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Terms in this set (73)
A note given with a mortgage would be the:
primary evidence of the debt
Brokers should be extremely careful when acting as a power of attorney for one of the parties. Which of the following is true?
a written power of attorney must be recorded in the county in which the real property is located
It is not improper for the broker to be a power of attorney, however, the broker or licensee should be extremely careful as the broker acquires additional legal liability for the closing. The "selling" agent works for the buyer and thus cannot sign for the seller. The buyers agent cannot sign for both parties. The last choice is correct.
When Mary signed the deed she
became the trustor.
When a contract is rejected by the Seller, the seller should:
check the appropiate box and initial on the indicated line
The broker delegates the preparation of the legal documents for the closing to the Title Company. Who must bear the cost of such preparation?
If an employing broker leaves a real estate brokerage, what happens to the transaction records?
the brokerage retains the records as the company is responsibile for maintenance of records
What portion of the 24-hour continuing education requirement is to consist of the mandatory credits developed by the Real Estate Commission?
Every three years a licensee must complete 12 hours of electives and 12 hours of mandatory continuing education for a license renewal.
An FHA loan for $80,000 at 10.5% requires discount points paid at closing in the amount of 3%. Find the cash value of the discount points.
80,000 x 3 % = 2,400
Definition of 'Discount Points'
Discount Points are a form of prepaid interest. A borrower buys a point and in return gets a lower interest rate on the loan. Each discount point generally costs 1% of the total loan amount and depending on the borrower, each point lowers your interest rate by one-eighth to one one-quarter of your interest rate. As the IRS considers discount points to be prepaid interest they are tax deductible in the year in which they were paid.
For example, on a $300,000 loan, each point would cost $3,000. Assuming the interest rate on the mortgage is 5% and each point lowers the interest rate by 0.25%. Buying 2 points will cost $6,000 and will result in an interest rate of 4.50%.
True/False - The name of the Brokerage Firm with whom the team is associated does NOT have to appear on all team advertising as long as all licensed brokers on the team have their licenses registered under the Brokerage Firms name.
Closing is February 10 and taxes for the prior year were not paid for $1,854, this is shown on the settlement sheet as:
$1,854 debit to the seller, credit to the broker
The Commission Position on earnest money deposits indicates:
if the transaction fails and there is no dispute over who is to receive the earnest money the broker should release the funds **
Which is not true regarding the Counterproposal form:
The only changes allowed are purchase price and earnest money
Which would need to be registered with the CREC (Colorado Real Estate Commission) for a subdivision?
60 unit co-op building
The hold over period may be found in all of the following contracts except?
Residential Contract to Buy and Sell Real Estate
The Licensee Buyout Addendum contains the following verbiage EXCEPT:
Correct -> Seller is responsible for marketing and closing expenses
Seller acknowledges that in entering into the Contract, Buyer is exposed to possible losses and expenses.
The Contract may be terminated at any time by Seller upon written notice to Buyer.
Any termination of the Contract shall not affect the listing contract for the Property (Listing Contract).
A 1031 Exchange is:
a tax deferred exchange of investment properties
Which does NOT fall under Rule F?
Contract to purchase newly constructed home with warranties.
This is an actual question from the licensing exam. Rule F is the rule under which all approved contracts and the rules governing their use fall. To answer this question requires a knowledge of the contracts that are approved and those which are not. They are listed in the Printout section of our website. The non-approved contract in this list is the "contract to purchase newly constructed homes with warranties". New home builders are exempt from the rules established under the Conway-Bogues court decision. As such they are not required to use approved contracts and generally choose to use purchase contracts they create. Some students may wish to point out that some small new builders may choose to use the the approved purchase contract and add warranty info. This is true. However, please read the first sentence of this explanation again. We want you to be prepared to answer this question should you see it on the State exam.
New home builders are exempt from the rules established under the Conway-Bogues court decision. As such they are not required to use approved contracts and generally choose to use purchase contracts they create
Seller's proceeds are shown at the bottom of a six-column settlement worksheet as a:
debit to the seller
Seller's proceeds are a shown as a debit on the worksheet. To fully understand this answer you need to have a good understanding of the six-column worksheet used in closings. Once all expense and credits have been applied you total up the Debit and Credit columns at the bottom. If the Seller is going to have proceeds, the debit column total should be less that the total of the credit column. For the sake of discussion lets assume the seller's debits are 125k and credits 200k. This means ultimately the seller is going to be getting a check from the escrow account for 75K, but how do you express this on the 6 column worksheet? After totaling the columns you need to make then equal, meaning you add 75K to the DEBIT column to make it equal to the credit column. This means the sellers proceeds are shown as a DEBIT on the worksheet.
You still need to assign a corresponding CREDIT and that is to the BROKER CREDIT column. Remember the Broker CREDIT column tells the closing agent what checks they have to write out of the escrow account. The check they need to write in this case is for 75K to the Seller.
***Property taxes are based on an assessed value of $132,000 and the tax rate is 8.5 mills. The property closes on Jun 14. On a basis of the banker's calendar (360 day year, every month is 30 days) the seller owes how much in taxes?
$132,000 X .0085 = $1,122 / 360 = $3.1166 X 164 = $511.13
Which of the following is true when a broker signs the Broker Acknowledgments at the end of the Residential Contract to Buy and Sell?
The brokers' signatures acknowledge receipt of the earnest money deposit and confirms their brokerage relationship to the party with whom they are working
Instruments affecting real estate are recorded with the recorder of deeds, in the county where the property is located, to:
give constructive notice to the world of the interest in a particular parcel of property the instrument purports to create
In Colorado legal documents are not required to be recorded to be valid. Recordation gives construction notice to the world that the document exists, and establishes priority in the event of foreclosure.
A broker must keep which of these funds in his trust account?
rental money received
An executory contract is one which:
is yet to be performed
"Liquidated damages" refers to which of the following?
The seller's sole remedy in case of default by purchaser is to keep earnest funds received from purchaser
True/False - According to Commission Position 40 on Teams, Real estate brokers that function as teams should not advertise teams using the terms "realty", "real estate", "company", "corporation", "corp.", "inc.", "LLC" or other similar language that would indicate a company other than the employing brokerage firm.
What if anything is required by the broker to be included on his/her Web site.
Name of licensee's brokerage firm
Commission rules regarding advertising of brokerage identity all apply to any Web site or Internet advertising. Brokerage name must appear on web site.
Which of the following is required in the event of a dispute between the parties relating to the Contract to Buy and Sell?
The parties must mediate in good faith to seek a settlement for up to 30 days.
For dispute resolution, the contract only requires nonbinding mediation. If mediation does not reach a voluntary settlement after 30 days, either party may proceed to arbitration or litigation.
According to Colorado law, in the absence of a written agreement to the contrary, a real estate broker:
represents neither the buyer nor the seller
Agency is not implied. Brokers are considered to help or assist buyers and sellers as Transaction Brokers when there is no written agreement. Do not use the term "represent" as it implies agency.
If the buyer assigns her right to purchase a property pursuant to an exclusive right-to-buy contract to her brother-in-law:
the broker shall still have the right to collect a commission
C.C. & R.'s are appurtenances to real property. The harshest consequences results from the violation of which of the following?
Under "vicarious liability" in Colorado:
The principal is liable only for acts of the agents that the principal has approved, directed or ratified.
vicarious liability: a principal's liability for an agent's acts performed within the scope of the agency; specifically excluded by Colorado statute from a principal's liability unless the act or omission was approved, directed or ratified.
If a Seller is in default of the terms of the Contract to Buy & Sell:
The buyer may cancel or sue for specific damages
In Colorado, all of the following would be required to obtain a real estate license except:
a time share salesperson
Correct -> a rental referral agent
Your Choice -> a property manager
a commercial real estate broker
A Corporation, LLC, Partnership must have E&O insurance for entity and employing broker.
On a new loan tax reserves appear on a closing statement as a:
debit to the buyer
Title insurance endorsements appear on a closing statement as a:
credit to the broker
The formula for determining the value of income property is:
Value equals net income divided by cap rate
If there is no Legal Description of a property in a Purchase and Sell contract, is the contract:
A notice to quit should be:
delivered to a family member of at least 15 years of age
A commercial lease for a definite period of time is terminated by:
he potential gross income of a warehouse is $4,200 a month and the vacancy rate is 2 1/2%. The taxes are $3750, the monthly maintenance costs are $350, monthly reserves for replacement are $250, depreciation is $575 a month, management fees are $500 per month, debt service is $1200 per month and the quarterly landscaping fees are $600. If the cap rate is 12.5% what is the estimated value of the warehouse?
The real estate contract for a specific property for use as an unlicensed petroleum sales operation was forced to terminate. The termination was the result of:
impossibility of performance
A sale and leaseback arrangement is one in which a seller sells a property to a buyer and then leases the property back. Which is correct as it applies to a sale and leaseback arrangement?
The seller retains possession of the property
With an amortized mortgage or trust deed loan:
The principal portion of each payment increases throughout the entire term of the loan.
n using the market data approach
Adjustments are made by adding to or subtracting from the comparable property
Federal Fair Housing laws have ruled that a private organization:
may discriminate if they are truly private
Responsibility for recording a deed is that of:
Which of the following is accepted as evidence of marketable title?
Title insurance policy
A seller may give actual notice of an interest in property by
telling someone the property is his
To terminate an estate for years leasehold estate, how much notice must be given?
**** None of the above NO NOTICE
A lawsuit for inverse condemnation may be brought by
A lease in which the tenant pays rent plus maintenance and property charges is a
The contract to purchase addresses the following issues:
pre-owned home warranty programs are available
The continued use of a property that was lawful at the time the use began but now is in violation of a zoning regulation is an example of:
When is an offer to purchase, considered accepted?
When the buyer's broker is notified, that the offer has been accepted by the seller
An easement created by adverse use is an easement by
A legal easement can be created by any of the following EXCEPT
The Principal of Substitution, which states that no one will pay more for one item if an equally substitutable item is available at a lower price, applies to what appraisal methods?
Sales Comparison, replacement cost, and income
To protect your buyers, the seller, and yourself, you should:
walk through the home with your buyers
Under Colorado Real Estate Commission rule E-35:
written disclosure of agency is required
Which of the following statements are true regarding a VA funding fee?
It varies according to the veteran's eligibility
A standard title insurance policy offers protection to
A permissive use that gives no future rights to the user would be a(n):
Which of the following is the largest area?
10% of a township
**** Two miles squared
5,280 feet by 5,280 feet
All of the following are true when a lender must comply with RESPA, except:
Construction loans are not included.
Real estate property taxes are:
A deceased person who dies testate devises real property to:
The term "merchantable title" means:
that the seller can transfer his interest by deed
Ben and Dave are co-owners of a fee simple estate in a parcel of real estate. Ben dies intestate and leaves no estate to be distributed to his heirs. Dave is neither related to Ben, or a creditor of Ben. Which of the following explains how Dave acquired the interest of Ben?
Real property is closing on May 14. The buyer is assuming the seller's mortgage. As of closing the balance is $65,325. The annual interest rate is 8%. How should the interest on the loan be prorated based on a banker's year (360 days in a year, all months have 30 days)
Debit the seller $203.23
Debit the seller $203.23 $65,325 x 8% / 360 days = $14.5167 x 14 days = $203.23. On the national test the Seller is responsible for the day of closing, on the State test the Buyer is responsible for the day of closing.
Prior to closing, it is usually the responsibility of the following person to order the appraisal:
Which workplace hazard is the OSH Act designed to protect workers from?
A privilege to enter the premises for a certain purpose, which does not operate to confer an, or vest in, the licensee any title, interest, or estate in such property
The Environmental Protection Agency can regulate a toxic substance that poses an imminent hazard but cannot prohibit its use altogether.
What is the aim of tort law?
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