CR-GREAT TEST-1 Real Estate PDF

RESUMEN great question. 1 Who can be sued for trespass due to a neighbor’s garage encroaching on the property line? Neighbor. Easement that restricts construction of solar energy systems? Solar easement. Example of a freehold estate?...

RESUMEN great question. 1 Who can be sued for trespass due to a neighbor’s garage encroaching on the property line? Neighbor. Easement that restricts construction of solar energy systems? Solar easement. Example of a freehold estate? Life estate. Square feet in three acres of land? 130,680. Acres in a lot with 73,000 square yards? 15.1 acres. Listing period difference between a single-family home and commercial property? Single-family: 60-120 days, Commercial: 6 months-1 year. Roof with all sides sloping to the eaves? Hip roof. Meaning of “tenancy” in real estate law? Holding interest to real property. Main factor affecting apartment vacancy rates? Housing supply and demand. Action to settle a property ownership dispute? Quiet title action. What are ownership rights in real estate called? Estates or fees. What is shown on a plot map? Location of improvement. Estate of indefinite duration? Estate of inheritance. First component of real estate? Land. How does the Real Estate Commissioner rescind subdivision approval? Desist and refrain order. Zoning map "M" means? Manufacturing. Which court is the Real Estate Commissioner concerned with under the Subdivided Lands Law? Small Claims. TRUE statement about zoning? Zoning is never retroactive. Clause showing the grantor receives something for property? Consideration clause. What do “adequate, valuable, and good” refer to in a contract? Consideration. Intentional concealment of material facts by an agent? Fraud. Who gets the commission if Broker Phoebe shows the property but Broker Saul sells it? Saul. What happens if one party in a contract is coerced? The contract is voidable. How can a broker still get commission if the buyer and seller agree to wait until the listing expires? Prove they were the procuring cause. Terms “index, triple net, flat” describe what? Leases. Acceptable termination date for an exclusive residential listing? 180 days after signing. Most crucial element of an enforceable listing contract? Written contract. Who holds right of possession and equitable title? Vendee. Requirements for a valid contract? Competent parties, legal purpose, offer, acceptance, and compensation. Which contract needs to be in writing under the Statute of Frauds? A contract not performed in 13 months. Liquidated damages in a purchase agreement: what amount if buyer defaults? Given to the seller. What does “passing title” mean in real estate? Giving and receiving a deed. How can a grantor prove they signed the deed voluntarily? Acknowledgment. Under an exclusive agency listing, when is the seller not liable for commission? If they sell the property themselves. What loan allows interest rate fluctuations based on market conditions? Adjustable rate mortgage. Financial instrument where borrower promises to repay debt? A note. Typical reverse mortgage customer? Senior homeowners. When won’t a lender enforce a due-on-sale clause? All of the above (various circumstances). What happens when the Federal Reserve increases reserve requirements? Decreases loan activity. When does Regulation Z give the borrower a 3-day right of rescission? Refinancing a personal residence loan. What does a beneficiary statement indicate? Current loan balance to pay off. What must a loan broker provide for a $9,600 home equity loan? Mortgage loan disclosure statement. What is the “secondary mortgage market”? Marketplace for reselling trust deed loans. What is a final payment greater than twice the regular payments? Balloon payment.  What is a foreclosure sale? Auction to the highest bidder. What is a lender making a loan to a borrower with a 500 FICO score called? Subprime lender. What is the purpose of the Federal National Mortgage Association (FNMA)? Increase money available for housing. Which entity does NOT buy loans in the secondary mortgage market? FHA. What should Syndi do if Maria defaults before making any payments on a note? Foreclose to collect $150,000. Which of the “three c’s” of underwriting does NOT apply? Conformity. Minimum total foreclosure time under trustee’s sale? Four months. Which amount is incorrect for documentary transfer tax stamps? $111.00. What are “recurring costs” in an escrow statement? Impound account items. Which is NOT an impound requirement for a borrower? Mortgage interest. What method of transferring property requires a neutral third party? Escrow. Why did Mike fail to set aside the grant deed he gave Trevor? Delivery presumed with recording. How to determine annual property taxes? Assess land and improvements, multiply by tax rate. If the loan assumption amount is $290,000 instead of $300,000, what happens? Buyer can void the contract. What happens if Marshal, a joint tenant, secures a loan on the property and then dies? Sara owns property free and clear of the loan. Which does NOT cancel escrow? Broker’s order to terminate escrow. What is NOT tax deductible for a single-family home owner? Landscaping expenses. What will a preliminary title report from April 5, 2020 show about a property bought in 1998 with an FHA loan? Deed of trust with the seller as trustor. Which is NOT true of tenancy in common? A tenant in common cannot will their interest in the property. What legal document transfers ownership of real property? Quitclaim deed. Anna sold her home for $950,000, bought for $750,000, with $300,000 in improvements. What can she write off? None of these. What is a writ of execution issued for? Sheriff’s sale. What does a warranty deed guarantee? Marketability of the property title. A broker fires a salesperson for an illegal act. When should the Real Estate Commissioner be notified? Immediately in writing. What is it called when a broker represents only the buyer? Single agency. What is NOT essential in creating an agency relationship? Agreement to pay consideration. Who is a buyer’s salesperson responsible to when selling another broker’s listings? The selling broker. What leads to discriminatory effects but is NOT openly discriminatory? Implicit discrimination. Who must approve a broker’s advance fee paperwork? Department of Real Estate (DRE). A broker receives two offers on a listing. What is the best practice? Present both offers at the same time. What is true about a listing broker? A listing broker may not be the sole agent of the buyer. What should someone discriminated against in housing do? File a civil action in federal court. What should a seller’s agent do if the buyer paid less for a ranch than others nearby? Disclose all information to the seller and let them decide. Under what circumstance can a deed with racial identity of the parties be rewritten? By court order. What is the Real Estate Commissioner authorized to do? Promulgate rules and regulations to enforce real estate laws. A buyer finds out a house has a septic system, not a sewer. Who can the buyer sue? The broker and the owner. What establishes an agency relationship? Any of these. A broker tells a buyer that the seller will accept $380,000 due to bankruptcy. What did the broker violate? Fiduciary obligation to the seller. Is disclosing a buyer's race or color discriminatory? Yes, because it does not matter. What source provides information on sewer assessments, liens, utilities, etc., for a vacant lot? Real Estate Commissioner.  Who does the Uniform Commercial Code protect in a bulk sale transfer? Creditors. What triggers the delivery of a Natural Hazard Disclosure Statement (NHD)? All of these EXCEPT a property that contains lead-based paint. What violates the First Amendment regarding residential neighborhoods? Prohibiting the display of "For Sale" signs. What is an example of a red flag? A floor that is not level. What is steering in real estate? Restricting someone from buying in a community based on characteristics. Which state agency prevents discrimination in housing? Department of Fair Employment and Housing. If Lori is transacting real estate on Alex’s behalf with Alex's authority, who is Lori? An agent. What must be included in a real estate broker’s advertisements? Broker’s name and license number. What is NOT disclosed in a Transfer Disclosure Statement (TDS)? Criminal activity in the surrounding neighborhood. What is an agent’s positive effort to satisfy the customer’s objectives? Due diligence. When is a verbal agreement to sell real estate enforceable? When the buyer makes a down payment, takes possession, and improves the property. What is blockbusting? Inducing panic selling by suggesting changes in neighborhood demographics. A buyer sues the seller and broker for a leaking roof. What is the probable court result? The buyer may recover from both the seller and the broker, and the seller may recover from the broker. What is the purpose of the Real Estate Law? Protect the public. What grants the right to use property owned by another person? License. What does an appraiser mean by "effective age"? The 10-year-old appearance of a 20-year-old residence. Under cost approach, what is the value of the property? $525,000. When does demand affect value? When there is purchasing power. What is "highest and best use"? Greatest net return. What is return of investment? Depreciation. What leads to vacancy rates? Housing supply and demand. What is NOT a force that influences value? Demand. Most common appraisal approach for SFR? Market comparison. What does an appraiser NOT consider? Assessed value. Cost of home ownership? Loss of interest on equity. What must happen for real estate to depreciate? It must be improved. What factor should John focus on for modernization? Effect on net income. What can't be deducted in capitalization process? Debt service. What is NOT shown as an expense by an owner? Depreciation. What is NOT an essential element of value? Anticipation. First step in the appraisal process? Define the problem. Who borrows money in a mortgage? Mortgagor. What should Martha do with an escrow deposit? Deposit with the court. How much was the transfer tax? $426.80. Difference between a mortgage banker and broker? Broker finds the loan; banker funds it. What is TRUE about a note rate? Rate will decrease, principal remains. Value of a duplex with $1,200 rent and 12.5 GRM? $360,000. What would the appraiser recommend first? Toxic waste report. What is a lot with a long narrow driveway called? Flag lot. Best choice for Lupe? Real Estate Recovery Fund. Who lends mortgage money? Mortgagee. What property style is this house? Colonial. How many acres is a quarter of a section? 160 acres. First half of current tax bill? $2,310.  What is this an example of? Valid purchase and resale. Person holding an option to buy property? Optionee. Which appraisal approach is used here? Market comparison. What is the owner of a rental property called? Lessor. Who holds the note secured by a trust deed? Beneficiary. What is subject to sales tax? Furniture and fixtures. Minimum duration for brokers to keep purchase agreements? 5 years. Incorrect statement about listing brokers and property managers? Both have limited authority to bind principals. Correct statement about California Real Estate Law? You may pay a commission to a broker from another state. What kind of equipment did William install? Removable equipment. Max payout from California Consumer Recovery Account? $50,000 per transaction; $250,000 per licensee. What kind of agency was established? Implied agency. Common appraisal report used by lenders for SFR? Summary Report. Mandatory Continuing Education for California brokers? 45 hours. Average width of earthquake fault zones in CA? 0.25 miles. Regulatory body for licensees in CA? DRE. Status of listing agreements at James' firm? Terminate due to James' incapacity. Which act makes two brokers conspiring to set commissions illegal? Sherman Antitrust Act. True claim about Nancy’s property improvements? None of the statements are correct. State agency preventing housing discrimination in CA? Department of Fair Employment and Housing. What responsibility compels a listing broker to inform of unpaid child support? Disclosure. Laws with significant influence on housing and construction in CA? State Housing Law, Local building codes, Contractors License Law. The primary responsibility of a property manager is: B. Maximizing rental income for property owners. What is the formula for calculating the capitalization rate (cap rate) in real estate? A. Cap Rate = Net Operating Income (NOI) / Current Market Value If a property generates $5,000 per month in rental income and has $2,000 in monthly operating expenses, what is the monthly Net Operating Income (NOI)? C. $3,000 What is the formula for calculating the Loan-to-Value (LTV) ratio? LTV = Loan Amount / Property Value If a property is listed for $300,000 and the buyer secures a mortgage with a down payment of $60,000, what is the Loan-to-Value (LTV) ratio? D. 80% What is the formula for calculating the Gross Rent Multiplier (GRM)? A. GRM = Property Value / Gross Rental Income If a property is valued at $400,000 and generates an annual Gross Rental Income of $40,000, what is the Gross Rent Multiplier (GRM)? A. 10 What is the formula for calculating the Debt Coverage Ratio (DCR)? C. DCR = Net Operating Income (NOI) / Mortgage Payment If a property has an annual Net Operating Income (NOI) of $60,000 and annual mortgage payments of $40,000, what is the Debt Coverage Ratio (DCR)? C. 1.5 What is the formula for calculating the Cash-on-Cash Return? B. Cash-on-Cash Return = (Net Operating Income (NOI) - Debt Service) / Down Payment If a property has an annual Net Operating Income (NOI) of $50,000 with no debt service and the investor's down payment is $100,000, what is the Cash-on-Cash Return? A. 50% Under Easton, an agent’s duty of inspection and disclosure covers: A visual inspection and known or should have known defects. An exclusive-right-to-sell listing likely includes: All of the above. All statements regarding an exclusive-right-to-sell listing are true EXCEPT: The agent is precluded from working with other agents to sell the property. The greatest likelihood of resulting in a sale is a(n): Exclusive-right-to-sell listing.