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PRATICE

Georgia Real Estate Final Exam 2

QuestionAnswer
What is the primary purpose of a listing agreement? Contract of employment between owner and broker: The listing agreement is a contract where the broker promises to find a buyer for the property and the owner promises to pay a commission if that happens.
Which of the following statements is TRUE of discount points? They result in an increased upfront yield for the lender
An easement created by long, continuous, apparent, and non-permissive use would be an easement by: prescription: Long, continuous use of another's land can, under certain circumstances, ripen into a permanent easement by prescription.
The primary purpose of a closing statement is to: account for all funds collected and disbursed in a transaction: The primary purpose of a closing statement is to provide an accounting to the buyer and seller of all funds collected and disbursed in a transaction
The Truth in Lending Act covers: any loan to purchase a principal residence: The Truth in Lending Act applies to consumer loans that are for $25,000 or less, or are secured by real property.
An agreement between two or more persons to do or to not do certain things is called: a contract: This is a simple definition of a contract.
A property owner gave an open listing to each of six different brokerages. Which of the following statements is CORRECT? The firm that sells the property will earn the entire commission: The seller gave open (nonexclusive) listings. The firm that sells the property is entitled to the entire commission.
The seller listed the property for $95,000. Assuming that their listing agreement is typical, the broker would NOT be entitled to a commission if the seller: rejected a $90,000 offer from a financially qualified buyer: The broker is not entitled to a commission when the seller rejects an offer that doesn't meet the terms the seller specified in the listing agreement
A buyer obtains a term loan for 80% of the property's value. The interest rate on the loan is 8.25%, with quarterly interest payments of $1,485. What is the value of the property? $90,000 ($1,485 × 4 = $5,940). Divide the annual interest by the interest rate to get the loan amount ($5,940 ÷ 8.25% = $72,000). Divide the loan amount by 80% to get the sales price ($72,000 ÷ 80% = $90,000).
Which of the following is NOT covered by the provisions of the Federal Fair Housing Act? A commercial building used for retail stores that advertise to the public: Explanation: The Federal Fair Housing Act applies to residential real estate only. It does not apply to commercial property.
Anything that is incidental to or pertains to the land and is transferred with it, but is not necessarily a part of it, is: an appurtenance: This is the definition of an appurtenance. Appurtenances include air rights, water rights, and mineral rights.
A property use that is permitted to continue even though it doesn't comply with a new zoning ordinance is called a: nonconforming use: A property use that does not conform to current zoning requirements, but is allowed because the property was being used in that way before the present zoning ordinance was adopted, is called a nonconforming us
A house is sold for $500,000 with a $50,000 downpayment. the seller will pay 3 discount points and a 1% loan origination fee. The brokerage fee is 6%. How much do the seller's expenses come to? $500,000 – $50,000 = $450,000), amount of the discount points $450,000 × .04 = $18,000. Calculate the brokerage fee ($500,000 × .06 = $30,000), then add the figures together for the seller's expenses ($18,000 + $30,000 = $48,000).
When the maximum housing expense the buyer can qualify for is calculated, the monthly payment amount includes: All of the above: hazard insurance premiums, principal and interest , property taxes
Anything that is incidental to or pertains to the land and is transferred with it, but is not necessarily a part of it, is: An appurtenance: Explanation: This is the definition of an appurtenance. Appurtenances include air rights, water rights, and mineral rights.
A property use that is permitted to continue even though it doesn't comply with a new zoning ordinance is called a: nonconforming use: Explanation: A property use that does not conform to current zoning requirements but is allowed because the property was being used in that way before the present zoning ordinance was adopted, is called a nonconforming use.
A house is sold for $500,000 with a $50,000 downpayment. The seller will pay 3 discount points and a 1% loan origination fee. The brokerage fee is 6%. How much do the seller's expenses come to? $48,000: ($500,000 – $50,000 = $450,000), 3% for discount points and 1% for the loan origination fee): $450,000 × .04 = $18,000. Calculate the brokerage fee ($500,000 × .06 = $30,000), seller's expenses ($18,000 + $30,000 = $48,000).
When the maximum housing expense the buyer can qualify for is calculated, the monthly payment amount includes: principal and interest: A novation is the substitution of a new obligation for an old one. A. hazard insurance premiums B. principal and interest C. property taxes D. All of the above
A licensee fails to renew his license on time, causing the license to lapse. Which of the following is true? He may reinstate the license within two years of the lapse by paying a reinstatement fee: It's a suit for specific performance.
An income property's economic rent is: the rental rate that could be charged if the property were available for rent now: Explanation: The economic rent (the potential gross income) is the rental rate that could be charged if the property were available for rent in the current market.
A commercial tenant carefully read her lease and found no covenants restricting her use of the property. As a result, she changed her business from a clothing store to a butcher shop. Zoning laws permitted this use. The tenant: will be allowed to operate the butcher shop for the duration of the lease: Explanation: If there are no covenants in the written lease prohibiting a particular use, and if there also are no laws prohibiting it,
Shannon's license has been on inactive status for three years. Before the license can be activated, she must take: 18 hours of Commission-approved courses (six hours for each year on inactive status): Explanation: A person whose license was inactive for more than two years must, in order to reactivate the license
Ad valorem property taxes would be levied against: an undeveloped lot: Explanation: A person whose license was inactive for more than two years must, in order to reactivate the license, complete six hours of approved courses for each year the license was inactive.
Which of the following loan transactions would be exempt from the Real Estate Settlement Procedures Act? A purchase money mortgage carried by a home seller: Explanation: Seller financing is exempt from RESPA.
When applying the income approach to value, the appraiser would be concerned with all of the following, EXCEPT: Accrued depreciation existing within the property: Explanation: Estimating depreciation is not a step in the capitalization process.
Owner K has listed his single-family residence with a broker. If he refuses a bona fide offer from the following buyers because of the characteristics specified, in which case would he be in violation of the Federal Fair Housing Act? A buyer who will have a handicapped relative living with her: Explanation: Handicap is a protected class under the Federal Fair Housing Act, but marital status
For federal income tax purposes, when can you depreciate a single-family dwelling? When it is rented: Explanation: If the property is a rental (income property), it is eligible for depreciation. Owner-occupied homes are not eligible.
A borrower secures a mortgage loan in the amount of $95,000, with semiannual interest payments of $4,275. What was the interest rate charged by the lender? 9 %: Explanation: Multiply the semiannual payments by two to get the annual interest ($4,275 × 2 = $8,550). Divide the annual interest by the loan amount to get the interest rate ($8,550 ÷ $95,000 = .09, or 9%).
Which of the following situations could be exempt from the Federal Fair Housing Act of 1968? Discriminatory conduct in the: rental of a bedroom in an owner-occupied single-family dwelling: Under the Federal Fair Housing Act, the owner of rental property can rent on a discriminatory basis, provided the property has four units or less and the owner occupies one of the units.
The loan-to-value ratio represents the relationship between the: amount borrowed and the value of the security property: Explanation: The loan-to-value ratio (LTV) represents the relationship between the loan amount and the value of the property serving as security for the loan
The term plat refers to: a document that is used to record a subdivision of land: Explanation: A plat, or plat map, shows the lots and blocks in a subdivision. It is recorded in the county where the subdivision is located
Real estate owned by only one person is owned in: severalty: Explanation: Ownership by one person is ownership in severalty.
A tenancy in which the tenant is in possession with the permission of the landlord, but there is no definite rental period or duration of possession, is called: an estate at will: Explanation: This is the definition of an estate at will (tenancy at will).
Which of the following would NOT result in the termination of a lease? Property is sold before conclusion of lease term: Explanation: A sale of the property does not terminate a lease that is in force at the time of the sale. The new owner takes title subject to the lease.
A standard property management agreement would usually include a/an: description of manager's authority and responsibilities:The managment agreement creates an agency relationship and establishes the working relationship between the property manager.
A brother and a sister own a rental house as joint tenants. The brother is nearly destitute and deeply in debt when he dies. Which of the following statements is TRUE? A. The brother's creditors can attach the brother's interest in the rental hous The creditors can't attach the property at all: Explanation: When the brother dies, the creditors can't attach his interest in the joint tenancy property because it has passed automatically to the sister by right of survivorship.
In a listing agreement, who is the principal? Seller: Explanation: A listing agreement creates an agency relationship between a seller (the principal) and a broker (the agent).
A use right for real property that does not include ownership is called: an easement: Explanation: A listing agreement creates an agency relationship between a seller (the principal) and a broker (the agent).
Which of the following laws assigns responsibility for environmental cleanup costs? CERCLA: Explanation: CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act) is a federal law regarding liability for environmental cleanup costs
The buyers want to make an offer to purchase a home, but they don't want to be bound to the contract if they are unable to obtain the necessary financing. What should they do? Include a financing contingency: Explanation: A financing contingency in the purchase and sale agreement would say something like, "If, through no fault of the buyer, the earnest money shall be refunded in full and this agreement shall terminate."
F is leasing part of a building. Under the terms of the lease, F is to pay her proportionate share of the property taxes, hazard insurance, and property maintenance costs. She has signed a: net lease: Explanation: A net lease requires the tenant to pay part or all of the building's operating expenses, such as the taxes, utilities, and insurance, in addition to the base rent.
An estate for years must be created by which of the following methods? Express agreement: Explanation: Since an estate for years calls for specific starting and ending dates, it can only be created by express agreement between the parties.
A first mortgage's priority over a second mortgage is normally determined by: the date of recording: Explanation: With mortgage liens, the lien recorded first ordinarily has higher priority.
A mortgage loan in which the amount of the monthly payment can change in response to fluctuations in an index is a/an: ARM: Explanation: An adjustable-rate mortgage (ARM) ties the interest rate (and, therefore, the size of the monthly payment) to the fluctuations in a chosen index.
Property owner's home has been condemned and will be destroyed. This is an example of: highest and best use of the land: Explanation: Commission regulations must be based on some provision found in the license law itself.
In the secondary market: investors buy mortgage loans at a discount: Explanation: In the secondary market, lenders sell mortgage loans to investors. The investors generally buy the loans at a discount (that is, they pay less than the face value of the loans).
H agrees to sell her farm to R for $287,000, and they both sign a valid purchase and sale agreement. Three weeks later H changes her mind and notifies R that she is canceling the agreement. R sues to force H to complete the transaction. This is calle A Explanation: Children can be excluded from properties intended for older persons if at least 80% of the units are occupied by at least one person who is 55 years old or older.
A written transfer of a mortgage note from one lender to another lender is a/an: assignment: Explanation: A mortgage is a contract between a borrower and a lender. When the lender transfers its rights and interests in the mortgage contract to another lender in the secondary market, it is called an assignment.
Voluntary transfer of title to property is called: alienation: Explanation: Alienation is the transfer of real property from one person to another. It may be voluntary or involuntary. Eminent domain, forfeiture, and foreclosure all pertain to involuntary methods of alienation.
A deed must be acknowledged in order to: be recorded: Explanation: A document that conveys an interest in land cannot be recorded unless the party giving that interest (in the case of a deed, the grantor) acknowledges his signature (in other words, has the signature notarized).
A buyer and seller enter into a purchase and sale agreement that specifies that the buyer has 45 days to obtain financing. Through no fault of the buyer, it becomes impossible to obtain a loan commitment from a lender within the prescribed period, so amendment: Explanation: The amendment would change the agreed-upon closing date to accommodate the delay. An addendum would be a part of the original contract, not a later modification.
The mortgage insurance for an FHA loan: B. involves a one-time premium and annual premiums. Explanation: For FHA mortgage insurance (the MIP) includes both a one-time premium (which may be paid at closing
On the 5th, a salesperson receives an offer with an earnest money deposit and a request that the check not be deposited until the 10th. The seller accepts the offer on the 6th. On what day should the check be turned over to the broker 5th: Explanation: Even though the broker was asked not to deposit the check until later, the salesperson must still turn over trust funds (such as an earnest money deposit) to his broker as soon as is practically possible.
Created by: Mz Jade