South Carolina Advanced Real Estate Principles Study

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Terms in this set (185)
Designated Agency

In South Carolina designated agency, a broker-in-charge may designate individual associated licensees to act solely on behalf of each client. Designated agents are not limited by the brokerage firm's agency relationship with the other client, but instead have a duty to promote the best interest of their clients, including negotiating a price.
For how long should the licensee retain the copy of the signed South Carolina Disclosure of Real Estate Relationships form?5 Years A licensee must retain copies of the disclosure form as part of the transaction file for five years.True or False? The owner of a property under contract for sale has declared bankruptcy. The owner must disclose the bankruptcy to the buyer.True Factors such as foreclosure and bankruptcy that may affect the closing of a property must be disclosed.Which of the following can be considered a liability defense shield?Owner mandatory property disclosures The burden to disclose is placed squarely on the party who actually knows about the problemsā€”the owners! Licensees can view the Property Condition Disclosure Statement as a "liability defense shield."At what time in the real estate transaction is it a good idea for the real estate licensee to provide the disclosure form to buyers?Early in the transaction Licensees can provide a blank seller disclosure form to buyers early in the transaction to encourage the buyers to identify issues about which they are concerned and which may not be included the disclosure.The sellers have been told that the sewer backup is caused by tree roots in the sewer line to the street. This is an example ofLatent Defect Latent defects are problems that are not easily discovered but could be known by the owner; examples include a leaking roof, damage from wood-destroying insects, the presence of synthetic stucco, or the presence of mold.Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)Comprehensive Environmental Response, Compensation and Liability Act. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) exposes property owners, past and present, to substantial expenses for the cleanup of hazardous materials from real property.Environmental Due DiligenceEnvironmental Due Diligence is the process that evaluates the environmental conditions and risks associated with a property. The process can be at the request of land developers, lenders, attorneys, or private owners who intend to purchase, refinance, or occupy a property.Lead-Based Paint HazardMany homes and condominiums built before 1978 have lead-based paint, which can be a hazard to the health of the inhabitants.MoldMold can be present in homes and can be a hazard to the inhabitants.Potentially Responsible Party (PRP)Potentially responsible party means a person identified as a possible cause of, or contributor to, contamination or pollution on a site or property. Potentially responsible party means a person who is or may be liable for remediation under any state or federal law, regulation, or program.Resource Conservation and Recovery Act (RCRA)The Resource Conservation and Recovery Act (RCRA) gives EPA the authority to control hazardous waste from cradle to grave.Superfund Amendments and Reauthorization Act (SARA)The Superfund Amendments and Reauthorization Act amended the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) on October 17, 1986. The Superfund Amendments and Reauthorization Act of 1986 (SARA) reflected EPA's experience in administering the complex Superfund program during its first six years and made several important changes and additions to the program. SARA: - stressed the importance of permanent remedies and innovative treatment technologies in cleaning up hazardous waste sites; - required Superfund actions to consider the standards and requirements found in other State and Federal environmental laws and regulations; - provided new enforcement authorities and settlement tools; increased State involvement in every phase of the Superfund program; - increased the focus on human health problems posed by hazardous waste sites; - encouraged greater citizen participation in making decisions on how sites should be cleaned up; and increased the size of the trust fund to $8.5 billion.Underground Storage Tanks (USTs)Any storage tanks for chemicals or gas that are 10% or more buried underground; in MA, banned under 21EWhat makes waste considered hazardous?Waste is considered hazardous if it is toxic, corrosive, reactive, or ignitable.True or False? Under RCRA, a waste is hazardous if tests reveal it is toxic, corrosive, and soluble.True The EPA has the right to fine violators at the rate of $50,000 per day; the fine is subject to periodic review, which will next occur in 2021.How many homes does the EPA estimate have elevated Radon levels? (over 4pCL/Liter of Air)The EPA estimates that 1 out of every 15 homes in the United States has a radon level that is more than 4 pCL/liter of air.What does the EPA consider an elevated Radon level?EPA recommends taking action to reduce radon in homes that have a radon level at or above 4 picocuries per liter (pCi/L) of air (a "picocurie" is a common unit for measuring the amount of radioactivity).Are real estate professionals are expected to understand complicated environmental legislation?No Real estate professionals are not expected to understand complicated environmental legislation; they are expected to be able to direct their clients to appropriate resources.What is an indication of the presence of a meth lab?A strong chemical odors that smell like cat urine, ammonia, or acetone. Red flags indicating the presence of a meth lab include strong chemical odors that smell like cat urine, ammonia, or acetone; windows that have been blackened out; renters who pay in cash; lots of traffic at unusual times; and excessive trash that includes antifreeze containers and red chemically stained coffee filters.The Lead-Based Paint Hazard Reduction Act (LBPHRA) of 1992 requiresProspective buyers for a home built before 1978 be given a special booklet. The LBPHRA does not require testing for or removal of lead-based paint, but it does require that buyers of homes built before 1978 be provided with the booklet Protect Your Family From Lead In Your Home.For an innocent landowner to qualify for the de minimis settlement, the landowner must show that heThe landowner was reassured by experts that the property did not contain hazardous wastes. The EPA will consider a de minimis settlement with an innocent landowner when it is clear that the landowner acquired the property without knowledge or reason to know of the disposal of hazardous substances. The landowner must have conducted "all appropriate inquiry," and that the price of the property must reflect the belief that the property was not contaminated.Targeted housing under the Residential Lead-Based Paint Hazard Reduction Act is housing built before?1978True or False? Constructive or passive fraud involves knowingly making a FALSE statement about a material fact.False Constructive or passive fraud involves knowingly failing to disclose a material fact. Knowingly making a false statement about a material fact would be active fraud. Think "they didn't ask, I didn't tell" vs actively lying about something.True or False? Most states have their own version of Megan's Law.False All states have their own version of Megan's Law.True or False? Negligent nondisclosure imposes liability for failure to exercise adequate care to discover a material defect and disclose it to the seller.False Negligent nondisclosure imposes liability to discover and disclose to the buyer, not the seller. (Read the questions carefully)True or False? In South Carolina, brokers can lawfully prepare documents such as deeds, contracts for deeds, options, mortgages, and certain leases.False In South Carolina, a real estate broker is permitted to fill in the blanks of legal instruments such as deeds, contracts for deeds, options, and mortgages; a broker who actually prepared these documents would be guilty of the unauthorized practice of law.A real estate licensee was aware that a property had a plumbing problem and was surprised to see that it was not indicated on the seller disclosure form. The licensee is now working with a buyer. What should the licensee say or do?Tell the buyer he has no verification or solid information but has heard that this home has a plumbing problem, and strongly advise the buyer to get a professional home inspection. Once the licensee has "knowledge" about a potential problem with the property, the licensee has an obligation, at the minimum, to relay that information to the client and to strongly suggest obtaining a professional home inspection. The licensee should get it in writing that the buyer was informed and urged to get a professional inspection.True or False? According to the statute of frauds, all documents used in the transfer of real estate must be in writing and signed by the parties to be enforceable in court.FalseBilateral ContractA type of contract that arises when a promise is given in exchange for a return promise.Unilateral ContractA promise is exchanged for performance and the contract is binding only on the person who made the promise.Implied ContractA contract formed in whole or in part from the conduct of the parties.An AmmendmentAn amendment changes specific terms of an existing contractAn AddendumAn addendum is an additional document that gets added to the purchase and sale agreement.NovationNovation is a legal instrument used to replace one obligation or party with another in a contract.AssignmentAssignment is a legal term whereby an individual, the "assignor," transfers rights, property, or other benefits to another known as the "assignee."Executory ContractA contract under which unperformed obligations remain on both sides, or where both parties have continuing obligations to performTrue or False? An option contract is a bilateral contract.FalseTypes Of LeasesA landlord-tenant relationship is created by a contract called a lease, which creates a leasehold estate. Lease types are distinguished by their different rent structures and include the following: - Gross lease (fixed lease) - Net lease, percentage lease - Graduated lease (step-up lease or index lease) - Land lease (ground lease) - Sandwich lease.What are the main types of Leasehold estates?Estate for years, the estate from period to period, and the estate at will. An estate for years is a tenancy for a fixed period of time. An estate from period to period automatically renews for a like term as the rent is paid for each period. An estate at will is for an indefinite time period, and it continues until either party gives proper notice of termination to the other party.What is actual eviction?Actual eviction is used by a landlord to remove tenants who are in breach of the terms of the lease. It gives the landlord, after a court hearing, the right to remove the tenants and their possessions from the property.What is constructive eviction?Constructive eviction is a wrongful eviction that occurs when the landlord interferes with the tenant's possession of the leased property or materially disturbs the tenant's use and enjoyment of the property. This gives the tenant the right to terminate the lease and vacate the property.Executed ContractA contract that has been completely performed by both parties.A Wood Infestation Report (CL100) is valid for how long?The answer is 30 days. CL100 reports are good for 30 days. Seller obligations terminate at closing.A contract that has no legal force or effect is?VoidWho, if anyone, is responsible for providing a home warranty to buyers?No one. Anyone can buy home warranty coverage, including sellers, buyers, their agents, or no one.The real estate agent made a few minor changes to the contract before asking her client to sign it. Is this okay?The real estate agent may be disciplined. Failing to get changes in written agreements signed and failing to get the changes properly initialed and dated results in a surprisingly high number of violations. Only parties to the contract are permitted to initial changes.What is a great advantage to buyers if they include a Due Diligence Addendum?They do not have to provide any reason if they terminate the purchase agreement. When the Due Diligence Addendum is used, buyers do not have to have a reason to withdraw from the contract, although they are obligated to pay the seller whatever termination amount was agreed upon.What does POA stand for?Power Of AttorneyAsbestosA long, thin, fibrous silicate mineral with insulating properties, which can cause cancer when inhaled.Carbon Monoxide (CO)A colorless, odorless gas that occurs as a by-product of fuel combustion that may result in death in poorly ventilated areas.GeneralistAs a rule of thumb generalist realtors are real estate professionals who will take on anything and everything - near or far, high or low value, big or small. For the most part they tend to be more junior in terms of experience though sometimes more experienced realtors continue to cover all corners of the industry too.Kick-Out ClauseA kick-out clause allows home sellers to continue showing and accepting offers even after accepting a contingent offer. A kick-out clause is a provision in a home's sales contract that allows sellers to accept a contingency while still showing their home in hopes of receiving a non-contingent offer.Marketable TitleGood and marketable title has been defined as one free from reasonable doubt, that is, not only a valid title in fact, but one that can be sold to a reasonable purchaser or mortgaged to a person of reasonable prudence.RadonIt is a radioactive, colourless, odourless, tasteless noble gas.True or False? As long as a title company is willing to provide title insurance, the seller is able to deliver "marketable title."False Sometimes a title insurance company is willing to "insure over" a defect, but this is not necessarily a marketable title. The defect remains and may cause problems in the future when the property is sold.True or False? An amendment form must state that this amendment becomes a part of the original contract but does not require any further signatures.False All parties must agree to accept the amendment or the original contract remains in place.True or False? The buyer of an older home has requested that the seller make numerous repairs to the property based on the home inspection contingency. There will be no problem if the seller offers the buyer $10,000 in cash rather than make the repairs.False A large sum of money given to the purchaser by the seller could have an effect on the mortgage loan. Many loan programs have a limited amount that can be received from the seller.What is a CL-100CL-100 Inspections, also referred to as a Termite Inspection, refers to the Official South Carolina Wood Infestation ReportWhat does CCRBR mean?Covenants, conditions, restrictions, bylaws or rules (CCRBR)The EPA regulates underground storage tanks containing hazardous substances that store?At least 10% of their volume underground. The EPA regulations apply to tanks that contain hazardous substances or liquid petroleum product that store at least 10% of their volume underground.In South Carolina, when should the purchaser review applicable documents relating to any property subject to any association subject to covenants, conditions, restrictions, bylaws or rules (CCRBR)?The answer is before entering into any legal agreements including a contract. The SC Residential Property Condition Disclosure Statement Addendum specifically states that purchasers should review the applicable CCRBR documents should be reviewed before entering into any legal agreements including a contract. Purchasers are solely responsible to determine what items are covered by the owners association changes.A buyer terminating the sale contingencies creates?A valid contract. If the buyer is able to withdraw the sale contingency condition, the buyer is bound by the sales contract to purchase the seller's property.If the buyer cannot fulfill the mortgage contingency, the SELLER has?An opportunity to void the contract. If the buyer cannot fulfill this contingency, the seller has an opportunity to void the contract and put the property back on the market.True or False? A REALTORĀ® has a new listing where the previous owners were murdered during an attempted burglary of their home. Regardless of where the property is located, the REALTORĀ® will be required to disclose this information.False The laws regarding the disclosure of stigmatizing information, such as a murder, suicide, or other committed felony in a home, varies from state to state.Broker Tom believes that he has a strong case for being the procuring cause for the sale of 1000 Ocean Avenue and is not willing to negotiate any part of the commission. He should definitely agree to go for mediation.False Mediation is a great way for two parties to reach an acceptable resolution for both parties. It does not sound like Broker Tom is interested in anything except receiving the total commission and he would probably opt to go for arbitration unless, of course, his board or association requires members to first try to mediate.Article 10 of the NAR Code of Ethics originally dealt with avoiding discrimination against anyone wishing to rent or purchase housing. It has been further extended to includeEqual opportunity employment of agents and staff. All REALTORSĀ® are subject to antidiscrimination laws of their local and state authorities in addition to the Code of Ethics. Some states also include commercial transactions in their fair housing law. Article 10 was expanded to include equal opportunity employment of agents and staff.When a case ends up in civil court, the first thing the judge will usually ask is "what does the contract say?" The importance of having every detail of a sales transaction in writing and signed by all parties is covered inArticle 9. Article 9 specifies that all contracts, addenda, amendments, et cetera, must be in writing with a copy given to all parties; copies submitted electronically are accepted in most states today.When does an attempt at mediation happen?An attempt at mediation is taken prior to an arbitration hearing.If the parties involved in a mediation are NOT able to reach a solution, then?The complainant can file for an arbitration hearing. When mediation fails, the complainant has the right to submit the case to the Professional Standards Committee of the local board or association with a request for arbitration.The National Association of REALTORSĀ® (NAR) Code of Ethics is divided into three sections including all of the following EXCEPTA) Duties to Clients and Customers. B) Duties to REALTORSĀ®. C) Duties to the Public.The MOST recent addition to the list of protected classes under Article 10 is?Gender identity. This category was added in 2014.Although not one of the most often cited for violation, the article that often has the MOST impact on the day-to-day practice of a REALTORĀ® is?Article 16. Article 16 is one of the shortest articles but has the most Standards of Practice attached. This article is very clear in stating that no REALTORĀ® shall interfere in any way with the relationship that another REALTORĀ® has with a client. There are 20 Standards of Practice that attempt to clarify what constitutes unethical behavior.According to Article 3 of the NAR Code of Ethics, if the commission offered to a buyer agent is different from that offered when the listing broker procures the buyer, it must be disclosed?Prior to the time an offer to purchase is made. In many cases, the local MLS service also requires that this information be included in the original MLS listing.A salesperson is a little confused about whether he has any responsibility to a person wishing to purchase the property that he has listed. He should look at which of the following articles?Article 1. Article 1 covers responsibility to clients and customers.A REALTORĀ® receives a notice from her local association that she must appear as a witness in regard to a complaint concerning a potential ethics violation. Being very busy at the time, she refuses to attend the hearing. She may now be found in violation of?Article 14. Article 14 not only requires the REALTORĀ® subject to the investigation to cooperate but also includes the duty to give testimony or appear as a witness if called upon.Which NAR Article discusses: When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORSĀ® pledge them-selves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORSĀ® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORSĀ® remain obligated to treat all parties honestly. Article 1 establishes a balanced obligation to clients and customers.Article 1Which NAR Article discusses: Guarantees faithful service to both clients and customers as consumers of real estate services. Protects the consumer by ensuring that the REALTORĀ® provides accurate, factual information without exaggeration; that the REALTORĀ® communicates truthfully and does not misrepresent the facts; and that the REALTORĀ® does not remain silent concerning pertinent facts including adverse factors affecting the property.Article 2Which NAR Article: Obligates REALTORSĀ® to cooperate with their competitors on mutually agreed upon terms when it is in the best interest of the client. This obligation promotes harmonious teamwork by competitors to the benefit of buyers/tenants and sellers/lessors. The real estate market is best served when individuals with a variety of skills and resources work together.Article 3Which NAR Article: Prohibits the REALTORĀ® from buying, presenting offers, or selling property owned by the REALTORĀ®, or in which the REALTORĀ® has any interest, without making full disclosure of the ownership or interest to the buyer or seller or their agent or representative.Article 4Which NAR Article; Protects the public by requiring REALTORSĀ® to disclose any present or contemplated interest they may have in a property for which they are undertaking to provide professional services. These services include buying, selling, leasing, appraising, managing, counseling, and other real estate related services.Article 5What does Article 6 of the NAR Code of Ethics discuss?Article 6 protects clients and customers from conflicts of interest by the REALTORĀ® by requiring advance disclosure of the REALTORĀ®'s connection or interest in any organization or business entity before the REALTORĀ® recommends such services or products.Which NAR Article: Imposes an ethical obligation that may go beyond the requirements of state law. A REALTORĀ® may never accept compensation from more than one party without the informed consent of all parties. Only through adequate prior disclosure can the parties be fully aware of any potential conflicts of interest that may affect their ability or willingness to rely on the objectivity of the REALTORĀ®'s advice and counsel.Article 7What does Article 8 of the NAR Code of Ethics discuss?Article 8 discusses the commingling of funds and special accounts?Which NAR Article: When agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases should be in writing.Article 9What does Article 10 of the NAR Code of Ethics discuss?Article 10 Illustrates the REALTORĀ®'s commitment to fair housing. A charge alleging that a REALTORĀ® has violated a fair housing law may also form the basis of a charge alleging a violation of Article 10. The REALTORĀ® can have nothing to do with any plan or agreement to discriminate on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity with respect to any real estate transaction.Article 11 discusses?Is explicit in setting forth REALTORSĀ®' responsibilities to refrain from attempting to provide service for which they are inadequately prepared. The services which REALTORSĀ® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.Which NAR Article discusses honesty, truthfulness and the prompt / clear disclosure of real estate licensure status in marketing materials.Article 12The below is from what NAR Code of Ethics Article? Realtors shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.Article 13Which NAR Article discusses: The Code of Ethics is meaningful because it is respected and enforced. Article X establishes an absolute obligation to cooperate with the Board when charged with unethical practice, or when asked to present evidence in any professional standards proceeding or investigation. In either event the REALTORĀ® must place all pertinent facts before a proper tribunal.Article 14Article 15 of the NAR Code of Ethics discusses what topics?Knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices. Article 15 logically flows from the REALTORĀ®'s duty established in Article 12 "to present a true picture in . . . representations." This includes comparisons with competitors, and comments or opinions offered about other real estate professionals.Which NAR Article discusses engaging in or taking any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORSĀ® have with clients. Discusses the competitive nature of the market and how to interact with other professional's clients.Article 16Which NAR Article discusses: REALTORSĀ® shall mediate the dispute if the Board requires its members to mediate. If the dispute is not resolved through mediation, or if mediation is not required, REALTORSĀ® shall submit the dispute to arbitration in accordance with the policies of the Board rather than litigate the matter. In the event clients of REALTORSĀ® wish to mediate or arbitrate contractual disputes arising out of real estate transactions, REALTORSĀ® shall mediate or arbitrate those disputes in accordance with the policies of the Board, provided the clients agree to be bound by any resulting agreement or award. The obligation to participate in mediation and arbitration contemplated by this Article includes the obligation of REALTORSĀ® (principals) to cause their firms to mediate and arbitrate and be bound by any resulting agreement or award.Article 17True or False? Specific sanctions are mandated by NAR for violation of one of the Articles of the Code of Ethics.False Recommendations for sanctions are given in the NAR Code of Ethics and Arbitration Manual, but no specific sanction is designated for any individual violation.When can an ethics panel arbitration decision be appealed?The decision of an ethics hearing panel can be appealed to the Board of Directors for procedural error. The decision of an arbitration hearing panel cannot be appealed.True or False? A REALTORĀ® makes it a practice to never disclose whether or not there are other offers to purchase on her listing. She is potentially in violation of Article 3.True Article 3, SOP 3-6 requires disclosure of all accepted offers, including those with unresolved contingencies. Article 1, SOP 1-15, also addresses the issue of disclosing the existence of offers on a property.Based on Article 17, what can a Realtor do after arbitration if they are not satisfied with the result?If the REALTORĀ® is not satisfied with the results of an arbitration panel hearing, they still have the right to resort to litigation.What is the CAN-SPAM Act?The CAN-SPAM Act requires that all commercial e-mails include: a legitimate return e-mail address and physical postal address; a clear and conspicuous notice of the recipient's opportunity to opt-out of future e-mails; and. a clear and conspicuous notice that the e-mail is an advertisement or solicitationWhat Is the Fair and Accurate Credit Transactions Act (FACTA)?The Fair and Accurate Credit Transactions Act (FACTA) is a federal law enacted by the United States Congress in 2003. Its stated purpose was to enhance consumer protections, particularly in relation to identity theft.What is the MAP Rule?The MAP Rule sets specific deceptive acts and practices in the advertising of mortgage loan products and prohibits misrepresentation in any commercial communication concerning terms of mortgage loan products. This includes internet, radio, billboards, print and television advertising.What is RESPA?The Real Estate Settlement Procedures Act (RESPA) provides consumers with improved disclosures of settlement costs and to reduce the costs of closing by the elimination of referral fees and kickbacks. RESPA was signed into law in December 1974, and became effective on June 20, 1975.What is the SAFE Act?The SAFE Act requires licensing of individuals who engage in the business of a loan originator. To trigger the licensing requirements under the SAFE Act, the financing must be primarily for personal, family, or household use.What is TRID?"TRID" is an acronym that some people use to refer to the TILA RESPA Integrated Disclosure rule. This rule is also known as the Know Before You Owe mortgage disclosure rule and is part of our Know Before You Owe mortgage initiative. Learn more about Know Before You OweIs a violation of the Section 8 anti-kickback, referral fees, and unearned fees provisions of RESPA is subject to both criminal and civil penalties.YesWhat are three relatively new types of real estate brokerages?A) Fee-for-service broker. B) Teams of agents operating under one broker. C) Discount broker.The BEST rationale for holding all offers to be presented at a future time and date would be that it?Allows time for a better selection of offers for the seller.The requirement for all brokerage firms to destroy all personal information about their clients before disposing of the paperwork is a part of federal legislation named?FACTA. The Fair and Accurate Credit Transaction Act requires all companies or individuals who deal with sensitive consumer information to completely destroy such information before disposing of it. This is part of the effort to prevent identity theft and is enforced by the Federal Trade Commission.The type of representation that is MOST likely to cause problems with a cooperating broker is?Limited representative. The biggest problem with limited service representation is the possible confusion of who is responsible for which duties.What is one thing not covered in the Junk Fax Prevention Act?Length of fax message. The Junk Fax Prevention Act was signed into law, making unsolicited fax messages illegal. The act does allow businesses to maintain contact with their established customers and clients through the use of fax. No-cost opt-out provisions must be provided.What is the fine for each violation of the National Do Not Call Registry?There is a $16,000 fine for each violation of the National Do Not Call Registry.Which ethical / moral principals are based on utilitarianism?The ends-based principle is based on utilitarianism. The rule-based principle is based on the teachings of Immanuel Kant.Which of the following is NOT one of Tom Morris's "Six Tests for Ethical Action"? A) Man/woman in the mirror test B) Transparency test C) Platinum Rule test D) Publicity testThe answer is Platinum Rule test. The sixth of Morris's Six Tests is the Golden Rule test, not the Platinum Rule test.What sources are used in the development of property measurement language?The sources used in the development of property measurement language are the International Residential Code, The Dictionary of Real Estate Appraisal, the American National Standard Institute (ANSI), and the Residential Cost Handbook.Is there a requirement for minimum wall length for any habitable room?No, the room just needs to have at least 120 square feet of living space.When were standards developed for the measurement of square footage in detached and attached single-family homes?1996What organization developed the method for calculating square footage?American National Standards InstituteAn opening that features a sill height that is up to 44 inches above the finished ground level is considered a gradeFloor Opening A grade floor opening is a window or other opening located such that the sill height of the opening is not more than 44 inches above or below the finished ground level adjacent to the opening.What is a habitable space?The answer is a finished area used for eating, living, sleeping, or cooking. Bathrooms, storage rooms, mechanical rooms, and closets are not considered habitable spaces.What is the primary source for definitions related to the appraisal industry?Dictionary of Real Estate Appraisal (DREA). The Appraisal Institute's Dictionary of Real Estate Appraisal was produced in an effort to develop acceptable industry terminology for the valuation profession.When were the Uniform Residential Appraisal Report (URAR) guidelines developed for measuring residential properties?Mid-1970s. URAR was developed in the mid-1970s by appraisal and lending professionals. Fannie Mae was instrumental in developing specific and detailed guidelines in regard to how the description of residential subject property was to be reporting in appraisal assignments.What is a build-out?Interior construction that converts raw space into space ready for occupancy. It includes the installation of equipment, finish carpentry, construction of amenities, and initial tenant improvements.Nearly 100 years ago, standards for the measurement of commercial buildings were established byBuilding Owners and Managers Association (BOMA). The manual is called Office Buildings: Standard Methods of Measurement (Z65.1-2010). Before 1996, no nationwide standard existed for measuring square footage in single-family houses.According to the American National Standards Institute, professionals shouldMeasure to the tenth of a foot. Measuring to the tenth of a foot gives a more accurate calculation of the square footage of the home. This is voluntaryDoes Fannie Mae have written guidelines?Yes, it is contained in the Fannie Mae Single-Family Selling Guide. It guides professionals through the process of the appraisal, adjustments, and final estimates of value.What is considered a multi-level home?There are several different styles of multi-level homes. Four-level splits, Split-entry or split foyer and Three-level splits. In four-level splits that feature only a partial basement and crawl space, the bottom two levels are considered basement levels because at least one wall is partially or completely below grade.Is it possible for a four-level split to have three levels completely above ground?It depends on the build. You must carefully check all sides of the foundation to make sure that the height requirement (at least six feet) on all four sides is accurate. This is the most common mistake on the multiple listing service (MLS) sheet because many think that if the first lower level looks like a walk-out, it is all above ground. This is not true.A multi-level home consists of how many levels?Consists of any number of levels for living, above and below grade.Is a semi-finished furnace room in the basement counted as finished square footage?Yes, if the mechanicals are covered up and not seen. All three surfaces need to be finished, and it would have to follow room-size requirements. However, if the mechanicals are located in a closet within the gross living area (GLA) of the home, the space is included in the finished square footage GLA.What is a modified two-story?A second story, usually off to one side or the other of the home and never the same size as the first floor. In a typical story-and-a-half, the second level is directly above the first story. However, in a modified two-story, the additional living space is either on the right or left side of the home, leaving a vault in the living room.How do you measure a three-story home?Use architectural features to obtain measurements along with interior measurements, but add back the wall thickness to obtain figures consistent with the balance of the home. (will need to rely on professional judgement as well)In what year was International Building Code for One and Two-Family Dwellings written?1996In some parts of the country, a split-level home is also calledA raised ranch. In doing appraisal work, professionals should use simple terms in their reports so that the language is clear and understandable no matter the region.One-story homes are also known as:Ranch style homes and / or RamblersWhat measurements are required for an appraisal report?Gross living area, foundation, and below-grade finished area. These measurements are included in the grid for the appraisal report, and it is these measurements that give us the most direct comparisons for comparables in developing the estimate of value for the subject.Are bay windows included when measuring the exterior of a home?Yes. Bay windows are included when measuring the exterior of a home, but only if there is walking area into the window. We also include bump-outs, trapezoidal doorways, four-season porches, and the like.Every dwelling unit must have at least one habitable room that does not have less than how many square feet of gross floor area?120 sq. ft. Other habitable rooms must have a floor area of at least 70 square feet, and every kitchen must have at least 50 square feet of gross floor area.How much windows must a habitable room have?The glass area must be at least 8% of the floor area and half of that must open. There are exceptions. Windows do not need to open if they are not required for egress, and if an approved mechanical ventilation system is installed.What qualifies an adjoining room?If the opening is at least half of the adjoining wall and is open without obstructionAll habitable rooms must be 150 square feet EXCEPTKitchens need only be 50 square feet to be counted as a room.As an appraiser, it is your responsibility to obtain exterior measurements of a second story usingInterior measurement plus wall thicknesses, along with exterior main floor architectural features for measurements. The key is to use the interior measurements and add back wall thickness for measurements where the uses of main floor architectural features are not available.How are garages counted?By the number of garage door openings in the space. Garages are counted by the number of garage door openings in the space, even though more vehicles could fit into the space.Three rooms running together may be calledA great room is an area that is completely open but features three habitable rooms. Great rooms are measured as individual rooms when a wall can theoretically be erected around an area without obstructing the traffic-flow pattern of the home.Would additional homes on a lot all be counted together?No There must be one primary home; additional homes are considered amenities. Only one home can be counted for the appraisal. A second home, guest cottage, or rental would be considered an amenity or auxiliary living area.Are homes ALWAYS measured by the exterior?Yes To ensure that all living areas are included in the overall square footage. Measuring the exterior of a home ensures that all hallways, bathrooms, closets, and other such spaces are included in the home's gross living area.Is a bonus room over the garage counted in gross living area (GLA)?The access to the area decides its value to the home. If you can get to this area from a finished area or staircase within the home's gross living area, it is part of GLA. If you have to access it through an unfinished area, then it is not.GLA stands for what?Gross Living AreaWhich source of data for a comparative market analysis (CMA) is limited only to property that has been listed in the past?Multiple listing service (MLS) data. MLS data has the disadvantage that only listed properties are included, and the data does not show properties sold by the owner.A broker is preparing a CMA. The subject property has a pool, which contributes $4,000 to value. The comparable does not. The adjustment is+ $4,000 to the comparable. Adjustments are always made to the comparable. If the comparable is inferior, add; if the comparable is superior, subtract.In a CMA are adjustments made to the subject or the comparable?Adjustments are always made to the comparable.A gross lease is one that:Tenate pays a fixed monthly amount, The landlord pays for all operating expenses. (most common residential lease)A ground lease is?A ground lease is an agreement in which a tenant can develop property during the lease period, after which it is turned over to the property owner. Ground leases commonly take place between commercial landlords, who typically lease land for 50 to 99 years to tenants who construct buildings on the property.A triple net lease is?Triple net lease (NNN) is normally a commercial lease where the lessee pays rent and utilities as well as three other types of property expenses: insurance, maintenance, and taxes.A percentage lease is?A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. It is a term used in commercial real estate.The formula for determining the capitalization rate is:NOI Ć· Value. The formula is Net operating income Ć· Value = Capitalization rate.What is the value of a property with a gross income of $12,200 if the gross rent multiplier is 9.3?$113,460. GRM Ɨ Gross Income = Value. 9.3 Ɨ $12,200 = $113,460.GRM stands for?Gross Rent MultiplierIf a small apartment property has a monthly income of $5,000 and a sales price of $300,000, the gross rent multiplier is60. The formula is Sales price Ć· Gross rents = Gross rent multiplier. While the annual income is often used, the monthly income may also be used on smaller residential investments.The internal rate of return is arrived atUsing an after-tax analysis of future cash flows. The internal rate of return is arrived at using an after-tax analysis of future cash flows.An increase in national interest rates will MOST likely causeAn increase in capitalization rates.The gross rent multiplier in a given market has increased. If there are no other changes, this increase willResult in generally higher values. The formula is gross rent multiplier Ɨ rents, resulting in increased values.What is the calculated value of a property with gross rents of $12,000 and a gross rent multiplier of 50?$600,000. Multiply $12,000 in rent by the GRM of 50.If the income does not change, an increase in the capitalization rate will?Decrease the value of the investment. When the capitalization rate increases, the value decreases based on a given amount of income.A property with a calculated potential gross income of $19,600, a 5% vacancy factor, and $5,400 in operating expenses?$18,620. Potential gross income - vacancy = effective gross income.When analyzing comparable sales, you determine the gross rent multiplier for similar properties is 11. What value would you assign to a subject property with gross annual rents of $11,000??$121,000. The formula is Gross rents Ɨ Gross rent multiplier = Value; therefore, $11,000 Ɨ 11 = $121,000.The vacancy and collection loss is usually expressed as a percentage of theGross annual rental income. The vacancy and collection loss is usually expressed as a percentage of the gross annual rental income.When income tax rates are reduced, what benefit is reduced?Benefits of tax deductions are diminished. Deductions are taken against the tax rate; the lower the rate, the less the benefit received.The Internal Revenue Code provides that the useful life of a residential rental property for depreciation purposes is27.5 years."Tax shelter" in real estate investments comes from?Depreciation, depreciation reduces taxable income, therefore it is called tax shelter.An investor who has a modified adjusted gross income of $125,000 can qualify for a maximum passive loss exception of$12,500. The maximum passive activity loss limitation of $25,000 is reduced by $.50 for each $1 the modified adjusted gross income exceeds $100,000.An asset acquired under Section 1031 of the Internal Revenue Code must be depreciated how?By the same schedule as the previous asset.Investors in rental real estate are limited in the losses they may claim each year by?Passive activity loss limitations imposed by the Internal Revenue Code. Investors are limited in losses they may take based on the passive activity loss limitation rulesUsing straight-line depreciation, what is the annual depreciation deduction for a residential rental property with a depreciable basis of $550,000?$20,000. Divide $550,000 by the property's useful life of 27.5 years. The annual depreciation deduction is $20,000.A residential investment with a depreciable basis of $275,000 will shelter$10,000 of income annually. The depreciable basis is divided by the 27.5 years of useful life for residential property.An increase in income tax rates would be MOST likely to positively affect?benefits of depreciation deductions. Tax deductions are more beneficial at higher rates but returns are diminished.In a tax deferred exchange, the taxpayer must identify replacement property within?Within 45 days of closing on the disposition property. Section 1031 requires that replacement property be identified within 45 days of the closing of the disposition property.In a limited partnership, the general partner is?Shielded from losses to the extent of his or her investment.