Real Estate Exam Review

Flashcards for reviewing real estate concepts

In the case of default, once senior liens have been addressed, the remaining liens' priority sequence is determined by:

Relative timing of establishment of lien

When identifying an easement appurtenant, what is the parcel of land that benefits from the right to use the land in question called?

Dominant Parcel

Which type of engineer provides specifications and design for the HVAC system?

Mechanical Engineer

When considering design aesthetics, optimal use/preservation of a site, traffic flows, utility systems, and drainage systems, which individual is most concerned?

Land Planner

In a lease agreement, what is the owner referred to as?

Lessor

What is the most difficult aspect of being a commercial real estate broker?

Building a book of business

With mezzanine debt, which entity is typically pledged as collateral to the lender?

Ownership shares in the development entity

What type of item would most likely be considered a fixture at the time of sale of a property?

Attached to the property and intended to be permanent

After a specific use is chosen for a site, what is the first stage in the development process?

Establishing site control

What type of co-ownership includes right of survivorship?

Joint Tenancy

Which management function would be considered a primary responsibility of an asset manager?

Property acquisitions and dispositions

What risk is of primary concern after the construction phase has been completed?

Market risk

Which type of lien is automatically superior to any other lien?

Property tax and assessment lien

What legal instrument is commonly used for personal representatives/trustees to act on behalf of a principal?

Power of Attorney

Brokers or agents that specialize in helping tenants find suitable space are referred to as:

Tenant reps

What is it called when a developer combines the roles of the architect and general contractor into one to mitigate design-cost conflicts?

Design build

Under the law of agency, the individual or entity that grants authority to the broker to act on their behalf is referred to as the:

Principal

When a property manager works under a management contract in which the manager is empowered to serve as the owner’s fiduciary, what type of relationship is this?

Agency relationships

In Commercial Real Estate, list one one of the ways to describe property:

Parcel of land and everything attached to it.

Calculate the most effective way to calculate a property management fee, that best aligns the interests of the owner and manager:

Net operating income

In an open-listing contract, when is a broker entitled to a commission?

If she procures the buyer of the property

To give exclusive possession, use, and enjoyment during their lifetime, yet provide the university with the right of disposition, the university may want to purchase a:

Ordinary life estate with remainder interest

In the basic principal-agent relationship of real estate brokerage, real estate brokers act in the capacity of:

Special agent

When one party’s contractual rights and obligations are transferred to someone else, it is more commonly referred to as contract:

Assignment

Which marital property right gives a spouse a one-half claim on all property acquired "from the fruits of the marriage?"

Community property

When the seller fails to perform during a contract of sale, how can you appeal to the court to force the defaulting seller to carry out the contract?

Specific performance

Which of the following types of costs typically constitute the greatest proportion of the project’s construction budget?

Hard costs

What is it called when a developer pre-leases space to a financially strong tenant, without having yet built the structure?

Build to suit

Which of the following duties refers to a broker’s obligation to be completely open and honest with the principal?

Fiduciary duty

What leasehold estates best describes the situation in which a tenant who previously occupied a property under a legitimate leasehold interest refuses to vacate?

Tenancy at Sufferance

Which of the following individuals serves as the developer’s liaison and representative on the project site?

Construction manager

What are potential tenants referred to as when their general debt obligations are rated “investment grade”?

Credit tenants

When the owner of an oil or gas well is able to claim all that is pumped from it, regardless of whether the oil or gas migrated from adjacent property, this is referred to as a _ state.

Law of capture

What costs would be expected to constitute the largest portion of a development project’s expense?

Hard construction costs

What kind of consideration is demonstrated when someone shopping for a new suit at a department store is much more likely to stop at a nearby shoe store than a nearby bakery or drugstore?

Tenant mix

What duty refers to a broker’s obligation to never subordinate the best interest of their principal to the interests of others?

Loyalty

What is the value given up, or promise made, by each party in a contract is referred to as?

Consideration

What type of cost is classified as a soft cost:

Legal fees of permitting process

Boosting short-run NOI by choosing to not perform ordinary maintenance at the time a problem is detected is referred to as:

Deferred maintenance

Which type of engineer is responsible for determining the requisite skeleton to maintain the building’s integrity?

Structural engineer

The management agreement provides for a management fee that is usually in the range of 3 to 6% of which of the following measures of property income?

Effective gross income

Companies or individuals who provide specialized construction activities such as installation of heating, ventilating, and air conditioning systems during the construction process are referred to as what kind of engineer?

Mechanical engineer

A contract for the sale of real estate must adhere to two additional requirements - list one:

Written form

If Brian just began graduate school at the local university and is looking to rent an apartment with an oral agreement with no definite lease period outlined, what best describes Brian’s situation?

Periodic Tenancy

What is the defect to mutual assent that involves intentional misrepresentation?

One party is committing fraud

Recording documents provides what of an interest in real property?

Constructive notice

What is a contract commonly be referred to as when contracts for sale may contain sections that cause implementation of the contract to depend on the successful completion of some prior action?

Contract with contingencies

Which duty refers to a broker’s obligation to keep the principal informed about financial aspects of their assignment?

Accounting

In acting as an agent for another person, what carries, by law, special responsibilities that must be adhered here to throughout the transaction process?

Fiduciary relationship

When interpreting cap rate movements, an increase in cap rates over time would indicate that:

Property values have decreased

Which of the following approaches for calculating the market value of a property involves estimating the dollar value associated with replacing the property new, as well as determining the loss in value due to physical, functional, and external obsolescence?

Cost approach

The rental income that a property would most probably command if all the space were continuously leased at current rental rates is more commonly referred to as the:

Market Rent

Which of the following measures is considered the fundamental determinate of market value for income-producing properties?

NOI

What ratio measures the percentage of the price (or value) of a property that is encumbered by the first mortgage?

Loan to Value

Lenders usually seek a minimum DCR of:

1.20

Accrued depreciation is also related to changes in tastes, preferences, technical innovations, or market standards. This is commonly referred to as:

Functional Obsolescence

Which of the following clauses prohibits prepayment of the mortgage loan for a specified period of time after its origination?

Lockout provisions

floating-rate loans may increase a lender’s exposure to which of the following risks

Default Risk

The use of financial leverage reduces the real estate investor's exposure to default risk.

FALSE

The starting point in calculating net operating income is the total annual income the property would produce is:

Potential Gross income

Real estate appraisers generally distinguish among the concepts - list one:

Estimate of the most probable selling price

What type of lease of the following statements best describes a “graduated” or step-up lease?

The lease establishes the schedule of rental rate increases over the term of the lease

This ratio indicates the cash-on-cash return what ratio is appropriate to use?

Debt yield ratio

One way that lenders protect themselves from prepayments

Defeasance

What kind of loan is it when a lender receives a specified portion of a property’s net operating income and/or net sale proceeds as part of the loan agreement?

Participation loan

Which of the following ratios measures the extent to which a property’s net operating income (NOI) can decline from expectations before it is insufficient to service the mortgage debt?

Debt coverage ratio

lenders cannot lay claim to the personal assets of the defaulted borrower, this type of loan is commonly referred to as a:

Non recourse loan

Which of the following types of transactions would be most appropriate for use in the sales comparison approach to valuation?

Arms length transaction

Which of the following classes of properties within a particular property type would be expected to have the highest cap rates?

Class C properties