Real Estate Sales License Exam - Rhode Island Flashcards

Real Estate Sales License Exam - Rhode Island Flashcards Open listing or Non-exclusive listing- Seller can employ any number of brokers- Commission goes to the broker who produces a ready, willing and able buyer- Seller can sell directly without paying a commission Single agencyAgent represents only one party in the transaction Termination of agency can be accomplished via: - Completion, performance, or fulfillment of purpose- Destruction or condemnation of property- Expiration of the terms- Mutual agreement of all parties to contract- Breach by one of the parties- Bankruptcy (operation of law) Not required in the Mandatory Real Estate Relationship

Agreement:

• Statement that written representation on contracts are

mandatory if consumer wants to work with real estate licensee as a designated client rep- Indemnification clause- Statement that if a consumer wishes to change his or her relationship to a designated client rep from a transaction facilitator it must be done no later than the closing Lender's rule of thumb on % of income for PITI 28% Implied agencyResults from behavior of the parties Does a homeowner's insurance policy typically cover theft?Yes, but not for a person injured in the home Loan programs with more flexible terms for those with lower credit ratings

• FHA (Federal Housing Administration)- VA (Dept. of

Veterans Affairs) Negligent misrepresentationBroker should have known that a statement about a material fact was wrong PrincipalClient Real estate salesperson is a _____ of the broker general agent FixturePart of real property. Attached to the land or building Comprehensive Loss Underwriting Exchange (CLUE) Database of insurance claim history Types of Housing- Single-family homes- Apartment complexes- Condominiums- Cooperatives- Planned Unit Developments (PUDs)- Mixed-Use Developments (MUDs)- Modular homes- Mobile homes- Time shares AgentHired by Principal to act on their behalf Relationship between a broker and seller is typically what

type of agency:

Special Emblements (personal property)Annual plantings (not perennials) or crops or grains

Title is:- Right to ownership- Bundle of legal rights- Evidence of

ownership provided by a deed Real estate agency relationships are covered by: - Common Law (established by tradition and court decisions)- Statutory law (passed by state legislators and governing bodies) easement in grossUsually for a corporation, such as a utility company, to use another's land

A bill of sale is used to transfer:Personal property

Agency coupled with an interestCannot be revoked by principal or terminated upon the principal's death RealtorMember of the National Association of Realtors

Federal Trade Commission regulates the:National Do Not Call Registry

Bundle of Legal Rights, as part of Real Property, include:Right of:- Possession- Control- Enjoyment- Exclusion- Disposition Co-insurance clauseHomeowner to maintain insurance equal to 80% of replacement costs Remainder interestCreator of a Life Estate names a person or entity to whom the property will pass when the life estate ends Fee simpleHighest estate recognized by law Physical characteristics of real estate- Immobility- Indestructibility- Nonhomogeneity or uniqueness Factors influencing real estate demand- Population- Demographics- Employment and wage levels Freehold estatelasts for an indeterminable period of time Severance (personal property)Can be separated from the land, e.g. apple being picked from the tree Exclusive agency listing- One broker- Seller retains right to sell directly without paying a commission to broker PITI- Principal- Interest- Taxes- Insurance Uniform Electronic Transactions Act (UETA) Act served to make electronic transactions as enforceable as paper transactions.Fee simple defeasibleQualified estate subject to occurrence or non-occurrence of a specified event Procuring causeThe effort that began a chain of events that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.ChattelsPersonal property

New agency law permits:Transaction facilitation

Six Common Law Fiduciary DutiesCOLD AC- Care- Obedience- Loyalty- Disclosure- Accounting- Confidentiality HomesteadOwner occupied. Protects against most creditors during the occupant's lifetime Real property includes:- Interests- Benefits- Rights that are automatically included in the ownership of land and real estate Electronic Signatures in Global and national Commerce ActEnacted by Congress in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically Listing agreement is an employment contract between:broker and seller (principal) Deed of Trust LoanDeed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan What is not a factor in how quickly the forces of supply and demand work Pricing

a broker helps buyer and seller with paperwork and this is:Transactional brokerage Net listing- Excess over the net from the sale will go to the broker- Illegal in many states Designated AgentAuthorized by the broker to act as the agent of a specific principal Legal tests for a fixture- not easily removable (means of annexation)- considered a permanent addition (adaptation to real estate)- agreement of the parties (in the offer to purchase) Pur Autre Vie"For the life of another." A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee Penalties for violating the Sherman Antitrust Act - For individuals: $1M and ten years in prison- For

corporations: As high s $100M- In a civil suit, triple

damages plus legal fees and costs Trade fixturesproperty attached to the structure but used in the course of business. Personal property or Real Property.FraudIntentional misrepresentation of a material fact to harm or take advantage of another person Just compensationmust be paid to property owner when enacting eminent domain Uses of Real Property- Residential- Commercial- Mixed-Use- Industrial- Special Purpose CompensationDoes not determine agency- can be compensated by a third party- can be at no charge (gratuitous) Listing agreement can be terminated when: - Purpose is fulfilled- Term expires- Property is destroyed- Title is transferred by law- Broker and seller mutually agree to end the listing- Either party dies or becomes incapacitated- Broker or seller breaches the agreement Riparian Water RightsPersons who own land adjacent to a river, stream or similar body of water have the right to make REASONABLE use of the stream. Domestic use of water trumps commercial or agricultural use.

New agency law requires:that a principal broker adopt reasonable procedures to

protect clients' confidential information Investment considerations- Appreciation- Equity increase with an amortized loan- Tax deductions- Capital gains taxation exclusion (principal residence)- Tax-free withdrawals from an IRA for downpayment National Flood Insurance Act of 1968- Subsidizes flood insurance- Administered by FEMA (Federal Emergency Management Agency) Planned Unit Development (PUD)master planned communities with single family homes Not covered under the homeowner's basic policy frozen pipes or flooding Exclusive right to sell- One broker- Broker receives a commission regardless of who sells the property

Improvements do not include:- Shrubbery- Trees- Lawns

PuffingExaggeration of a property's benefits Reversionary InterestA future interest a person has in property after present possession is terminated. Ownership reverts to original owner upon end of life estate

Police Powerenabling acts to:- Preserve order- Protect the public health

and safety- Promote the general welfare of citizens Factors influencing real estate supply- Labor force availability- Construction and material costs- Government controls- Govt. financial policies Littoral rightsOcean front estate owners has title up to the mean high tide line, mean high tide to ocean is public Express agencyFormal agreements between the parties Sherman Antitrust Act1890 - A federal law that committed the American government to opposing monopolies, it prohibits contracts, combinations and conspiracies in restraint of trade.appurtenant easement"runs with the land" when title is transferred Easement by necessityArises when land has no access to a street or public way Informed consent to act as a dual facilitator does not

require:

that the dual facilitator refer client to another company if consumer refuses to give his or her consent to licensee to act as a dual facilitator Encumbrances- Liens- Covenants, Conditions, and Restrictions (CC&R) Schools are part of what real estate classificationSpecial purpose Legal life estateHomestead, dower, curtesy AgencyFiduciary relationship in which the Agent is held in a position of special trust and confidence by the principal AccessionTrade fixtures that are not removed and become part of the real property being purchased Tax exclusion on a primary residence- $500,000 if filing jointly- $250,000 for a single filer AppurtenanceRight or privilege associated with real property, e.g.- parking space- easement- water rights Attachment or Annexation (personal property in to real property) e.g. cement, stone, and sand mixed in to concrete to make a sidewalk Life estatebased on the lifetime of a person

Sales licensee will receive his/her commission when:the transaction is closed

Economic characteristics of real estate- Scarcity- Improvements- Permanence of investment- Location EscheatOccurs when the deceased has no will or legal heirs Easement is terminated when:- Need no longer exists- Owner of either the dominant or servient tenement becomes the sole owner- Release of the right of easement to the owner of the servient tenement- Easement is abandoned- Non-use of prescriptive easement easement by prescriptionAcquired when a claimant has used the property for 10-21 years Non-Agent- Facilitator- Intermediary- Transactional Broker- Transactional Coordinator- Contract Broker