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A contractual agreement for the purchase of real property which is ordinarily used when a buyer does not have a large down payment is called a/an:
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Terms in this set (150)
A real estate broker presented an offer to purchase a home which met the terms of the listing. The offer was from a financially qualified minority prospect. Later, this salesperson presented the seller with a lower offer from a Caucasian prospect. The seller did not accept either offer, instead, he sold the property to a neighbor through the same salesperson. The neighbor wanted to buy the property so as to prevent a minority person from moving into this neighborhood. The person who has not violated the Civil Rights Act of 1968 is the:
A Request for Notice of Default should be requested by the:holder of a junior trust deed.If the buyer and seller agree that "time is of the essence," and one of the parties misses a deadline in the contract, the other party may:rescind or cancel the contract without penaltyWhich of the following is associated with eminent domain?severance damagesA position of trust, assumed by the broker as an agent for a principal, is described most accurately as a/an:fiduciary relationship.The quickest appraisal method that can be used to convert income into value is the:Gross Rent Multiplier ApproachA real estate broker should regard herself as:a fiduciaryTrust deeds and mortgages differ in all of the following ways except:security for the promissory note.If a contract contingency is not removed:the buyer can cancel the purchase and receive his earnest money deposit backThe capitalization rate to be used in the income approach provides for a return on, and a return of, an investment in the improvement. A return of the investment is provided for by:Depreciation methods/recaptureThe law which prohibits all forms of discrimination based on race, color, religion or national origin is the Title VIII of the Federal Civil Rights Act which became a law in:1968If a lease does not contain a covenant to repair, a landlord could possibly be liable to third parties to keep commonly used areas in good condition in each of the following instances, except:A property leased to a family as a dwelling.A Real Estate Broker has as much authority as:The principal actually or ostensibly confers upon him.Fire insurance coverage protects an owner of real property. When he files a claim:he will neither gain or lose.Under a liquidated damages clause, if a buyer backs out of a purchase of a home, what happens to the earnest money deposit?it will normally be divided between the seller and brokerAn appraisal is good:On the date of the property inspectionAccording to the law of agency in the civil code, the fiduciary duty of the agent for the buyer is:acting with the utmost care, integrity, loyalty and honesty on behalf of the buyer.A buyer is entitled to recover damages from the broker when:the broker acts in excess of the authority given to him by the seller.In January 1988, the following became a new California Law:Agency disclosureWhat is the lender called who purchases a negotiable note and has no knowledge of any defects?holder in due courseA real estate broker obtains an exclusive authorization and right to sell listing from a corporation. During the listing, all of the officers of the corporation are killed in a plane crash. The listing would:remain in full effectWhen a broker sells real property that is part of an estate held by the deceased, the commission amount is determined by:Court orderAn industrial property is valued, appraised, or marketed by the:Square footRegarding riparian rights, which of the following are true?-riparian rights can be severed by eminent domain or condemnation action -if a seller sells a parcel that does not abut a river, then no rights are conveyed. -a neighbor usually has reasonable water rights also.A significant California law affecting real estate licensees, which became effective January 1, 1988, relates to:Mandatory agency disclosures.A request for notice of default is recorded to protect:the beneficiary on the second loan.An agent or licensee is able to sell which of the following?any new mobile home sold with a deedA single-family property's final estimate of value is:limited by the replacement cost of the building plus the value of the land.At 12:00 noon, Baker made an offer to purchase a single-family residence. He instructed his real estate broker not to present his offer until 6:00 PM. By 6:00 PM, three more offers had been submitted. The real estate broker should:present all offers to the property owner simultaneously as soon as possible.A homeowners property tax exemption is:$7,000When is an agency terminated?At the close of escrowHusband Charlie Smith is out of town when wife Dolores Smith finds a property she loves. She gives Broker Able a $500 cash deposit with a written offer to purchase the property signed by Dolores Smith only. To be a legally complete offer, Broker Able should write on the purchase agreement:Received from Dolores Smith, herein called BuyerIf an exclusive listing contains a clause that gives the seller a right to a 24 hour notice to cancel the listing:the real estate broker could be subject to disciplinary action by the Real Estate CommissionerWhen is it okay for a renter to vacate or desert the premises?When the building is condemned.In appraising real property, a separate valuation of the site is least important for:applying the gross rent multiplier.It is prohibited by real estate law for a real estate agent to:receive a referral fee from a pest company for each pest inspection soldIf a contract has been executed it means that:both parties have performed, completely, their obligations as provided by the contract.When lending money to two of more joint tenants using a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the joint tenants?Joint and severallyA broker has two offers on the same property. The two offers are from salespeople within his office and both have given deposits. The broker decides not to present the second offer until the first offer has been accepted or rejected by the seller. The seller is not made aware of the second offer. The brokers action is:not permissible.Capital expenditures for improvements, for federal income tax purposes, are:added to the cost basis of the property and depreciated.A broker may not lawfully collect a commission from both buyer and seller without:the knowledge and consent of both parties prior to the saleBy law a real estate agent is required to:communicate any offer to her principal, as long as it is in writingSpace is measured in a warehouse by the:Cubic footA broker advertises the sale of "Mega Bucks Trust Deeds" in a newspaper. In the advertisement he offers a specific yield which he arrives at by looking at his yield for the past year. Which of the following is true concerning this advertisement:It is legal if he also gives the actual interest rate specified in the note and the discount from the outstanding principal balance.A broker licensee can legally claim a commission for:the sale of a property on which he/she had an exclusive authorization to sell with a definite termination date.All of the following are prorations of recurring costs, except:mortgage loanA person who is employed by another to act on his behalf may be considered an:-employee -agent -independent contractorThe government's police power applies to all of the following, except:TaxationThe cost approach is best used with:New residencesIn the secondary mortgage market:loans are bought and sold by investors and other lenders.A real estate broker need not prove that he is the procuring cause when:an exclusive right to sell listing is used.A buyer made an offer on a property but refused to give a $500 deposit to the broker as written in the listing agreement. The buyer said he would give the $500 deposit to the broker when the seller accepted his offer. What should be written into the offer?Buyer agrees to deposit $500 cash immediately upon sellers acceptanceIf in a transaction the amount made as a deposit is not sufficient to cover the monetary damages incurred by a party to the real estate sales transaction, a real estate broker as an agent for his principal could do all of the following, except:file an action in a court of law.If a trust account contains trust funds from more than one beneficiary, the real estate broker:may not disburse any funds without the prior written consent of every principal who has funds deposited in the accountWhen an appraiser uses all three appraisal approaches, he will obtain a final estimate of value by doing what to the three indications of value?ReconcilingThe beneficiary on a second deed of trust sold his interest for less than the unpaid balance of the note. This is called:DiscountingA broker has listed a sellers home using an exclusive agency listing agreement. The exclusive agreement is for four months. During this time, the broker expends considerable time, effort and money marketing and advertising on behalf of the seller. Ten days before the date the listing is to expire, the seller decides to sell his home to his next door neighbor. The seller now owes the broker:No commissionA salesperson brought in an offer for an office lot listing of $118,500. The broker, when taking the listing, was told by the seller not to bring any offers less than $138,000. What must the broker do?present the $118,500 offer to the seller for approvalIf a broker fails to disclose dual agency, he may:-be denied a commission from both the buyer and seller. -be disciplined by the Real Estate Commissioner. -be sued for damages by the seller.Under the Subdivision Map Act, subdivisions are controlled by:The local city or county.An appraiser would make an allowance for accrued depreciation in the:Cost approachCommercial banks consider liquidity and marketability of loans of primary importance in making loans secured by real property. Banks are referring to:activities of secondary mortgage markets.A buyer dies after mailing an offer into a seller. What happens to the offer?The offer is terminatedA broker generally gets paid his commission:at close of escrowNon-disclosure of dual agency may result in:-disciplinary action by the Real Estate Commissioner. -loss of commission. -contract rescission.To calculate the gross rent multiplier, the appraiser needs the:annual rents and the selling price from comparable properties.The term voidable contract refers to a contract that is valid until:RescindedMany lenders consider the liquidity and marketability of loans to be very important when they make a loan secured by a mortgage. The importance of liquidity and marketability relates to:activities of the secondary mortgage marketsWhich of the following is not a requirement for a real estate brokers trust account?Minimum balanceIf a married couple acquires a deed to real property in only one spouses name, the title is most likely held in:community property.A brokers safety clause would most likely be found in:exclusive authorization and right to sell agreementGross rent multiplier would be computed as:sales price divided by gross rent.Does a tenant have the duty to disclose the presence of asbestos in a property?no, a tenant is under no duty to disclose asbestos in a propertyYou are a California real estate broker. A prospect is referred to you by an out-of-state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under California Real Estate Law, you:may pay a commission to a broker of another state.If the seller changes his mind regarding selling a property and the buyer wants to gain access to the title, what could the buyer do?Institute a suit for specific performanceA broker has many lots in a subdivision listed when he suddenly dies. His daughter (who is a broker) must:write up a new listing agreement in her own name for each lot in the subdivisionLiens brought about by court action are considered:General liensIn an appraisal of an income property, an appraisers estimate should:approximate the cash flow as it relates to value.A lender would be exempt from the requirement of providing the borrower with a Federal Right to Rescind Notice:-when the loan is for business expansion. -when the security for the loan is commercial property. -when the loan is for more than $25,000 and it is not secured by the borrowers personal residence.A real estate broker only has a right to earn a commission when the property sells during the listing period unless the following is included in the listing agreement:a brokers protection clause.If a buyer or seller dies before a contract is consummated, what happens?the contract is enforceableBeginning with the date when a parcel of property is sold to the state for delinquent taxes, the taxpayers right of redemption exists for:5 yearsThe buyer backs out of a deal and wants his earnest money deposit back. When can he pull out of a deal without penalty and does the seller have any recourse?-If the buyer has contingencies that need to be removed and the seller signs the escrow holders deposit release form. -The seller may seek arbitration (in lieu of court action) if both buyer and seller agreed to it in the original purchase agreement contract. -The seller must file a lawsuit in a court of law and seek restitution for damages if there was not an arbitration agreement.Capitalization:establishes the value of an asset by dividing annual net income by the desirable rate of return.A contract signed under duress is:VoidableBroker Charlie listed a property owned by Seller Able. The listing agreement stated, No more than a 20% down payment. The broker brought in an all cash offer. Broker Charlie is entitled to:No commissionAs a real estate broker, you negotiate the sale of a residence. The building appears to be sound and therefore, no termite inspection is ordered. However, before the escrow closes, you discover what you consider to be evidence of termite infestation in a closet. Under these circumstances, you should promptly disclose this information to:both buyer and seller for the appropriate resolutionWhich of the following factors has the greatest influence on mortgage rates?condition of money marketsA recorded easement that does not have ingress/egress locations shown on the deed is:valid/enforceable because the location of an easement need not be specified.The buyers agent should disclose his relationship to other persons involved in a sales transaction:As soon as possibleOf the following, which is the most important reason for a broker to maintain a trust fund account in addition to a regular business account?The consequences which could occur should legal action be taken against the brokerJoint tenants and tenants in common have what thing in common?equal possessionA seller issues a counter offer and the offeree rejects it. What can the seller do?Do nothingWhich of the following is the best hedge against inflation?ownership of real property.A buyer purchased a home based upon representations made by the seller and broker. Buyer discovered many defects with the property after close of escrow. How long does the buyer have to bring action against the seller and/or broker?2 yearsIf an appraiser does not use generally accepted appraisal methods to appraise property for an FDIC insured lender, the penalty is a:FelonyCopies of all listings, deposit receipts, canceled checks, and trust records must be retained by a licensed real estate broker for:three yearsTwo parties want to create an enforceable broker-principal relationship. The most essential element is:an employment agreement.If a buyer makes an offer to purchase a property on October 2nd and the terms allow the seller five days for acceptance, but the seller did not accept the offer until October 10th, the buyer can:demand the return of his depositIf a buyer purchases a home for $300,000 and obtains a loan for $250,0000, normal loan origination would be:$2,500A person who for a payment of a fee acquires the right to offer to sell or distribute goods or services to others under a marketing plan prescribed by another is known as a:FranchiseeAn urban industrial property is valued by:cubic foot.All of the following are necessary elements of a contract, except:performance.If a licensee is the buyers agent, he must disclose this to others:As soon as possibleBob sells you a home and does not have a real estate license. Do you have any recourse?Yes, to the courts.A joint tenancy in real property can legally be created with the execution of a deed by:-a husband and wife to themselves as joint tenants. -existing joint tenants to themselves and others as joint tenants. -existing tenants in common to themselves as joint tenants.Regarding the transfer disclosure statement:The seller must make an observation of the condition of the property and fill it out.The least useful determination in establishing the value of a property, using the market data approach, is the:original cost.With a note secured by a deed of trust:the lien of the trust deed is incidental to the debt.Broker Charlie took a listing on a commercial property and also received a right to purchase it within thirty days. On the 28th day Broker Charlie decides to purchase the property, he must:-give the seller any material information. -disclose any outstanding offers. -obtain a written consent from the seller acknowledging any profits or anticipated profits that Broker Charlie may acquire.Consideration for a valid contract would include:-a promise made in consideration of marriage -a promise to paint a unconstructed building -a promissory note that does not pay any interestSherman's listing agreement ends, two weeks later another agent (Carmen) contacts the same prospective seller and sells the property. Who gets paid a commission?Agent CarmenThe owner of property adjacent to the water flow can be acquired by:AccessionTo avoid litigation between a principal and a broker, it is best to have a/an:Written contractBroker must make certain that the buyer receives a structural pest control report:as soon as practicable before close of escrow.Which of the following would not be a way to create an agency relationship?SubornationA prospective purchaser can revoke or withdraw an offer:at anytime and for any reason before the sellers acceptance of an offer has been communicated back to the purchaserHow much a lessor will allow a tenant to improve a property is found in the:Rental agreementA prospective purchaser is considering buying a lot from a non-licensee subdivider. The purchaser wants to know about street maintenance, liens, utilities, blanket encumbrances, and sewer assessments. The best single source for this information is the:Real Estate CommissionerThe appraisal principle that asserts that a prudent buyer will not pay more for a particular parcel of real property than one of reasonable similarity which will become available in a reasonable period of time is:SubstitutionThe Real Estate Commissioners regulations require a written employment agreement between a broker and a salesperson. This agreement:must be kept by both broker and salesperson for three years after cancellation of the agreement.An agency relationship can be established by all of the following except:agent volunteeringIf an offeror communicates a notice of revocation after the offeree properly posts a notice of acceptance, this will:not terminate an offer to purchase real propertyA misrepresentation in real estate advertising is:Actual fraudSurface water:percolates back into the water table.An agency relationship is best established by:written contract.A pest control company finds no evidence of active infestation; however, they do find conditions deemed likely to lead to pest infestation. Who pays for this corrective work?buyer, only if he chooses to have the conditions corrected.Police power allows:the enactment of zoning laws limiting the use of real property.Tenant Able agrees to fix certain items for Owner Baker. After many promises, Owner Baker realizes that Tenant Able is not going to fix the items. Owner Baker then writes up a contract compelling Tenant Able to fix the items, and Owner Baker also threatens to evict Tenant Able if he does not comply. Such a contract would be:voidable by Tenant AbleBuyer Baker made an offer to purchase real property, however he refused to give Broker Charlie a $500 security deposit until Seller Able accepted his offer. What should Broker Charlie write in the purchase agreement to reflect this fact?Buyer agrees to deposit $500 with the broker immediately upon sellers acceptance.Able, Baker, and Charlie hold title as joint tenants. Charlie dies:Able and Baker remain joint tenants.In the capitalization approach, using the past as a guide to the future adjusted by an analysis of current trends is:forecasting.The owner of a single-family home gives a listing to salesperson Charlie, providing Charlies broker will appraise the property to verify the price. The broker:is acting within the law since no claim of being an expert appraiser was stated or insinuated.An agency relationship requires all of the following except:considerationAll of the following are necessary elements of a contract, except:WritingAnna Able recorded title to her existing property as a single woman. Later, she married Bob Baker and changed the name on the deed to read, Anna Baker, a married woman. This would create:a cloud on the title.A witnessed will has:2 signatures, plus the devisors signature.An appraiser uses which of the following to determine the highest and best use for a property?Site analysisBaker does not have a real estate license. He is, however, the owner and president of an investment firm. Baker advertises and sells property for his clients. These transactions involve real estate, therefore he can be prosecuted for violating real estate law by the:District Attorney.If a seller delivered a deed to a buyer and did not acknowledge or record it, the deed would be:ValidAll of the following are a necessity of any contract except:Payment of money