A licensee was showing property in an eight-unit complex to a prospective tenant using a motorized wheelchair. The tenant wanted to rent a unit, install grab bars in the bathroom, and lower all the door handles. The landlord
must allow the tenant to make the modifications at the tenant's expense, but can require, by the terms of the lease, restoration of the property.The 1988 Amendments to the Federal Fair Housing Act require that a landlord allow a tenant to make changes to
Which of the following is the best description of a fee simple estate?
the most complete ownership in property that one can obtain. A fee simple estate is the highest form of ownership one can hold. It is complete ownership in its least limited form. There can be limitations on the use of the land as imposed by the governmen
A licensee plans to send out an e-mail offering his services. According to the CAN-SPAM Act, the licensee must
tell recipients how to opt out of receiving future e-mail.The CAN-SPAM Act establishes rules for commercial e-mail and the requirements for commercial messages, gives recipients the right to have the e-mail stopped, and spells out penalties for violations
An owner's mortgage includes a clause requiring a prepayment penalty. Three percent of any outstanding loan principal would be charged by the lender if the owner paid off the principal before the scheduled time. Payments were $296.88, due on the first of
$261.27. The monthly house payment, $296.88, includes both interest and principal. The prepayment penalty is charged only on the principal, not on interest. Therefore, one must determine how much the new principal loan balance will be after the August 1st
The owner of an apartment building has just signed an agreement with a real estate firm. Has an agency been formed?
Yes, because an agency is formed whenever one party delegates to another the right to act on his behalf in certain business transactions. An agency is formed whenever one party gives someone else the right to act on his or her behalf in certain matters. A
The most typical purpose of a deed restriction is to
control future uses of the property.Deed restrictions control how the property is used. Once they have been recorded, they run with the land. They bind current and future owners of a property.
A managing broker requires his licensees to mention a particular lender to buyers. The broker has a financial interest in this particular mortgage lender. Which of the following should the licensee recommend to buyers?
Consider this lender, disclosing the broker's interest, and other lenders.Licensees should generally avoid recommending only one lender, and if a financial interest is involved, it should be disclosed. Since rates can change, a licensee most likely would
A brokerage firm offers to split the commission equally with any cooperating brokerage or any buyer's brokerage firm. A licensee who works for the buyer's broker has an agreement with his broker that the licensee will receive 60% of the firm's share of co
$3,870. The commission is always based on the actual sale price of the property and not on its listed amount. The property sold for $215,000 and the brokerage fee was 6%. This makes the total commission to the listing firm $12,900. Half of that amount wil
A couple leased a waterfront bungalow. The lease began on June 15, 2010, and continued through July 31, 2010. The couple had
an estate for years.A lease that has a specific beginning and ending date is called an estate for years, even though it may not be a year in duration.
A licensee anxious to make a sale violates his duties toward his principal if he volunteers which of the following pieces of information to a prospective buyer?
You should make an offer for less than the listing price because the owner is anxious to sell."One of the duties of a licensee who is an agent for the principal is confidentiality. The licensee should not divulge personal information about the owner. Only
An owner obtains a new mortgage on her house because the house has appreciated in value and she wants money for an investment. The new mortgage rate is 1% lower than the old rate. What is this process called?
refinancing. Refinancing is the process of obtaining a new loan to pay off an old loan. If property has appreciated in value, this is frequently done to free up money for investment purposes.
An enforceable purchase agreement is formed when
the buyer knows of the seller's written acceptance of the offer.The two components of a valid contract are offer and acceptance. Upon written acceptance by the offeree of all terms in an offer, a valid contract is created. Enforceable means that the parti
Which of the following is generally income tax deductible in home ownership?
points paid to obtain the loan.Points paid by the buyer for a loan is income tax deductible.
Which of the following is true concerning eminent domain?
The property is taken through the process of condemnation.Eminent domain is the power or right the government has to take private land for a public use or a use determined by a court to be in the public's best interest. To do this, the land must first be
When a borrower defaults on a mortgage, an acceleration clause allows the lender the option of
demanding immediate payment of the entire loan balance.An acceleration clause is a provision in a mortgage or trust deed that, upon the occurrence of a specified event, gives the lender the right to call the entire debt due and payable in advance of the f
A property has a fair market value of $95,000 and is assessed at 50% of value. The tax rate is $55.00 per $1,000 of assessed value. What is the real estate tax for this property?
$2,612.50. $95,000 � 0.50 = $47,500 assessed value
$47,500 � 1,000 = 47.5 units (how many thousands in $47,500)
$55.0 � 47.5 = $2,612.50
An owner has been asked to grant a 60-day option to purchase a property. When should the purchase price be decided?
upon creation and signing of the option to purchase. One of the essential elements of an option agreement is that the purchase price at which the property would be sold must be established at the time the option is created. The stated purchase price is se
Which of the following is true about prepayment penalties on VA or FHA loans for single-family dwellings?
Neither the VA nor the FHA allows prepayment penalties.A prepayment penalty is a charge for paying a loan off before it matures. By paying it off ahead of schedule the lender may not make the amount of interest planned on at the time the loan was initiate
When managing property, which of the following actions is legal?
obtaining information from prospective tenants to determine if they are financially able to afford the rent.Qualifying prospective tenants financially is legal and an extremely important requirement in leasing real estate.
The owner of a lot is interested in selling. The lot is 99' x 110'. If similar property sells for $36,000 per acre, what is the most likely selling price for this property?
$9,000. There are 43,560 sq. ft. in an acre. 99 � 110 = 10,890 sq. ft. 10,890 � 43,560 = 0.25 or � of an acre. The cost of an acre is $36,000; therefore, � of an acre would be $9,000: $36,000 � 0.25 = $9,000.
A licensee is representing prospective buyers. The licensee orally informed the buyers that the developer would be paving the streets in front of a house in a rural subdivision. The licensee had not verified this but assumed that it was true because the d
the licensee because his unverified statement was misrepresentation.The licensee presented information as being factual but did not verify it. If it is incorrect and the buyers are damaged due to their reliance on that information, whether it is oral or i
Which of the following is a characteristic of a limited partner's role in a limited partnership?
reduced personal liability and no management decision making. Unlike a general partnership, limited partners are passive investors, share in profits, and have no say in the organization and direction of the operation. Each limited partner may lose only as
For a real estate sales contract to be valid, it must include
consideration.Consideration is an essential element for any contract. For a real estate contract to be valid, it must contain some form of consideration.
A home equity line of credit is
a secured loan.A home equity line of credit is a mortgage loan that allows the borrower to obtain advances up to an amount that represents a specific percentage of the borrower's equity in a property.
Which of the following factors tends to increase the price of residential real estate in a given area?
a large manufacturing plant opening in the city.The price of residential property generally increases when there are more buyers, and, therefore, more demand for houses. If a large plant opens in a city, the employment opportunities increase and more empl
A buyer made an offer on a property and the seller accepted the offer. A week later, the seller asked the licensee to amend the contract's provision for closing from 60 days to 90 days. The licensee completed the amendment and all parties initialed the ch
an addendum.An addendum is an additional provision added to an existing contract without altering the content of the original. It is a new contract that references the original contract and should be dated, signed or initialed by all parties. The original
Four people bought an investment property together, each having an equal ownership interest. They took title in such a manner that if one died he could leave his one-fourth interest to his heirs. How did they take title to the real estate?
tenants in common.In tenants in common ownership, the ownership interests do not have to be equal, but they can be. Each owner can sell or bequeath his or her property without the consent of the other co-tenants.
A couple's yearly income is $87,400. The couple's bank currently allows residential loans for an amount equal to twice the annual income. Disregarding minimum percentage down payment requirements, what is the minimum cash down payment that the couple will
$35,200.The couple would need to make up any difference between the loan amount and the purchase price of the property in the form of a down payment. Since their joint incomes equal $87,400, the bank will loan twice that amount or $174,800. The purchase p
A seller agreed to list an older house for sale on an "as is" basis. He told the licensee that the roof leaked occasionally and that the plumbing and electrical systems were old and outdated. After signing the listing agreement, the seller had the house i
Yes, because the licensee did not alert the buyer once he discovered the damage.Even though the licensee is an agent of the seller, he is required by law to disclose any latent defect of which he has knowledge.
A property sells for $85,000. The existing mortgage balance is $17,000 and the seller's closing costs are $1,600. What will the seller net if the brokerage fee is 6.5%?
$60,875.The real estate commission is based on the actual sale price. $85,000 � 0.065 = $5,525 commission. Subtract all expenses, including the commission, from the sale price: $85,000 - $17,000 - $1,600 - $5,525 = $60,875 seller's net.
A buyer has a properly executed option with a seller to buy a property, which runs through September 15. The buyer decides not to exercise the option. What should the seller do to terminate the option?
Nothing, as the option expires automatically.An option must contain a stated time period. If the option right has not been exercised within that time period, the option automatically expires. The optionor (seller) does not need to take any further action
The closing date is approaching on the sale of a property to a buyer who is represented by a licensee. Although the sellers have both signed the sales contract, the licensee learns that a relative of the sellers may have a title claim to this property. In
ask the listing licensee to advise the seller to contact an attorney to seek a quitclaim deed from the relative.The licensee should ask the seller's agent to advise the seller to seek a quitclaim deed from the relative who may have a possible interest in
The primary purpose of the Real Estate Settlement Procedures Act (RESPA) is to
inform the buyers and sellers of all settlement costs in real estate transactions.The primary purpose of the Real Estate Settlement Procedures Act (RESPA) is to inform the buyers and sellers of all settlement costs in a real estate transaction. It applies
A person bought three lots for $22,000 net each and divided them into four lots of equal frontage. The lots were then sold for $18,000 each. What was the approximate percentage of gross profit?
9%The initial investment was $66,000 (3 lots at $22,000 each). The developer divided them into four lots and sold them for $18,000 each. $18,000 � 4 = $72,000 in sales; $72,000 - $66,000 = $6,000 (dollar amount of profit). The percentage of profit is alwa
Under which of the following circumstances may a seller keep the earnest money deposit of a defaulting buyer?
if the seller wants to declare the sales contract forfeited, and there is a forfeiture clause in the contract.If the buyer defaults on the terms of a real estate contract and there is a forfeiture clause in the contract, the seller would be able to retain
A deed restriction in a subdivision created a community playground that used a few square feet from the rear of every owner's lot. An owner has begun making plans to convert the rear half of his lot to a garden. The plans would require the removal of park
apply for a court injunction against the owner's plans.Deed restrictions are enforced through a court. If a neighbor sees a violation of a deed restriction occurring, or about to occur, the neighbor could apply for a court injunction against the owner's p
An appraisal prepared using the amount of rent generated by the property is an example of which of the following approaches to value?
incomeThe income approach to value is determined by the amount of net income the property will produce over its remaining economic life. The following four steps are used:
1. Estimate the potential annual gross income.
2. Determine the effective gross inc
A licensee with firm A had a listing from a seller with a commission rate of 8%. The licensee in firm A listed it in a listing service, offering a 4% commission to the selling company. Licensee B, with a different company, cooperated through firm A and so
?$12,000.The seller will owe firm A the entire commission amount agreed to in the listing contract: $150,000 � 0.08 = $12,000. The firm will then split the amount with licensee B's firm as agreed to in the offer of cooperation.
Which of the following best describes steering?
?A licensee shows prospects of a particular race properties only in areas populated by families of the same race.Steering is the directing of prospective buyers toward or away from particular areas to avoid changing the neighborhood.
When using the sales comparison approach, a licensee determines that a comparable property's tile floor in the entry hall is worth $2,000. The subject property does not have tile floors at all. Which of the following adjustments should be made?
The comparable should be adjusted downward.In the sales comparison (market data) approach to appraisal, it is always the comparables that are adjusted, never the subject property. If the comparable is better than the subject property, the adjustment to it
An owner has accepted an offer. Another buyer approaches the licensee with an offer on the same property. The licensee should tell this second offeror that
this offer can be presented as a back-up offer only.Once an owner has accepted an offer, the owner has entered into a legal and binding contract. If a second offer comes in, the licensee should tell the second buyer that the offer can be presented only as
A real estate licensee was hired by a property management company to lease and manage commercial properties. Each commercial lease was different based on the negotiations of the parties. Which of the following should the licensee do in this circumstance?
Seek legal counsel to write or review the leases.A lease is a legal and binding contract. Although preprinted lease agreements are often used in residential leases, commercial leases are more complex. Drafting a commercial lease may constitute the practic
On February 1, a licensee with ABC Realty takes a 3-month exclusive right-to-sell listing on a house. On March 1, the licensee moves out of state and inactivates his license. What happens to this listing?
?It remains a valid exclusive right-to-sell listing contract with ABC Realty. The listing belongs to the brokerage firm; it does not belong to an individual licensee. The licensee takes the listing on behalf of the firm, and, if the licensee leaves or bec
A person bought property from a seller and received a general warranty deed. Two years later, the seller's brother came forth and claimed he had an ownership interest in the property. The brother stated he knew the court would uphold his interest. In a ge
of seisin.Although all covenants in a general warranty deed work together to protect the buyer, the covenant of seisin specifically guarantees that the owner owned the real estate at the time of the sale and had the right to convey it.
What do special, general, and universal types of agency have in common?
They originate with the principal.Agency is created when the principal delegates to his agent the right to act on his or her behalf in business. Special agency occurs when the principal authorizes an agent to perform a particular act without consideration
Which of the following could be deducted as expenses from annual income taxes on an investment property?
painting a structure. Repairs and recurring expenditures such as repairing a leaking roof or painting a structure are tax deductible expenses.
A buyer has been pre-approved for a loan up to $300,000. The buyer plans to make a down payment of 20% on a property. The buyer will most likely apply for which of the following types of mortgage loans?
?conventional.Conventional loans are viewed as the most secure because their loan-to-value ratios are often the lowest. Traditionally, the borrower will make a down payment of at least 20%. Usually, with a 20% down payment, no additional insurance or guar
A listing licensee has which of the following obligations to a buyer?
honesty.A licensee's duties to a buyer or customer are fairness, honesty, and accuracy.
A builder is obtaining a construction loan of $95,000 for a single-family residence. Under the Truth-in-Lending Act, disclosure of a prepayment penalty by the lender is
not required for a business loan.The Truth-in-Lending Act is applicable to individual home owners, but it does not apply to a construction loan for a builder because the loan is for a business purpose.
Which of the following is a unilateral contract?
an option.A unilateral contract is one in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party. An option is a unilateral contract because the seller agrees to sell for a certai
Which of the following is a purpose of a staked survey?
locating property boundaries
A staked survey is a method of identifying boundaries of a parcel of land by placing stakes in the ground. Although it shows the corners of the property, it does not provide complete dimensions.
A licensee was taking an upper bracket listing from a seller. The seller told her that they had lived in the neighborhood a long time, had many friends there, and wanted to be selective about who bought their house. The licensee was to tell them the race
She should refuse to do so and explain that the seller's instruction could be a violation of federal law.Any discrimination based on race or national origin is a violation of the Civil Rights Act of 1866. There are no exceptions. A licensee representing a
A licensee is typically authorized to do which of the following on behalf of his principal?
Submit all written offers to purchase.As part of agency duties, a licensee must present all offers to his principal (client).
A metes and bounds description must contain which of the following?
a point from which the description begins and at which it ends.A metes and bounds description must contain a beginning point and end at the same point, thus enclosing the parcel of land being described. A metes and bounds description must be based on land
A prospective buyer says he only has $1,000 for earnest money, but he anticipates receiving $4,000 as a gift from his aunt. The licensee accepts the $1,000 and a promissory note for the remaining $4,000 as a deposit. Must the promissory note be tied to th
No, the note is a personal promise to repay a debt and is a complete contract alone.A promissory note executed by a borrower is a contract complete in itself and need not be tied to a mortgage or a deed of trust. It is the borrower's personal promise to r
A buyer wants a high initial equity investment in a house. Which of the following should the buyer seek as part of the mortgage terms on the house?
largest down paymentA large down payment gives the buyer a high initial equity investment in a house. An equity investment refers to the amount of monetary interest an owner has in the property over and above any mortgage indebtedness.
In the appraisal process, the relationship between basic and non-basic employment patterns as a means of predicting population and income is known as
economic-base analysis.Economic-base analysis is an appraisal term describing a means of measuring the economic activity of a community that enables it to attract income from outside its borders.
Replacing the furnace filters at a rental property on a regular basis is what type of maintenance?
preventive.Preventive maintenance refers to those things done on a regular basis to prevent problems occurring in the future.
During property inspection, there are indications that a methamphetamine laboratory had been in the house. This may constitute
an environmental hazard.According to the EPA, the production of methamphetamines causes fumes that can contaminate a structure's walls, flooring, built-in appliances, surrounding land, and groundwater. Whether the drug is smoked in a home or made in a hom
A minor leases an apartment. Immediately upon reaching the age of majority, the lessee notified the lessor that the lease was being terminated. Which of the following is true in this situation?
The termination is possible because the rescission was made within a reasonable amount of time after the lessee reached the age of majority.Most contracts entered into by a minor are generally voidable at his or her option. However, if a minor does not di
A seller wants to allow a buyer to assume the existing mortgage. The sellers want to be sure that they will not be liable for the mortgage after it is assumed. Which of the following will best meet the seller's needs?
?novation. Novation is substituting one party's obligations for that of the other party. In assumptions, the novation clause would release the seller from liability on the loan and make the buyer liable.
Which of the following types of information should a licensee disclose to a seller at the time of listing?
current market conditions.Only the current market conditions are relevant to the determination of the listing price of the property. In a seller agency relationship, the broker or his/her licensee, not the seller, would negotiate with buyers, and asbestos
To allow for more intensive use of subdivision land, a zoning variation is required to permit which of the following?
an increase in the number of building sites per acre.An increase in the number of building sites per acre allows more buildings to be built, which intensifies the use of subdivision land.
A licensee was completing a listing with a seller as the seller's agent. When they were walking through the property together, the licensee noticed that new paneling had been installed in the basement. When asked, the seller told the licensee that there h
Tell the buyer the basement had leaked and there had been some repair work done, but the buyer is entitled to an inspection of the basement.The licensee is acting as an agent of the seller and owes him agency duties. However, he must disclose to the buyer
To qualify as a tax-deferred exchange, a property must be
held for productive use in trade or business.To defer the gain on the sale of an income-producing property, a tax-deferred exchange may be used.
A buyer wants to buy a larger house and open a beauty salon in her home. She tells the listing licensee her plans and looks at property with that licensee. They find a property she likes and she makes an offer that is accepted. After closing and moving in
Since the licensee knew of the buyer's intended use, the licensee should have ascertained whether or not the property could be used for that purpose.Even though the licensee is legally representing the seller, the licensee still has an obligation to the b
An unencumbered residence was sold. The closing expenses amounted to $526.40 plus a commission of 7%. The seller received a closing check in the amount of $37,231.60. What was the selling price?
?$40,600.The seller netted $37,231.60. To arrive at the selling price, add the expenses to the net: $37,231.60 + $526.40 = $37,758. This amount equals 93% of the selling price since the seller paid the broker a 7% commission. 100% - 7% = 93%. To arrive at
A listing licensee has an exclusive right to represent a new subdivision. She shows properties in the subdivision to prospective buyers who are not working with other licensees. She prepares the offers for those who decide to buy. Which of the following s
?The buyers are not represented by a licensee.The licensee is representing the developer of the subdivision, and the buyers are not represented. Even though the licensee is not representing them, the licensee still owes the buyers due care and honesty in
A licensee was showing a buyer an older home built in 1976. The buyer was concerned about the possibility of lead-based paint having been used on the house. The licensee should tell the buyer
that the Residential Lead-Based Paint Reduction Act requires disclosure by the seller on houses built before 1978, and the buyer could require an inspection.The Residential Lead-Based Paint Reduction Act does require seller disclosure on any lead-based pa
A person wants to lease a small building to use as a coffee shop. The tenant and the landlord agree upon a lease where the tenant will pay all utilities and taxes, in addition to rent. The landlord will pay the insurance. This type of lease is best known
net lease.In a net lease, the tenant pays some or all of the operating expenses, such as utilities and taxes.
The real estate market in a property owner's area is deflated. During a listing period of 6 months, the owner lowered the price of her property a total of $20,000 before finally selling. Upset at taking such a loss on the property, the owner tells the lic
No, once a commission rate has been negotiated and agreed upon in the listing contract, it cannot be changed unless both parties agree.Once a commission rate has been agreed upon in a listing contract, it cannot change unless both the client and the licen
An owner operated a gas station for 15 years. The city has decided to rezone the area from commercial to residential use. Which of the following is true regarding this situation?
?The owner has a non-conforming use and can continue to operate the gas station.The gas station is a non-conforming use, which is a use that existed prior to the change of the zoning ordinance and is grandfathered in
An office building is valued at $800,000 when the annual net income is capitalized at a rate of 20%. If the operating expenses and vacancy and rent loss total 40% of the gross income, what is the approximate gross annual income?
?$266,667The income approach to value is calculated as follows:
Annual net income divided by capitalization rate equals value. Therefore, net income � 0.2 - $800,000.
The net income is $800,000 � 0.2 = $160,000.
The net income is 60% (100% - 40%) of the g
A buyer's licensee described the boundaries of a property to a client without disclosing that the boundaries described were not exact. After purchasing the property, the new owner extended a fence within the described boundaries. A neighbor then brought a
Yes, because the licensee knew the boundaries cited could be false.The licensee had a responsibility to tell the buyer that the boundaries cited were approximate and, if the buyer wanted exact boundaries, a survey should be requested. Since the licensee d
A farmer continuously plowed and planted an unused field that neighbored his property for the statutory period of time set by state law. He did not have the owner's permission to do this. After the statutory time period, the farmer put in a claim of owner
adverse possession.Adverse possession is acquiring title to real estate owned by someone else. The use must have been continuous for the time period set by state law, and without the owner's permission.
A church owns a retirement home and restricts the rental of the units to church members regardless of age, sex, race, color, or national origin. Is this policy a violation of federal fair housing laws?
No, because religious organizations may limit occupancy of dwelling units they own to persons of the same religion.Religious organizations are one of the exemptions under the federal Fair Housing Act as long as the organization is restricting its rental o
The best way to determine whether or not there is an encroachment of a boundary line is to
have a survey done.Surveys are the best way to determine the boundary lines of a property. A survey may reveal easements or encroachments that public records do not reveal.
A single bedroom apartment rents for $1,500 a month. The security deposit is equal to one month's rent. An additional deposit of one-third of a month's rent is required of tenants with pets. What is the amount of the deposit required for a one bedroom apa
?$2,000The security deposit is 1 month's rent = $1,500 and an additional one-third of a month's rent = $500. The total deposit is $2,000.
Real property taxes are taxes on
a house and the land on which it sits.Real property is another term for real estate and includes the land and any permanent structures thereon.
A vacant lot on a commercial street is rectangular in shape, contains 17,550 sq ft, and has a depth of 150'. The owner of the lot plans to build and needs more space. Two lots are available; one on each side of the existing lot. Each of the adjacent lots
?197'. The combined area of the three lots is 17,550 + 12,000 = 29,550. The combined lots created a rectangle with a depth of 150'. The area of a rectangle is length x width; therefore, the total street frontage is determined by dividing the combined area
Which of the following is the most important element for a property manager to consider when selecting rental rates?
the rental rates for similar units in the area.Supply and demand is the primary influence in the rental market. A competitive market analysis of similar units in the neighborhood is the first and most important step in establishing rental rates.
A licensee who finds a buyer a house listed with his own firm and is paid a fee by the buyer for finding a suitable house has what type of agency?
dual.Dual agency is a situation in which a licensee represents both principals in a transaction. States allowing dual agency generally require that licensees obtain written consent to dual agency at the beginning of the relationship.
A licensee has a property under contract with a financing contingency. The mortgage lender calls the licensee and asks if the contract price on a property can be decreased by $5,000. The mortgage lender explains that this will help the buyer qualify for a
Refuse to change the price as this is illegal.Loan origination fraud schemes involve falsifying a borrower's financial information to qualify the buyer, who would otherwise be ineligible for a mortgage loan. The mortgage lender in this case may be trying
A pest inspection is ordered and an infestation is found. Who pays to correct the problem?
the party specified in the contract.Either party (seller or buyer) could pay for it. This will depend on what the parties have agreed to in the contract.
A buyer bought a home from an owner. The owners agreed to owner-finance the property. The parties agreed to amortize the loan over a 15-year period. The buyer became the owner of record of the property, and the seller had a lien against the property. What
a purchase money mortgage.In a purchase money mortgage, the buyer acquires legal title and the seller has a lien against the property.
A buyer signs a contract to purchase a house, but then attempts to have the contract voided. He is able to prove that he was legally mentally ill when he signed the contract. Will the buyer likely have the contract declared void?
Yes, because his mental illness renders the contract voidable.The contract in this case is a voidable contract, which is a contract that appears valid and enforceable but is able to be voided because one party acted under a disability. The valid act of si
The Real Estate Settlement Procedure Act (RESPA) applies to which of the following loans?
a first mortgage home loan.RESPA regulations apply to first mortgage loans only.
A buyer bought a house in a subdivision zoned residential. The buyer wanted to open a day care in the home. To do so legally, the buyer should obtain a
conditional use permit.A conditional use permit is usually granted to a property owner to allow for a special use of property that is defined as an allowable conditional use within that zone. The permit must be applied for and, if granted, is a permitted
An owner of an apartment building asks a licensee who is managing the property not to advertise the apartments in the local newspaper because it is published by her ex-husband. The property manager argues that many advertisements in this newspaper have pr
?No, because the property manager is obligated to obey the lawful instructions of the owner.A licensee is obligated to obey the lawful instructions of the principal. The property manager could advise the owner that it would be in her best interest to adve
A listing licensee is preparing an offer for a buyer. The property is listed for $205,000. The buyers want to offer $200,000 and require that the new free-standing stove and refrigerator remain with the property. The licensee prepares the offer, the buyer
The original offer is now terminated and a counteroffer has been created.If the seller does not accept the original offer, exactly as it was made, there is no contract. Any changes made by the seller create a counteroffer. This must now be presented to th
A property is sold to satisfy a judgment lien. There are also annual real estate taxes, a first mortgage, and a second mortgage due. Which of the following must be paid first?
annual real estate taxes.The local tax lien for unpaid taxes generally has priority over all other liens on the property, whether or not they were recorded before the recording of the state tax lien. The first mortgage and then the second mortgage follow.
When should a licensee provide the owners a copy of their listing agreement form?
immediately upon signature of the owners.A listing agreement is a legal contract. A copy should be given to all parties of the contract at the time of signing. This is not only a general element of contract law, but is also required in most states' licens
Which of the following is an example of functional obsolescence?
A person must go through the kitchen to get to the only bathroom.Functional obsolescence is a loss in value due to something being outdated or a defect in design.
A landlord had a property that produced a 12% rate of return. The net income on the property was $1,050 a month. Based on the income approach to value, what was the market value of the property?
?$105,000.The income approach to value is calculated as follows: Annual net income divided by the rate of return will equal value.
$1,050 a month x 12 = $12,600 a year rent. $12,600 � 0.12 rate of return = $105,000 value.
An adult buyer who is illiterate signs a contract to purchase property from a seller. The buyer understands the nature of the contract because the terms were explained orally. Is the contract binding?
Yes, because the buyer understands the terms of the contract.The contract is legal and binding as long as the buyer understands the terms of the contract, regardless of whether or not the person is illiterate.
When an offer to purchase is agreed to and signed by all parties, but not closed, the purchaser has
?an equitable interest.An equitable interest in real estate is an interest a buyer has once a purchase agreement has been accepted and signed by all parties, but prior to the buyer receiving legal title from the seller at closing of the transaction.
A tenant leased a small building and installed metal shelves to display his products. Near the time for the lease to expire, the tenant decided to move to a larger building and wanted to take the metal shelving. Is the tenant allowed to take the shelving
?Yes, the shelves are trade fixtures and can be removed as long as it is done before the expiration of the lease.Trade fixtures belong to the tenant for personal use in conducting a business. They are removable by the tenant as long as they are removed be
Which of the following instruments gives written authority to a listing licensee to sign a sales contract on an owner's behalf in the owner's absence?
?a power of attorney.A power of attorney is a written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument.
A licensee is listing a rural property. The property was owned by a woman who is now deceased. The woman had six grown children. Two of the sons are listing the property for sale. Before completing the listing agreement, the licensee should do which of th
Check the ownership of record.The licensee needs to be sure the persons who are listing the property are the owners of record. If they are not the owners of record, they do not have the right to sell the property.
Which of the following is a requirement of an independent contractor relationship between a responsible broker and a licensee?
The licensee must enter into a written agreement with the responsible broker.Current IRS regulations require a written contract between the brokerage firm and the licensee. If the broker in charge of a firm says licensees are independent contractors, the