A buyer purchases a rental home that is fully furnished. The document used to transfer
title to the furniture is:
a. quitclaim deed
b. bill of sale
c. special warranty deed
d. general warranty deed – Answer- b. bill of sale
Deeds transfer title to real estate, a bill of sale is generally needed to transfer title to
personal property.
Ben receives a life estate in a property, with his nephew Will designated as the
remainderman. When Ben dies, what kind of interest does Will receive?
A. Fee Simple Estate
B. Life Estate
C. Remainder Interest
D. Reversionary Interest – Answer- A. Fee Simple Estate
The interest that passes to a designated person upon the death of a life tenant (or other
measuring life) is a fee simple estate. Will has a remainder interest only up until the
moment Ben dies. Once Ben is dead, Will’s interest immediately becomes a fee simple
interest.
A buyer accepts a general warranty deed from a seller, believing that the seller is the
sole owner of the property. The buyer later finds out that the seller is only a co-owner.
Has a covenant in the general warranty deed been violated?
A. No, the only covenant in a general warranty deed promises that the previous owner
didn’t encumber the property
B. No, the principle of caveat emptor controls matters concerning a deed
C. Yes, there is a covenant providing equitable title
D. Yes, there is a covenant providing marketable title – Answer- D. Yes, there is a
covenant providing marketable title
The general warranty deed contains a covenant of the right to convey, meaning that the
grantor either has title to the interest or is an agent of the owner with the authority to
transfer the interest.
A plaintiff files a lawsuit involving a property and also files a separate document
intended to provide notice of the lawsuit. This recorded notice of a pending legal action
is called a\/ an:
A. Abstract of judgement
B. Petition for alienation
C. Writ of execution
D. Lis Pendens – Answer- D. Lis Pendens
A Lis Pendens is a recorded notice stating that there is a lawsuit pending that may
affect title to the defendant’s real estate and that could bind the purchaser of the
property.
A movie theater was built ten years ago. If the neighborhood is now zoned entirely
residential, the movie theater:
A. will have to be torn down
B. must be remodeled to better conform to the neighborhood’s intended use
C. will be allowed to continue if the owner obtains a conditional use permit
D. will be allowed to continue since it was built before the new zoning law went into
effect – Answer- D. Will be allowed to continue since it was built before the new zoning
law went into effect
The movie theater is an example of a nonconforming use, which predated a zoning
change. Nonconforming uses are generally allowed to continue, although they may not
be enlarged, or resumed if they are stopped.
In a bilateral contract:
A. a duty wil be performed by only one party
B. one party can restrict the performance of another party
C. two parties have exchanged promises, and both parties are obligated to perform
D. all parties have fully performed their duties – Answer- C. two parties have exchanged
promises, and both parties are obligated to perform
In a bilateral contract, two parties have exchanged promises and both parties are
obligated to perform. (Bi=two way)
Gerald engages a licensee to list his property and find a buyer for it. In this context, the
licensee is acting as a:
A. General agent
B. power of attorney
C. property manager
D. special agent – Answer- D. Special Agent
When a licensee represents a seller in a single transaction, and is authorized to perform
typical duties associated with listing a property, she acts as a special agent.
A licensee located what seems like a ready, willing, and able buyer. However, the deal
falls through at closing because the buyer cant obtain necessary financing. At the same
time, though, a seller turns out to be unable to provide marketable title. Does the seller
still owe a commission to the listing agent in this case?
A. No, because the sale didn’t close
B. No, because there was no ready, willing, and able buyer
C. Yes, because the licensee saw the transaction through the closing date
D. Yes, because the seller has an absolute duty to provide marketable title at closing –
Answer- B. No, because there was no ready, willing, and able buyer
The most important rule of determining whether a seller is obligated to pay a
commission is whether a ready, willing, and able buyer was found during the listing
period. This would take precedence over the seller’s failure to provide marketable title. A
buyer who does not have financial ability to complete the purchase does not qualify as
“able.”
Legally, how much earnest money must be submitted with a valid purchase and sale
agreement?
A. 1% of the purchase price
B. 3% of the purchase price
C. 5% of the purchase price, but the amount over 3% cannot be retained as liquidated
damages
D. No earnest money is required – Answer- D. No earnest money is required
While almost all buyers will include an earnest money deposit along with the purchas
and sale agreement, that is because of tradition. There is no contractual or legal
requirement of a particular amount, or any earnest money at all.
A mortgage often includes a clause requiring the lender’s consent before another
borrower may assume the mortgage. This clause is called a\/ an:
A. power of sale clause
B. subordination clause
C. defeasance clause
D. alienation clause (due-on-sale clause) – Answer- D. Alienation clause (due-on-sale
clause)
an Alienation clause prevents assumption without the lender’s consent by stipulating
that the loan balance is due and payable in full if the property is sold.
A buyer is unfamiliar with the concept of discount points and asks a licensee to explain.
The licensee responds ” Discount points are used to replace funds that are being held
by the Federal Reserve, so that more funds are available to lend.” Is that description
correct?
A. No, discount points are used to increase yield for lenders who will sell the loans on
the secondary market
B. No, discount points are used to pay brokers’ commissions
C. Yes, banks hold discount points in escrow until sufficient funds have been
accumulated to make more loans
D. Yes, discount points lower interest rates, which make loans more affordable for
everyone – Answer- A. No, discount points are used to increase the yield for lenders
who will sell the loans on the secondary market.
Discount points are paid to a lender in order to increase the lender’s upfront yield on a
loan. Typically, the lender will compensate for this by charging a below-market interest
rate.
A small house is situated n a larger lot in a mixed-use neighborhood. The city decides
that the area will, in the future, be zoned commercial. What will most likely happen to
the property’s value?
A. It will increase, because of the fears of new businesses built nearby
B. It will increase in anticipation of the changing uses
C. No effect, since the house is a nonconforming use
D. No effect, until the change actually occurs – Answer- B. It will increase, in anticipation
of the changing uses.
Under the principle of anticipation, a property’s value is based on expectations of what
will happen to the property in the future. Generally commercial land is worth more than
residential land. A small house on a large lot would be viewed as a tear down.
The Real Estate Settlement Procedure Act ( RESPA) applies to:
A. contracts for deed
B. seller-financed transactions
C. commercial and residential mortgages
D. residential first mortgages – Answer- D. residential first mortgages
RESPA applies to mortgages secured by a dwelling with up to four units. It does not
apply to commercial transactions or seller financing. (A contract for deed, which is the
same thing as a land contract, can only be used in a seller-financed transaction.)
A homeowner bought his home for $150,000. Ten years later, he refinanced his
mortgage and borrowed $100,000. Which of the following is true for this type of
property?
A. Interest on the difference between the original loan amount and the refinanced
amount is not deductible
B. Interest on only half of the difference between the original amount and refinanced
amount is deductible
C. Interest on loans such as this one for the purchase or refinance of a principal
residence is deductible
D. Interest deductibility will depend on the borrower’s tax bracket – Answer- C. Interest
on loans such as this one for the purchase or refinance of a principal residence is
deductible
For a principal residence, interest on a purchase or refinance loan is fully deductible.
Interest on a home equity loan of up to $100,000 is also deductible, regardless of the
size of the purchase loan, and regardless of the taxpayer’s income.
Under Title VIII of the Civil RIghts act of 1968, certain transactions are exempt. Which
one of the situations below would be exempted and not a violation of the act?]<\/p>\n","protected":false},"excerpt":{"rendered":"
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