IL Real Estate Broker PSI Practice Exam Flashcards

IL Real Estate Broker PSI Practice Exam Flashcards Under which of the following circumstances may a seller keep the earnest money deposit of a defaulting buyer?if the seller wants to declare the sales contract forfeited, and there is a forfeiture clause in the contract Which of the following best describes steering? A licensee shows prospects of a particular race properties only in areas populated by families of the same race Which of the following is a characteristic of a limited partner's role in a limited partnership?reduced personal liability and no management decision making The best way to determine whether or not there is an encroachment of a boundary line is to Have a survey done. A survey may reveal easements or encroachments that public records do not reveal.Which of the following is the most important element for a property manager to consider when selecting rental rates?The rental rates for similar units in the area An owner has been asked to grand a 60-day option to purchase a property. When should the purchase price be decided?Upon creation and signing of the option to purchase.When an offer to purchase is agreed to and signed by all parties, but not closed, the purchaser has an equitable interest.Real PropertyImmovable (house, land & everything attached) An owner of an apartment building asks a licensee who is managing the property not to advertise the apartments in the local newspaper because it is published by her ex-husband. The property manager argues that many advertisements in this newspaper have produced rentals, but the owner will not change her mind. Should the property manager advertise in this newspaper?No, because the property manager is obligated to obey the lawful instructions of the owner Types of Less than Freehold Estates1. Estate for years- limited period of time- two dates- Ex.Summer rental2. Periodic Tenancy- Recurring timeframe (month to month)3. Estate at Will- Can end at any time4.Estate at Sufferance- also known as holdover lease - tenant stays beyond end of lease without approval of landlord A buyer bought a home from an owner. The owners green to owner-finance the property. The parties agreed to amortize the loan over 15-year period. the buyer became the owner of record of the property, and the seller had a lien against the property. What type of instrument was used to purchase the property?A purchase money mortgage. The buyer squires legal title and the seller has a lien against the property An enforceable purchase agreement is formed when the buyer knows of the seller's written acceptance of the offer The Real Estate Settlement Procedure Act (RESPA) applies to which of the following loans?A first mortgage home loan A licensee anxious to make a sale violates his duties toward his principal if he volunteers which of the following

pieces of information to a prospective buyer?You should make an offer for less than the listing price because the owner is anxious to sell

Which of the following is generally income tax deductible in home ownership?points paid to obtain the loan When should a licensee provide the owners a copy of their listing agreement form?Immediately upon signature of the owners. The listing agreement is a legal contract. A copy should be given to all parties of the contract at the time of signing.A pest inspection is ordered and an infestation is found.Who pays to correct the problem?The party specified in the contract.When a borrower defaults on a mortgage, an acceleration clause allows the lender the option of demanding immediate payment of the entire loan balance.A person wants to lease a small building to use as a coffee shop. The tenant and the landlord agree upon a lease where the tenant will pay all utilities and taxes, in addition to rent. The landlord will pay the insurance. This type of lease is best known as a Net lease. The tenant pays some or all of the operating expenses, such as utilities and taxes.A couple's yearly income is $87,400. The couple's bank currently allows residential loans for an amount equal to twice the annual income. Disregarding minimum percentage down payment requirements, what is the minimum cash down payment that the couple will need to have on a $210,000 home?$35,200. The couple would have to make up any difference between the loan amount and the purchase price of the property in the form of a down payment. Since their joint incomes equal $87,4000, the bank will loan twice that amount, or $174,800. The purchase price of the property is $210,000, minus the loan amount of $174,800, equals a required down payment in the amount of $35,200 Essential Elements of Value1. Scarcity: how much of it is there?2. Transferability: Can you sell it?3. Utility: Can you use it?4. Demand: Do people even want it?A couple leased a waterfront bungalow. The Lease began on June 15, 2012, and continued through July 31, 2010.The couple had An estate for years A person bought property from a seller and received a general warranty deed. Two years later, the seller's brother came forth and claimed he had an ownership interest in the property. The brother stated he knew the court would uphold his interest. In a general warranty deed, the buyer is protected from this situation by the covenant..of seisin. Although all covenants in a general warranty deep work together to protect the buyer, the covenant of seisin specifically guarantees that the owner owned the real estate at the time of the sale and had the right to convey it.A managing broker requires his licensees to mention a particular lender to buyers. The broker has a financial interest in this particular mortgage lender. Which of the following should the licensee recommend to buyers?Consider this lender, disclosing the broker's interest, and other lenders.A seller wants to allow a buyer to assume the existing mortgage. The sellers want to be sure that they will not be liable for the mortgage after it is assumed. Which of the following will best meet the seller's needs?Novation is substituting one party's obligations for that of the other party. In assumptions, the novation clause would release the seller from liability on the loan and make the buyer liable.Government PowersP.E.T.E- Police power: tell you how to use property (ex:

building codes, rent control, zoning)- Eminent domain: gov

condemns property + pays you- Taxation- Escheat: no

heirs so property goes to state

An appraisal prepared using the amount of rent generated by the property is an example of which of the following approaches to value?Income. The income approach to value is determined by the amount of net income the property will produce over its remaining economic life.what do special, general and universal types of agency have in common?The originate with the principal.Which of the following is the best description of a fee simple estate?The most complete ownership in property that one can obtain A licensee plans to send out an email offering his services.According to the CAN-SPAM Act, the licensee must Tell recipients how to opt out of receiving future emails A property is sold to satisfy a judgment lie. There are also annual real estate taxes, a first mortgage, and a second mortgage due. Which of the following must be paid first?Annual real estate taxes. A local tax lien for unpaid taxes has priority over all other liens A church owns a retirement home and restricts the rental of the units to church members regardless of age, sex, race, color, or national origin. Is this policy a violation of federal fair housing laws?No, because religious organizations may limit occupancy of dwelling units they own to persons of the same religion.An owner obtains a new mortgage on her house because the house has appreciated in value and she wants money for an investment. The new mortgage rate is 1% lower than the old rate. What is this process called?refinancing Types of Liens1. Specific Lien- mortgage, property tax, mechanics lien- If you don't pay, they take something specific2. General Lien- Income tax, lost judgement lien- If you don't pay, they can take everything A licensee is listing a rural property. The property was owned by a woman who is now deceased. The woman had six grown children. Two of the sons are listing the property for sale. Before completing the listing agreement, the licensee should do which of the following?Check the ownership of record. The licensee needs to be sure the persons who are listing the property are the owners of record.In the appraisal process, the relationship between basic and non-basic employment patterns as a means of predicted population and income is known as Economic-base analysis measures the economic activity of a community that enables it to attract income from outside its borders When using the sales comparison approach, a licensee determines that a comparable property's tile floor in the entry hall is worth $2,000. The subject property does not have tile floors at all. Which of the following adjustments should be made?the comparable should be adjusted downward. It is always the comparable that is adjusted, never the subject property.If the comparable is better than the subject property, the adjustment to it is downward. If the comparable is not as good as the subject property, the adjustment to it would be upward.A real estate licensee was hired by a property management company to lease and manage commercial properties.Each commercial lease was different based on the negotiations of the parties. Which of the following should the licensee do in this circumstance?Seek legal counsel to write or review the leases. Drafting a commercial lease may constitute the practice of law, and a real estate licensee cannot practice law unless also a licensed attorney.An adult buyer who is illiterate signs a contract to purchase property from a seller. The buyer understands the nature of