Real Estate Study Exam #1
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Cram for Exam.com Thank you for purchasing this practice exam. Here are some tips to help you pass your exam:
Answer the questions slowly. Even if you recognize the answer immediately, there may be two choices that are almost alike.
Review your exam. The old adage, the first answer is always the correct one, is not necessarily true. You may think of a better answer as you go through the exam. If you have time, and you should, review your entire exam. You have 1.5 hours to complete the NYS salesperson exam.
You don't have to know all of the answers. The pass grade for the NYS salesperson exam is 70% .There are 75 questions. Each question is worth 1.33 points. The DOS "rounds down" the grade. This means that you need a minimum of 52 correct questions to pass (and 23 wrong questions gives you a passing grade.)
Don't worry too much if you are not a "math person." There may be three or four math questions on the NYS salesperson exam, so if you get all of them wrong and some other questions wrong, you can still pass.
In using the practice exam, know what all the "wrong" choices mean as well. Use the answer key at the end of this exam and read the explanations for the answers to learn more about the topic in the question.
The answer key explanations with this exam also have the important key terms that are in the explanation written in red and
boldface
. Know the meaning of these terms.
These exams are referenced to New York Real Estate for Salespersons
, 5th edition
by Marcia Darvin Spada, OnCourse Learning, 2013.
For further study, you can purchase any of the other exams offered on this website. They are all different and will provide a fuller study experience.
In addition, for a comprehensive study experience, I recommend Cram for the Exam: Your Guide to Passing the New York Salesperson and Broker Exams, 5th edition
by Marcia Darvin Spada. This very useful Guide answers many questions
related to taking the NYS exam
, defines all of the NYS-mandated key terms, and includes important points for each topic in the NYS curriculum, review tables with key terms, Marcia's List
, which summarizes all of the important terms and concepts in the salesperson 75-hour course, hundreds of review questions, and two practice salesperson and two practice broker exams. You can purchase this Guide
through the link on our website. www.cramforexam.net.
Thank you again for using my content and good luck on your exam! Marcia Contact: cramforexam@hotmail.com
Salesperson 75-Hour Licensure Course Practice Exam Created by Marcia Darvin Spada March 7, 2014 Exam I
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
I. License Law and Regulations
____ 1. In New York, the three categories of real estate licensure do NOT include: a. salesperson c. transaction broker b. associate broker d. broker ____ 2. To obtain a real estate broker license in New York, a person must be at least: a. 18 c. 20 b. 19 d. 21 ____ 3. An illegal commission arrangement in which the agent is authorized to keep all of the sales price over a given figure is a (n): a. flat fee c. percent commission b. net listing d. finder’s fee
II. Law of Agency
____ 4. Which of the following do NOT describe the agent’s relationship to the principal?
a. loyalty c. obedience b. trust d. nonconsensua
l
____ 5. Giada, an agent brought Henry to view Kay’s property. Giada represents seller Kay. This makes Henry the: a. client c. customer b. principal d. fiduciary ____ 6. Agent Richard told a customer that his client’s home was 5000 square feet when in fact he had no idea about the measurements of the property. Richard has: a. committed an act of misrepresentation c. no duty to be truthful to customers b. done nothing wrong d. engaged in self-dealing ____ 7. Doug earns a commission of $10,000 for a residential property sale. His commission rate is 8%. What is the selling price of the property? a. $80,000 c. $125,000 b. $88,000 d. $150,000 ____ 8. A written listing agreement is an example of a (n): a. single agency c. express agency b. implied agency d. cooperative agency
____ 9. When an agent attempts to represent the buyer and seller in the same transaction, this is an example of: a. subagency c. buyer agency b. dual agency d. undivided loyalty ____ 10. Wanda has signed a listing agreement stating that even if she sells her property herself, her broker will still receive his commission. She has probably signed a (n): a. exclusive agency agreement c. open listing agreement b. exclusive-right-to-sell agreement d. option to purchase ____ 11. Naomi lists her property with ABC Brokerage. She agrees that if she sells the property herself, ABC will not receive a commission. However, ABC is the only broker she is listing with. This arrangement is a (n): a. net listing c. exclusive-right-to sell b. open listing d. exclusive agency ____ 12. Salesperson Vinnie sells a property for $100,000. The commission on this sale to the real estate firm with whom Vinnie is associated is 6%. Vinnie receives 70% of the total commission paid to the real estate firm. What is the f
irm’s share of the commission in dollars?
a. $618 c. $180 b. $6,000 d. $1,800 ____ 13. According to the IRS code, real estate salespersons qualify as independent contractors if they: a. are state licensed c. work full time b. sign a contract with the broker d. both a and b ____ 14. Although salespersons are independent contractors under the law, the broker still has the duty of: a. paying the agents a base salary c. issuing W-2s b. enforcing strict work hours d. supervision III. Legal Issues Part 1 Estates and Interests
____ 15. Denise had attached built in bookshelves to the walls of her retail store and removed them when her lease was up. These items are called: a. estates in land c. a stick in the bundle of rights b. trade fixtures d. common elements ____ 16. The most complete form of ownership in real property is called: a. a life estate c. in severalty b. fee simple absolute d. joint tenancy ____ 17. Patsy deeded his land to his friend, Joan, with the condition that she only use it for residential purposes. This is an example of a (n): a. fee simple defeasible estate c. tenancy in common b. life estate d. partnership
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Part 2 Liens and Easements
____ 18. A mortgage is a type of: a. deed c. judgment b. lien d. writ of attachment ____ 19. Harry built a sun room for the Grabbers, but after the initial deposit, they never paid him the balance. To recover the monies owed, Harry can file a (n): a. lis pendens c. subordination agreement b. mechanic’s lien
d. judgment ____ 20. Which of the following is TRUE? An easement owner: a. owns the land where the easement lies c. owns the right to use or have access to the land b. can never terminate the easement d. cannot use the easement for commercial purposes Part 3 Deeds
____ 21. A type of deed that contains the strongest and broadest form of guarantee of title is a (n): a. full covenant and warranty deed c. bargain and sale deed b. quitclaim deed d. judicial deed ____ 22. When the grantor or his representative gives the deed to the grantee or his representative, transfer of title has occurred. This act is known as: a. dedication c. delivery and acceptance b. probate d. adverse possession Part 4 Title Closing and Costs
____ 23. A title to real property that is free and clear of encumbrances is said to be: a. profitable c. “judgment proof”
b. enforceable d. marketable ____ 24. One of the most important provisions of the Real Estate Settlement Procedures Act is that the lender: a. provide a good faith estimate of closing costs c. follow the provisions of Regulation Z b. does not discriminate in the lending process d. open branches in low-income communities IV. The Contract of Sale and Leases Part 1 Leases
____ 25. Trudy needed to move in the middle of her lease term. She transferred all of her lease obligations to her friend, Sue. This transfer is called a (n): a. assignment c. option to renew b. sublet d. breach of lease
Part 2 Contracts
____ 26. Jaycee entered into a written real estate contract with a person under 18. From the point of view of the minor, this contract is: a. void c. unilateral b. voidable d. implied Part 3 Contract Preparation
____ 27. The first document signed by a purchaser, especially in downstate areas, is generally a: a. binder c. deed b. contract of sale d. rider V. Real Estate Finance
____ 28. When a lender holds a mortgage on real property, the collateral for the loan is the: a. mortgage itself c. property b. note or bond d. the borrower
’
s good will ____ 29. Tax deductible expenses for home ownership are: a. mortgage interest and property taxes c. mortgage interest only b. mortgage principal and mortgage interest d. mortgage principal only ____ 30. A payment of mortgage and interest not large enough to pay off the debt with a larger payment at the end of the terms is called a (n): a. open end mortgage c. shared equity mortgage b. package mortgage d. balloon mortgage ____ 31. Thea was relieved that her property was sold at foreclosure because now she would be out of debt. However, her property did not bring in enough to satisfy the debt, and she received notice from the lender called a (n): a. lis pendens c. deficiency judgment b. deed in lieu of foreclosure d. subordination agreement ____ 32. On January 1, a mortgagor makes a $500 payment on her mortgage that is at the rate of 4%. Of the $500 total payment for principal and interest, the mortgagee allocates $300 to the payment of interest. What is the principal balance due on the mortgage on the date of payment? a. $36,000 c. $90,000 b. $60,000 d. $120,000 VI. Land Use Regulations
____ 33. Which of the following is an example of private land use control? a. eminent domain c. police power b. escheat d. deed restrictions
____ 34. A New York statute that protects residents in the purchase of vacant subdivided land sold through an installment contract is: a. Article 12-A c. Article 9-A b. the State Environmental quality Review Act d. the Interstate Land Sales Full Disclosure Act ____ 35. Zoning ordinances are established by the: a. planning board c. federal government b. legislature d. HUD VII. Construction and Environmental Issues
____ 36. The concrete base below the frost line that supports the foundation is the: a. foundation wall c. sill plate b. footing d. bearing wall ____ 37. Which of the following is NOT a type of framing? a. platform c. post-and-beam b. balloon d. slab-on-grade ____ 38. Which of the follow is NOT a warranty on the sale of new homes? a. one-
year builder’s warranty against defects in construction c. three-year warranty on all alert systems installed, including smoke alarms b. two-year warranty for all plumbing, electrical and heating and air conditioning systems d. six-year warranty covering material defects ____ 39. The Residential Lead-based Paint Hazard Reduction Act applies to which of the following: a. all residential properties c. residential and commercial properties b. residential properties built before 1978 d. senior citizen housing only ____ 40. Which of the following substances is radioactive and measured in picocuries? a. electromagnetic waves c. PCBs b. formaldehyde d. radon VIII. The Valuation Process and Pricing Properties
____ 41. An estimate of the value of real property using one or more of the three approaches to value as of a certain date is a (n): a. appraisal c. evaluation b. comparative market analysis d. feasibility study ____ 42. An arms-length transaction describes which of the following: a. a contract that is breached c. a property that is greatly reduced from the original listing price b. nonrelated buyers and sellers d. a property that sells well below market value
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____ 43. To be considered as the land’s highest and best use, any potential use must pass which of the following tests?
a. legally allowable c. financially feasibility b. physically possible d. all of the above IX. Human Rights and Fair Housing
____ 44. The fair housing law that is interpreted to prohibit all racial discrimination with no exemptions is the: a. Federal Fair Housing Act of 1968 c. Civil Rights Act of 1866 b. New York Human Rights Law d. Civil Rights Act of 1964 ____ 45. If a lender refuses to make housing loans in culturally diverse areas, this is called: a. redlining c. blockbusting b. steering d. filtering down ____ 46. A real estate agent calls several residents of a neighborhood to announce that many families of a certain minority group are moving into the neighborhood. This agent is guilty of: a. steering c. blockbusting b. redlining d. discriminatory advertising ____ 47. The civil penalty for a first time offense for violation of the Federal Fair Housing Act is: a. $1000 c. $5,000 b. $3,000 d. $10,000 X. Real Estate Mathematics
____ 48. A salesperson earns a commission of $6,000 in a sale of a property worth $100,000. What is the commission rate? a. 3% c. 8% b. 6% d. 9% ____ 49. A property valued at $200,000 appreciates 2% each succeeding year. What is the value of the property after two years? a. $201,080 c. $204,080 b. $202,000 d. $208,080 XI. Municipal Agencies
____ 50. Which of the following is NOT a function of city councils and town boards? a. preserve order, peace and the health, safety and the welfare of its citizens c. approve applications for construction b. adoption of the tax rate d. decisions to take private property for public use ____ 51. Who appoints the members of the municipal planning board? The: a. governor c. town board or city council b. mayor d. electorate
XII. Properly Insurance
____ 52. Insurance brokers represent the: a. property owner c. themselves b. insurance company d. the government ____ 53. In order for insurance to be issued on a replacement cost basis, the home must be insured for what percentage of its replacement cost? a. 100% c. 60% b. 80% d. 33% XIII. Taxes and Assessments
____ 54. Which of the follow properties are ALWAYS fully exempt from property taxes? a. senior citizen’s homes
c. gas stations b. veteran’s homes
d. churches ____ 55. Which of the following determine a tax bill? a. the property’s taxable assessment
c. the total cost of the municipality’s operations b. the tax rates of the taxing jurisdiction in which the property is located d. both a and b ____ 56. A house is valued at $200,000, and the tax value is 50 percent of the assessed value, what is the annual tax if the rate is $1.00 per $100? a. $500 c. $4,000 b. $1,000 d. $5,000 XIV. Condominiums and Cooperatives
____ 57. Which of the following statements is TRUE about a cooperative? a. is also a condop c. it is fee absolute ownership b. the interior space is individually owned, and the common elements are owned in common d. it forms when people join to own or control the housing and related facilities ____ 58. What form of ownership is a cooperative ownership? a. fee simple absolute c. fee simple defeasible b. leasehold estate d. tenancy in common ____ 59. Adrian wants to know if purchasing a cooperative unit is a wise investment. Which of the following is the most important document from the cooperative to review? a. annual financial statement c. offering plan b. house rules d. bylaws
XV. Commercial and Investment Properties
____ 60. If an investor requires a 15% annual return and the property has a $12,000 net annual income, what should his investment be according to the rate of return? a. $27,000 c. $40,000 b. $80,000 d. $65,250 ____ 61. Which of the following accurately describes a “risk factor”?
a. the greater the risk of loss, the less potential rate of return c. the greater the risk of loss, the greater potential rate of return b. the less the risk of loss, the greater potential rate of return d. the less the risk of loss, the less potential rate of return ____ 62. Which of the following is NOT an objective of property ownership? a. a hedge against an inflationary economic trend c. long-term, low risk investment b. tax savings d. a quick way to make a large profit ____ 63. The tenant’s cost per square foot after all concessions are considered is called the:
a. usable square footage c. rentable square footage b. effective rent d. pro rata share ____ 64. If an investor’s rate of return is 15%, and his investment is $90,000, what will his net annual income be?
a. $6,000 c. $15,000 b. $13,500 d. $16,000 ____ 65. The process that calculates the value of an asset in the past, present or future is called: a. chronology of money c. rate of return b. time value of money d. leverage ____ 66. The use of borrowed funds is called: a. leverage c. risk b. liquidity d. equalization ____ 67. A strip mall would be considered a: a. residential building c. retail center b. mixed-used building d. industrial property ____ 68. The net monthly income of a five-unit apartment building is $5,400. The capitalization rate the lender uses is 6 percent. Use the IRV formula to find the value of the building. a. $90,000 c. $908,000 b. $108,000 d. $1,080,000
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XVI. Income Tax Issues in Real Estate Transactions
____ 69. Jensen and Carla are in the 25% tax bracket. They sell their primary residence for a profit of $350,000. Do they pay capital gains tax, and if so, what is the amount they must pay taxes on? a. no, they do not pay capital gains tax c. yes, they must pay on the $350,000 b. yes, they must pay on the $100,000 d. no, they are paid since they are $150,000 under the limit ____ 70. What allows first-time home buyers to use IRA distributions to fund up to $10,000 of their new home cost, without paying the early distribution fee? a. $250,000/$500,000 Rule c. Capital Gains Exclusion b. Age 59 1/2 Rule d. PMI Tax Deduction ____ 71. Which of the following is not a tax bracket for federal income tax? a. 5 c. 35 b. 15 d. 55 XVII. Mortgage Brokerage
____ 72. Which of the following do a mortgage broker and a mortgage banker have in common for registration for their licenses? a. both are licensed by the NYS Department of Financial Services c. surety bond or pledge deposit of $50,000 b. $1,500 investigation fee d. a net worth of at least $250,000 ____ 73. What mortgage document shows the seller that the purchaser qualifies to buy the property, but is not a commitment by the lender? a. mortgage broker disclosure form c. pre-qualification/pre-approval letter b. pre-application disclosure and fee agreement d. mortgage commitment XVIII. Property Management
____ 74. In which of the following property management scenarios is a real estate license NOT required? a. Jenkins oversees and collects rent on several apartments with the same owner c. Michele oversees three retail businesses in a mini mall with different owners b. Manuel lives on the premises of an apartment he oversees, and he also oversees several businesses downtown d. Pablo owns his owns a property management company with several employees who manage different properties ____ 75. When a property manager sets forth the commitments he makes when employed, it is called a: a. management agreement c. property management report b. management proposal d. marketing plan
Salesperson Practice Exam I Created by Marcia Darvin Spada March 7, 2014 Answer Section This exam is referenced to New York Real Estate for Salespersons,
5
th
edition, by Marcia Darvin Spada, OnCourse Learning, 2013. Important key terms appear in red and boldface. 1. ANS: C The three categories of real estate licensure do not include a transaction broker.
REF: p. 12 Chapter 1 2. ANS: C Twenty is the minimum age requirement for a real estate broker license.
REF: p. 13 Chapter 1 3. ANS: B A net listing
is when the seller specifies the amount of money he wants to receive from the sale of the property, and the salesperson may keep any additional money made on this sale. It is illegal in New York.
REF: p. 32 Chapter 1 4. ANS: D Loyalty, obedience and trust
are all fiduciary duties owed by the agent to the principal.
REF: p.49 Chapter 2 5. ANS: C The customer
of an agent is the party to whom the agent brings to the principal as a seller or buyer of the property.
REF: p. 48 Chapter 2 6. ANS: A Agent Richard has committed an act of misrepresentation
because he has made a statement about the property, when in fact, he does not know whether the statement was true or false.
REF: p. 51 Chapter 2 7. ANS: C sales price x rate = commission n x .08 = 10,000 10,000 /.08 = 125,000
REF: p. 312 Chapter 8 8. ANS: C Express agency
is an agency relationship created by an oral or written agreement between the principal and the agent. Single agency
is an agent who works only for the buyer or the seller
. Implied agency
is when the words or actions of the principal and agent indicate that they have an agreement. Cooperative agency
is when agents work together to sell property.
REF: p. 54 Chapter 2
9. ANS: B Dual agency
can occur when one sales associate is involved with both buyer and seller. Subagency occurs when seller and broker agree that other agents will work for the seller. Buyer agency
is when the agent represents the buyer as principal and enters into a listing agreement with the buyer. Undivided loyalty
is a fiduciary duty of the agent to the principal.
REF: p. 61 Chapter 2 10. ANS: B An exclusive-right-to-sell agreement
means that only one broker lists the property, and the broker is entitled to the commission no matter who sells it. In an exclusive agency agreement
, if the owner sells the property the broker is not entitled to the commission. In an open listing agreement
,
the property is shown by more than one broker and the one with the sale is entitled to the commission. In an option to purchase, the property owner sells his right to purchase his property to a prospective buyer.
REF: p. 73 Chapter 2 11. ANS: D In an exclusive agency agreement, if the owner sells the property the broker is not entitled to the commission. In a net listing, a seller specifies a net amount of money he wants to receive upon sale of a property. In an open listing agreement, the property is shown by more than one broker and the one with the sale is entitled to the commission. An exclusive-right-to-sell agreement means that only one broker lists the property, and the broker is entitled to the commission no matter who sells it.
REF: p. 78 Chapter 2 12. ANS: D sales price x rate = commission $100,000 x .06 = $6,000 100% - 70% = 30% $6,000 x .03 = 1,800
REF: p. 313 Chapter 8 13. ANS: D A salesperson that qualifies as an independent contractor
much be state licensed, and sign a contract with the broker.
REF: p. 95 Chapter 2 14. ANS: D Salespersons must be under the supervision
of a broker.
REF: p. 99 Chapter 2 15. ANS: B Trade fixtures
are items of personal property that a business operator installs in rented building space, and they are presumed to remain personal property. Estates in land are divided into two groups, freehold estate and nonfreehold estates. A stick in the bundle of rights
refers to tangible and intangible rights that come with real property. Common elements
are the space that all residents have in common to use.
REF: p. 116 Chapter 3
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16. ANS: B Fee simple absolute
is the most complete form of ownership in real estate. A life estate
is ownership, possession and control only for a lifetime. Ownership in severalty
is when the title is only in the name of one person. Joint tenancy is the formation of a co-ownership of a property.
REF: p. 119 Chapter 3 17. ANS: A A fee simple defeasible estate
is similar to a fee absolute except that there are conditions of ownership. A life estate is only owned for the owner’s lifetime. Tenancy in common
refers to two or more people holding title to a property at the same time. In a partnership, a business is owned by two or more people.
REF: p. 120 Chapter 3 18. ANS: B A
lien
is a claim or charge against another. The
deed
is the document to convey title legally to real property. A judgment
is a court decree resulting from a lawsuit. A writ of attachment is an involuntary lien.
REF: p. 130 Chapter 3 19. ANS: B A mechanic’s lien
is a specific lien filed by a person who provides labor to a property. Lis pendens
is a legal notice that a lawsuit is pending affecting title or possession of a specific property. A subordination agreement
modifies the order of priority of liens against a property. A judgment becomes a lien against all of the real property of the debtor in that county.
REF: p. 132 Chapter 3 20. ANS: C An easement
is a nonpossessory interest in land owned by another. Someone who owns an easement right does not own or have possession to the land where the easement lies.
REF: p. 133 Chapter 3 21. ANS: A A full covenant and warranty deed
contains the strongest and broadest form of guarantee of title of any type of deed, and provides the greatest protection to the grantee. A quitclaim deed
contains no warranties whatsoever. A bargain and sale deed
is an implied representation on the part of the grantor that he has good title and possession of the property. Judicial deeds
result from a court order.
REF: p. 153 Chapter 4 22. ANS: C
Delivery and acceptance
is the delivery of a valid deed to the grantee and the grantee accepting the deed. Dedication
is an appropriation of land or easement given by the owner to the public.
Probate
is the procedure for proving a will. Adverse possession
is the method of acquiring a title to real property by conforming to statutory requirements. REF: p. 155 Chapter 4 23. ANS: D A marketable title
is one that is reasonably free and clear of encumbrances.
REF: p. 165 Chapter 4
24. ANS: A A good faith estimate
is one of the most important provisions of the Real Estate Settlement Procedures Act.
REF: p. 171 Chapter 4 25. ANS: A Assignment
is the transfer of legal rights and obligations from one party to another. Sublet is the transfer of only part of a lease term with the reversion to the lessee. Option to renew is a provision setting forth the method and terms for renewing a lease. Breach of lease
is failing to perform any promise that forms part or whole of the lease agreement.
REF: p. 203 Chapter 5 26. ANS: B In New York, the age of a minor is under 18. Minors do not have the legal capacity to contract. With minors, the contract is voidable
at the minor's option.
REF: p. 210 Chapter 5 27. ANS: A The first document signed by a purchaser is usually a binder
, also called a receipt, purchase offer
, or an agreement.
REF: p. 221 Chapter 5 28. ANS: C The
mortgage pledges a property as security for the repayment of the loan. A note or bond
is written evidence that a debt exists.
REF: p. 225 Chapter 6 29. ANS: A Tax-deductible expenses for home ownership are mortgage interest (not principal) and real property taxes.
REF: p. 259 Chapter 6 30. ANS: D Balloon mortgages
provide for installment payments that are not enough to pay off the principal and then end with a larger sum due. Open end mortgages
may be refinanced without rewriting the mortgage. Shared appreciation mortgage means the lender participates in the profits generated by a commercial property used to secure payment of the debt in the mortgage loan. A package mortgage
means that personal property, in addition to real property, has been pledged to secure payment of the mortgage loan.
REF: p. 287 Chapter 6 31. ANS: C A deficiency judgment
is a court order stating that the borrower still owes the lender money. Lis pendens means “a lawsuit pending”. The deed in lieu of foreclosure
conveys the title of the property to the lender without record of the foreclosure. A subordination agreement
modifies the order of liens on a property.
REF: p. 262 Chapter 6
32. ANS: C $300 x 12 months = $3,600 principal x rate = annual interest n x 4% = $3,600 factor missing: divide $3,600 / 0.04 = $90,000 mortgage balance on date of payment
REF: p. 314 Chapter 8 33. ANS: D Deed restrictions
limit the use or appearance of a given property. Eminent domain
is the power of the government to take private property for public use. Escheat
is the power of the government to take a property, which has no heirs after the owner’s death. Police power
is when a government regulates the use of a property for the benefit of the public. REF: p. 332 Chapter 9 34. ANS: C Article 9-A
addresses the purchase or lease of vacant subdivided land sold through and installment contract. Article 12-A
pertains to real estate salespersons and brokers. The State Environment Quality Review Act
requires preparation of an environmental impact statement on projects requiring government approval and having any impact on the environment. The Interstate Land Sales Full Disclosure Act
regulates the sale across state lines of subdivided land. REF: p. 335 Chapter 9 35. ANS: A Along with the master plan, planning boards along with the community decide on certain zoning requirements. REF: p. 339 Chapter 9 36. ANS: B Footings
are the concrete base below the frost line that supports the foundation of the structure. The foundation wall
is supported by the footing, and is usually composed of concrete, brick, etc. The sill plate
is the first wooden member of the structure and is used as the nailing surface for the floor system. The bearing walls support the ceiling and/or the roof and include the outside wall frame.
REF: p. 382 Chapter 11 37. ANS: D Slab-on-grade
is the only choice in the question that is not a type of framing. Slab-on-grade is a type of foundation.
REF: p. 383 Chapter 11 38. ANS: C There is no three-year warranty on alert systems installed.
REF: p. 400 Chapter 11 39. ANS: B The Residential Lead-based Paint Hazard Reduction Act
applies only to residential properties built before 1978.
REF: p. 407 Chapter 11
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40. ANS: D Radon
is a gas measured in picocuries and is radioactive. Electromagnetic waves are high frequency radio waves in which the electric and magnetic fields are inseparable. Formaldehyde can be toxic and is often used for preservation. PCB’s
are synthetic liquid organic compounds.
REF: p. 412 Chapter 11 41. ANS: A An
appraisal
is an unbiased estimate of the nature, quality, value, or utility, based on factual data as of a certain date. A comparative market analysis
is an analysis of the competition in the marketplace that a property will face. Evaluation
is a study of the nature, quality, or utility of a certain property interests in which a value estimate is not necessarily required. A feasibility study
is a detailed economic analysis.
REF: p. 413 Chapter 12 42. ANS: B An arm's length transaction
describes nonrelated buyers and sellers.
REF: p. 435 Chapter 12 43. ANS: D To be considered as the land’s highest and best use
, any potential use must pass the tests of being legally allowable, physically possible, financially feasible, and maximally productive.
REF: p. 441 Chapter 12 44. ANS
: C The Civil Rights Act of 1866
has the blanket statement that citizens have the same rights to inherit, buy, sell or lease real and personal property, prohibiting racial discrimination. The Federal Fair Housing Act of 1968
prohibits discrimination based on race, color, religion or national origin. The New York Human Rights Law
prohibits discrimination in areas other than housing. The Civil Rights Act of 1964 prohibits discrimination in any program receiving federal funds.
REF: p. 459 Chapter 13 45. ANS: A Redlining
is refusing to make loans to purchase, construct, or repair a dwelling by discriminating against any of the protected classes.
Steering
is the practice of directing prospective purchasers toward or away from certain neighborhoods. Blockbusting
is inducing present property owners to sell by telling them that a person from a particular race, color, or national origin is moving into the neighborhood. Filtering down
is when the properties in a formerly middle-class neighborhood decline in value allowing lower income purchasers to buy them.
REF: p. 468 Chapter 13 46. ANS: C Blockbusting is inducing present property owners to sell by telling them that a person from a particular race, color, or national origin is moving into the neighborhood. Steering is the practice of directing prospective purchasers toward or away from certain neighborhoods. Redlining is refusing to make loans to purchase, construct, or repair a dwelling by discriminating against any of the protected classes. Discriminatory advertising is any ad that states a preference, limitation, or discrimination on the basis of protected traits.
REF: p. 467 Chapter 13
47. ANS: D The civil penalty for first time offense for violation of the Federal Fair Housing Act
is $10,000.
REF: p. 466 Chapter 13 48. ANS: B sales prices x rate of commission = total commission $100,000 x rate of commission = $6,000 divide $6,000 / $100,000 = .06 6%
REF: p. 312 Chapter 8 49. ANS: D original value x % of appreciated value = new value $200,000 x .002 = $4,000 one year $4,000 + $200,000 = $204,000 $204,000 x .002 = $4,080 two years $4,080 + $204,000 = $208,080
REF: p. 314 Chapter 8 50. ANS: C Town boards and city councils do preserve order, adopt tax rates, and can exercise eminent domain. Building departments
generally approve applications for construction.
REF: p. 351 Chapter 10 51. ANS: C The local town board or city council appoints the planning board.
REF: p. 359 Chapter 10 52. ANS: A Insurance brokers represent the property owner.
REF: p. 484 Chapter 14 53. ANS: B If the insured purchases coverage for the home for at least 80 percent of its replacement cost, the insurance will be automatically issued on a replacement cost basis.
REF: p. 488 Chapter 14 54. ANS: D Religious organizations are the only property types listed in the question that generally have full exemption from property taxes.
REF: p.501Chapter 15 55. ANS: D The two items that determine a tax bill are the property’s taxable assessment
and the tax rates
of the taxing jurisdiction in which the property is located.
REF: p. 510 Chapter 15
56. ANS: B assessed value
x tax rate = annual taxes
$200,000 x ($1.00/50) = $1,000
REF: p. 324 Chapter 8 57. ANS: D A
cooperative
forms when people join to own or control the housing and related facilities in which they live. It is considered personal property
.
REF: p. 529 Chapter 16 58. ANS: B The tenants are shareholders, and own a certain amount of shares, which entitles them to a lease of their unit. Ownership of stock is considered personal property
. The only real property ownership the shareholders have in the cooperative
is leasehold estate
.
REF: p. 529 Chapter 16 59. ANS: A The annual financial statement should be reviewed by an attorney, also known as due diligence.
REF: p. 530 Chapter 16 60. ANS: B properties income / rate of return = investment $12,000/.15 = $80,000
REF: p. 560 Chapter 17 61. ANS: C A risk factor
describes the greater the risk of loss, the greater potential the rate of return.
REF: p. 559 Chapter 17 62. ANS: D Property ownership is generally not a quick way to make a large profit.
REF: p. 560 Chapter 17 63. ANS: B The effective rent is t
he tenant’s cost per square foot after all concessions are considered. Usable square
footage
is the area contained in the space, which the tenant occupies
. Rentable square footage
equals the entire space rented, including the common areas
. Pro rata share r
efers to the tenant’s use of the common areas.
REF: p. 573 Chapter 17 64. ANS: B properties income / rate of return = investment n / .15 = $90,000 multiply $90,000 x .15 = $13,500 REF: p. 560 Chapter 17
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65.
ANS: B Time value of money
is the process that calculates the value of an asset in the past, present, or future. Rate of return
is the percentage of the investment an investor wishes to receive. Leverage
is the use of borrowed funds.
REF: p. 560 Chapter 17 66. ANS: A The use of borrowed funds is called leverage.
Liquidity
means that an investment is easily transferred.
REF: p. 561 Chapter 17 67. ANS: C A strip mall is a retail center.
REF: p. 562 Chapter 17 68. ANS: D To solve this problem using IRV, multiply the income by 12 (to bring it to an annual figure) and divide by the rate. $5,400 x 12 = 64,800 / .06 = $1,080,000 REF: p. 572 Chapter 17 69. ANS: A They do not pay capital gains tax
since the profit was under $500,000.
REF: p. 595 Chapter 18 70. ANS: B The “Age
59 1/2 Rule
allows first-time home buyers to use IRA distributions to fund up to $10,000 of their new home cost without paying the early distribution fee. The $250,000/$500,000 rule makes home sellers eligible to exclude up to $250,000 if single, or up to $500,000 if married, of the capital gains tax
on their home. The Capital Gains Exclusion
allows an individual to qualify for the $500,000 exclusion on capital gains in the sale of their principal residence within two years of a spouse’s death. The PMI Tax
Deduction allows homeowners to deduct the amount they pay for private mortgage insurance from their federal income tax.
REF: p. 593 Chapter 18 71. ANS: D 55 percent is not a tax bracket for federal income tax.
REF: p. 593 Chapter 18 72. ANS: A Both mortgage bankers
and mortgage brokers
register with the NYS Department of Financial Services
.
The mortgage broker’s investigation fee is $1,500 while the
mortgage banker’s is $3,000. The
mortgage broker’s surety bond is only 10,000 while the mortgage banker’s is $50,000. The mortgage banker’s net worth must be at least $250,000.
REF: p. 295 and p. 300 Chapter 7
73. ANS: C The pre-qualification/pre-approval letter
is used to show that a buyer qualifies for a mortgage, but does not guarantee the loan. The mortgage broker disclosure form is an acknowledgement of the mortgage broker’s services. A pre-application disclosure and fee agreement includes the fees payable at the time of application and the conditions for refunding the fee. The mortgage commitment
is a statement by the lending institution that assures the purchaser that the lender will loan a certain sum of money.
REF: p. 301 Chapter 7 74. ANS: A When one owner of a real property employs an individual on a salaried basis to perform any functions of a real estate salesperson or broker, including collecting rent, he does not require a real estate license.
REF: p. 615 Chapter 19 75. ANS: B In a management proposal
, the manager sets forth the commitment he will fulfill for the property. The management agreement
creates an agency relationship between the owner and the property manager. A property management report
is a periodic accounting of all funds received and disbursed. A marketing plan is a manager’s pl
an for acquiring tenants.
REF: p. 616 Chapter 19