔✔An individual entrepreneur who owns several apartment buildings. Ownership of common stock in a corporation gives an interest that is classified as what? ✔✔personal property.