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Modern Real Estate Quiz review questions and AnswerKey.
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Modern Real Estate Quiz review questions and AnswerKey.
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Modern Real Estate QuizCircle the letter of the Answer that corresponds to the displayed Question.
1. Contribution
A. The upward and downward fluctuations in business activities generally characterized by four stages: expansion, recession, depression, and revival
B. A contract by which the insured is compensated against any losses sustained as a result of defects in a title.
C. A listing based on the net price the seller will receive if the property is sold; broker can offer property at highest price to increase the commission.
D. The principle that affirms that the value of any component of a property is defined by what its addition contributes to the value of the whole or what its absence detracts from that value.
2. Agricultural Fixtures
A. modeled after the Residential Agreements Act, it establishes uniform rules for landlords, tenants, and their agents involved in the handling of short-term rentals under 90 days in length
where tenant has primary residence elsewhere.
B. In North Carolina, a fixture attached to leased property by a tenant farmer is considered the landowner's real property rather than the tenant's personal property.
C. Due and payable by the buyer/principal on the signing and acceptance of an offer to purchase property found by the buyer's agent.
D. The legal remedy of canceling, terminating, or annulling a contract and restoring the parties to their original positions.
3. crawl space
A. Estimate based on the present worth of the future rights to income.
B. a figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value
C. Colorless, odorless poisonous gas produced as a by-product of incomplete combustion; can be dangerous if not properly ventilate
D. the space between the ground surface and the first floor; frequently found in homes w/o basements that are not built on a slab foundation
4. balloon payment loan
A. An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no
costly delay is encountered in making the substitution.
B. An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.
C. a mortgage loan that includes a final payment that is larger than the required periodic payments because the loan amount was not fully amortized.
D. Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface
rights).
5. Commission
A. When you deduct the annual operating expenses of the real estate from the effective gross income.
B. a person who retains possession of leased property after the lease has expired; the landlord may continue to accept rent or start eviction procedures.
C. a deed used to release a parcel of property from a mortgage or deed of trust lien when the real estate loan has been paid in full.
D. compensation provided by the principal to the firm, contingent on the firm successfully performing the service
6. Ratification
A. a person who retains possession of leased property after the lease has expired; the landlord may continue to accept rent or start eviction procedures.
B. establishing an agency relationship by performing any act that accepts the conduct of the agent as that of an agent.
C. exaggerated comments or opinions; "This house has the best view in town!"
D. a flat strip of wood or metal that encloses the ends of the rafters; gutters are usually attached to it.
7. estate at sufferance
A. the slope of a roof measured as the vertical distance in inches (rise) divided by the horizontal distance in feet (run)
B. an increase in the loan balance.
C. an estate that arises when a tenant who lawfully came into possession of real property continues, after the tenant's rights have expired, to hold possession of the premises without the
consent of the landlord; lowest estate in real estate.
D. the appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
8. Cooperation brokers
A. those who act as subagents of the principal
B. Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
C. illegal eviction of a tenant that has exercised protected rights under the law.
D. imposes restrictions and limitations on high-cost loans; revises permissible fees and charges on certain loans; prohibits unfair or deceptive practices by lenders
9. Deed of Release
A. In real estate, generally a listing agreement, a buyer agency agreement or a management agreement (a document evidencing formal employment between principal and agent).
B. written promise to repay a debt in definite installments with interest.
C. a deed used to release a parcel of property from a mortgage or deed of trust lien when the real estate loan has been paid in full.
D. A flexible moment in time when conversation between a licensee an a consumer begins to address confidential needs, desires and abilities; latest moment to legally disclose agency
choices to a consumer.
10. North Carolina human Relations Commission
, A. The first place to file a complaint by those who have been injured by discriminatory housing acts.
B. Encumbrances on real property. AKA: covenants, conditions, restrictions. A private agreement placed in public record that affect the use of the land.
C. The right to use the land of another for a particular purpose.
D. the slope of a roof measured as the vertical distance in inches (rise) divided by the horizontal distance in feet (run)
11. valid contract
A. poisoning caused by an elevated level of lead in the human body that can result in damage to the brain, nervous system, kidneys, and blood.
B. A loan in which principal as well as interest is payable in periodic installments over the term of the loan.
C. The support a parcel of land receives from adjacent land; a neighbor's duty to support adjoining land in its natural state.
D. A contract that complies with all the essential elements of a contract.
12. prepayment penalty clause
A. IRS
B. People who are recognized by law as being able to contract with others; those of legal age and sound mind; a requirement of a legal enforceable contract.
C. included in a promissory note requiring the borrower to pay a penalty against the unearned portion of the interest for any payments made ahead of schedule.
D. A listing agreement under which the broker's commission is contingent on the broker personally producing a ready, willing, and able buyer before the property is sold by the seller or
another broker.
13. constructive eviction
A. A measure of heat used in rating the capacity of heating and cooling systems. (BTU)
B. the doctrine that gives the tenant the right to cancel the remainder of the lease and vacate the premises w/o penalty if the landlord fails to keep the premises fit.
C. An item of personal property that has been converted to real property by being permanently affixed to the realty.
D. Prohibits creditors from discrimination on the basis of race, color, religion, national origin, sex, marital status, age, and receipt of public assistance.
14. Life Estate
A. An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
B. A listing agreement under which the broker's commission is contingent on the broker personally producing a ready, willing, and able buyer before the property is sold by the seller or
another broker.
C. A codification of commercial law, adopted in most states, attempts to make uniform all laws relating to commercial transactions, financing statement must be recorded, Article 6
regulates bulk transfers the sale of a business as a whole.
D. An employment contract between a property owner and a real estate firm/broker by which the broker is employed to find a ready, willing and able buyer for the owner's real estate on
the owner's terms, for which service the owner agrees to pay a commission.
15. Certificate of Occupancy
A. A tenant's right to occupy real estate during the term of a lease, generally considered a personal property interest; nonfreehold estate.
B. created when a property owner promises to give the contracting party the first chance to buy the property or to match the bona fide offer of a third party, should the owner decide to sell.
C. a board around the bottom of a wall perpendicular to the floor; covers gap b/w the floor and wall; decorative
D. Issued upon the satisfactory inspection of a structure; building is fit for occupancy and there are no building code violations
16. Square foot method
A. Granted to a property owner who wishes to use property in a special way that is in the public interest such as a church or hospital.
B. Areas designated by FEMA as being prone to flooding.
C. The amount of money that will compensate the injured party for breach, which the parties agree to at the time they enter into the contract.
D. Cost per square foot of a recently built comparable structure multiplied by the number of square feet in the subject property.
17. Transferability
A. money or property given to make up any difference in value or equity between two properties in a 1031 exchange
B. The time a buyer has to have property inspected, title examined, and review any leases to determine if the property meets his or her needs.
C. The support a parcel of land receives from adjacent land; a neighbor's duty to support adjoining land in its natural state.
D. The relative ease of transfer of ownership rights from one person to another; often relates to clear title and satisfactory physical condition.
18. package loan
A. Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales. Usually considered to be personal property,
B. a loan that includes not only the real estate, but also all fixtures and appliances installed on the premises; has been used extensively in financing furnished condo units
C. A tenant's right to occupy real estate during the term of a lease, generally considered a personal property interest; nonfreehold estate.
D. interest paid in advance; one point equals 1% of the loan amount for the borrower and increases the yield for the investor approximately 1/8%.
19. stud
A. the consummation of the real estate transaction; the point at which ownership of a property is transferred in exchange for the selling price; also called settlement
B. Property regarded as undesirable because of events that occurred there; also called psychologically impacted property. Some conditions; gang-related activity, proximity to a nuclear
plant, and even the alleged presence of ghost.
C. the relationship of all finance charges to the loan amount; must be disclosed to borrowers the Truth-in Lending Act.
D. the vertical members in the wall framing; usually placed 16-24 inches apart and serve as main support for the roof and/or the story above
20. unilateral contract
A. A type of contract in which one party makes a promise to induce a second party to do something. "I will give you a reward if you find my dog"
B. exterior roofing material frequently made of fiberglass, asphalt, or wood
, C. Areas such as landscaped parks and playgrounds used to separate and screen residential areas from nonresidential areas
D. A loan in which only interest is paid during the term of the loan, with the entire principal due with the final interest payment; also called a straight loan.
21. Assessment
A. The consideration for an insurance policy.
B. a heavy horizontal board, set on edge at the apex of the roof, to which the rafters are attached
C. cost of any physical capital improvements that add value to the property or prolong its life (added to the cost basis)
D. An official valuation of property for the purpose of establishing assessed value for tax purpose.
22. Implied agreement
A. a loss derived from the sale of real property that may be deductible from ordinary taxable income.
B. In NC, the most common title for a real estate sales contract
C. when principal and agent, without formally agreeing to the agency, act as if one exists.
D. If misrepresentation, fraud, mistake of fact, undue influence or duress are absent in contract formation, good contract is formed.
23. loan-to-value ratio (LTV)
A. one who is empowered to do anything the principal could do personally
B. This means that the contract must be performed within the time limit specified, and any party who has not performed on time is liable for breach of contract.
C. ratio of debt to value of the property
D. The principle that affirms that the value of any component of a property is defined by what its addition contributes to the value of the whole or what its absence detracts from that value.
24. walk-through
A. the final inspection of the property by the buyer prior to closing to assure that the seller has vacated, made required repairs, and delivered the property in the condition it was in at
contact.
B. the appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
C. Physical or design features that are no longer considered desirable by property buyers but can be replaced or redesigned at low cost. ex: changing fixtures
D. one of a series of sloping beams that extends from the center ridge board to an exterior wall and provides the main support for the roof.
25. boot
A. A lender in a deed of trust loan transaction; the recipient of personal property in a will
B. Broker
C. money or property given to make up any difference in value or equity between two properties in a 1031 exchange
D. Agency responsible for designating flood hazard areas bordering rivers and streams.
26. exclusive-right-to-sell listing
A. One broker is appointed as sole agent of the seller and is given the exclusive right, or authorization, to represent the property in question
B. An employment contract between a property owner and a real estate firm/broker by which the broker is employed to find a ready, willing and able buyer for the owner's real estate on
the owner's terms, for which service the owner agrees to pay a commission.
C. uses the three-party deed of trust instrument as security for the mortgage debt; the borrower conveys legal title to a trustee to hold for the lender until the debt is paid off. NC uses this
theory.
D. A clause in a listing contract that says the listing broker is entitled to commission for a time period after the listing expires if the property is sold to a prospect that the broker initially
introduced to the client during the listing term.
27. Special Warranty Deed
A. The need or desire for possession or ownership backed by the financial means to satisfy that need.
B. An insurance policy covering buildings and personal property against loss or damage from fire, lighting, removal, windstorm, hail, explosion, riot, smoke, vandalism and theft.
C. A conveyance that carries the warranty that the property was unencumbered by the grantor.
D. laws that prohibit monopolies and contracts, combinations, and conspiracies that unreasonable restrain trade.
28. Reference to a recorded deed
A. A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
B. the taxable profit earned from the sale of real property
C. The concept of land ownership that includes ownership of all legal rights to the land, i.e.. Disposition, exclusion, enjoyment, possession and control.
D. A reference to a publicly recorded document, usually an earlier deed. The referenced document typically contains a legal description of the property.
29. Easement
A. when principal and agent, without formally agreeing to the agency, act as if one exists.
B. The right to use the land of another for a particular purpose.
C. imposes restrictions and limitations on high-cost loans; revises permissible fees and charges on certain loans; prohibits unfair or deceptive practices by lenders
D. one of a series of sloping beams that extends from the center ridge board to an exterior wall and provides the main support for the roof.
30. graduate lease
A. 1)acceleration clause 2)prepayment penalty clause 3)due-on-sale clause
B. a lease that provides for increases in rent to occur at set future dates; often used in the rental of office space for multiple-year terms. Also called a step-up lease.
C. an agreement b/w property owner and possible buyer, secured by the payment of an option fee, to buy or not to buy property within a specific time period at negotiated terms.
D. a leasehold estate that continues for a definite period of time, whether for years, months, weeks, or days; automatically terminates at the end of the lease period.
, 31. Broker
A. Loss not covered by the insurer.
B. One who acts as an intermediary on behalf of others for a fee or commission; licensed to list, lease, buy, exchange, auction, negotiate or sell interest in real estate for others for a fee
C. Estimate of the quantity, quality or value of something.
D. The channeling of homeowners to particular neighborhoods based on the presence or absence of a protected class.
32. Foreshore
A. A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
B. a note secured by a mortgage or deed of trust given by a buyer as a borrower, to a seller, as lender, as part of the purchase price of the real estate.
C. when a land owner leases land to a tenant who agrees to erect a building on the land.
D. Land at the coast between average high tide and average low tide this is owned by the state of North Carolina.
33. Real Estate Settlement Procedures Act (RESPA)
A. story-high space below the first floor; floor is usually concrete slab
B. federal law that ensures that residential buyers and sellers receive full disclosure of all settlement charges; mandates HUD booklet about closing costs, a good-faith estimate of closing
costs, and hUD-1 closing statement.
C. a flat strip of wood or metal that encloses the ends of the rafters; gutters are usually attached to it.
D. a standardized conventional loan that meets Fannie Mae or Freddie Mac's requirements; made by for-profit lenders and are not insured by the federal gov't to the most creditworthy
borrowers.
34. lien theory
A. an older, traditional approach in mortgaging property where a two-party mortgage instrument is used as security for the debt; the borrower retains both legal and equitable title to the
property.
B. a loan insured by the FHA and made by an approved private lender according to FHA's regulations
C. Reference to linear measurements and compass directions.
D. Colorless, odorless poisonous gas produced as a by-product of incomplete combustion; can be dangerous if not properly ventilate
35. Escheat
A. An easement acquired for a public purpose through the power of eminent domain.
B. The reversion of property to the state in cases where a person dies intestate.
C. provides that on sale of the property by the borrower to a buyer who wants to assume the loan, the lender has the choice of either declaring the entire debt to be due and payable
immediately or permitting the buyer to assume the loan
D. determines the amount of the gain realized from a sale of real property
36. Commingling
A. The 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.
B. A report furnished to prospective buyers contain essential information about a development contain 25 or more lots.
C. An area zoned strictly for aesthetic or appearance considerations
D. when trust funds and the firm/broker's personal/business funds are placed in the same account
37. Endorsement
A. A legal action to compel a party to carry out the terms of a contract.
B. In an insurance policy, coverage added to general policy; a rider.
C. provides that in addition to the rent, the tenant pays all or some of the property charges such as maintenance, property taxes, and insurance; sometimes called a triple net lease.
D. an agency option a firm may use when the consumer is willing to commit to an exclusive written buyer agency relationship.
38. Contract
A. A legally enforceable promise or set of promises between legally competent parties.
B. Refers to a transfer of rights or duties under a contract to a third party.
C. the fiduciary relationship between the subagent ant the principal
D. the lowest horizontal member of the house frame; also on a window or door
39. Comparable (COMP)
A. A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
B. The dollar amount required to construct an exact duplicate of the subject building at current prices. This is mostly used when appraising historical homes.
C. warehouses, factories, land in industrial districts, and power plants.
D. Property used in an appraisal report that is substantially equivalent to the subject property.
40. TICAM
A. Land at the coast between average high tide and average low tide this is owned by the state of North Carolina.
B. This deed offers greater protection than any other deed, is the best deed for the grantee, but gives the grantor the greatest degree of liability.
C. 1)Note rate 2)Index 3)Margin 4)Interest rate caps 5)Payment Cap 6)Adjustment Period 7)Conversion option
D. acronym used by commercial agents in a net lease that frequently refer to these charges: taxes, insurance, and common area maintenance
41. Ms. Murphy's Law
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