A subdivision declaration reads, “No property within this subdivision may be further subdivided for sale or otherwise, and no property may be used for other than single-family housing.” This is an example of
Term
Severance
Definition
Which of the following describes the act by which real property can be converted into personal property?
Term
immobility of a product.
a property's specific geographic location.
uniqueness of a property.
Definition
the following affect how quickly the forces of supply and demand work
Term
3 A retail store in a residential neighborhood
Definition
All of the following are variances EXCEPT
1 An owner given permission to build into a setback
2 A fence being built to a height of 15 feet
3 A retail store in a residential neighborhood
4 A building that exceeds height limits
Term
personal property.
Definition
According to law, a trade fixture is usually treated as what type of property?
Term
zoning ordinance or codes
Definition
To determine whether a location can be put to future use as a retail store, you would examine the
Term
variance.
Definition
Under an existing ordinance, no signs that extend more than three feet above the highest point of a roof may be placed on any building. An owner wants to erect a nine-foot-high revolving sign on the roof of his store. In order to do this legally, the owner must get a
Term
Restrictive covenants:
Restrictive covenants are private, not public land-use controls.
Definition
What is NOT included in public land-use controls?
Term
Trade fixtures: Trade fixtures can be attached to a building and appear as improvements, but are legally permitted to be removed and are considered personal property.
Definition
All of the following are properly described by the word improvement EXCEPT
Term
the comprehensive plan of the local government: Before the actual subdividing can begin, the subdivider must go through the process of land planning. The resulting land development plan must comply with the municipality's comprehensive plan.
Definition
When planning a subdivision, developer Jamal should determine the kinds of land uses to be involved and the amounts of land to be allocated to each use by considering
Term
personal property.
Definition
A bill of sale is used to transfer the ownership of
Term
A certificate of occupancy must be issued.
Definition
The construction of a family room, additional bedroom, and extra bath has been completed on the owner's home. Before the addition can be used, which of the following is TRUE?
Term
price tends to rise.
Definition
When the supply of a commodity decreases while demand remains the same
Term
Government financial policies
Definition
Which of the following factors primarily affects supply in the real estate market?
Term
plat of subdivision.A plat is a map. A subdivision plat is a map of a subdivision showing at least those details required by local subdivision regulations.
Definition
A map illustrating the sizes and locations of streets and lots in a subdivision is called a
Term
would be forbidden to rebuild the plant in that neighborhood under any circumstances.
Definition
A tire company has a manufacturing plant located in an area that has just been rezoned for residential use. The company is allowed to continue operating the plant under the new zoning classification as a nonconforming use. However, if the plant is destroyed by fire or other hazard, the tire company MOST likely
Term
ensure that proposed land uses conform with the master plan.
Definition
The primary intent of zoning ordinances is to
Term
statute.
Definition
Deed restrictions are created by all of the following EXCEPT
Term
Severalty
Definition
Which of the following refers to ownership by one person?
Term
Base lines, principal meridians, and townships
Definition
Which of the following are NOT basic components of metes-and-bounds descriptions?
Base lines, principal meridians, and townships
Degrees, minutes, and seconds
Tangible and intangible monuments
Points of beginning
Term
condemnation
Definition
The process by which government can acquire ownership of private land for public use is
Term
Cooperative unit
Definition
Sandra lives in the elegant Howell Tower. Sandra's possessory interest is evidenced by a proprietary lease. What does Sandra own?
Term
lot and block system.
Definition
A recorded subdivision plat is used in the
Term
if the holder of the qualified fee estate breaks the condition.
Definition
The holder of a reversionary interest in a qualified fee estate might be able to obtain title to the property
Term
Multiply denominators for the first part: 4 x 4 = 16; 640 acres ÷ 16 = 40 acres; multiply denominators for the second part 2 x 4 x 4 = 32; 640 ÷ 32 = 20 acres; 40 + 20 = 60 acres
Definition
How many acres are in a parcel described as the NW¼ of the SE¼ and the S½ of the SW¼ of the NE¼ of Section 4?
Term
prescription.
Definition
The road to John's hunting cabin is winding and long, and the shorter more direct route is across Sam's land. John has used the more direct route for years and has never seen Sam. He hopes to eventually gain an easement by
Term
An appurtenant easement is annexed to the ownership of one parcel and allows the owner use of the neighbor's land. The easement transfers with the title and so provides the greatest protection for a prospective purchaser.
Definition
Gina owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which type of access rights would provide the greatest protection for a prospective lot purchaser?
Term
In a limited partnership, a partner can be held liable for losses only to the extent of his or her investment.
Definition
In a limited partnership
Term
reversionary interest.
Definition
Lonnie conveys the ownership of his house to his mother and stipulates that on her death ownership will revert to him. The interest Lonnie has in the property is a
Term
easement in gross.
Definition
A decedent left a will giving his neighbor the right to use a well on the decedent's land as long as the neighbor lived. The neighbor's interest in the property is properly called a(n)
Term
Condominium unit
Definition
An owner has purchased a fee simple interest in a lakefront cottage along with 6 percent of the parking lot, laundry room, and boathouse. What kind of ownership interest has been bought?
Term
Fee simple estate
Definition
A person wants to ensure that the ownership of real property can be willed to her children. Which form of ownership would the person want?
Term
easement in gross.
Definition
The type of easement that is a right-of-way for a utility company's power lines is a(n)
Term
Multiply all denominators: 2 x 4 x 4 x 4 = 128; 640 (acres in a section) ÷ 128 = 5 acres
Definition
The following legal description contains how many acres: the S½ of the SE¼ of the NW¼ of the NE¼ of Section 7?
Term
An easement by necessity arises when there is no ingress or egress (entry or exit) from one piece of property without crossing over a parcel of land owned by another. An easement of necessity is not merely for convenience or imposed to validate a shortcut.
Definition
Mary has divided much of her land into smaller parcels and has recently sold a tract near a nature preserve that is landlocked and cannot be entered except through one of the other tracts. The buyer of that property will probably be granted what type of easement by court action?
Term
nsure the health, safety, and welfare of the community.
Definition
The main purpose of police power is to
Term
4,800 square feet ÷ 80 feet (one side) = 60 front feet; 60 x $350/foot = $21,000 (sales price)
Definition
A lot with a depth of 80 feet and an area of 4,800 square feet was sold for $350 per front foot. What was the total sales price?
Term
640 acres.
Definition
A standard rectangular survey system section contains
Term
The land on either side of a principal meridian is divided into six mile-wide strips that run north and south parallel to the meridian, and the strips of land are called ranges.
Definition
Strips of land six miles wide that run north and south are called
Term
Freehold estate
Definition
Which of the following has an indeterminable duration?
Term
by deed.
Definition
A joint tenancy with right of survivorship may be created
Term
can be created only if adjacent properties have different owners.
Definition
An appurtenant easement
Term
1,320 feet (1/4 mile) x 1,320 feet = 1,742,400 square feet ÷ 43,560 (square feet in an acre) = 40 acres
Definition
How many acres are in a lot that is 1/4 of a mile wide by 1/4 of a mile long?
Term
The term person does not always refer to an individual-a human; the law regards a corporation as a person. Because this is so, a corporation holds real estate ownership in severalty (alone).
Definition
A corporation is a legal entity, a person in the eyes of the law. Property owned by the corporation is owned in
Term
metes and bounds system.
Definition
The system of legal description that defines a parcel of land by tracing its perimeter is the
Term
If Frank had been a joint tenant, the property would not have passed according to his will because joint tenancy supersedes a will. He was not a tenant by the entirety, a category reserved for husbands and wives. Nor was he an owner in severalty because that requires property to be held by only one person.
Definition
Ed, Frank, and Gina were concurrent owners of a parcel of real estate. Frank died, and his interest passed according to his will to become part of his estate. Frank was a
Term
release of the right of easement to the dominant tenement.
Definition
All of the following will terminate an easement EXCEPT
Term
A real property interest and the right to use the facilities for a certain period of time is called a time-share.
Definition
An ownership interest that is based on annual occupancy intervals is a
Term
Joint tenancy
Definition
The four unities of possession, interest, time, and title are associated with which of the following?
Term
Upon death in a joint tenancy, all remaining interests do not pass to the heirs or according to the will but to the surviving joint tenant.
Definition
Victor and Norman are co-owners in fee simple of a small office building. Norman dies intestate and leaves nothing to be distributed to his heirs. Victor is neither related to Norman nor his creditor. Which of the following would explain why Victor acquired Norman's interest?
Term
as tenants in common.
Definition
Kyle and Ursula own a property together. Ursula dies and Kyle now owns the property with her heirs. They owned the property
Term
remainder interest.
Definition
Herta conveys a life estate to her grandson and stipulates that on her death the estate will pass to her son-in-law. The son-in-law has a(n)
Term
Until James dies, the church will have a remainder interest. James reserved for himself a life estate. The church may legally sell its future (remainder) interest, even during the lifetime of the life tenant.
Definition
James conveys ownership of his residence to his church but reserves for himself a life estate in the residence. The interest the church owns during James's lifetime is a
Term
When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common-to avoid the results of accidental joint tenancy. Friends are unable to hold community property or be tenants by the entirety as those are both for married couples.
Definition
A parcel of property was purchased by two friends, Kevin and Zelda. The deed they received from the seller at closing conveyed the property “to Kevin and Zelda” without further explanation. Kevin and Zelda took title as which of the following?
Term
base line.
Definition
The primary survey line running east and west in the rectangular survey system is the
Term
Fee simple absolute
Definition
Betsy conveys a life estate to Chuck and names her son as remainderman. On the death of Chuck, the son will have what type of estate?
Term
metes and bounds.
Definition
In describing real estate, the system that may use a property's physical features to determine boundaries and measurements is
Term
real estate lien
judgement lien
estate lien
Definition
Which of the following is a specific, involuntary, statutory lien?
Term
involuntary alienation.
Definition
Eminent domain and escheat are two examples of
Term
A general lien affects all of a debtor's property, both real and personal. A specific lien affects only a particular property.
Definition
What is the difference between a general lien and a specific lien?
Term
mechanic's lien.
Definition
When a company furnishes materials for the construction of a house and is subsequently NOT paid, it may file a(n)
Term
With a tenancy for years
Definition
no notice is required to terminate the lease. - what lease is this?
Term
percentage lease
Definition
A tenant enters into a commercial lease that requires a monthly rent of a minimum fixed amount, plus an additional amount determined by the tenant's gross receipts exceeding $5,000. This type of lease is called a
Term
may be oral.
Definition
A lease that will terminate within one year of its inception
Term
acknowledgment.
Definition
Wally signed a deed transferring ownership of his house to Luke. To provide evidence that his signature was genuine, Wally executed a declaration before a notary. This declaration is known as an
Term
ensures that the title will be good against the title claims of third parties.
Definition
Under the covenant of quiet enjoyment, the grantor
Term
A)
Definition
A lease would be terminated by which of the following?
A)
B)
D)
Term
In both the county where the decedent resided and the county in which the property is located
Definition
Generally, where does a probate proceeding involving real property take place?
Term
Four steps: (1) Minimum rental for the year is 12 times the monthly amount: 12 months x $1,200 per month = $14,400. (2) Rental above the minimum is found by subtracting the minimum rent from the total rent paid for the year: $19,200 – 14,400 = $4,800. (3) This overage is 4 percent of the amount of business that exceeded $150,000. The amount of business that exceeded $150,000 is found by dividing $4,800 by 4 percent: $4,800 ÷ 4 percent = $120,000. (4) Total business is the sum of the basic $150,000 and the $120,000 overage: $150,000 + $120,000 = $270,000.
Definition
A commercial lease calls for a minimum rent of $1,200 per month plus additional annual rent of 4 percent of the year's gross business exceeding $150,000. If the total rent paid at the end of one year was $19,200, how much business did the tenant do during the year?
Term
it is signed by the attorney-in-fact of the seller.
Definition
Normally, a deed will be considered valid even if
Term
A deed must be signed by all grantors named in the deed. The grantee must be named but does not sign.
Definition
A deed must be signed by the
Term
devise.
Definition
Real estate that is inherited from a person who died testate is referred to as a
Term
Lessor
Definition
Mr. and Mrs. Delong lease a two-bedroom apartment from Karos Management Company. Due to ordinary wear and tear, the dishwasher breaks down. Who must pay for its repair?
Term
grantor must be legally competent.
Definition
In order for a deed to be valid, the
Term
delivered and accepted.
Definition
The title to real estate passes when a valid deed is
Term
The sale does not affect the lease.
Definition
An individual rents an apartment for one year. The landlord sells the building during the one-year lease term. What effect does the sale have on the lease?
Term
Unpaid real estate taxes “move to the head of the line” when property is liquidated at a foreclosure sale. They are a statutory lien with priority over liens created by contract, such as mortgages. They get highest priority.
Definition
Which of the following liens usually would be given highest priority in disbursing funds from a foreclosure sale?
Term
Definition
Which of the following BEST describes a net lease?
Term
court.
Definition
The authority to carry out the eviction of a delinquent tenant from rented property comes from the
Term
A recorded lis pendens-a notice of action pending-warns any potential purchaser that a property is subject to a pending legal action. This notice would prompt a buyer to consider very carefully whether to proceed, but it would not absolutely prevent it.
Definition
A general contractor recently filed suit against a homeowner for nonpayment. The contractor now learns that the homeowner has listed the property for sale with a real estate broker. In this situation, which of the following will the contractor's attorney use to protect the contractor's interest?
Term
An estate from period to period, or periodic tenancy, does not have a specific expiration date. An estate (tenancy) for years has specific beginning and ending dates.
Definition
The principal difference between an estate for years and an estate from period to period is that an
Term
granting clause.
Definition
The clause in the deed that conveys the rights and privileges of ownership is called the
Term
Kevin is the tenant of his landlord (lessor) and, at the same time, Linda's landlord. In this ''sandwich'' position, he is a sublessor.
Definition
Kevin still has five months remaining on a one-year apartment lease. When Kevin moves to another city, he transfers possession of the apartment to Linda for the entire remaining term of the lease. Linda pays rent directly to Kevin. In this situation, Kevin has become a(n)
Term
The landlord may evict the tenant.
Definition
Which of the following is TRUE about a holdover tenant?
Term
involuntary lien.
Definition
When properly recorded in the county where the real estate of the defendant is located, a judgment becomes a(n)
Term
Upon delivery and acceptance of the deed
Definition
Doris decided to convey property to John with a deed. John then recorded the deed. When did title to the property actually transfer or pass to John?
Term
delivery of a deed.
Definition
Pierre wants to give his property to his sister Estelle. The BEST way to transfer title would be
Term
Quitclaim deed
Definition
Which deed contains NO express warranties?
Term
the order in which they are filed or recorded.
Definition
Normally, the priority of general liens is determined by
Term
Mary, the assignor, is liable to the landlord because of her contract with the landlord-the original lease. Ben, the assignee, is liable to the landlord because of his possession of the premises.
Definition
Mary has assigned her apartment lease to Ben, and the landlord has agreed to the assignment. Who is liable for payment of the rent?
Term
Total destruction of the property
Definition
Which of the following would automatically terminate a residential lease?
Term
involuntary alienation.
Definition
Title to real estate may be transferred during a person's lifetime by
Term
)
Definition
An instrument authorizing one person to act for another is called a(n)
Term
tenant would be entitled to recover damages from the landlord.
Definition
If a tenant moved out of a rented store building because access to the building was blocked as a result of the landlord's negligence, the
Term
Buyer
Definition
Security deposits should be listed on a closing statement as a credit to the
Term
Pre–World War I means before 1914. Lead-based paint was common in housing interiors until outlawed in 1978. T
Definition
John is a real estate salesman. He shows a pre–World War I house to Tina, a prospective buyer. Tina has two toddlers and is worried about potential health hazards. Which of the following is TRUE?
Term
ecording gives constructive notice to the world of the rights and interests claimed by a party in a particular parcel of real estate.
Definition
Which statement BEST explains why instruments affecting real estate are recorded?
Term
debit to the seller.
Definition
Real estate property taxes that were NOT paid would show up on the closing statement as a
Term
Partially amortized loan
Definition
A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments of principal and interest were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?
Term
Blanket mortgage
Definition
Subdivider Jonathan had a mortgage loan on his entire housing subdivision. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?
Term
conventional loan.
Definition
The type of loan that will MOST likely have the lowest loan-to-value ratio is a(n)
Term
an option.
Definition
A buyer agrees to buy a property, and then changes his mind. The seller in this agreement has no recourse against the buyer. The contract was
Term
executory.
Definition
During the period of time after a real estate sales contract is signed, but before title actually passes, the status of the contract is
Term
Three steps: (1) Find the amount of interest in the first monthly payment by multiplying the annual interest rate by the original amount of the loan-Rate x Principal = Interest: 7 percent x $85,000 = $5,950. (2) Then, divide the annual interest by 12 to find the first month's interest: $5,950 ÷ 12 = $495.83. (3) Finally, subtract that interest from the amount of the regular monthly payment to find the amount available to apply to principal: $530.20 - 495.83 = $34.37.
Definition
Hal borrowed $85,000, to be repaid in monthly installments of $530.20 at 7 percent annual interest. How much of Hal's first month's payment was applied to reducing the principal amount of the loan?
If the quarterly interest at 10½ percent is $3,150, the principal amount of the loan is
Term
novation agreement.
Definition
When a seller is freed of any future liability for a loan assumed by a buyer, the seller has signed a(n)
Term
is kept by the seller until the purchase price is paid according to the contract.
Definition
When real estate is sold under an installment land contract and the buyer takes possession of the property, the legal title
Term
novation.
Definition
A new contract is known as a(n)
Term
Power of sale
Definition
Which of the following allows a mortgagee to proceed to a foreclosure sale without having to go to court first?
Term
satisfaction of mortgage.
Definition
The defeasance clause in a mortgage requires the mortgagee to execute a(n)
Term
pay into an impound account.
Definition
Mortgage lenders want assurance that future real estate taxes will be paid. The MOST common way to do this is to require the borrower to
Term
The loan-to-value ratio will be based on the relationship of the loan to either the appraisal or the purchase price, whichever is less. In this case, the appraisal is less. Therefore, the loan will be 80 percent of $114,500, which equals $91,600.
Definition
If a lender agrees to make a loan based on an 80 percent LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,900?
Term
blanket loan.
Definition
A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This type of loan arrangement is called a
Term
equitable title.
Definition
The seller agrees to sell the house to the buyer for $100,000. The buyer was unable to qualify for a mortgage loan for this amount, so the seller and buyer enter into a contract for deed. The interest the buyer has in the property under a contract for deed is
If the interest rate on an FHA-insured mortgage loan is 5½ percent and the monthly payment is $1,012, the principal sum would be
Term
Competent grantor is a requirement of a deed.
Definition
The essential elements of a contract includes all of the following EXCEPT
Term
Rescission
Definition
What action returns a contract's parties to their position before the contract, including return of any deposit?
Term
option.
Definition
If an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants an individual the right to purchase the property within that period for a stated price, this is called a(n)
Last month's loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest?
Term
fully amortized loan.
Definition
A real estate loan payable in periodic installments that are sufficient to pay the principal in full during the term of the loan is called a
Term
insist that the lender loan up to the allowable maximum of the certificate of eligibility.
Definition
An eligible veteran made a purchase offer of $180,000 on a home he wants to finance with a VA-guaranteed loan. Four weeks after the offer was accepted, a certificate of reasonable value (CRV) for $177,000 was issued for the property. In this situation, the veteran could do all of the following EXCEPT
Term
vendor.
Definition
Under an installment contract, the title to the property is held by the
Term
interest-only loan.
Definition
A type of financing that offers smaller payments but has a balloon for all the principle is a(n)
Term
usury.
Definition
Charging more interest than is legally allowed is known as
Term
transfer one's rights under the contract.
Definition
To assign a contract for the sale of real estate means to
Term
A point is 1 percent of the amount borrowed (the loan amount). Three points would be three times as much: 3 percent x $120,000 = $3,600.
Definition
A charge of three discount points on a $120,000 loan equals
Term
business use.
Definition
All of the following loans to individuals are affected by the truth-in-lending law under Regulation Z EXCEPT those for
Term
private mortgage insurance.
Definition
A lender's interest in a mortgage loan is protected by obtaining additional security from
Term
) voidable by the buyer because of fraud.
Definition
At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil was firm enough to support the construction of a building when, in fact, the seller knew it was not. This contract is
Term
) binds the optionor for a specified time.
Definition
An option
Term
Straight Line
Definition
In which type of loan is the loan amount divided into two parts, to be paid off separately by periodic interest payments followed by payment of the principal in full at the end of the term?
Term
Recurring interest income
Definition
For a lender, income on the loan is realized from loan origination fees, discount points, and which of the following?
Term
Conveyance of the property
Definition
Nick accepts Kelly's offer to purchase his property. Before closing, Nick changes his mind, and Kelly sues for specific performance. What is Kelly seeking in this lawsuit?
Term
due-on-sale clause.
Definition
The clause in a mortgage instrument that would prevent the assumption of the mortgage by a new purchaser is a
Term
purchase-money mortgage.
Definition
A loan from a seller to a buyer to allow the buyer to complete the transaction is called a
Term
conveyance of legal title at a future date.
Definition
A land contract provides for the
Term
Seller only
Definition
An option to purchase binds which of the following parties?
Term
trustor.
Definition
The borrower under a deed of trust is known as the
Term
specific performance.
Definition
The legal proceeding or legal action brought by either the buyer or the seller under a purchase contract to enforce the terms of the contract is known as
Term
Reverse-annuity mortgage
Definition
Mrs. Robinson has owned her house for over 50 years. It has fallen into disrepair, but because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan would BEST suit her needs?
Term
specific performance.
Definition
The legal proceeding or legal action brought by either the buyer or the seller under a purchase contract to enforce the terms of the contract is known as
Term
Reconciliation
Definition
analyzing the results obtained from the three approaches to value and deciding how much weight to give to each approach. A final value is estimated from the results of the analysis and the judgment of the appraiser.
Term
loss of value due to uncollected delinquent rent.
Definition
When estimating the value of property using the cost approach, all of the following are considered by an appraiser EXCEPT
Term
A new residence requires the sales comparison approach to be used when applying for mortgages, and existing residences also require the use of the sales comparison approach. While both are correct, the existing residence answer may be most correct since the new residence can also use the cost approach
Definition
The sales comparison approach to value would be MOST important when estimating the value of a(n)
Term
None of it, if it is less than $500,000
Definition
Three years ago, the Henderson's moved from the house they had owned for 20 years but did not sell it. They decided to travel and bought a mobile home to live in. They now decide to sell the house. How much of their capital gain on the house will be taxable?
Term
listed price of the parcel.
Definition
An appraiser has been employed to estimate the market value of a parcel of vacant land. The resulting appraisal report would NOT include reference to the
Term
Traditionally, lenders want borrowers' budget mortgage payment (PITI-Principal + Interest + Taxes + Insurance) to be not more than 28 percent of their gross monthly income: 28 percent x $3,000 = $840.
Definition
Peter wants to buy his first home but doesn't know how much he can afford to pay. He has a gross monthly income of $3,000. According to the traditional lender's rule of thumb formula, what is the total housing expense (principal, interest, taxes, and insurance) Peter can bear?
Term
Income approach
Definition
An appraiser asked to estimate the value of an existing strip shopping center would probably give the MOST weight to which approach to value?
Term
The income approach would be used on the income-producing property such as an office if the entire mansion is used as such. Should the mansion have other uses along with the insurance company, then multiple approaches may be appropriate.
Definition
An appraiser has been hired to prepare an appraisal on a property that includes an elegant old mansion that is now used as an insurance company office. Which approach to value would the appraiser MOST rely on?
Term
A house sold by owners who were undergoing a foreclosure
Definition
An appraiser who is using the sales comparison approach to value would NOT use which of the following similar homes as a comparable property?
Term
Net annual income ÷ Market value = Capitalization rate, so: $24,000 ÷ $300,000 = 0.08, or 8 percent. Given any two elements, the third can easily be computed.
Definition
If a property's annual net income is $24,000, and it is valued at $300,000, what is its capitalization rate?
Term
The cost approach is used to estimate the replacement or reproduction cost of the building. Estimated replacement or reproduction cost less accrued depreciation plus estimated land value equals the estimated value by the cost approach.
Definition
In the cost approach to value, the appraiser makes use of the
Term
original cost.
Definition
All of the following factors would be important in comparing properties under the sales comparison approach to value EXCEPT differences in
Term
Progression
Definition
The owners of the lesser-valued houses in the neighborhood may find that the values of their homes are affected by what principle?
Term
The income approach would carry the most weight. The income approach is the primary approach used in valuing the income stream produced by the apartment complex.
Definition
In the valuation of a large apartment complex, the MOST weight would be given to which approach to value?
Term
the same agent may represent both the buyer and the seller at the same time.
Definition
In designated agency, all of the following apply EXCEPT
Term
functional obsolescence.
Definition
A house with outmoded plumbing is suffering from
Term
Marcia's equity is the difference between the market value of her property and the debt that encumbers it. Original cost ($250,000) + Increase in value ($250,000 x 15 percent) = Current market value ($287,500). Current market value ($287,500) – Mortgage debt ($95,875) = Marcia's equity ($191,625)
Definition
Five years ago, Marcia bought a home for $250,000. Home values in her area have improved, and the current market value of Marcia's house has increased by 15 percent. If Marcia has $95,875 left to pay on her mortgage loan, what is her current equity in her home?
Term
general agent.
Definition
A property manager is hired to manage a property while the owner is overseas for two years. The property manager is a(n)
Term
the price it sold for.
Definition
The market price of a parcel of real estate is
Term
The capitalization (income) approach requires the use of the net operating income. Thus: $112,000 – $53,700 = $58.310 (NOI). The cap rate is found by dividing the net operating income (NOI) by the value of the property. Thus: 58,310 ÷ 542,325 = 0.1075, or 10.75 percent.
Definition
The effective gross annual income from a property is $112,000. Total expenses for this year are $53,700. What capitalization rate was used to obtain a valuation of $542,325?
Term
agent's relationship to the principal.
Definition
In a real estate transaction, the term fiduciary typically refers to the
Term
A $500,000 exclusion applies to Sam and Alice; a $250,000 exclusion applies to Greg; and no exclusion applies to Mike and Cindy.
Definition
Sam and Alice, who are married, file a joint income tax return and have lived in their home for 20 years. Greg is a single homeowner who has lived in his home for five years. Mike and Cindy are father and daughter and bought their home together last year. Based on these facts, which statement is TRUE if all three homes are sold today?
Term
Value
Definition
Change, contribution, and substitution are some of the basic principles that affect what aspect of real estate?
Term
divide the net operating income by the capitalization rate.
Definition
To find the value of a property using the income approach to value, if the net operating income and the capitalization rate were known, the appraiser would
Term
)
Definition
The relationship between a broker and the seller they represent is generally what type of agency?
Term
Functional obsolescence, physical deterioration, and external (economic) obsolescence are all sources of depreciation. Accelerated depreciation applies for tax purposes.
Definition
For appraisal purposes, accrued depreciation is NOT caused by
Term
required to disclose it because it is a material fact-information important to the seller's evaluation of the offer.
Definition
A licensee is hired as a buyer's agent. The buyer confides he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the licensee's responsibility regarding disclosure of the bankruptcy when presenting the offer to purchase is
Term
External depreciation is caused by factors not on the subject property, such as poorly maintained properties in the neighborhood.
Definition
Which of the following would be classified as external depreciation?
Term
real estate taxes.
Definition
Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for
Term
The income would be calculated by multiplying the income from the four apartments based on a year; 65 percent of that sum would be the NOI. NOI divided by the value of the building would provide a capitalization rate. The calculation would be $470 x 4 x 12 x 65 percent ÷ $215,000, which would provide a capitalization rate of 6.8 percent.
Definition
A building is valued at $215,000 and contains four apartments that rent for $470 each per month. The owner estimates that the net operating income is 65 percent of the gross rental receipts. What is the capitalization rate?
Term
solicit an offer to purchase the property from a prospective buyer.
Definition
As an agent for the seller, a real estate broker can
Margie listed her real estate for sale at $100,000. If her cost was 80 percent of the listing price, what will her percentage of profit be when her real estate is sold for the listing price?
Term
The cost approach to value
Definition
It is necessary to calculate a dollar value for depreciation when using which of the following?
Term
Regression
Definition
A homeowner constructs an eight-bedroom brick house with a tennis court, a greenhouse, and an indoor pool in a neighborhood of modest two-bedroom and three-bedroom frame houses on narrow lots. The value of this house is MOST likely to be affected by what principle?
Term
Income approach
Definition
Which appraisal method uses a rate of investment return?
Term
Effective gross income is the result of all incomes minus any losses due to vacancy, bad checks, etc.: $20,000 (potential gross income) + $700 (other income) – $1,000 [vacancies at 5 percent (0.05)] = $19,700
Definition
If the potential gross rental income from a property is $20,000, the vacancy rate is 5 percent, and the additional income from the laundry facilities and extra storage is $700, what is the effective gross income?
Term
Yes, if the housing complies with regulations for elderly housing
Definition
Martha has a nine-year-old grandson living with her and her application for an apartment has been rejected as the community does not allow anyone under the age of 18. Is this permissible?
Term
procuring cause.
Definition
Real estate broker Todd was responsible for a chain of events that resulted in the sale of one of his client's properties. This is referred to as
Term
death of the salesperson.
Definition
All of the following reasons are valid bases for terminating a listing agreement EXCEPT
Term
Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.
Definition
Which of the following is a similarity between an open listing and an exclusive-agency listing?
Term
no commission.
Definition
A seller has listed a property under an exclusive-agency listing with a broker. If the seller sells the property personally during the term of the listing to someone who learns about the property through the seller, the seller will owe the broker
Term
Because her earnings were more than half in noncommissions, the IRS would not see her as self-employed but could treat her as an employee.
Definition
Margot is a licensed real estate salesperson. Her written contract with broker George specifies that she is not an employee. In the last year, just less than half of Margot's income from real estate activity came from sales commissions. The remainder was based on an hourly wage paid by George. Using these facts, it isMOST likely that the IRS would classify Margot as which of the following for federal income tax purposes?
Term
Diana's broker received $329,985 x 8 percent x 60 percent = $15,839.28. He kept $15,839.28 x 30 percent = $4,751.78, leaving Diana with $15,839.28 – $4,751.78 = $11,087.50.
Definition
Diana, a salesperson, took a listing on a house that sold for $329,985. The commission rate was 8 percent. Carol, a salesperson employed by another broker, found the buyer. Diana's broker received 60 percent of the commission on the sale; Carol's broker received 40 percent. If Diana's broker kept 30 percent, and paid Diana the remainder, how much did Diana earn on this sale?
Term
that reasonable accommodations be provided for people with disabilities.
The salesperson received a $2,800 commission on her 35 percent share of the total commission on the sale of a property that sold for $160,000. What was the commission rate?
Term
Department of Housing and Urban Development.
Definition
The agency responsible for the enforcement of the Fair Housing Act is the
Term
refusing to show certain residential property to people who are not financially qualified to purchase it.
Definition
All of the following actions are illegal under federal and state fair housing laws EXCEPT
Term
The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm.
Definition
A broker has established the following office policy: “All listings taken by any salesperson associated with this real estate brokerage must include compensation based on a 7 percent commission. No lower commission rate is acceptable.” If the broker attempts to impose this uniform commission requirement, which statement is TRUE?
Term
the transaction is closed.
Definition
Unless some other written agreement has been made, broker Hugo will usually receive his brokerage commission when
Term
exclusive buyer agency agreement.
Definition
A buyer has signed an agreement with a broker to compensate the broker even if the buyer purchases the property from a relative. This is called a(n)
Term
Unless the broker has been employed by the seller under a valid contract, the broker is not entitled to a commission.
Definition
Landowner Shelley subdivides her acreage and offers the lots for sale. Broker Ernie tells her that he can sell the lots. After Ernie sells some of the lots, the landowner refuses to pay him a commission. The broker can
Term
Blockbusting
Definition
“I hear they're moving in. There goes the neighborhood! Better put your house on the market before values drop!” This is an example of what illegal practice?
Term
The tenant is entitled to make the necessary alterations.
Definition
The landlord's lease prohibits tenants from altering the property in any way. A young woman who uses a wheelchair cannot maneuver over the doorstep into the apartment by herself. In addition, she cannot access the bathroom facilities in her wheelchair. Which of the following is TRUE?
Term
Megan may not run discriminatory ads.
Definition
Megan owns a triplex and rents out two of the units. She desires tenants with no children or pets. She runs an ad that reads: ''Two-bedroom available, but no children or animals allowed.” Which of the following is TRUE?
Term
price-fixing.
Definition
Broker Janna was accused of violating antitrust laws. Of the following, she was MOST likely accused of
Term
Compensation the person would receive
Definition
A broker would have the right to dictate which of the following to an independent contractor?
Term
Fair Housing Amendments Act of 1988.
Definition
Discrimination based on familial status was prohibited with the passage of the
Term
exclusive-right-to-sell listing.
Definition
The type of listing agreement that provides for payment of a commission to the broker even though the owner makes the sale without the broker's aid is called an
Term
includes a restriction that 80 percent of the units be occupied by people 55 or older.
Definition
Housing that qualifies for exemption from familial status provisions
Term
The ad should not mention St. John's Church.
Definition
The following ad appeared in the newspaper: “For sale: 4 BR brick home; Redwood School District; excellent Elm Street location; short walk to St. John's Church and right on the bus line. Move-in condition; priced to sell.” Which statement is TRUE?
Term
On April 15, the owner tells the listing broker that the owner is dissatisfied with the broker's marketing efforts.
Definition
The listing agreement on a residential property states that it expires on May 2. Which event would NOT terminate the listing?
Term
$196,900 x 7 percent (0.07) = $13,783 (total commission); $13,783 divided by 2 (between both brokers) = $6,891.50; $6,891.50 x 35 percent (0.35) = $2,412.03 (salesperson's commission)
Definition
The listing and the buyer's brokerage agree to split a 7 percent commission 50-50 on a $196,900 sale. The buyer's brokerage gives the salesperson 35 percent of the commission. How much does the buyer's salesperson earn from the sale?
Term
Two steps: (1) Find the commission. (2) Subtract the commission from the selling price to find seller's amount. (1) Brokerage rate (7 percent) x Selling price ($220,000) = Commission ($15,400). (2) Selling price ($220,000) – Commission ($15,400) = Seller's amount ($204,600)
Definition
Sue signs a listing agreement with broker Ken to sell her home. The agreement states that Ken will receive a 7 percent commission. The home sells for $220,000. What is the net amount that Sue will receive from the sale?
Term
date the broker will schedule an open house.
Definition
All of the following are typically found in a listing agreement EXCEPT the
Term
800 feet x 200 feet = 16,000 square feet; 16,000 x 10 percent (0.10) = $1,600 (total commission); $1,600 x 60 percent (0.60) = $960 (salesperson's commission)
Definition
A parcel of vacant land 80 feet wide and 200 feet deep was sold for $200 per front foot. How much money would a salesperson receive for her 60 percent share in the 10 percent commission?
Term
$150,000 (sales price) x 6.5 percent (0.065) = $9,750 (listing commission); $9,750 x 60 percent (0.60 = $5,850 (cooperating broker's commission); $5,850 x 55 percent (0.55) = $3,217.50 (Wella's commission)
Definition
Wella is a salesperson working for broker Vincent. Wella sells a $150,000 home listed with another brokerage. The listing commission is 6.5 percent of the selling price. Of this amount, 5 percent is payable to the referral network that referred the buyer, 35 percent goes to the listing broker, and 60 percent belongs to the cooperating broker. Broker Vincent and salesperson Wella agreed that she would receive 55 percent of any commission that she generated for their office. For this transaction, she is entitled to receive
Term
Marital status is a protected category only under the Equal Credit Opportunity Act.
Definition
If a mortgage lender discriminates against a loan applicant on the basis of marital status, it violates what law?
Term
Open listing and exclusive-agency listing
Definition
Under which of the following listing agreements can owners of listed property sell the property on their own without having to pay the listing broker a commission?
Term
The neighbor is not obligated to pay the broker a commission.
Definition
A real estate broker learns that her neighbor wishes to sell his house. The broker knows the property well and is able to persuade a buyer to make an offer for the property. The broker then asks the neighbor if she can present the offer, and the neighbor agrees. At this point, which statement is TRUE?
Term
Marital status is not one of the seven protected classes under the federal Fair Housing Act.
Definition
The federal Fair Housing Act does NOT prohibit
Term
take the listing at the proposed seller's price planning on reducing the price in the future when the seller is more realistic.
Definition
A broker who has done a proper CMA discusses the probable market value of the property with the seller, and the seller wants an unrealistic price on the property. The broker may do all of the following EXCEPT
Term
exclusive-right-to-sell listing.
Definition
A seller has sold property to a neighbor without the services of a real estate broker. However, the seller still owes the broker a commission because the seller signed a(n)
Term
Bonus and commissions are paid to the broker, who then pays the salesperson.
Definition
Salesperson Nellie finally concluded some extremely difficult negotiations that resulted in the sale of a listed parcel of land. For all of her extra efforts, she can legally receive a performance bonus from
Term
An exclusive-agency listing authorizes one broker to act as sole agent of the seller, but the seller retains the right to sell the property without obligation to the broker.
Definition
Under an exclusive-agency listing, the listing broker would be entitled to a commission EXCEPT if the
Term
By the governor
Definition
How are members of the Washington Real Estate Commission selected?
Term
$112,000 effective gross income - $ 53,700 expenses = $58,300 net operating income ÷ $542,325 property value = 10.75% capitalization rate
Definition
If the effective gross annual income generated by an apartment house is $112,000 and operating expenses are $53,700, what capitalization rate was used to obtain an indicated value of $542,325?
Term
No later than five business days after contract offer and acceptance
Definition
A buyer and seller enter into a written contract to sell/purchase. After the contract has been accepted, how long does the seller have to deliver the disclosure statement to the buyer?
Term
both the broker and associate broker.
Definition
If the license of an associate broker has been lost, an affidavit of lost license will have to be completed by
Term
kept at the same location where the trust bank account records are maintained.
Definition
For sales transactions, a copy of the earnest money agreement, a copy of the final settlement statement, and any addenda related to the accounting or disposition of client funds must be kept where?
Term
cease and desist order.
Definition
After notice and hearing and a determination that a person has violated a provision of the license law or a lawful order or rule of the director, the director may issue that person what type of order?
Term
broker provides the buyer with an agency disclosure that the real estate company represents the seller.
Definition
A buyer prospect is interested in seeing a house listed with a real estate company but does not wish to enter into a buyer agency agreement. A broker from the real estate company can show the buyer an in-house listing if they do what?
If an interest payment of $1,500 is made every 3 months on a $50,000 loan, what is the interest rate?
Term
A) furnishings and appliances. B) a community mobile home. C) household goods.
Definition
Under the Washington State theory of community property, both spouses are required to join in executing the security agreement or bill for what?
Term
45 days.
Definition
An applicant has passed the licensing exam and submitted the completed license application form and fee. The applicant may begin working as a real estate licensee using the completed license application as an interim license. This interim license is effective for up to
Term
trust.
Definition
In Washington, a broker's license can be issued to any of the following EXCEPT a(n)
Term
clear evidence of title.
Definition
The closing statements of all transactions in which a real estate broker participates must show all of the following EXCEPT
Term
deposit the money in an existing interest-bearing escrow account in which all earnest money received from buyers may be held at the same time.
Definition
A broker received an earnest money deposit from a buyer. Under Washington law, the broker should put it where?
Two brokers split the 6% commission equally on the sale of a small commercial tract of land. What was the selling price of the tract if the selling salesperson received $1,074, which was 40% of the portion of the total commission coming to the selling broker?
Term
15 days
Definition
A transcript of the disciplinary hearing will be prepared at the licensee's expense, which will be delivered to the court hearing the appeal. If the licensee does not pay the cost of the transcript, the appeal will be dismissed. From the time that the transcript is filed, how many days does the licensee have to pay for the transcript?
Term
Human Rights Commission.
Definition
A person who believes that he or she has been illegally discriminated against may file a complaint with the Washington
Term
Federal fair housing laws prohibit discussion of HIV or AIDS. “Psychological impacts” or “stigmas,” such as a murder or suicide, are not considered material facts under Washington license law (RCW 18.86.010(9)) and, therefore, do not have to be disclosed.
Definition
Five years ago, Unit 5B in a condominium community was the site of a brutal and highly publicized murder. The unit was sold to an elderly woman who contracted the AIDS virus in a blood transfusion and died in the unit last year. As the agent for the woman's estate, what are your disclosure responsibilities to prospective purchasers of Unit 5B?
Term
$6,600 income x 28% = $1,848 monthly PITI payment
Definition
For how much monthly PITI payment can Ryan qualify if he earns $6,600 monthly and the lender applies 28/36 qualifying ratios?
Term
Only the licensee
Definition
If a person lawfully relies on the word, representation, or conduct of a licensee who knowingly commits or is a party to any material fraud, misrepresentation, concealment, conspiracy, collusion, trick, scheme, or device, who is subject to disciplinary sanctions?
Term
the director of the Department of Licensing or an administrative law judge.
Definition
A disciplinary hearing will be conducted by who?
Term
four months.
Definition
A temporary broker's permit may be issued to a legally accredited representative of a deceased or incapacitated broker for a period NOT exceeding
Term
four months.
Definition
A temporary broker's permit may be issued to a legally accredited representative of a deceased or incapacitated broker for a period NOT exceeding
Term
inform the owner in writing that she is a licensee before making an offer.
Definition
A broker took a listing for a small office building. Because the property is in excellent condition and produces a good, steady income, the broker has decided to purchase it as an investment. If the broker wishes to buy this property, she must
Term
at the time of execution.
Definition
Disciplinary sanctions will be warranted if the licensee fails to furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories thereof
Term
An inactive license may be placed on active status by filling out an application and returning it to the director. If a license is inactive for more than three years, the licensee must successfully complete a 30 clock-hour course in real estate within one year of applying for active status.
Definition
An inactive license may be placed on active status by
