MN Real Estate Salesperson Course I Final

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Which of the following circumstances would concern you about working for Broker John?

a) John offers weekly training seminars.
b) There are several successful agents at John's office.
c) John's office has a selection of books, CDs and tapes for agent use.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.
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Terms in this set (708)
Which of the following circumstances would concern you about working for Broker John?

a) John offers weekly training seminars.
b) There are several successful agents at John's office.
c) John's office has a selection of books, CDs and tapes for agent use.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.
Good ethical practices have to do with:
trustworthiness, honesty, and competence.
Which statement is TRUE regarding working as an independent contractor?

a) The contractor will pay Social Security and Medicare taxes.
b) The broker can dictate the number of hours per week the agent spends in the office.
c) The broker will withhold income tax.
d) The contractor must attend weekly sales meetings.
a) The contractor will pay Social Security and Medicare taxes.
Real estate licensing regulations on the state level deal primarily with
agency issues and disclosures.
One goal of the National Association of REALTORS® Code of Ethics is to:
encourage the highest standard of ethical business practice by all of the members.
Which of the following would be an example of a licensee specializing in business type?

a) Jim specializes in clients who want to buy restaurants.
b) Alice knows everything about the exclusive east side neighborhoods.
c) Tom specializes in options.
d) Chris is a buyer's agent.
Jim specializes in clients who want to buy restaurants.
Which entity recommends changes to articles in the NAR Code of Ethics?
Professional Standing Committee
What type of property is described as one having a unique use to the persons who own and use it such as churches, hospitals, schools and government buildings?
Special-purpose property
If an area has an overabundance of lower priced homes with more buyers than homes available, the location is considered
a sellers' market.
What term describes a person licensed to perform any of the acts of a real estate broker but while associated with and supervised by a broker?
Real Estate Salesperson
Laws tend to set:set the minimum standards for acceptable behavior.A salesperson may receive compensation for performed activities fromOnly their employing broker.What association is primarily made up of Hispanic members who meet and work towards real estate goals that are beneficial to the Hispanic population?NAHREP (National Association of Hispanic Real Estate Professionals)In what category do real estate sales persons spend the bulk of their time and effort?Sale or transferWhat refers to a legal document that pledges a property to the lender as security for payment of a debt?A mortgageWhich of the following statements is FALSE? a) A broker may require licensees to carry high levels of automobile insurance. b) It's a good idea for brokers to carry workers' compensation coverage. c) A broker is not responsible for the acts of independent contractors. d) Employee status versus independent contractor status is an IRS issue.c) A broker is not responsible for the acts of independent contractors.What is the oldest and largest minority trade association in the United States?NAREB (National Association of Real Estate Brokers)In a 100% commission plan, who is typically responsible for the costs of advertising?The salespersonThe formal Code of Ethics and Standards of Practice set forth by NAR calls for professionals to observethe golden rule.How often are the NAR Code Articles reviewed?YearlyAlice has decided that she will specialize in selling farm land. Which area of specialization would she fall into?Type of propertyWhich of the following is NOT a condition of the safe harbor test? a) Person must be properly licensed. b) Gross income must be based on production. c) Clearly written contractor agreement must exist. d) Gross income must be based on hours worked.d) Gross income must be based on hours worked.What is an organization of member brokers who share listing?MLSBroker Alice has hired several independent contractors in her firm. Which of the these activities does she have control over? a) What the licensees wear b) What percent of commission the licensees can charge c) How much time the licensees must spend in the office d) Whether or not the licensees attend staff meetingsb) What percent of commission the licensees can chargeWhat is defined as land or improved property with buildings designed for humans to live in, such as single-family homes, multifamily homes, apartments, vacation homes or condominiums?Residential propertyBob wanted to know the succession of property owners of record dating back to the original grant of title. Bob would request achain of title.Title insurance for the lender protects the lender's interest in thepropertyAll of the documents that relate to a transfer of property or an interest in property must bein writingWhat might an owner need to remove a cloud from a title to clear the title record of any unrecorded claims?A suit to quiet titleHow long does title insurance stay in effect?Until the property sells againWhen the abstracting process is combined with an insurance program, the result isTitle insuranceWhich of the following will a title policy NOT cover? a) Problems with the title that occur after the date the owner purchased the policy b) A lease on the land wasn't recorded in the public records and disclosed to the owner c) Failure of the title policy to disclose legal restrictions on how the owner can use the property d) Improper signature on the chain of titlea) Problems with the title that occur after the date the owner purchased the policyWho are the essential parties involved in an estate in trust?Trustor (borrower), trustee (neutral 3rd party), and beneficiary (lender)Investor Bob was contracted to purchase a piece of property when Agent Jill called and said a defective conveyance to the title was found. This would create a/anclouded title to the property.Which of the following statements best defines joint tenancy? a) In a joint tenancy, three or more persons collectively own a property as if they were a single person. b) In a joint tenancy, two or more persons collectively own a property as if they were husband and wife. c) In a joint tenancy, two or more persons collectively own a property as if they were a single person. d) In a joint tenancy, two or more persons collectively own a property under the ownership of a company.c) In a joint tenancy, two or more persons collectively own a property as if they were a single person.What briefly summarizes the various activities that affect the ownership of a parcel of land?An abstract of titleWhen a single individual or entity owns a fee or life estate in a real property, the type of ownership istenancy in severalty.Knowledge of a fact that a person could have or should have obtained is defined asconstructive noticeA historical summary of all consecutive grants, conveyances, wills, records and judicial proceedings that affect the title to a particular property isan abstract and opinion.What refers to taxes that are imposed on homeowners and landowners to cover the cost of improvements that will benefit all those upon whom the tax was imposed?Special assessmentsWhen a chain of title is performed what is the last grantee found called?Record title holderUnlike tenants in common, joint tenants a) own distinct portions of the physical property. b) cannot will their interest to a party outside the tenancy. c) may own unequal shares of the property. d) cannot sell their interest to outside parties.b) cannot will their interest to a party outside the tenancy.What is the foremost method of constructive notice?Recording ownership documents in public recordsThree people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is this?Tenancy in commonWhich of the following is used to indicate a marketable title?Title InsuranceWhat system is the creation of an index based on the names of the grantors and of the grantees?Grantor/Grantee systemUnrecorded liens, mining claims, and water rights are examples of what is covered byan extended coverage title insurance policy.Who conducts a search for abstract of title?An abstractorMike has Title Insurance that covers legal action based on claims that are not covered by the public record. What type of coverage did Mike get?Extended CoverageWhat describes a lien placed on a property by the lender when granting a mortgage for a property?A property lienWhat is one defining characteristic of a tenancy in common?No survivorshipWhen dealing with properties and titles, what is the name of the person who conveys whatever title he or she has to a property?The grantorWhat does a title search reveal?-The legal description of the property -The owners of record -Any outstanding liens or encumbrances on the propertyWhich of the following is NOT an example of a cloud on a title? a) Encroachment b) Change in property's mailing address c) Property tax lien d) Zoning violationb) Change in property's mailing addressWhat guarantees the validity and accuracy of a title search?Title insuranceWhat type of document transfers the property from the seller to the buyer?The deedWhat Law/Act set a standardized explanation of the financial terms of a loan?Truth in Lending ActWhat insurance clause requires that a homeowner have insurance that is equal to 80% of the home's replacement value?Coinsurance clauseTypically, when does a purchaser receive the original deed and title insurance policy?Several weeks after the closingWhat do real estate closing companies use to make sure all details of the closing have been covered and all pertinent documents are in house ready for the buyers and sellers to sign?A checklistA mechanic's lien is an example of aCloud on the titleWhat can a lender require a borrower to maintain for property taxes and insurance so that money is available for payments?An escrow accountWhich document notifies the borrower of the total amount of interest and property taxes paid in the previous year?Form 1098What document provides evidence of the borrower's debt to the lender, a description of the loan terms and a means for the lender to transfer or collect the debt?The noteDuring the escrow period who is the appraisal sent to?The lenderThe Minnesota purchase agreement has no provision for naming the escrow company so the parties will make this decision atthe time the contract becomes valid.If an inspection finds that a home does not have enough smoke detectors and it is determined that it is the seller's obligation the seller mustbuy and install additional detectors.Which person in a closing reviews documents and answers questions about the title?Title company representativeFire Prevention inspects buildings on a2 year cycleWhen is the title insurance policy issued to the purchaser?After recording of the grant deed and security instrumentWhen an offer to purchase contract is accepted and signed by the seller, the licensee should change the status in MLS toPendingThe escrow holder will need information about all items except a) the terms of the loans. b) commissions. c) back up offers on the property. d) instructions about inspections.c) back up offers on the property.The title report on a property shows there is a lien on the property. Who is responsible for removing the lien to clear the title?SellerWhat type of closing describes where all parties and their representatives meet to exchange documents and to ensure that all necessary steps have been taken so that the buyer can receive marketable title and the seller receives the money?Face to face closingWhich type of property title is most desirable?MarketableFlood insurance isnot included in a homeowner's policy.ABC Mortgage Lenders requires all borrowers to open an escrow account and deposit funds to cover real estate taxes. These funds arereservesIn order to protect their interest in a property, lenders typically require title insurance andHomeowner's insuranceAfter a closing, all real estate sales must be reported to the Internal Revenue Service on aForm 1099If a title has defects, who deducts the amount necessary to remove the liens from the seller's money?The escrow agentIf the seller will remain on the property for some period of time after the closing what will the buyer need to provide to cover that period?A leaseWhich of the following statements best describes the term "consummation" as defined under Regulation Z? a) The time that a consumer becomes contractually obligated on a credit transaction b) The window of time that a consumer has to accept or reject a credit transaction c) The amount of time that a mortgage loan is viable d) Three business days prior to acceptance of the loana) The time that a consumer becomes contractually obligated on a credit transactionRESPA applies to all of the following EXCEPT which? a) Condominium purchase b) Seller-financed loan c) Loan involving a second mortgage d) Federally-insured loanb) Seller-financed loanOn what document would a consumer find information regarding a good-faith estimate of credit costs and transaction terms for a property loan mortgage?Loan estimateWhich pages of the Closing Disclosure will look the same regardless of the loan type the consumer is getting?2 and 3Any item that is prorated is shown on the settlement statement asa debit to one party and a credit to the other party for the same amount.Willful violation of Regulation Z is amisdemeanorIf a seller pays for an item in advance,the buyer will receive a debit and the seller will receive a credit.For purposes of the TRID rule, a business day is a:day on which the creditor's offices are open to the public for carrying out substantially all of its business functions.A mortgage Loan Estimate must be delivered within:three business days of loan application.Amounts collected by the lender and held in a trust or impound account for future payment are called what?ReservesWhich agency publishes the booklet, "Your home loan toolkit"?Consumer Financial Protection Bureau (CFPB)Regulation Z applies to which of these situations? a)$35,000 farm loan b)$50,000 restaurant loan c)$75,000 condominium loan d)$85,000 warehouse loanc)$75,000 condominium loan (regulation z is residential)Accepting referral fees from other service providers in the transactioncould be a violation of RESPA (Real Estate Settlement Procedures Act)The Truth in Lending Act existsso lenders disclose to buyers the true cost of obtaining credit.According to the TRID Rule, the Closing Disclosure must be delivered to the buyer how long before closing?At least three daysWhat is a credit to the seller on the settlement statement?Sales priceClosing agents and lenders typically use one of two methods when calculating items that need to be prorated. These are the 12-month/360 day method and the365 day method.Under settlement charges, buyers generally do not paydeed preparation fees or costs to clear a titleMortgage lenders are required to disclose financing costs and annual percentage rate to the borrower under which law or regulation?Truth in Lending ActWhat type of information is found in the Loan Calculations section on page 5 of the Closing Disclosure?-The total amount of all payments on the loan -the dollar amount of the finance charges over the life of the loan -the amount financed -the annual percentage rate (APR) -the total interest percentage (TIP)What is not an item that a buyer usually pays at closing?Fee for clearing the title & preparation of deedWhat is the person called who receives property from a grantor?The granteeWhat is a private grant that occurs when the owner dies?A transfer by willWhat clause in a deed describes the type of estate being conveyed?Habendum clauseThe transfer of property under a will is known asdeviseA legal description provides a basis for court rulings onencroachments and easements.When does a deed become valid?Upon delivery and acceptance by the granteeWhat is the east-west line between two parallels called?A tierAn owner transfers title to a property to a buyer in exchange for consideration. This is an example of what?Voluntary alienationWhich of the following would NOT be used as a legal land description?Parcel methodA rectangular survey system divides townships into 36 squares calledsectionsWhat accurately locates and identifies the boundaries of a subject parcel of property by metes and bounds, lot and block or government survey?A legal descriptionWhat accurately locates and identifies the boundaries of the subject parcel of property to the degree acceptable by courts of law in the state where the property is located?A legal descriptionWhat is an area enclosed by the intersection of two consecutive meridians and two consecutive parallels called?A townshipWhat term describes a will that is made orally and written down by a witness?NuncupativeWhich of the following would be used as a legal land description? a)Aerial photographs b)Reports and guides c)Parcel method d)Metes and boundsd)Metes and boundsWhat is also known as a "subject to" clause?Exemptions and reservations affecting the titleFor a deed to convey title, it is necessary for the deed to be what?Accepted by the granteeIf a person dies with no legal heirs or relations and has left no valid will, what happens to real property owned by that person?It is taken by the state according to the process called escheat.If a will does not name an executor, who will the court appoint to fulfill the role?An administratorWhat refers to a will that is in the testator's handwriting and is dated and signed?HolographicIf a person having several heirs dies intestate, what will happen to the property?The estate passes to lawful heirs according to the state's laws of descent and distribution, or succession.A beneficiary of a will is calledAn heirWhat is a legal instrument for the voluntary transfer of real and personal property after the owner's death called?A last will and testamentWhat gives the public constructive notice of a grantee's ownership?Recording the deedWhat term describes the person who transfers title to real property?GrantorWhat is a court proceeding that settles a decedent's estate whether or not the person dies with a will?ProbateReal property may be exempted from probate if it is held in aland trustIf a descendent dies without a valid will, he or she is said to have diedIntestateWhere there is a possibility that prior errors in deeds or other recorded documents might cloud the title, which of the following is used to convey any and all interest to the grantee?Quitclaim deedWhen a subdivision developer turns the subdivision road or the common ground in the subdivision over to the local government, he or she does so by what is known asdedicationAll Minnesota deeds must besigned by the grantor and acknowledged by a notary public.First and foremost, a valid deed mustbe produced in writingA covenant must be in writing due to theStatute of Frauds.The state deed tax isa state tax imposed on each deed or instrument that grants, assigns, transfers or otherwise conveys real property.A deed that expressly states that the deed is only effective on the death of one or more of the grantor owners is known as aTransfer on death deedWhat is considered in a deed or title to the property, where the grantor of the title makes certain guarantees to the grantee?CovenantsIn Minnesota, a written contract to do (or not to do) something to the land is known asa real covenant.What type of deed is typically used when one person is purchasing property from another person?A warranty deedThe deed most used in real estate transfers and offers the greatest protection of any deed is thefull covenant and warranty deed.The price that must be stated in the deed is also known asconsiderationBuilders usually give which type of deed?Special Warranty DeedThe legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty isPrivityThe covenant is: "I may or may not own, and I won't defend" of which deed?Quitclaim deedAn easement is:is the right of one or more persons to use the real property of another for some limited purpose.Transfers of real property must be in writing andnoterizedOften used to convey title to someone who purchases real property from an estate would be a/anMinnesota personal representative's deed.The form of deed commonly used for transfers within a family and in divorce settlements is known as aQuitclaim deedIf there is any unclear or ambiguous language regarding the existence of a covenant, the courts willfavor free alienation of the property.Failure to meet the age requirement of 18 years of age would cause a deed to becomevoidableA declaration by a person that the person has executed an instrument for the purposes stated therein is termed a/anacknowledgmentThe creation of easements often require the assistance of alicensed surveyorA special warranty deed is also known asa bargain and sale deed with covenants.What type of deed does not protect the grantee against claims that predate the owner's period of ownership?Special Warranty DeedIn Minnesota, deeds should be recordedin the county where the property is located.I own and I will defend describesan overall general warranty covenant.A quitclaim deedtransfers real and potential interests in a property.What happens if a broker dies or becomes incapacitated?The Commissioner may issue a temporary broker license to an individual so that salespersons may continue to do business until a new broker is found.How does a person obtain a real estate license?Complete the prelicense education courses and written examination, and submit an application and the appropriate fees.Who is responsible for administering the Minnesota Statutes governing real estate?The Minnesota Department of CommerceWhat will happen if an applicant for a broker's license passes the exam but fails to apply for the broker's license within 1 year?The applicant will have to take the exam again.How many hours of prelicense education must an applicant for a salesperson's license complete in total?90 hours, comprising course I, II and III.What must a business entity engaging in real estate have before commencing real estate transactions?A valid real estate licenseHow many brokers may a salesperson work on behalf of at any one time?Only 1How many hours of continuing education are licensees required to complete during each license renewal period?30 hoursWho is responsible for renewing a salesperson's license?The salesperson's brokerWhich of the following people would need a real estate license? a) A cemetery's owner selling burial plots. b) A person helping, for a fee, the owner of a property to sell that property. c) An attorney carrying out duties as an attorney. d) A trustee carrying out orders of a count.b) A person helping, for a fee, the owner of a property to sell that property.Applicants for a salesperson's license must include what on the application?The name and place of business of a real estate broker for whom the salesperson will be acting.What does a person engaging in real estate need to obtain before they can act as a salesperson?A valid real estate license.Which of the following is not exempt from requiring a real estate license? a) A trustee carrying out orders of a count. b) A cemetery's owner selling burial plots. c) An auctioneer employed to auction a property. d) A person who, for a fee, buys or sells real estate.d) A person who, for a fee, buys or sells real estate.When does a salesperson's automatic transfer between brokers become effective?Upon the mailing or personal delivery of the required fee and documents to the Commissioner's office.What is the license fee for renewing a broker's license?$100Can a salesperson automatically transfer between brokers?Yes, provided the salesperson applies for an automatic transfer from the Commissioner.If the balance of the education, research and recovery fund falls below a certain level, what will the Commissioner impose?An additional recovery fund assessment fee.All licensees must pay a fee to which fund when receiving an initial license or renewing a license?The education, research and recovery fund.How long is the licensing period between license renewals?2 yearsSalesperson Natalie wants to transfer from broker Michelle to broker Trish. What is the amount of the transfer fee?$20Who is responsible for the regulation and issuing of real estate licenses in Minnesota?The Minnesota Department of CommerceLicense examinations are held at times and venues as determined by the Commissioner at least once every45 daysWho keeps the records of an automatic transfer?The salespersonBy what date must a salesperson have fulfilled all the license renewal requirements?June 15thWhat is a "licensee" as defined in Minnesota statute Chapter 82?A person duly licensed under chapter 82.What must applicants for the broker's license exam provide proof of?3 years' experience as a salesperson within the previous 5 years.What is a "primary broker" as defined in Minnesota statute Chapter 82?A broker on whose behalf salespersons are licensed to act.What must an applicant for a salesperson's license complete before taking the exam?Prelicense education course I.Which of the following is not a responsibility of the Department of Commerce? a) Creating rules necessary to carry out the provisions of the real estate statutes. b) Settle disputes between real estate salespersons and brokers. c) Discipline real estate licensees when necessary. d) Ensuring real estate licensees are educated in the business of real estate.b) Settle disputes between real estate salespersons and brokers.Who is responsible for ensuring real estate licensees are properly educated in real estate matters in Minnesota?The Minnesota Department of CommerceWhat is the minimum age for applicants wishing to obtain a real estate license?18 yearsIf an applicant makes an overpayment of a fee, how long does he or she have to request a refund?6 monthsIf a broker does not intend to renew the license of a salesperson, the broker must notify the salesperson how far in advance?30 days before June 15th of the renewal year.What license must a non-licensee obtain in order to provide closing services for real estate transactions?A real estate closing agent's licenseWhat is the license fee for an initial salesperson's license?$70What is a MN applicant not required to have in order to receive a real estate license?A Minnesota drivers license.What describes any payment of money in excess of a statutory fee or for a license for which a person does not qualify?OverpaymentIf a salesperson wishes to utilize the automatic transfer system between brokers, how quickly must he or she begin working for the new broker?5 daysWho heads of the Minnesota Department of Commerce?The Commissioner of Commerce, more commonly called the Commissioner.If a trust account is interest-bearing, to whom is the interest paid?The Commissioner of Management and BudgetWho must agree to a trust account being interest-bearing before a broker can deposit funds into such an account?Seller and buyerCan a broker keep his or her personal money in a trust account?Yes, but only a small sum to pay account charges and maintain a minimum account balance.A broker must keep formal trust account records that include enough information to identify the transaction and thepartiesHow soon must a broker notify the Commissioner of any changes to a trust account?immediatlyWhen a broker applies for his or her license, what must he or she provide to the Commissioner?The name of the bank in which the broker's trust accounts will be held, and the trust accounts' numbers.Which of the following does not have to be in a broker's trust account records? a) From whom the funds were received. b) The check number of a check received as earnest money. c) The date of disbursements for any previously deposited funds. d) A monthly balance of the trust account.b) The check number of a check received as earnest money.Where will the Commissioner of Management and Budget credit any interest from interest-bearing trust accounts?To the housing trust fund account.If a check representing escrow money is being held by the listing broker and not deposited into an escrow account, how soon must the broker return the check if the offer is rejected?1 dayWhich of the following is not required in a broker's trust account records? a) The date funds were received. b) The amount of funds received. c) From whom the funds were received. d) The time the funds were deposited.d) The time the funds were deposited.If a broker wishes to close an existing trust account, how much notice must he or she give the Commissioner?10 daysWhich of the following best describes a broker's trust fund record keeping responsibilities? a) A broker must keep all teller receipts and other proof of deposit of trust funds and show them to the Commissioner if asked to do so. b) A broker must present all trust account balance books to the IRS at the end of each financial year. c) A broker must maintain trust cash receipts and a cash disbursement journals in accordance with generally accepted accounting principles. d) A broker must keep photocopies of all earnest money checks and provide these to the Commissioner at each license renewal period.A broker must maintain trust cash receipts and a cash disbursement journals in accordance with generally accepted accounting principles.Which of the following is a depositable item that can be accepted as escrow money? a) A treasury bill b) A stock certificate c) A bond d) A personal checkd) A personal checkWhat must a licensee do when advertising real estate?Identify him or her self as either a broker or a salesperson acting as agent to a broker.From whom may a salesperson receive a commission or compensation?Only from the licensee's broker.What must a licensee do before listing a property for sale?Obtain a signed listing agreement from the owner of the property.Licensees must notify the Commissioner of the suspension or revocation of his or her real estate license or other occupational license within how many days of the suspension or revocation?10 daysA buyer's broker agreement may NOT includean automatic extension. an override clause that extends more than 6 months. a holdover clause.What must a primary broker do to ensure all the places of business within a real estate company are properly supervised?Specify the name of each broker designated as responsible for the direction and supervision of each place of business, and keep a record accordingly.What must first be done before a security can be sold?It must be registered under the Minnesota Securities Act.A buyer's broker agreement involving residential property must include what?A notice stating that after the agreement expires, the buyer is not obligated to pay the licensee a fee if the buyer has signed another buyer's broker agreement obligating the buyer to pay a fee to another licensee for the purchase of the real property in question.Regarding protective lists, what are the licensee's responsibilities?To demonstrate that each property on the protective list has been shown to the buyer, or specifically brought to the attention of the buyer, during the time the buyer's broker agreement was in effect.When may a licensee include in any advertising the name of a team or group working within a brokerage?When it is authorized by the primary broker and the brokerage's name is featured more prominently in the advertising than the team's name.A listing agreement may contain an override clause of up to how many years in length when used in conjunction with the purchase or sale of a business?2 yearsWhat is required to be in a buyer's broker agreement?a) The amount of the licensee's commission. b) A definite expiration date. c) A statement explaining the services to be provided by the broker. d) A notice stating that after the agreement expires, the buyer is not obligated to pay the licensee a fee if the buyer has signed another buyer's broker agreement for the property (if residential)What must a broker do if a complaint is made against one of his or her salespersons?Investigate and attempt to resolve any complaints and maintain a complaint file for each individual against whom a written complaint is made.How should a licensee notify the Commissioner of changes to the licensee's information the Commissioner has on file?In writing or the format prescribed by the Commissioner within 10 days.Who may prepare a broker price opinion?A licensed salesperson A licensed broker A licensed appraiserRegarding a brokerage with more than one place of business, which is true? a) Each place of business must be under the supervision of an individual broker who is licensed to act on behalf of the brokerage. b) Only the main office needs to be under the supervision of a broker licensed to act on behalf of the brokerage. c) Each place of business must be under the supervision of an individual salesperson who is licensed to act on behalf of the brokerage. d) Each place of business must be licensed under a separate business name and supervised by separate principal brokers.a) Each place of business must be under the supervision of an individual broker who is licensed to act on behalf of the brokerage.Does a licensee need to disclose that he or she is a real estate licensee when selling his or her own property?Yes, a licensee must still identify him or herself as a broker or salesperson when advertising his or her own property.A broker must supervise all the real estate activities of his or her salespersons and employees. Which of the following does not require supervision? a) Ongoing monitoring of listing agreements prepared by salespersons or employees. b) Ongoing monitoring of purchase agreements prepared by salespersons or employees. c) Ongoing monitoring of the number of potential new leads a salesperson or employee generates. d) Ongoing monitoring and review of all trust account books and records.c) Ongoing monitoring of the number of potential new leads a salesperson or employee generates.A listing agreement may not includea) a holdover clause. b) an automatic extension. c) an override clause that extends more than 6 months.What is required to be included in a listing agreement?The amount of the licensee's commission. A definite expiration date. A description of the property.Between which people is commission splitting not permitted?Transactions between a licensed real estate broker or salesperson and an unlicensed person.What are the five types of agency representation?Seller's broker Buyer's broker Dual agency broker Facilitator SubagentWhat is required on an agency disclosure form?a) A description of the available agency relationships. b) A signature line for the acknowledgment of receipt by the client. c) A description of the role of a licensee under each agency relationship option.What must a licensee disclose if he or she wishes to purchase a property?Disclose to the owner that he or she is a real estate licensee.Can a licensee act as a dual agent in Minnesota?Yes, provided he or she has the informed consent of both parties in the transaction.Is a broker or salesperson required to disclose information regarding persons who are required to register as predatory offenders?A broker or salesperson is not required to disclose information regarding persons who are required to register as a predatory offender as long as he or she provides written notice that information about the predatory offender registry may be obtained by contacting local law enforcement or the Department of Corrections.Describe a facilitator in a real estate transactionA facilitator is a broker or salesperson who performs services for a buyer, a seller, or both, but does not act on the behalf of either as a buyer's broker, seller's broker, or dual agent.When must a licensee provide a client involved in the sale or purchase of real estate with an agency disclosure form?At first substantive contact between the licensee and client.Describe a seller's brokerA broker who lists a property and acts on behalf of the seller.What must a licensee do if he or she is informed a party to the transaction will not perform per the terms of the purchase agreement?Immediately disclose to any other parties the fact of the party's intent not to perform.Agency disclosure is required by law for any transaction involving property occupied, or intended to be occupied, by up to how many families as their residence?4What must a broker offering a guaranteed sale program provide to the seller before signing a listing agreement?A written disclosure that states the terms and conditions under which the broker agrees to purchase the property.What is a material fact?A fact that could significantly affect a buyer's enjoyment of a property or the ordinary or intended use of a property.What describes a broker or salesperson who represents the seller but works with a buyer when the buyer is a customer?A subagentA third party written report on the physical condition of a property was given to the potential buyer, what, if any, disclosures about the physical condition of the property is the seller's agent required to make?None; the written report means the licensee is no longer required to disclose physical condition information.Which of the following is not considered a fraudulent, deceptive, or dishonest practice by a licensee? a) Making a material misrepresentation. b) Acting on behalf of more than 1 party to a transaction with the knowledge and consent of all parties. c) Making a false statement in any information provided to the Commissioner. d) Obtaining or attempt to obtain a real estate license by fraud, misrepresentation, or deceit.b) Acting on behalf of more than 1 party to a transaction with the knowledge and consent of all parties.Can a person advertise as a real estate salesperson if they do not hold a valid real estate license?No, it is unlawful for a person to advertise or represent him or herself as a real estate agent without a valid real estate license.During a real estate transaction, can a licensee insist a party uses a specific closing agent?No, licensees may not require a person to use a particular entity in connection with a real estate closing, including: lenders; attorneys; brokers; and closing agents.What must a person seeking compensation from the recovery fund do before applying?Obtain a final judgment from a court against a real estate licensee.Which of the following is not grounds for the Commissioner to revoke a license or deny an application?The Commissioner finds that a real estate licensee or applicant also has an appraisal license.What power does the Commissioner have to discipline licensees who engaged in fraudulent, deceptive, or dishonest practices?The Commissioner may deny, suspend or revoke the licensee's license, or may censure the licensee.What will happen to a licensee if a payment from the recovery fund is made against him or her?The licensee's license will be automatically suspended.In order to have a license reinstated following a payment from the recovery fund, a licensee must do what?-Repay the recovery fund twice the amount originally paid -pay interest on the sum paid from the recovery fund at 12% -obtain a surety bond of $40,000.The maximum sum payable by the recovery fund against a single licensee is ______.$250,000How is the real estate education, research and recovery fund maintained and funded?By fees charged to all real estate brokers, real estate salespersons, and real estate closing agents.On what date each year must the Commissioner review the amount of money spent or allocated for providing information to the public on housing issues during the previous calendar year?Feb 1stIf an existing listing contract exists between a seller and a broker, when can another broker sign a listing agreement with the same seller?Not until the existing contract has expired.The maximum sum payable by the recovery fund is $______ per claimant, per transaction.$150,000Describe a "hold harmless clause" in a purchase agreementA "hold harmless clause" is a clause in a contract stating that a party will not be liable for any damages to the other party.What is a person who violates any provision of the Minnesota statutes governing real estate, or violates any rule or order of the Commissioner guilty of?A gross misdemeanorWhich of the following would be grounds for the Commissioner to revoke a license? a)The Commissioner finds that a licensee of is subject to a judgment of mental incompetence. b)The Commissioner finds that a licensee was a disclosed dual agent. c)The Commissioner finds that a licensee moved to Iowa and reported the change of address. d)The Commissioner finds that a licensee has decided to open a real estate school.a) The Commissioner finds that a licensee is subject to a judgment of mental incompetence.If the seller of a property already has a seller's broker agreement with a licensee, can another broker negotiate the sale of that property on behalf of the owner?No, a licensee may not attempt to sell a property if the owner already has representation to do so with another licensee.May a broker employ a non-licensee to help him or her in closing real estate transactions?No, it is unlawful for a licensee to engage or authorize any unlicensed person to act as a real estate broker, salesperson, or closing agent on the licensee's behalf.May a licensee guarantee future profits from the purchase of a property to a potential buyer?No, licensees must not guarantee future profits that may result from the purchase of real estate, unless the guarantee is fully disclosed in the instrument of sale.If a broker's license is revoked by the Commissioner, what, if anything, happens to the salespersons supervised by that broker?The licenses of the salespersons become inactive.What can an innocent salesperson do if the license of his or her broker is suspended by the Commissioner?Apply to the Commissioner for a transfer to an actively licensed broker.If a licensee is suspended after an order to show cause is issued, within how many days of the suspension must the hearing be held?30 daysAn application for consolidation must be accompanied by a consolidation fee of$50Can a public offering statement be used for promotional purposes before registration of the subdivided lands?No, it can only be used after land registration and then only when used in its entirety.If a person fails to pay the filing or inspection fees required by the Subdivided Land Act, what penalty will he or she face?A penalty of three times the sum of the unpaid fees.If no activity has occurred after 120 days from the date a registration application was made, what will happen?The Commissioner may declare the application withdrawn.Can the registration of lands belonging to a subdivider that are going to be offered for sale at a later date be consolidated with an earlier registration offering subdivided lands for sale?Yes, provided the additional subdivided lands are contiguous to those previously registered.To whom should a public offering statement be given?To each person to whom an offer is madeWhat must be done to subdivided lands before they can be sold in Minnesota?They must be registered under the Subdivided Land Act.Anyone violating the Subdivided Land Act will be subject to what?A fine of up to $1,000 for each violation.All subdivider's or subdivider's agents must obtain a receipt of a public offering statement prior to the execution of any contract to purchase and all receipts must be kept in files held by the subdivider or sudivider's agent for how many years from the date of receipt?3 yearsWhat is a subdivider required to provide to the Commissioner at least 20 days before offering a subdivision?-Either a title opinion prepared and signed by an attorney, or a certificate of title insurance acceptable to the Commissioner. -A copy of each instrument which will be given to a purchaser to show the purchaser's interest in the land. -The name and address of the subdivider and the form and date of its organization if other than an individual.If the Commissioner receives an application to make material changes to information on file with the Commissioner, what action may the Commissioner take?Suspend the registrationWhat is a requirement to register subdivided lands by NOTIFICATION?The subdivision consists of no more than 100 separate lots, units, parcels, or interests.What must a public offering statement disclose?-The subdivided lands being offered -Circumstances or features affecting the subdivided lands.What are the requirements when registering subdivided lands by QUALIFICATION?-File an application for registration with the Commissioner in an approved format. -Pay a filing fee of $400 plus an additional registration fee of $1 for each lot, unit, parcel, or interest. -Provide the Commissioner with a financial statement of the subdivider's most recent fiscal year.Shane, a licensee, wishes to sell subdivided lands which are not registered under the Subdivided Land Act. Can he do this?No, it is unlawful for anyone to sell an interest in subdivided lands that have not been registered.Any violation of, or failure to comply with any provisions of the Subdivided Land Act is considered aMisdemeanorWhich subdivided lands are exempted from the Minnesota Subdivided Land Sales Practices Act?-Leases of apartments, stores, offices, or similar spaces -Cemetery lots -Subdivided lands registered as securitiesWho is responsible for the actions of persons acting on behalf of a real estate appraiser?The real estate appraiserHow many people comprise the Real Estate Appraiser Advisory Board?9Who appoints the members of the Real Estate Appraiser Advisory Board?The CommissionerHow much real estate appraisal experience must an applicant for certified general real property appraiser license have completed?3,000 hours of experience obtained in no fewer than 30 months.How many members of the board of Real Estate Appraiser Advisory Board must be real estate appraisers?6What can a certified residential real property appraiser appraise?Residential property or agricultural property regardless of transaction value or complexity.What are the classes of real estate appraiser license?Trainee Real Property Appraiser (75 hours training) Licensed residential real property appraiser (1,000,000/250,000 value, 2000 hours in 12mo) Certified Residential Real Property Appraiser (any resident/agriculture prop, 2500 hours in 24mo) Certified general real property appraiser (anything, 3000 hours in 30 months) Temporary practiceWhat can a licensed residential real property appraiser appraise?-Noncomplex residential/agricultural property having a transaction value less than $1,000,000 -Complex residential or agricultural property having a transaction value less than $250,000.Who would need appraisal license?A person preparing a real estate appraisal for a fee.How many hours of prelicense training must an applicant for a trainee real property appraiser license complete?75The Commissioner requires that all real estate appraisers complete the 7-hour national USPAP update course every2 yearsBefore the Commissioner renews an appraiser's license, what must a real estate appraiser provide?Evidence that he or she has met the continuing education requirements.What is the minimum level of education an applicant for a certified residential real property appraiser license must have achieved?A bachelor's degree or higher from an accredited college or university.What is the basic requirement for renewal of an appraiser license?Completion of at least 30 hours of Commissioner-approved continuing education in the preceding licensing period.To whom will the Commissioner grant a temporary practice appraiser license to?To a person certified or licensed by another state if the term of a temporary practice license is no more than 12 months.A licensed real estate appraiser returning from active military duty may be placed in active status for up to how many days pending completion of all continuing education requirements?90 daysFor how long must real estate appraisers keep records?5 years after preparationWhat is a failure to perform according to the terms of the agreement called?A breach of contractMike signed a rental agreement for his friend Norm. What must be enforced for this contract to be binding?Power of AttorneyWhat are the four types of legal contracts?Valid, valid but unenforceable, void and voidableAn exclusive listing is an example what type of contract?bilateral contract.What occurs when one party announces, in advance of the due date of performance, that he or she intends not to perform on his or her side of the bargain?Anticipatory breachIf a seller fails to comply with a contract he or she will be indefaultBuyer Bill has agreed to pay for a computer system after all hardware has been installed and operational. What type of contract does Bill hold?executoryWhat describes an action brought into court to compel a party to carry out the terms of a contract?A suit for specific performanceWhat does the Statute of Limitations require that parties to a contract who have been damaged or who question the contract's provisions do?Act within the statutory periodWhat occurs when a party refuses to perform his or her obligations under a contract?RenunciationThe guardian for a mentally incompetent party enters into an oral contract with another party to buy a trade fixture. What is true about this contract?It is possibly valid and enforceable.What term describes a predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party?Liquidated damagesWhat is the term given to a contract that has been fully performed and fulfilled?ExecutedWhat describes expenses incurred as a result of bringing a lawsuit and which the court may order the losing party to pay?costsAccording to contract law, every valid contract is also what?Enforceable or unenforceableWhich of the following contracts must be in writing to be enforceable? a)A parol contract b)A six-month lease c)A two-year lease d)An executory contractc)A two-year leaseCapacity to contract is determined by-legal age. -mental competency. -legitimate authority.Which contract element indicates a mutual agreement?Offer and AcceptanceAn unscrupulous investor completes a contract with a buyer to sell a property the investor does not own. What is true about the sale contract for this transaction?It's voidWhat describes an otherwise valid contract being canceled if it is not possible to perform?InfeasibilityWhat is the purpose of the Statute of Frauds?Require certain conveyance-related contracts to be in writing.In a breach of contract the non-defaulting party isreleased from any further obligations of the agreement.What does the Statute of Frauds concern?EnforceabilityWhen is a contract terminated?After it is performedWhat describes an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement?An implied contractA contract agreement to sell alcohol to minor would be consideredVoidWhat occurs when one party refuses to perform his or her side of the bargain on the due date or performs incompletely?Actual breachWhere in an exclusive buyer agency agreement does the buyer affirm that he or she is not represented by another agent?The buyer's representation of exclusivityWhich type of listing allows for the owner to sell his or her property outright, without a commission owed?Exclusive AgencyWhat clause in a sales contract provides for the custody and disbursement of the earnest deposit money and releases the escrow agent from certain liabilities in the performance of escrow duties?The escrow clauseWhich sales contract section allows parties to amend dates and deadlines if both give written approval?Time is of the essenceWhat clause in a sales contract states under what conditions the buyer can cancel the contract without default and receive a refund of the earnest money?A financing contingency clauseWhat is a condition that must be met before a contract is enforceable?A contingencyWhat is the most common sales contract addendum?Seller's property condition disclosureWhich type of listing provides the most incentive for a broker to market a property?Exclusive Right to SellWhat type of contract is a legally binding agreement between a seller and a buyer to transfer real estate interest?A sales contractWhat is the seller's written summary of the property's condition at the time of contracting for sale?The residential property condition disclosureIn a buyer representation agreement, the two parties involved arebuyer and brokerWhat provision in a sales contract states when title will transfer, as well as when the buyer will take physical possession?Closing and possession datesWhat type of contingency is it when a third party evaluates the fair market value of the property?An appraisal contingencyWhat type of agency agreement is exclusive in the sense that the property is listed with only one broker?An exclusive agency listingAn open listing is often considered to be what type of contract?a unilateral contract.When a counteroffer is made, the original offer:terminates and the counteroffer becomes a new offerWhat is not a commonly used real estate contract?A condition of sale agreementNet listingsare legal in Minnesota (although strongly advised against.. seller says min amount they want for it, agent keeps anything over that amount)What term regarding real estate contracts means there are two parties involved who make promises to each other?BilateralThe mutual consent needed for a contract to be valid is reached through the process ofoffer and acceptance.Define a multiple listing service (MLS)An organization of brokers within a specified geographical area who agree to distribute and share listing informationWhen a buyer makes an offer to purchase, he or she can withdraw the offerbefore it is accepted.Which type of listing is least attractive to a broker?OpenDescribe the survival clause in a sales contractSales contract parties continue to be liable for the truthfulness of representations and warranties after the closing.What clause in a sales contract generally describes what must take place at closing to avoid default?The closing clauseWhat shows that buyers are serious about their offer and represents possible liquidated damages to the sellers if the buyers default?An earnest money depositWhat clause in an exclusive buyer agency agreement addresses how the agent will be paid, who pays the commission and what the buyer owes the agent if the seller does not participate in the agent's compensation?Agent compensationThe most common contingency concernsFinancingWhat gives buyers today the opportunity to browse the current market before they even think about contacting a real estate licensee?Homes for sale onlineIn which contract section might you find the property address?Description of the PremisesAn unused option to buyterminates at the expiration date.What do we call the right of a person to have the first opportunity to purchase or lease a property?Right of first refusalIn which provision would a landlord describe what activities can take place on the property?Use of the PremisisWhat is a good example of a unilateral contract?An option to buyA contract for deed is attractive tomarginally qualified buyers.In a contract for deed the seller acts as alenderA contract for deed instrument includes all except: a) the principal parties. b) the property disclosure. c) the terms of sale. d) default and remedies.b) the property disclosure.In which contract provision would the length of the lease be outlined?Clear Statement of TermAn option to buy isa unilateral agreementIn a contract for deed who is responsible for home repairs?The buyerWhich of the following covenants are not included in a lease agreement? a)Demise clause b)Capacity to pay rent clause c)Clear statement of term d)Description of premiseb)Capacity to pay rent clauseWhat is one advantage of a contract for deed?Gives the seller certain tax benefits. Buyer is responsible for repairs, taxes, insurance.What type of option agreement allows progressively smaller portions of the option price to be counted toward the purchase, as the option period increases?A declining credit optionWhich aspect of a lease contract deals with when a tenant takes possession of the property?Demising ClauseWhich items are included in a lease agreement?a)Use provisions b)Demising clause (tenant takes possession) c)Description of premises d)Capacity to contract e)Clear statement of term f)Rent clause g)signatures h)delivery -must be in writing if over 1 yearA contract for deed is what type of agreement?BilateralWhen land is purchased rather than optioned, the developer must pay interest chargesduring the pre-development phase.In an option-to-buy, which party is the potential seller?The optionorWhat clause in a lease stipulates the time, place, manner, and amount of rent payment?A rent clauseAn installment sales contract can also be called:a contract for deed. a land contract. an agreement for deed.Many areas have no standardized contract for deed or forms sanctioned by associations and agencies. Therefore, what is advised for all parties?To seek legal counselWhat provision in an option agreement typically says the optionor is entitled to the consideration if the option term expires?Forfeiture termsWhat occurs when an option to buy is exercised?A bilateral sale contract is created and both parties are bound to perform.Which part of a contract deals with the legal requirements to enter into a contract?Capacity to contractWhat is an important legal characteristic of an option to buy agreement?The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.What happens if a tenant uses a property in a way that is legal but not permitted?It constitutes grounds for default.What type of option agreement allows the optionee to add specific new parcels to the option contract as parcels already included in the contract?Rolling optionIf a lender's letter states that loan approval is subject to "verification of the buyers' income and credit information" then the letter is aprequalification letter.What type of document does a home owner sign when agreeing to a mortgage?Promissory NoteWhich mortgage clause requires a borrower to maintain the physical condition of the mortgaged property?Preservation and Maintenance of PropertyWhat provides constructive notice to the public of the ownership of a property?Recording of the mortgageWho can provide a preapproval letter to a buyer?The lenderWhich mortgage clause requires the borrower to maintain the physical condition of the property?Preservation and Maintenance of PropertyWhat type of an acceleration clause requires the borrower to pay off the entire mortgage debt when the property is sold?Due-on-sale-clausePreapproval differs from prequalification in thatIt involves the completion of an actual loan application.Borrower Jake has defaulted on his mortgage and the lender has required the loan to pay in full. This action is based on which mortgage feature?Acceleration ClauseTo qualify for a mortgage loan, a borrower must meet the lender's qualifications in terms of income, debt, cash, andNet worthWhat should buyers obtain, when they are ready to buy in an active market that is attractive to sellers?A preapproval letterWhat type of property sale is the simplest?Free and clear cash saleWhat is a charge for a lender's use of money called?InterestWho has the right to approve the insurance company a borrower chooses?LenderWhen a lender does a prequalification for the buyer, the lender will issuePrequalification letterWhen a mortgage is paid in full the lender will issue a certificate calleda satisfaction or release of mortgage.What creates a hierarchy of claims against a property?The system of recordingWhat is another term used to describe a promissory note?BondWhat is not a critical procedure when a lender is processing a loan?Preparing title work for the propertyThe lender who gives the money to the buyer to purchase a home is called amortgagee.Buyers can find out how much of a loan they can qualify for in which of the following ways?Prequalification and preapprovalAn underwriter must evaluate a borrower'sability to repay the loan.A satisfaction of mortgage is also calleda release of mortgage.What is a financing instrument that creates a lien against a property?A mortgageWhat ways can a property with an existing mortgage sell?-Free and clear -Subject to a mortgage -Loan assumptionMark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points?$2,040 (1% loan amount per point)What allows the lender to sell the mortgage at any time and free up the money that the lender has invested?The right of assignmentWhat is the interest rate on an ARM tied to?IndexAn interest rate is typically the index plus theMarginAn interest-only loan might be a good choice for a buyer whoplans to own the property for a short time and believes the property will appreciate during that time.What are features of a conventional loan?Fewer forms Processing can be more flexible than government-backed loans. Higher down payment More lending options (lots of conventional lenders) Can get processed faster than government loansMost conventional loans require a borrower to make a down payment of20% or more.A borrower can request the cancellation of PMI payments whenthe equity reaches 20% of the purchase price.What type of loan has one large final payment due when the loan matures?BalloonIf payments remain level for the life of a loan and are structured to repay the loan at the end of the loan term, this would be a characteristic of afixed-rate fully amortized loan.What is true about reverse annuity mortgages?-The lender makes payments to the borrower. -This mortgage type is popular among the elderly. -The borrower pays a fixed rate of interest. -The loan does not have to be repaid before the borrower's death.When the monthly payment for principal and interest gradually increases by a certain percentage each year for a certain number of years and then it levels off for the remaining term of the mortgage is known as agraduated payment mortgage.What describes a lump sum payment that is made to the lender at closing that usually comes from the builder as an incentive to the buyer or a family member trying to help out?A buydownThe most common fixed-rate loans for home buyers are30 yearWhat did lenders establish to protect borrowers from unlimited increases in their interest rate?Rate capsSeller James has taken back $20,000 as a second mortgage so Buyer Karl can qualify to buy the property. The $20,000 is what type of mortgage?Purchase Money MortgageWhat type of rate cap sets the amount of increase or decrease allowed in each adjustment period?Periodic rate capIn an Adjustable Rate loan what determines when the lender will change the amount of the monthly payment to reflect the change in the interest rate?Mortgage Payment Adjustment PeriodA blanket mortgageCovers more than one piece of propertyWhat Act requires lenders to inform all borrowers of their right to terminate PMI by sending out an annual notice explaining the PMI cancellation rights?The Homeowners Protection ActDescribe a graduated payment mortgage (GPM)The payment starts out low and then gradually rises.What type of cap insures a set monthly payment that remains the same although the actual interest rate may fluctuate throughout the year?Payment CapIn which type of loans are the payments allocated only to interest?Straight (interest only)As of September 2010, the minimum credit score for FHA loans should be at least what?580What was established, in 1934 during the great depression to stimulate the housing market in the United States?The Federal Housing AdministrationThe most popular FHA financing that covers loans on one-to-four-unit, owner-occupied dwellings is theFHA 203bWhat is not eligible under a 203(k) rehabilitation home loan?Luxury itemsWho can issue a Certificate of Reasonable Value?An approved VA appraiserHow much is the minimum down payment of the purchase price that a buyer needs to provide for a FHA loan?3.50%Under VA rules a seller's "concessions" can't exceed4% of the loan.Which FHA program insures a loan for 30 years to purchase a unit in a condominium building?234cGovernment backed loans include loans offered byFHA and VAIn an effort to make it possible for veterans returning from World War II to purchase a home, the Veterans Administration offered the opportunity for veterans to purchase a home withNo money downWhat is the maximum loan amount on a VA guaranteed loan?No MaxWhat type of refinancing reduces documentation and underwriting but closing costs still apply?A streamline refinanceWho oversees the Federal Housing Administration?HUDWhat does FHA do in order to make loans available to high risk individuals?Insure the loan.Section 245a enables those who currently have a limited income, but expect their monthly earnings to increase, to purchase a home with the help of aGrowing Equity Mortgage. (Fixed rate, monthly payments increase over time according to a set schedule, shortens the term) -not to be confused with graduated payment mortgage. A graduated payment mortgage has a fixed rate and payments increase at set intervals, but a graduated payment mortgage also has negative amortization (payments start less than interest only).The basic entitlement of a DVA loan is$36,000Up to what percent of the purchase price of a home can a seller contribute to closing costs for a FHA loan?6%Who is not allowed to pay for a termite report when there is a purchase with a VA loan?The veteranFHA loans are available forone-to-four family residences.FHA loans can either be fixed-rate loans orAdjustable rate loansWhat is a short term loan that covers the period between the end of one loan and the beginning of another?A bridge loanHow does a bridge loan compare with a conventional loan?A bridge loan is more expensive.What guideline describes a lender paying only up to 85% for a construction loan?Loan to costA second mortgage that falls behind a first mortgage is calledlien holders positioning.Private mortgage lenders will typically lend up to what percent on raw land or undeveloped property?50%When determining LTV, the word "value" is defined astoday's purchase price.The down payment requirement for a FHA 203k program is3.5%The Rural Housing Service is an agency ofUSDAConstruction loans areshort term, high riskMost lenders fund in theFirst lien positionA loan where a lender will subordinate to another first lien position loan is known asa mezzanine loan.What percent of interest rate can investors expect to pay on private mortgage loans on the first lien?12-14%Underwriting of construction loans usually focuses onHow the loan is repaidWhat allows a borrower who has an existing loan to get another loan from a second lender without paying off the first loan?A wraparound mortgageHow long does a borrower have to make renovations after obtaining a FHA 203k loan?6 monthsThe interest rate of a seller carry back is determined byThe buyer and sellerWhen a borrower has a construction loan, he or she can usually obtain a permanent loan which is also called aTakeout loanA loan-to-value ratio typically hovers between60-70% of the market value of the propertyA wraparound mortgage is a form ofsecondary financingIn a wraparound mortgage, the second lender issues a new, larger loan to the borrower atA higher interest rateMost hard money lenders primarily qualify a loan amount based onthe value of the real estate being collateralized.A second mortgage can be structured as a fixed amount to be paid off in a specific time, calledHome equity termWhat types of home loans are made by private lenders instead of traditional financing sources?Private mortgage loansThe borrower pays interest on a construction mortgage on only the money that has been actually disbursed up to thePayment dateOn a conventional loan, what does a second mortgage create on a property?A second lienWhat type of insurance is required when a borrower obtains a FHA 203k loan?PMI (private mortgage insurance)What are the two types of municipal bonds?General and revenueWhat is the main purpose of Fannie Mae?To make sure mortgage money is available for people across the countryHow have life insurance companies recently become more involved with single-family mortgages?They have acquired blocks of single-family mortgages from the secondary market to enhance their investment portfolios.Investors are often attracted to real estate investment trusts (REITs) because of theirtax benifitsWhat are the three major types of institutional lenders?Commercial banks Savings and loan associations Life insurance companiesWhat's the main reason primary mortgage lenders sell their notes in the secondary mortgage market?To generate more money to make more loansWhile the risk of lending is higher to direct lenders than indirect lenders, direct lenders typically make up for the risk by havinghigher interest rate yields.The secondary mortgage market consists of holding warehouse agencies thatpurchase many mortgage loans and assemble them in packages to sell to investors.What was formed to influence small investors to combine their resources with others to raise venture capital for real estate transactions?The Real Estate Investment TrustMutual savings banks are owned bytheir investors.Ginnie Mae, Fannie Mae, and Freddie Mac are collectively referred to as(GSE) government-sponsored entities.One significant difference between an institutional lender and a noninstitutional lender isthe level of state and federal regulation each is required to follow.Which financial institution primarily makes short term loans to businesses to finance their operations?Commercial banksWho are the important players in the secondary mortgage marketGinnie Mae. Fannie Mae. Freddie Mac.What is a short term loan that covers the situation that exists when a buyer purchases a new home before selling his or her existing home?A swing loan AKA bridge loanA syndicate isa group of two or more people who unite their resources to make an investment.A private corporation that is NOT in conservatorship with the Federal Housing Finance Agency (FHFA)Farmer MacHow do most mortgage companies make money?From loan origination and servicing feesGinnie Mae is a government backed organization in the secondary mortgage market thatguarantees the monthly payments of mortgages.What does usury law regulate?The maximum amount of interest an entity can legally charge on a loanCredit unions are able to pay higher interest rates on deposits compared to other savings institutions, becausethey do not pay any income tax.A savings and loan association is a financial institution whose main function isto promote thrift and home ownership.Many commercial banks require private mortgage insurance (PMI) on any loan more than80% of the home's value.Freddie Mac's mission isto provide stability, affordability, and opportunity to the housing market.What happened to Fannie Mae under the 1968 Charter Act?It became a fully private company.What does Regulation Z of the Federal Truth-in-Lending Act require private loan companies to disclose to borrowers?The true cost of the credit being offeredTo avoid potential problems of doing appraisals and loan screenings, who do some private lenders choose to use to locate suitable transactions for their real estate investments?Mortgage brokersHow do commercial banks fund their mortgage lending activities?They use their depositors' savings accounts and borrow from other banks.What do we call anything attached to a piece of land or building such that it becomes a part of that property and is passed on to a new owner when the property sells?An appurtenanceOn average, how much of the price for a newly built, single family home goes towards regulations imposed by the government?25%What onsite system is designed to treat and dispose of domestic sewage?A septic systemThe detailed set of plans that will be used as a guide to construct the building arethe blueprints.What must contractors and developers apply for and receive before starting construction?Building permitsAccording to the International Codes Council, what means that the construction meets the criteria of being both practical and adequate for protecting life, safety, and welfare of the public?Minimum requirementsWhat is created when foundation walls have been excavated deeply enough to provide head room?A basementWhat is not typically included in a building's specifications?A specific selling price which the property will be listed at when completed.Impact fees are imposed byLocal governmentsA violation of the Minnesota building code isMisdemeanorWhat is a wooden support member that is laid on top of and bolted to the foundation wall?Sill plateWhen construction is complete, final inspections will be done and if all is up to code, the building department will issue acertificate of occupancy.Who requires that walkways be installed to all homes and buildings in a subdivision?HUDWhat are the codes and standards incorporated in whole or in part in the Minnesota Building Code?The International Building Code The International Residential Code The International Mechanical CodeIn platform framing, what are the members called that frame the structure?StudsWhat is one of the first considerations when preparing a building site?DrainageHow do concrete patios, decks and landings need to be installed so that water will not drain into doorways?Sloping away from the buildingWhat is described as a plastic sheet that keeps moisture from passing through a wall?A vapor barrierShade affectsthe energy efficiency of the building.The part of the foundation which transmits loads directly to the soil is calledthe footingStuds used to frame the roofing system are calledraftersWhat foundation is a flat concrete pad poured directly on the ground?the slabThe overhangs on a roof are calledeavesThe slope of the roof is also known asthe pitchHow much of a home's price is the result of costs incurred by the builder after purchasing a finished lot?8.60%What is the easiest type of foundation to build?a slabWhat types of buildings are generally not covered by the Minnesota building code?Agricultural buildingsApproximately what percent of a final house price is due to a higher price for a finished lot resulting from regulations imposed during the lot's development?16.4%What is a collection of laws, regulations, ordinances or other statutory requirements adopted by a government legislative authority that is involved in assuring the adequacy of the physical structures and healthy conditions of buildings?A building codeCounty and municipal planning departments are responsible for-implementing the long term master plan. -creating rules and restrictions that support plans and policies. -enforcing and administrating land use regulation on an everyday basis.The primary objectives of a master plan are to control and accommodatesocial and economic growth.What authorizes a use that is not consistent with the zoning ordinance yet is beneficial to the public?A special use permitWhat is the term for a property with a use that clearly differs from current zoning?Nonconforming useWhat is the statistical study of human populations, especially with regard to size, density and distribution?DemographyWhat type of variance considers the benefits to the individual landowner against the possible harm to the health, safety and welfare of the neighborhood?An area varianceWhat is a type of zoning in which density is determined for an entire area, rather than on a lot-by-lot basis?cluster zoningWhat is it called when a small area of land in an existing neighborhood is singled out and placed in a different zone from that of neighboring property?Spot zoningWhat is a facility called for 6 or less adults or children who have chronic disabilities?A group homeA growth plan must consider-availability of sanitation facilities. -adequacy of utility companies. -housing availability.What is the principal mechanism for implementing a master plan?ZoningResidential zoning regulatesthe density, value, and aesthetics of the area.The optimum management of real property usage must take into account the interests of the individual and the interests ofthe surrounding community.A community achieves its land usage goals through a three phase process.-Development of a master plan for the jurisdiction -Administration of the plan by municipal, county or regional planning board or commission -Implementation of the plan through public control of zoning, building codes, permits and other measuresWhat is an example of an accessory use?A storage shedWhat are the primary objective/s of a land use plan?To control/ accommodate social and economic growthA zoning _________ allows a use that differs from the applicable ordinance for a variety of justifiable reasons.varianceIf a zoning board rejects an appeal the landowner mayAppeal the rulingResidential zoning restricts land use toprivate, non-commercial dwellings.What does the planning board use to help establish the needs for housing and services in an area?Census tractsA non-profit organization wants to erect a much needed daycare center in a residential zone. Given other favorable circumstances, the local authorities grant permission by allowing what?A special exception (permit)In addition to the quantity of growth, a master plan also defines what type of growth will occur andWhereWhat type of variance gives permission to use the land for a purpose not allowed by the current zoning?A use varianceWhat is the best definition of a master plan?A fusion of land use laws and local land use objectives and strategies.In most jurisdictions, who manages the master plan?The planning boardWhat zoning classification includes hospitals, prisons, courthouses, colleges and public schools?Institutional areasWhat type of use conflicts with ordinances that were in place before the use commenced?Illegal nonconforming useWhat permits an applicant to vary one or more of the dimensional requirements of the applicable zoning law, code or ordinance in connection with some proposed construction?An area varianceIn most areas, a planning board is made up of officials appointed bythe government's legislative body.What is a temporary suspension of the development of a group of properties called?A moratoriumWhat type of zoning regulates intensity of usage, by limiting the area of store or office per site area?Commercial zoningBefore sponsors of a cooperative or condominium may convert a rental apartment building, they must present an offering plan to each tenant and to theAttorney GeneralIn a PUD development, what is the name given to local streets that connect major traffic arterials?Collector StreetsWho or what provides specific provisions for the operation of a particular CIC association?The association's governing documentsThe sale of co-op shares, condo units, or interests in homeowners' associations is subject to the Martin Act, as is the sale of other securities, such as stocks and bonds. The law requires that a complete description of these kinds of real estate interests be fully disclosed inan offering plan.The Federal Manufactured Home Construction and Safety Standards went into effect onJune 15, 1976.In which type of development would you most likely find a circulation system that links residential groupings, open space areas, schools, and local shopping areas?PUD (Planned Unit Development)Condominium common elements can include what?Elevator, hallways, poolThe purchase of a manufactured home with landshould lead to equity building for the homeowner.What is the main difference between a condo and a co-op?The form of ownershipManufactured homes are built as dwelling units of at least320 sq ftWhich entity owns the real estate in a co-op?A corporationWhat are the basic rules that a condominium works under and operates?BylawsWhich U.S. city was the first to coin the actual term "planned unit development?"San FranciscoWhich type of home ownership is absent of many of the day-to-day responsibilities, such as yard maintenance?Ownership in a common interest communityModular homeslack axles and an automotive-type frame.In a CIC, which entity is the declarant?Typically the developer or builderCo-op shareholders hold interest as aleasehold estate.Which entity governs a CIC?Board of DirectorsWhich of the following units would be classified as a mobile home?A manufactured homes produced prior to June 15, 1976To finance a property in a PUD, an individual will go through what type of qualification process?The same qualification process as in residential financing mortgages.What are the three documents that are considered the legal blueprint of a condominium?-Declaration -Articles of Incorporation -Rules and RegulationsWhat duties are performed by the condominium's sponsor?Appointing the board members Appointing the managing agent Putting a limit on his/her control of the boardMost planned unit developments employ ahierarchy of street types based on usage.What is needed to buy or sell a cooperative unit for a client?A real estate licenseWhat type of housing is found in PUDs?MixedThe condo sponsor is the condo'sOwner or developerA CIC association mustbe governed by a board of directors.A CIC association typically allows ownerslimited rights and freedoms as compared to single dwelling home owner.Manufactured and modular homes are commonly referred to asfactory-built housing.A CIC association typically has the power toadopt, amend and revoke rules not inconsistent with the association's governing documents.The oldest forms of the planned unit development in America appeared shortly afterWWIICCR condominium documents containcovenants, conditions and restrictions.What important condominium documents are included in the deed?Covenants, conditions, and restrictionsWhat type of PUD allows for smaller lots on some parts of the site in exchange for permanently preserved common open space elsewhere on the site?Simple Residential ClustersFannie Mae and Freddie Mac encouragereal estate mortgage loans that combine modular homes with land purchase.What information is included in a proprietary lease?Deposits required Insurance requirements Lease termDefine a manufactured homeHomes built entirely in the factory under a federal building code administered by the U.S. Department of Housing and Urban Development (HUD)What is the fee for the sale of a co-op unit known as?Flip taxFor the most part, the approval for a PUD development falls to thelegislative branch of local government.A condominium title report shows what?Where in the official county records CCR documents are recorded.Which documents are used to regulate Common Interest Communities?Declaration Bylaws Articles of IncorporationHigh-performance manufactured homesUse less energyWhen can the sponsor retain board control until all units are sold?In a new developmentWhat link has scientific evidence found regarding the symptoms of exposure to electromagnetic fields?noneWhat are invisible lines of force that surround any electrical device that is plugged in and turned on?EMF'sWhat factor limits mold growth?waterPCBs may be present in products and materials produced before1979What is a mineral fiber that occurs in rock and soil?AsbestosWhat are made up of waves of electric and magnetic energy moving together through space?Electric and magnetic fieldsWhat ratified agreement was designed to reduce the production and consumption of ozone depleting ordinances to reduce their abundance in the atmosphere?The Montreal Protocol on Substances that Deplete the Ozone LayerWhat is a cancer causing, radioactive gas?RadonUntil the mid-1980's, most USTs were made of what material which is likely to corrode over time?bare steelThe earth's surface where an earthquake starts is called theEpicenter (hypocenter in earth below epicenter)The first thing a homeowner should do when mold is identified isremediate the moisture source immediately.What does mold produce in order to reproduce?SporesA geologic hazard that is a slow phenomena includesliquefaction. thermal springs. volcanoes.What are nontoxic, nonflammable chemicals that contain atoms of carbon, chlorine and fluorine?ChlorofluorocarbonsPCBs have shown toxic and mutagenic effects by interfering withhormonesExposure to asbestos increases the risk oflung diseaseWhat class of vacuum cleaner is designed for asbestos containment?class HWhat describes a serious progressive, long term, non-cancer disease of the lungs?AsbestosisThe most commonly observed health effects in people exposed to extremely high levels of PCBs areSkin conditionsThe greatest potential hazard from a leaking UST is that hazardous substances cancontaminate drinking water.What is the term for asbestos fibers that are made into airborne dust?FriableWhat is one of several types of adverse geologic conditions capable of causing damage or loss of property and life called?A geologic hazardIf mold is present, it is preferable that porous materialsbe removedWhat naturally occurring element, that is toxic to humans and animals, is found in small amounts in the earth's crust?leadWho has the greatest health risk from chemicals in methamphetamine labs?ChildrenPCBs belong to a broad family of man-made organic chemicals known aschlorinated hydrocarbons.What do water providers submit for laboratory testing to verify that the water they provide meets all federal and state standards?Samples of waterWhat is the Comprehensive Environmental Response, Compensation and Liability Act commonly known as?SuperfundWhat Act made it unlawful to discharge any pollutant from a point source into navigable waters, without first obtaining a proper permit?CWA (clean water act)What act is the principal federal law in the United States governing disposal of solid waste and hazardous waste?The Resource Conservation and Recovery ActWhat type of assessment addresses the potential of contaminants to cause harmful effects in humans?A toxicity assessmentWhat should a landfill have to prevent contaminants from getting into the water?A protective bottom layerWhat act regulates the nation's public drinking water supply?SDWA (safe drinking water act)The Residential Lead-Based Paint Hazard Reduction Act of 1992 set procedures for disclosing the presence of lead-based paint when selling properties built before1978How many days do sale or lease contracts give buyers or lessors to check for lead hazards?10 daysWho does the SDWA authorize to set national health based standards for drinking water to protect against contaminants?EPAWhat percentage of the United States population depends on groundwater for drinking water?50%On March 1st, 1982 the U.S. Consumer Product Safety Commission banned the sale ofurea formaldehyde.Congress banned the installation of unprotected steel tanks and piping beginning in what year?1985What type of risk assessment estimates how much and in what ways exposures may occur?Exposure assessmentWhat collective term describes international treaties, statutes, regulations and common law or national legislation that regulates interaction of humanity and the natural environment to reduce the impact of human activity?Environmental LawIn 1976 Congress regulated PCBs through theToxic Substances Control Act.The Safe Drinking Water Act was originally passed by Congress in what year?1974Who did Congress direct to publish regulations that would require owners and operators of new tanks and tanks already in the ground to prevent, detect, and clean up releases?EPAWhat Act established prohibitions and requirements concerning closed and abandoned hazardous waste sites?CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act, known also as Superfund)What act did Congress design to protect public health and welfare from different types of air pollution?The Clean Air ActHow many common criteria pollutants has the EPA set air quality standards for?6What is required if an action is determined to have possible significant adverse environmental impacts?An environmental impact statementWhat are discreet conveyances such as pipes or man-made ditches called?Point sourcesWhat type of waste contains such dangerous chemicals that it could pose a threat to human health and the environment even when properly managed?Acute hazardous wasteIf phase I of an environmental assessment discloses the presence or release of hazardous substances, what takes place in phase II?Testing and evaluation 1) Investigation 2) Evaluation 3) remediationWhat lead-based paint testing procedure tests only deteriorated painted surfaces?A lead-based paint risk assessment.To meet NEPA requirements, federal agencies prepare a detailed statement known asan Environmental Impact Statement.What is an on-site wastewater disposal system used by homes, offices or other buildings that is not connected to a city sewer system?A septic systemWhat law, enacted by Congress on December 11th, 1980 created a tax on the chemical and petroleum industries?CERCLA - Comprehensive Environmental Response, Compensation, and Liability Act (Superfund)Approximately what percent of homes built before 1978 contain some lead-based paint?75%What agency sets forth rules and regulations, offers guidance, and enforces water standards?EPAWhat act requires federal agencies to integrate environmental values into their decision-making process by considering the environmental impacts of their proposed actions and reasonable alternatives to those actions?The National Environmental Policy ActWho outlines the procedures for lead inspections?HUDIn purchase and sale agreements, it is important to watch the definition of key terms like "Hazardous Materials" andContaminationIn order to lessen a licensee's liability when selling a property with environmental issues the licensee shouldhave an attorney draft disclosures regarding hazards.The first step to properly ensuring environmental risk management is effective is toidentify the most critical assets of an enterprise.What section of a Lead-Based Paint Disclosure is where the buyers acknowledge that they have received copies of reports and other pertinent information, that they have received the EPA pamphlet and that they have received or waived their right to the 10-day risk assessment period?The Purchaser's Acknowledgment sectionPollutants for sites once used for industrial purposes may be encountered when the land isDisturbedWhen a licensee makes a listing presentation for a home that has an environmental hazard present, it is the licensee's responsibility to recognize any potential hazards andrecommend that the sellers obtain an expert's advice.What fosters mold problems?Humid conditionsSite-specific Pollution Liability Policies routinely provide coverage formold and microbial matter. sudden and gradual pollution conditions. all primary and ancillary facilities. -not radon exposureWhat increases the risk of spreading contaminants to third parties?renovationsCompanies and organizations must assess, mitigate and monitorrisks involved with daily operations.Property disclosures should includelegal requirements. ethical obligations. service to the client or customer.Home sellers or real estate agents must give home buyers or lessors a copy of the EPA publication called"Protect Your Family From Lead in Your Home."What option for handling environmental risk management includes outsourcing certain aspects of the company's operations?The transfer of risks to another partyStorage tanks above and below ground are frequently utilized to storePotential pollutantsWhat type of risks in real estate are hard to quantify and therefore very hard to effectively manage?Environmental risksWhen a licensee presents an offer on a home that has hazards present, it is the licensee's responsibility to do all except a) recognize potential hazards. b) recommend an attorney's advice. c) conduct inspections. d) recommend an environmental specialist's advice.c) conduct inspections.An issue in the acquisition of sights with historical contamination that is now a priority enforcement target for regulators isthe intrusion of volatile vapors.Who should a client contact to determine requirements associated with providing radon measurements and/or radon mitigation/reduction in his or her state?The state radon contactWhat is paramount in determining the environmental risks associated with specific types of events?VulnerablilityUsing environmental risk management, an enterprise can adjust to natural disaster threats by establishing itself in areaswhere these events generally do not occur.What act set procedures for disclosing the presence of lead-based paint when selling properties built before 1978?The Residential Lead-Based Paint Hazard Reduction Act of 1992What must sellers fill out that discusses their knowledge or lack of knowledge about the presence of lead-based paint in the home?A Lead-Based Paint DisclosureHazardous materials can be limited to only certain substances, and contamination can be limitedin time and scope.What section in a Lead-Based Paint Disclosure does the real estate licensee initial to indicate that he or she has informed the sellers and is aware of his or her responsibility to ensure compliance?The Agent's AcknowledgementsSome residential facilities include swimming pools, which produce the humid conditions that can fosterMold problemsOn mold-specific insurance policies, the definition of a pollutant has been modified to includemicrobial matterWhat section in a Lead-Based Paint Disclosure is where all parties sign the disclosure?The Certification of AccuracyAn organization must establish procedures that manage the uncertainty of its operations and apply them to day-to-day activities that may bea threat to the environment.What page of the Loan Estimate form gives the details of the closing costs?Page 2What page/pages of the loan estimate will be essentially the same, regardless of the loan type?Page 1What is a range? What is a tier?A range is the north/south lines between meridians (3 ranges dividing townships between meridians) A tier is the east to west lines between parallels (3 tiers dividing townships between parallels)How many miles between meridians?24How big is a township? How big is a section?A township is 36 sq mi. - it is divided into 36 sections Each section is 1 sq mi. - each section is then divided intoHow many acres is 1 section?640 acres (1 square mile is 640 acres) divided into various parcels"I own and I will defend" is the overall covenant of what?Warranty deed- guarantees a clear title"I may or may not own and I won't defend" is the overall covenant of what?Quitclaim deed- no guaranteesWhat are the 5 covenants of a full covenant and warranty deed?Seisin (grantor owns) against encumberances (no one else can use) quiet enjoyment (no 3rd party disputes) further assurance (grantor will assist in claims later) warranty forever (grantee gets good title)"I own and I will defend against my acts only" is the covenant of what?Overall special warranty deed -only things that occurred during the grantors ownership (builder, bank)"I own, but won't defend" is the covenant of what?Bargain and sale deed without covenants (type of special warranty)