MA Real Estate Practice Exam Questions Flashcards

MA Real Estate Practice Exam Questions Flashcards

A lease creates an interest(s) known as a:A Freehold

interestB Non-freehold interestC Non-freehold and rental only interestD Non-freehold, transference, and possession interest B Non-freehold interestA freehold is an ownership interest, and a non-freehold is a possessory interest (for example, a rental).Real property can become personal property by which process?A FiduciaryB AnnexationC SeveranceD Hypothecation C SeveranceThe act of severance makes real property become personal property; an example is digging up a tree.A seller wants to net a profit of $305,000 after paying a 4% commission. What should the property sell for?A

$317,200B $317,508C $317,708D $317,900

C $317,708$305,000 / .96 = $317,708

A sum of money to be paid in the event of a breach of

contract that is pre-agreed to in a contract is known as:A

DamagesB Liquidated damagesC EstoppelD Specific performance B Liquidated damagesLiquidated damages are damages that are pre-negotiated in a contract, and are paid out in the event of a breach (violation) of that contract.Alex, a real estate salesperson, has access to the office escrow account. Is this allowed?A Yes, so long as Alex has permission to access the accountB No, because brokers must keep client money in the operating accountC Yes, because Alex is a real estate salesperson and is allowed to handle client fundsD No, because salespersons must not have access to the escrow account D No, because salespersons must not have access to the escrow account Which of the following verbal contracts would be enforceable in a court of law?A twenty year leaseB A listing contractC An offerD A purchase and sale agreemen B A listing contractA listing contract, such as an open listing agreement, may be oral; however, it is best to put a listing contract in writing. Most real estate contracts must be in writing pursuant to the Statute of Frauds. An offer is not an agreement.A Purchase and Sale agreement was agreed to and signed by both buyer and seller on August 15th, with a closing scheduled for September 15th. From the 15th of August till the 15th of September, what is the best description of this contract's status?A ExecutedB VoidableC ExecutoryD.Valid C ExecutoryAn executory status means that the promises in the contract have not yet been fulfilled, even though the contract has been signed and accepted.Jane owns a home located at 1776 Old Colony Way. She purchased the home five years ago with a mortgage for $440,000. She has paid the principal down on that loan to $319,414.87 when she decides to sell her home. Jane sells 1776 Old Colony Way to Manuel, who uses a wraparound mortgage for $570,500 to purchase the property. Manuel then takes advantage of a bank promotion to obtain a HELOC for $11,000 to redo 1776 Old Colony Way's kitchen. Unfortunately, Manuel falls ill, and is unable to pay

his bills. His contractor, Rob, is not paid, and places a mechanic's lien against 1776 Old Colony Way for $8,754.19 of unpaid work. If Manuel is foreclosed on, what amount will likely be paid first?A $8,754.19B $11,000.00C

$319,414.87D $570,500.00

C $319,414.87A wraparound mortgage is a type of seller financing where the seller extends the buyer a second mortgage to purchase the home, and the seller's original first mortgage stays in place. Since the first mortgage remains in place, in the event of a foreclosure that first mortgage would have priority, and would be paid first.Thus, the original mortgage's outstanding principal of $319,414.87 is most likely to be paid first in the event of a foreclosure.

Generally speaking, contingencies that rely on a third party

should:A Require final approval by the sellerB State the

approved third partiesC Have long deadlinesD Have short deadlines D Have short deadlinesTo avoid unnecessary delays, it is a good rule to have short deadlines for any contingencies involving third parties (e.g. a home inspection).In which of the following forms of ownership does the owner receive a lease to real estate, rather than a deed?CondominiumA CondominiumB Fee simpleC Life estateD Cooperative D CooperativeIn a cooperative property, owners receive shares in the cooperative, and proprietary leases to their individual units. The actual real estate is owned by the cooperative itself (which is often an LLC or other corporate entity).Allen asks Andre to list his home for sale. Upon signing the listing agreement, Allen asks Andre to take a look around the home to see if there is anything that needs to be repaired before the home goes on the market for sale.Andre notices a small stain on the ceiling of the master bedroom and asks Allen about it. Allen says he has never noticed it before but will be sure to repaint it before any buyers come through the home. Andre lists the home on MLS with an 'as-is' disclaimer and hosts the first open house, which brings 35 excited buyers to the home. None of the buyers notice the stain on the ceiling because it has been repainted and because the home is in such a great location, multiple offers come in on the property. The highest offer at $50,000 over asking is accepted and the transaction ends up resulting in a successful title transfer to the buyer, now new owner. A year after the new owner moves into the home, the master bedroom furniture and floors are damaged by a leak from the ceiling. If the new owner wants to file a Chapter 93A claim to receive damages due to the leak, who would be at fault?A Allen because it was his house.B Andre because he saw the stain and didn't disclose it.C Allen because he tried to cover up the stain.No one because the property was being sold as-is.B Andre because he saw the stain and didn't disclose it.Andre saw the stain, and he is responsible for disclosing it to any buyers, even if the stain was repainted. If the home owner is trying to cover up a material defect, the agent should not participate in that because it could lead to a Chapter 93A claim under the Consumer Protection Act.Even if a sale is as-is, that doesn't allow the home owner or their agent to not disclose any material defects. Since 93A only applies to businesses, only Andre would be liable under 93A.Joshua has a gross annual salary of $50,000 and his current debts amount to about a $500 monthly payment.What is Joshua's current debt to income ratio?A 1%B

25%C 12%D 10

C 12%In this case, Josh has monthly debt payments in the amount of $500 versus a monthly income of about $4,166 ($50,000/12) Therefore Josh's DTI is about 12% which we get from dividing 500 / $4,166.Joan signs an offer to purchase a property. After signing, Joan finds out that her salesperson/agent was fired the day before she signed the offer. What is the status of Joan's offer?A VoidB ValidC ExecutedD Unenforceable B ValidAgency relationships have no effect on an offer.Joan's offer is therefore valid (but not yet executed, since she has not yet purchased the property).An ownership interest that is more of an ownership of time

is a:A TimeshareB Interest for yearsC Estate for yearsD

Non-freehold A TimeshareA timeshare is a form of ownership where the owner only owns the property for a specific period of time during the year in fee simple, along with a shared interest in the common areas.

What deed implies, but does not warrant, that the grantor holds title to the property being granted?A WarrantyB Special warrantyC QuitclaimD Bargain and sale D Bargain and saleA bargain and sale deed implies an interest or rights to convey property, but it does not warrant (promise) title to it.What is the quarterly tax rate on a $840,000 home that is located in a town with a millage rate of $15 per $1,000?A

$3,150B $4,500C $6,300D $12,600

A $3,150Step 1: $840,000 / 1,000 = 840 Step 2: 840 x $15

= $12,600 tax bill per year Step 3: $12,600 / 4 = $3,150

quarterly tax bill An agent is paid $125,000 this year. They are paid 1% on all property sales up to $5,000,000, and some percentage on the sales above that amount. They sold $8,500,000 in real estate this year. Their commission over $5,000,000

was:A 2.01%B 1.51%C 3.52%D 2.14%

D 2.14%In this case, the agent cannot earn more than 1%

on their first $5,000,000 in sales, so we calculate that first:

$5,000,000 x 0.01 = $50,000. The agent earned $125,000,

so we have not yet calculated the remaining commission:

$125,000 - $50,000 = $75,000 of commission. This amount is the commission on the remaining amount sold ($8,500,000 - $5,000,000 = $3,500,000), so the agent's

commission on the amount over $5,000,000 was: $75,000 /

$3,500,000 = 0.02143, rounded off to 2.14% (answer).Richard is a retired, 64 year old fisherman. He qualifies for a $1,000 tax exemption as a result of his retirement status.His home is valued at $150,000, and assessed at 40% market value. His tax rate is $30 per $1000 of assessed value. What is his payment?A $800B $400C $3,500D

$1,800

A $800Property taxes are calculated on the assessed value

of the property, so that's the first place to start: $150,000 x

0.40 = $60,000 assessed value. The tax rate is $30 per

$1000 of value, so the property taxes are: $60,000 / $1,000

= 60 x $30 = $1,800. Richard can take a an exemption of

$1,000 from this tax bill, so his final tax bill is: $1,800 -

$1,000 = $800

Blockbusting causes:A Trust bustingB Panic peddlingC

Blind advertisingD Redlining

• Panic PeddlingBlockbusting causes panic peddling (also

known as panic selling), where homeowners quickly sell their homes for fear of a drop in home values due to the entry of a protected class into their neighborhood.

All of the following statements are true except:A Fannie

Mae was established in 1938 in order to introduce liquidity into the secondary mortgage marketB Any verbal agreement to sell real estate is automatically an open listingC The gradual deposit of detrital material by action of wind is know as alluvionD The government's ability to take property for the public good is carried out by condemnation C The gradual deposit of detrital material by action of wind is know as alluvionAlluvion is the gradual deposit of land by action of water, not wind. All of the other statements are correct.Claudia, a real estate agent is at an open house and using the bathroom. Upon exiting, Claudia forgets to shut off the faucet on the sink all the way. Claudia leaves the open house and when the sellers return from vacation three days later, they find that the sink has overflowed and caused damage to the floors in the hallways just outside the bathroom. Which of the following would likely cover this incident so Claudia doesn't have to pay out of pocket?A General Liability InsuranceB Errors And Omissions InsuranceC Professional Liability InsuranceD Corporate Insurance A General Liability InsuranceGeneral liability insurance covers damage done by agents to personal or real property while on showings or at open houses.