Real Estate National Exam 1 Flashcards

Real Estate National Exam #1 Flashcards A couple separates and the divorce will finalize in six months. The couple would like to resolve the interest in the marital home by conveying the property to the wife. Which deed would most likely be used to accomplish this?A.Trustee's DeedB. Limited warranty deedC. Nonwarranty DeedD. Special Purpose Deed

• Nonwarranty DeedExplanationNonwarranty deeds are

often referred to as "Quitclaim" deeds and would be the most likely solution for this case. Trustee's deeds are often used to convey foreclosures as it is the trustee who is delivering the deed, for the lender, not the actual title holder. Special warranty deeds are often used in commercial transactions or sale of "real estate owned" by the bank, where the title owner. Special or limited warranty deeds warrant only the period of time that they have owned the property. Special purpose deeds are often used when a property is being transferred by a public official performing a function of the office; for example a Sheriff's Deed.The owner of a duplex resides in one of the units and wishes to rent out the other. This owner will personally act as the landlord but is using the services of a real estate agent to locate a tenant. A prospective tenant called to set up an appointment for viewing the unit to which the owner agreed. Later that day when the prospective tenant arrived, the owner was dismayed to see a very dark complexion and pagri (an Indian headdress worn by men and women) because this prospective tenant didn't sound foreign on the phone. The owner refused to let this person view the unit and said, "It was rented out 30 minutes ago to someone else" even though that is a lie. Which federal fair housing law did the property owner violate?A. Federal Fair HousingB. No violation as owner-occupants are exempt from fair housing when renting out remaining units in a property.C. State Fair HousingD. Civil Rights Act of 1866

• Federal Fair HousingExplanationOwner-occupants are

not exempt from fair housing laws when a real estate agent is hired. In this case, the only federal law violated is Federal Fair Housing. Specifically the owner discriminated based on color and national origin. The Civil Rights Act of 1866 prevents racial discrimination. State Fair Housing is not a federal law and therefore cannot be the correct answer.Which of the following would NOT be considered a violation of federal fair housing laws?A. Failure to use the Fair Housing logo or slogan in advertising.B. Refusing to work with an African American family because they do not qualify for a loan.C. Telling a prospective tenant that a property is not available for rent when it is.D. Charging a higher rent rate for families with small children to compensate for extra damage.

• Refusing to work with an African American family

because they do not qualify for a loan.ExplanationA broker is not discriminating when they refuse to work with someone that cannot obtain financing. It would be irresponsible for a broker to work with a buyer that is not qualified.For a deed to be valid, it must include which of the following essential characteristics?A. Deed must contain words of conveyanceB. Deed must be signed by the granteeC. Deed must be recordedD. Deed must be acknowledged by a notary

• Deed must contain words of conveyanceExplanationThe

essential elements of a valid deed include: The deed must

be in writing, must be signed by the grantor, must have a valid legal description, must have operative words of conveyance, and must be delivered and accepted. There

are other elements that one usually sees but are not

essential for a deed to be valid, such as: Recordation,

Acknowledgement, and dated. Acknowledgement occurs when the deed is notorized by a notary.

A seller enters into a contract to sell his real property to a buyer and later learns that a large company is relocating to the area. Convinced that this will lead to an increase in home prices, the seller wants to terminate his contract for the sale of his home. Which of the following describes a remedy for the buyer?A. Liquidated damagesB. Suit for Specific performanceC. Relief under the Marketable Title ActD. Suit to Quiet Title

• Suit for Specific performanceExplanationSpecific

performance gives the buyer the right to sue for the contract to be performed specifically as written. This speaks to the "uniqueness or non-homogeneity" of real property. Suit to quiet title is associated with Adverse Possession or easements by prescription where a private party is seeking to take the land of another. A suit to quiet title may be used in foreclosures or to settle a title dispute, where the court is asked to settle who has the highest claim to the property. Liquidated damages are money damages for a breach, which are defined in the contract.The Marketable Title Act sets a 30-year Statute of Limitations on claims against a title where old claims are extinguished to remove the cloud on the title.Truth in Lending laws would apply to the financing of which of the following properties?A. The purchase of an apartment complex to be used for low-income housingB.The financing of a single-family home where the loan is secured by the residenceC. The purchase of a commercial property that is collateralized by an equity line against the owner's homeD. The purchase of a working farm where the property secures the loan

• The financing of a single-family home where the loan is

secured by the residenceExplanationTruth in Lending laws apply to consumer transactions, including when a loan is made on a consumer property for the purchase of a commercial property.Commercial transactions, farms greater than 25-acres, apartment complexes are exempt.Which of the following loan types typically carries the greatest risk to the lender?A. Construction loans because the allow for drafts against a credit line to construct the propertyB. FHA loans because they typically allow for lower down paymentsC. Reverse annuity loans as they target senior borrowersD. Adjustable-Rate Mortgage since they are variable in their monthly payment

• Construction loans because the allow for drafts against a

credit line to construct the propertyExplanationConstruction loans are risky because part of the time, the collateral is not available, as the home is being built. ARMs are risky but have caps to manage risk, and also they require mortgage insurance if there is a small downpayment. FHA loans carry some risk as well, but the government's mortgage insurance program backs them.Which of the following statements is most accurate regarding environmental concerns within a home?A.Lead-Based Paint has been banned in all homes built since 1968B. The EPA has stated that there is no acceptable level of exposure to asbestosC. Radon may be encapsulated within a crawl space to avoid it spreading into the homeD. Asbestos is the second leading cause of lung cancer in the US

• The EPA has stated that there is no acceptable level of

exposure to asbestosExplanationThe EPA has stated that there is no acceptable exposure to asbestos. Radon is the second leading cause of lung cancer in the US; it is odorless and colorless. Radon should be ventilated, not encapsulated. Lead-Based paint has been banned from residential properties since 1978.Which of the following is true regarding a Contract for Deed?A. It is a type of seller financing which gives the seller the right to foreclose in the event of nonpayment and pursue a deficiency judgment, when necessaryB. It is often referred to as an Option ContractC. It is both a contract to convey real property as well as a financing instrumentD.The seller conveys legal title at the time of closing and puts

a lien on the property in the event of nonpayment

• It is both a contract to convey real property as well as a

financing instrumentExplanationThe contract for deed, also known as Installment Land Contract, is a type of seller financing in which the seller holds legal title until s/he is paid in full. The contract serves as both a conveyance instrument and a financing instrument. Option contracts tie up a property for a period of time in exchange for an option