Real Estate Salesperson Practice Test - Flashcards
License Law and Regulations
The Division of Licensing Services operates under New York's Department of State.
New York Property Law, Article 12-A, went into effect in .
A Real Estate Broker can be a person, firm, partnership, or a corporation.
A broker listing a home for sale is required to be licensed to sell real property for a commission.
Ads made by real estate brokers that do not indicate the advertiser is a broker are known as blind ads.
Law of Agency & Brokerage
An individual who hires and delegates an agent the responsibility of representing their interests is referred to as a principal.
The broker of record is an agent of the principal.
In a fiduciary relationship, an agent is empowered to negotiate offers and counter-offers on behalf of the principal.
An individual who is a property manager for a commercial property owner is a general agent.
If a broker refuses to sue a seller-principal for a lawfully earned commission, the salesperson may sue the broker.
A broker with multiple written offers from separate prospective customers should submit all offers to the owner.
The compensation of a salesperson is determined by agreement between the broker and salesperson.
Estates & Interests
Unlike freehold estates, leasehold estates involve rentals.
In a fee simple estate, the owner is entitled to all rights of the property.
Ownership by a single individual is referred to as severalty.
In New York, if a will does not state how property inherited by multiple nephews would be titled, their ownership automatically will be tenancy in common.
The owner of a life estate does not have the right to pass ownership to heirs.
Liens & Easements
The permanent right to use another’s land for the benefit of a neighboring parcel is an easement appurtenant.
Real estate taxes supersede and have priority over all other liens.
If property is purchased subject to a mechanics lien, the lien will remain attached to the home.
An encroachment is often disclosed by a property survey.
A mortgage lien is considered to be a voluntary lien.
Deeds
A grantee’s signature is not needed to have a valid deed.
In describing land, distances and directions are associated with metes and bounds.
The size of a township using the rectangular survey system is square miles.
A grantee is often willing to accept a deed with no covenants or warranties in a divorce settlement.
Leases
For a lease to be enforceable in court, it must be in writing if it is for a term of more than one year.
A percentage lease is one where the tenant pays a percentage of their gross sales.
A lease should be signed by both the lessor and lessee.
Contracts
Every contract must have an offer and acceptance.
A verbal contract of sale to sell real estate under the Statute of Frauds is void.
An acceptance that varies in any way from the offer is a counteroffer.
Title Closing & Costs
A homeowner can identify all previous owners of a property through its chain of title.
A concern of the mortgage lender during a real estate closing is that the buyer receives marketable title, but not necessarily that the seller receives accurate credits.
The document a title company asks the seller to sign at closing to assure no judgments, bankruptcies, or divorces since the title examination date is an affidavit of title.
Finance
In real estate financing, a note is a promise to repay a loan and also acts as evidence of borrowing.
In New York, a penalty can be charged by a lending institution for a late mortgage payment on a conventional loan days after payment is due.
The gradual reduction of mortgage debt by periodic payment is called amortization.
The person who signs the mortgage and has a lien against their property as collateral for payments on the bond is called the mortgagor.
When the mortgagor pays the mortgage indebtedness in full, they receive a satisfaction piece from the mortgagee for recording and acknowledging payment.
In a friendly foreclosure, the lender accepts the deed from the borrower.
FHA programs are for insuring housing loans.
Land Use Regulations
A subdivider might regulate the type of building and construction on subdivision lots through a restrictive covenant.
The right of the government to take private property for public use is called eminent domain.
To be granted a variance, one must show unnecessary hardship.
The doctrine of laches concerns the loss of rights due to a delay in asserting them.
One objective of cluster housing is preserving community open space.
A property owner might obtain development rights from another owner to construct a building that will be higher than otherwise permitted.
Construction
A parcel of land that has been prepared for construction is referred to as a site.
Joists are installed in horizontal positions.
In a frame or wooden skeleton, studs rest on plates.
Scale drawings of buildings, including floor plans, elevations, and construction details, are blueprints.
The heat output of a furnace is measured in BTU’s.
Valuation & Pricing Properties
The area preference, or location, is often called situs.
The probable price that a property will bring is its market value.
Once completed, the cost of property does not change, but the value changes.
The price the present owner paid to acquire the property does NOT affect value.
The construction style in which only one floor is built at a time and each floor serves as a platform for the next story is called platform construction.
Environmental Issues
A percolation rate test is used to check a home’s septic system.
The federal act which expanded the definition of persons liable for environmental clean-up costs is the Superfund Amendments and Reauthorization Act.
Human Rights & Fair Housing
If an individual with a physical disability wants to rent a living unit requiring bathroom and kitchen accommodations, the landlord should rent the unit and allow reasonable modifications by the tenant, provided the tenant agrees to restore the property to the original condition when the rental is over.
The Jones v. Alfred H. Mayer Company Supreme Court decision upheld that no exemption could be made regarding the illegality of discrimination based on race.
Redlining is an illegal practice that denies loans based upon the location of the property.
HUD’s equal opportunity poster should be displayed in any location where a broker conducts business.
In New York, protected classes include military status.
Mathematics
For a building measuring at per square foot, the asking price is 140 imes 75 imes 130 = $1,365,000.
A broker’s percent commission on a home is 0.07 imes 450000 = $31,500.
An agency receiving a commission on a home implies a commission rate of \$19,200 / $320,000 = 6\%.
An acre comprises square feet.
Municipal Agencies
In many towns and cities in New York, the main elected government body is the board of trustees.
An owner-occupied mobile home is an example of a homestead property.
Tax assessments for all lands and buildings within a municipality can be found on its assessment roll.
Complaints about the effects of zoning ordinances on specific parcels of property are heard by the Zoning Board of Appeals.
Taxes & Assessments
A tax determined by the value of the property being taxed is known as an ad valorem tax.
Taxes levied only on parcels of real estate that will benefit from improvements are called special assessments.
In New York, the difference between the property tax in the year of a property’s sale and the target tax is referred to as the transitional tax.
An equalization factor is not applicable in any New York municipality where full-value assessment is used.
Condominiums & Cooperatives
A shareholder in a cooperative receives an occupancy agreement known as the proprietary lease.
The purchaser of a cooperative is an owner of shares of stock in a corporation.
The mortgage that covers a cooperative building is called an underlying mortgage.
The document containing the disclosure statement for a cooperative provided by the sponsor of a primary sale is the offering plan.
Covenants, conditions, and restrictions (CC&Rs) are set by the bylaws of a condominium.
Property Management & Insurance
A property manager’s job is to maintain the value of the property while maximizing income.
The market analysis, operating budget, financing proposals, and recommendations prepared by a property manager are referred to as the management proposal.
Information covered in the property manager’s property analysis includes the terms of each tenant’s existing lease and the property’s curb appeal.
Security deposits protect property owners from tenant default.
Liability insurance covers the risks an owner assumes when the public enters the building.
The management agreement between a property owner and a property manager creates an agency relationship.
Commercial & Investment Properties
An investor’s concern that a commercial office building may not yield adequate risks if the community does not attract restaurants and shopping relates to the project’s business risk.
Uninsurable risks, such as changes in the IRS’s treatment of capital gains, are referred to as dynamic risk.
In a shopping center, a large space user whose presence will attract other tenants is the anchor tenant.
Federal income tax would not be included in an investment’s net operating income.
The gross rent roll or gross receipts attributable to the rental activities of an investment property if that property were leased is called the potential gross income.
Cash expenses is NOT one of the three basic categories of expenses for income-producing property.
Operating expenses are subtracted from the effective gross income to determine the net operating income.
The annual profit sought by an investor on the overall cost of an acquisition is the ROI (Return on Investment).
The 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 is an estoppel clause.
Lease escalation clauses were designed to protect commercial property owners against increased costs in operations due to inflation.
The porter’s wage escalation formula concerns wages paid to commercial property workers.
Property insurance would be considered a fixed expense for a commercial rental.