Real Estate Salesperson Practice Test - Flashcards

Flashcards covering key vocabulary from the American Real Estate School's Salesperson Practice Test, focusing on License Law, Agency, Estates, Liens, Deeds, Leases, Contracts, Closing Costs, Finance, Land Use, Construction, Valuation, Environmental Issues, Human Rights, Municipal Agencies, Taxes, Condominiums, Cooperatives, Property Management, and Commercial & Investment Properties.

Division of Licensing Services (New York)

Operates under the New York Department of State.

New York Property Law, Article 12-A

Went into effect in 1922.

Real Estate Broker

Can be a person, firm, partnership, or a corporation.

Real Estate License Requirement

Applies to a broker listing a home for sale to earn a commission.

Blind Ad

An advertisement by a real estate broker that does not indicate the advertiser is a broker.

Principal (Agency)

An individual who hires and delegates an agent the responsibility of representing their interests.

Agent of the Principal

A broker of record.

Agent's Empowerment (Fiduciary)

In a fiduciary relationship, an agent is empowered to negotiate offers and counter-offers on behalf of the principal.

General Agent

An individual, such as a property manager for a commercial property owner, empowered to perform a broad range of tasks for the principal.

Salesperson Recourse (Unpaid Commission)

If a broker refuses to sue a seller-principal for a lawfully earned commission, the salesperson may sue the broker.

Broker's Duty (Multiple Offers)

A broker must submit all written offers to an owner.

Salesperson Compensation

Determined by agreement between the broker and the salesperson.

Leasehold Estates

Unlike freehold estates, these involve rentals.

Fee Simple Estate

A type of estate where the owner is entitled to all rights of the property.

Severalty Ownership

Ownership by a single individual.

Tenancy in Common (New York Inheritance)

The automatic ownership title for multiple heirs in New York if not specified otherwise in a will.

Life Estate Limitation

The owner does not have the right to pass ownership to heirs.

Easement Appurtenant

The permanent right to use another’s land for the benefit of a neighboring parcel.

Priority Lien

Real estate taxes, which supersede and have priority over all other liens.

Mechanics Lien (Property Purchase)

If a home is purchased subject to it, the lien will remain attached to the home.

Encroachment Disclosure

Often disclosed by a property survey.

Voluntary Lien

A mortgage lien.

Valid Deed Requirement

Does not require the grantee’s signature to be valid.

Metes and Bounds

A method for describing land using distances and directions.

Township Size (Rectangular Survey System)

Measures 36 square miles.

Quitclaim Deed Context

A grantee may accept a deed conveying only the grantor's interest without warranties, often in a divorce settlement.

Enforceable Lease

Must be in writing if its term is for more than one year to be enforceable in court.

Percentage Lease

A lease where the tenant pays a percentage of their gross sales in addition to or instead of fixed rent.

Lease Execution

Should be signed by both the lessor and the lessee.

Essential Contract Elements

An offer and acceptance must be present in every contract.

Verbal Real Estate Contract

Void under the Statute of Frauds or General Obligations Law.

Counteroffer

An acceptance that varies in any way from the original offer.

Chain of Title

A record that identifies all previous owners of a property.

Mortgage Lender's Closing Concerns

Include ensuring the buyer receives marketable title, property tax is paid, homeowner insurance is paid, but generally not the seller's credits.

Affidavit of Title

A document signed by the seller at closing to assure there have been no judgments, bankruptcies, or divorces involving them since the title examination date.

Promissory Note (Real Estate Finance)

Acts as a promise to repay a loan and evidence of borrowing.

Late Mortgage Payment Penalty (New York)

Can be charged 15 days after payment is due for a conventional loan in New York.

Amortization

The gradual reduction of mortgage debt by periodic payments.

Mortgagor

The person who signs the mortgage and has a lien against their property as collateral for payments on the bond.

Satisfaction Piece

An instrument for recording and acknowledging full payment of a mortgage debt, received by the mortgagor from the mortgagee.

Friendly Foreclosure

A process where the lender accepts the deed from the borrower.

FHA Programs

Primarily focus on insuring housing loans.

Restrictive Covenant

Used by a subdivider to regulate the type of building and construction on subdivision lots.

Eminent Domain

The right of the government to take private property for public use.

Variance (Zoning)

To be granted one, a person must show unnecessary hardship.

Doctrine of Laches

Concerns the loss of rights due to a delay in asserting them.

Cluster Housing Objective

Preserving community open space.

Development Rights

Obtained by one property owner from another, often to construct a building higher than otherwise permitted.

Construction Site

A parcel of land that has been prepared for construction.

Joists

Structural elements installed in horizontal positions in a building.

Plates (Construction)

Horizontal members in a frame or wooden skeleton upon which studs rest.

Blueprints

Scale drawings of buildings, including floor plans, elevations, and construction details.

BTU (British Thermal Unit)

The unit of measurement for the heat output of a furnace.

Situs

A term often used for area preference or location in real estate.

Market Value

The probable price that a property will bring.

Cost vs. Market Value Relationship

Once a property is completed, its cost does not change, but its market value can.

Factors NOT Affecting Property Value

The price the present owner paid to acquire the property is generally not considered a direct factor.

Platform Construction

A construction style where one floor is built at a time, serving as a platform for the next story.

Percolation Rate Test

Used to check a home’s septic system.

Superfund Amendments and Reauthorization Act (SARA)

A federal act that expanded the definition of persons liable for environmental clean-up costs.

Reasonable Modifications (Disabled Tenants)

Landlords should allow tenants with physical disabilities to make reasonable modifications, provided the tenant agrees to restore the property to its original condition.

Jones v. Alfred H. Mayer Company

A Supreme Court decision that upheld the illegality of discrimination based on race, admitting no exemptions.

Redlining

An illegal practice that denies loans based upon the location of the property.

HUD Equal Opportunity Poster

Should be displayed in any location where a broker conducts business.

Protected Classes (New York)

Include race, creed, color, national origin, sex, disability, age, sexual orientation, marital status, and military status.

Acre (Square Feet)

Comprises 43,560 square feet.

Main Elected Government Body (New York)

In many New York towns and cities, it is the board of trustees.

Homestead Property

An owner-occupied mobile home is an example.

Assessment Roll

The document where tax assessments for all lands and buildings within a municipality can be found.

Zoning Board of Appeals

Hears complaints about the effects of zoning ordinances on specific parcels of property.

Ad Valorem Tax

A tax that is determined by the value of the property being taxed.

Special Assessments

Taxes levied only on parcels of real estate that will benefit from improvements.

Transitional Tax (New York)

The difference between the property tax in the year of a property’s sale and the target tax in New York.

Equalization Factor (New York)

Not applicable in any New York municipality where full-value assessment is used.

Proprietary Lease

An occupancy agreement received by a shareholder in a cooperative.

Cooperative Purchaser

An owner of shares of stock in a corporation.

Underlying Mortgage

The mortgage that covers an entire cooperative building.

Offering Plan (Cooperative)

The document containing the disclosure statement for a cooperative, provided by the sponsor of a primary sale.

Covenants, Conditions, and Restrictions (CC&Rs)

Set by the bylaws of a condominium.

Property Manager's Primary Job

To maintain the value of the property while maximizing income.

Management Proposal (Property Manager)

A document prepared by a property manager that includes market analysis, operating budget, financing proposals, and management recommendations.

Property Analysis (Property Manager)

Covers information such as the terms of each tenant’s existing lease and the property’s curb appeal.

Security Deposits

Protect property owners from tenant default.

Liability Insurance (Property)

Covers the risks an owner assumes when the public enters the building.

Management Agreement (Property)

Creates an agency relationship between a property owner and a property manager.

Business Risk (Commercial Property)

An investor’s concern about whether an office building will yield adequate returns if the community lacks attractions like restaurants or shopping.

Dynamic Risk (Investment)

Uninsurable risks, such as changes in the IRS’s treatment of capital gains.

Anchor Tenant

A large space user in a shopping center whose presence attracts other tenants.

Net Operating Income (NOI)

Does not include federal income tax in its calculation.

Potential Gross Income (PGI)

The gross rent roll or gross receipts from an investment property if it were 100% leased.

Basic Categories of Income-Producing Property Expenses

Include fixed expenses, variable expenses, and reserves for replacements.

Net Operating Income Calculation

Determined by subtracting operating expenses from the effective gross income.

ROI (Return on Investment)

The annual profit sought by an investor on the overall cost of an acquisition.

Estoppel Clause (Rental Property Sale)

A document used in the sale of a rental property to certify that a rental agreement is in full force and existence as of a specified date.

Lease Escalation Clauses

Designed to protect commercial property owners against increased operational costs due to inflation.

Porter's Wage Escalation Formula

Concerns wages paid to commercial property workers.

Fixed Expense (Commercial Rental)

Property insurance.