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A farmer temporarily installs produce coolers in a leased farm stand in order to prevent spoilage. The coolers would be considered what?
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Property can be converted from real to personal property and from person property to real property by means of which progress, respectively?
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PSI TN Practice Test
| Question | Answer |
|---|---|
| A farmer temporarily installs produce coolers in a leased farm stand in order to prevent spoilage. The coolers would be considered what? | Trade fixtures that are personal property |
| Property can be converted from real to personal property and from person property to real property by means of which progress, respectively? | Severance and affixing |
| The highest form of ownership interest one can acquire in real estate is the: | Absolute fee simple estate |
| The distinguishing feature of a defeasible fee simple estate is that: | The estate may revert to a grantor or heirs if the prescribed use changes |
| Maria acquires a property from her uncle. When she dies, the estate will pass to her cousin, Serena. The type of estate that Maria has in the property is a: | Conventional life estate |
| One difference between a cooperative estate and a condo estate is that: | A condo owner owns a unit of air space whereas the co-op owner owns a proprietary lease |
| Who are the essential parties involved in an estate in trust? | Trustor, Trustee, and Beneficiary |
| A condo owner enjoys a: | Fee simple ownership of the airspace in a unit and an undivided share of the entire property's common areas |
| With various types of junior liens, the order of payment priority is generally established according to: | The date of recordation |
| What is a lien-theory state in contrast to a title-theory state? | A state in which a mortgagor retains title to the property when a mortgage lien is created |
| A property owner has an easement appurtenant on her property. One day the property is sold to another party who is opposed to the easement. Following the closing, this particular form of easement: | Transfers with the property |
| What fundamental legal purpose is fulfilled by title records? | Giving constructive notice of one's rights and interests in the property |
| What is "chain of title?" | A chronology of successive owners of record of a parcel of real estate |
| Which of the following provides the strongest evidence of marketable title? | Title insurance |
| A store owner enters into a lease that charges rent per square foot, a common area fee, and a portion of the store owner's gross income from the property. This kind of lease is a: | Percentage lease |
| An owner leases a property to a business in exchange for rent. The tenant is required to pay all operating expenses as well. This is an example of a: | Net lease |
| A lease automatically terminates under which of the following circumstances? | The leased property is foreclosed |
| A county or municipal authority usually grants a certificate of occupancy for new construction only after: | The construction conforms to building codes |
| A property owner is precluded by deed restriction from developing a thirty foot boat dock. The limitation prompts the owner to sell to another party. The new owner: | Takes title subject to the same restriction |
| What is the essential purpose of legal descriptions of real property? | To create a consistent, unchanging standard for uniquely locating a property |
| Which of the following characterizes metes and bounds descriptions? | They identify an enclosed area, beginning and ending at the same point |
| A buyer agrees to all terms of seller's offer except length of time for a contingency to procure financing. The buyer extends financing period in the offer by one week, signs the form, and mails it back to the seller. At this point, the seller's offer: | Is void |
| Real estate contracts that are not personal service contracts: | May be assigned |
| Which of the following contracts must be in writing to be enforceable? | A two year lease |
| Agent Bob, who works for Broker Bill, obtains an owner listing to lease a building. Bill's other agent, Sue, locates a tenant for Bob's listing. Broker Bill in this instance is: | A dual agent |
| A transaction broker should disclose his or her agency relationship to prospective buyers and sellers: | Upon first substantive communication |
| A transaction facilitator in a residential transaction represents: | Neither the seller nor buyer |
| A principal instructs an agent to inform minority buyers that the property for lease was just leased an hour ago and is no longer available. The agent refuses to comply. In this case: | The principal has proposed an illegal act, which should not be obeyed. |
| The amount of a real estate broker's commission is established by: | Negotiation with clients |
| A client revokes an exclusive right to sell listing two months prior to expiration. The reason stated: The client is too busy to meet with the agent. In this case: | The client may be liable for a commission and marketing expenses |
| A protection period clause in an exclusive listing provides that: | The agent has a claim to a commission if the owner sells or leases to a party within a certain time following the listing's expiration |
| Real estate advertising must conform to regulatory standards and requirements. One requirement is: | The advertising must not be deceptive |
| The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor currently in practice. This is an example of: | Collusion |
| Two leading agencies jointly agree to raise commissions charged to residential sellers to 7.5% of the sales price. Which of the following is true? | The brokers have illegally fixed prices |
| A sale contract contains an open-ended financing contingency: if the buyer cannot obtain financing within a reasonable time, the deal is off. Six months later, the buyer still cannot secure financing. Which of the following is true? | The seller may cancel the contract, since it can be ruled invalid |
| In the event of a buyer's default, a provision for liquidated damages in a sale contract enables a seller to: | Claim the deposit as compensated damages for the buyer's failure to perform |
| Which of the following is true of an option-to-buy agreement? | The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so |
| If a manufacturer that is the major employer in a small city moves its operations to another city, it is reasonable to expect: | A decline in demand for all types of real estate in the real estate market |
| If a commercial real estate market is under supplied, it is likely that: | Rental prices in that market will rise |
| The amount of available property that becomes occupied over a period of time is called: | Absorption |
| The roof of a property cost $20,000. The economic life of the roof is 20 years. Assuming the straight-line method of depreciation, what is the depreciated value of the roof after 3 years? | $17,000 ($20,000 / 20 years X 3 years = $3,000. $20,000 - $3,000 = $17,000 |
| The income capitalization approach to appraising value is most applicable for which of the following property types? | Apartment buildings |
| In the income capitalization approach, an appraiser: | Estimates net income and applies a capitalization rate to it |
| Net operating income is equal to: | Potential gross income minus vacancy and credit loss minus expenses |
| If net income on a property is $40,000 and cap rate is 10%, the value of the property using the income capitalization method is: | $400,000 ($40,000 / 10% = $400,000) |
| The key feature of an adjustable mortgage loan is that: | The interest rate may vary |
| Why is a wraparound mortgage loan potentially interesting to a home seller as an investment? | A wraparound lender can profit when the interest rate of the wraparound exceeds that of the underlying mortgage |
| A builder is required to secure a loan with mortgages on three properties. This is an example of: | A blanket mortgage loan |
| Which of the following is true of a loan with negative amortization? | Payments are not sufficient to retire the loan |
| The loan-to-value ratio is used as an underwriting mechanism because: | The loan amount needs to be less than the property's value |
| In the past, borrowers were often surprised by unexpected or undisclosed borrowing fees and expenses at closing. This phenomenon has been largely corrected through disclosure requirements mandated by which of the following laws? | Truth-in-Lending laws |
| Which of the following is an important function of the secondary mortgage market? | Participants sell mortgage-backed securities in order to buy pools of loans |
| Cash flow is a measure of how much pretax or after tax cash an investment property generates. To derive cash flow it is therefore necessary to exclude: | Cost recovery expense |
| The method for deriving an investor's return on investment, or ROI, is by: | Dividing net income by the price paid for the property |
| Which of the following items would affect a homeowner's adjusted basis? | Installing a higher capacity air conditioning and purifying system |
| Which of the following is true with respect to real property taxation by the federal government? | There are not federal ad valorem taxes on real property |
| Which of the following is true with respect to real property taxation by the federal government? There are not federal ad valorem taxes on real property | The assessed value of property |
| A retirement facility prohibits ownership of any unit by persons under 55 years of age. The association claims it has made the prohibition properly. Which of the following is true? | The prohibition may be legal if performed correctly |
| An owner suddenly pulls a property off market after hearing from agent on phone they received a full price offer from a minority. agent informs the offeror that home is unavailable. Which party, if any, have violated fair housing laws? | The agent and the owner |
| Which of the following are examples of closing items not prorated between buyer and seller? | Inspection fees |
| Which of the following activities is not allowed under the Real Estate Settlements and Procedures Act? | A lender paying a fee to a broker for referring a borrower to the lender |
| Which of the following communication records must (as opposed to should) be kept? | Copies of required communications to principals |
| To minimize the risk of violating fair housing laws, a licensee should: | Refuse to use terms that refer to or describe any of the classes of persons protected by the laws |
| What are "tenant improvements?" | Modifications to a rental suite to conform to a tenant's usage specifications |
| For the proper handling of client and owner monies, a property manager is generally required to: | Maintain a special trust account in a qualified financial depository |
| Jennifer advised her clients they need to paint their living room b4 showing the property. The walls of these rooms were all 8' high. The wall lengths were 14', 18', 16', and 18'. If a gallon of paint covers 200 SF, how many whole gallons needed? | 3 |
| An investor just purchased a rectangular 2 acre lot for $250 a frontage foot. If she paid $100,000 total, what was the depth of the lot? | 218" $100,000/250=400 43560*2= 87,120 87120/400=217.8 218 |
| Andra can afford to spend $5000 in closing cost to refinance her home. The lender quotes closing costs of $800 plus 2 points. The house appraised out at $240,000 and she can get an 80% loan. Can Annika afford to refinance? | Yes with $360 left over $240,000 * 80% = 192000 Points 2% 192000*2%=3840 3840 + 800 (closing costs)=4640 Anna has 5000 she can refinance and have 360 left over |
| $90,000 | |
| $96,000 | |
| $508 | |
| $92,000 | |
| $166,150 | |
| $80,000 | |
| Its primary mission is to protect the public by enforcing license laws | |
| Continuing to service a listing after transferring to another broker | |
| Refusing to license a given license applicant for character shortcomings | |
| Prior to being paid, an aggrieved party must obtain a judgment and complete all proceedings | |
| Leasing a property on behalf of an owner for compensation | |
| A guardian undertaking court-ordered activities | |
| An acquisition/disposition agent |
Created by:
jenkasick