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Flashcards in Quick Quiz 8 Deck (27)
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A Standard Policy of Title Insurance would insure against
A) forgery in the chain of title.
B) all of these.
C) items that the insured knew were faulty.
D) validity of a tenant's lease to be free of all liens and encumbrances.

A) forgery in the chain of title.
The standard policy of title insurance insures against (1) matters of record; (2) forgery and fraud; (3) lack of capacity; and (4) improper delivery. Insurance for validity of a tenant's lease to be free and clear of all liens and encumbrances requires a special endorsement. Insurance against items that the insured knew were faulty is incorrect because no policy will insure against that.


Local zoning ordinances determining use of land and building may also determine
A) location of buildings.
B) setbacks.
C) size.
D) all of these.

D) all of these.
The governing authority of a city or county has the power to adopt ordinances establishing zones within which structures must conform to size, set back, and location limitations.


An escrow closing statement that refers to "recurring costs" could be describing
A) deed transfer taxes.
B) impound accounts for taxes and insurance.
C) escrow charges.
D) title insurance.

B) impound accounts for taxes and insurance.
The term recurring costs describes the expenses that the buyer can expect year after year. These include property taxes and fire insurance, which are frequently impounded by the lender.


An estate in real property for a definite and specified period of time with an agreement for the payment of rent is known as
A) freehold estate.
B) estate for years.
C) periodic tenancy.
D) month-to-month tenancy.

B) estate for years.
An estate for years is an interest in lands by virtue of a contract (lease) for the possession of them for a definite and limited period of time. The term may be for any specified period of time, even for a certain number of years, months, weeks, or days.


Escrow companies are subject to the Corporations Commissioner's Regulations. Who would NOT be exempt?
A) Broker not accepting a fee and handling his own escrow
B) Attorney at law
C) Broker escrowing property of other brokers
D) Broker accepting a fee and handling his own escrow

C) Broker escrowing property of other brokers
A real estate broker who is not a party to the transaction would not be exempt from the Regulations of the Corporations Commissioner. A broker who is an agent for one of the parties to the transaction may handle the escrow without being licensed by the Corporations Commissioner whether the broker charges a fee or not. (Other exemptions include attorneys, banks, savings and loans, title companies, and related entities.)


A wife signs an agreement to sell community real property. The contract as it applies to her and her husband is
A) enforceable.
B) voidable.
C) illegal.
D) void.

B) voidable.
An agreement to sell would be unenforceable against the marital community if signed by one spouse only. It would be voidable by the nonconsenting spouse for one year. This type of contract is not considered void, because there is consent of one of the parties.


Which instrument requires a list of inventory of buildings on real property to be sold, conveyed, or insured?
A) Grant deed
B) Land contract
D) None of these

D) None of these
Neither a land contract, grant deed, nor ALTA policy of title insurance requires a listing of the buildings or improvements. A legal description is all that is required.


The right to use and enjoy another's property short of an estate is an example of a(n)
A) leasehold.
B) deed.
C) easement.
D) subordination clause.

C) easement.
An easement is the right to use another's property without payment. Although it is an interest in real property, it is not a "possessory" interest and therefore is not an estate.


A lessee may be justified in abandoning a rented dwelling if there is constructive eviction by the landlord. All of these would be constructive eviction EXCEPT
A) failure of the landlord to repair excessive wear and tear to property caused by the tenant.
B) condemnation of the entire property in eminent domain proceedings.
C) an eviction notice is tendered by the landlord.
D) unwarranted delays by the landlord after notice to make repairs of damages that have made the property unfit for occupancy.

A) failure of the landlord to repair excessive wear and tear to property caused by the tenant.
A landlord would not likely be found guilty of constructive eviction for failing to repair excessive wear and tear caused by the tenant. The three other circumstances would be classified as constructive eviction.


An owner of a five-unit apartment complex intends to sell each unit to different individuals. He wants each to own an estate in each unit with ownership of structures and land in joint ownership. Under these circumstances, this plan would be considered a
A) lot-splitting.
B) subdivision.
C) partition.
D) variance.

B) subdivision.
A conversion of an apartment building into five or more condominium units is a subdivision under both the Subdivision Map Act and the Subdivided Lands Act.


Amenities of residential real estate are
A) not considered by appraisers because they are intangible qualities.
B) measurable on the market.
C) the property's physical attributes.
D) related to its capacity to provide shelter effectively.

B) measurable on the market.
Amenities are the attractive or desirable features of a home or neighborhood. These may be physical attributes or perhaps the neighborhood's attitude toward schools, well-kept lawns, et cetera. These may be tangible or intangible qualities measurable on the market.


Lenders frequently will lend up to 95% on conventional residential mortgages due to the availability of
A) mortgage cancellation insurance.
B) guaranteed mortgage insurance.
C) private mortgage guaranty insurance.
D) Fannie Mae insurance.

C) private mortgage guaranty insurance.
Private mortgage guaranty insurance (more commonly called private mortgage insurance, or PMI) protection is available to lenders approved by a mortgage insurance company as additional security for low-down-payment home loans. It guarantees the lender that should the borrower default in loan repayment, the insurer will reimburse the lender for the dollar loss suffered or for the insured amount, whichever is less.


What is an advantage to the seller of real property in using a conditional sales contract in the sale of property instead of giving a grant deed and taking back a large trust deed?
A) A deficiency judgment can be obtained in the event of default.
B) Foreclosure proceedings are faster thereby permitting the vendor to recover possession quickly from the buyer.
C) The seller can prohibit the vendor from recording the contract if the contract includes a clause prohibiting such recording.
D) None of these

D) None of these
The other three choices do not offer a benefit to a seller using a land contract. There are probably no advantages since law changes in 1985.


A roof that slopes upward from all four sides and is joined at the ridge is called a
A) hip roof.
B) mansard roof.
C) gambrel roof.
D) gable roof.

A) Hip roof
Gambrel = Dutch
Mansard = French with windows
A gable is the generally triangular portion of a wall between the edges of intersecting roof pitches. The shape of the gable and how it is detailed depends on the structural system used, which reflects climate, material availability, and aesthetic concerns.


An appraiser is employed to advise an apartment owner of the economic feasibility of construction of a swimming pool. The appraiser would be most concerned with which valuation principle?
A) Integration
B) Contribution
C) Regression
D) Substitution

B) Contribution
The principle of contribution is applied to a portion of the property (in this case the added swimming pool) and affirms that the value of an additional improvement is measured by its contribution to the net return of the combined enterprise.


The economic life of improved property is _______ in relation to the physical life of the property.
A) lesser
B) greater
C) dependent on the type of improvement
D) the same

A) lesser


A buyer purchased a property using a recorded conditional sales contract and later defaulted on the payments. If a quitclaim deed was used to clear the cloud on title, it would be executed by
A) both buyer and seller.
B) the buyer.
C) the seller.
D) none of these.

B) the buyer.
This quitclaim deed would be executed by the buyer.


A real estate broker could be held liable to a buyer if he or she
A) retains the buyer's check at the seller's request after an offer has been accepted by the seller and acceptance has been communicated to the buyer.
B) unknowingly makes a misrepresentation to the buyer based on false information given by the seller.
C) executes an agreement with the buyer on behalf of the seller under a power of attorney granted by seller.
D) acts in excess of the authority given by the seller under a listing agreement.

D) acts in excess of the authority given by the seller under a listing agreement.
The principal is liable for the acts of his agent performed "within the scope of authority." The agent is liable for the agent's own acts performed "beyond the scope of authority."


A tenant who transfers an entire leasehold interest does so by
A) transfer.
B) assignment.
C) alienation.
D) sublease.

B) assignment.
Assignment of leasehold means the entire interest is transferred and includes the remaining term and the entire premises. Subleasing is transferring part of the premises or less than the entire term.


An appraiser determines the accrual for depreciation in using
A) the income approach.
B) market data.
C) cost.
D) none of these.

A) the income approach.
The term accrual for depreciation means to provide for future depreciation. This is done by setting aside funds or charging off against the future income an amount to eventually replace or recapture the investment in the improvements. This is usually provided for in the capitalization rate in the income approach. Accrued depreciation (past) is used in the cost approach.


The first installment of real property taxes had been paid by the seller for the current fiscal year. Property taxes for the current fiscal year amounted to $1,200. If escrow closed on February 1, what amount of prorated taxes would the seller be required to pay?
A) $100
B) $600
C) $1,200
D) $200

A) $100


Which statement is NOT true with respect to depreciation as determined by an appraiser?
A) It can be computed for both past and future.
B) It can be determined by more than one method of appraisal.
C) It is loss of value from any cause.
D) It is inherent in the property and not created by outside influences.

D) It is inherent in the property and not created by outside influences.
Depreciation can be from either inherent or extraneous causes. Economic/social obsolescence is an outside factor that can have a great impact on value. Examples include an increase in interest rates, and increase in crime in the neighborhood, zoning, and rent control.


A builder is selling a house that he had built under a blanket encumbrance. Under normal procedure, the instrument that would be requested of the beneficiary would be a
A) partial reconveyance deed.
B) warranty deed.
C) quitclaim deed.
D) grant deed.

A) partial reconveyance deed.
A partial reconveyance deed would reconvey the legal title to a specified lot or lots to the trustor in return for a partial payment on the trust note balance, thus releasing a specified lot or lots from under the blanket encumbrance.


A woman purchases a home for $80,000 and executes a note for $78,000 secured by a first trust deed. The balance she pays in cash. Subsequently, a period of economic inflation sets in. This would benefit
A) neither the beneficiary nor the trustor.
B) the trustee.
C) the trustor.
D) the beneficiary.

C) the trustor.
Inflation will cause the trustor's (borrower's) equity to increase faster than it would from principal payments alone. Since inflation will not affect the interest rate on the note, this is an advantage to the trustor but a definite disadvantage to the beneficiary (lender). The trustee is not affected in any measurable way.


Smith asked a broker to help secure a $19,000 loan for five years using his house as collateral. The appraised value of the residence was $80,000 and was completely free of liens and encumbrances. The broker would likely fail to succeed if she attempted to secure the loan through a(n)
A) savings and loan.
B) insurance company.
C) commercial bank.
D) private lender.

B) insurance company.
Since 1965, insurance companies have steadily withdrawn from mortgage lending on individual residences. Smith would have a better chance of receiving his loan from one of the other three lenders.


Eminent domain and police power are governmental rights established by law. Which action would NOT be considered police power?
A) Subdivision development regulations
B) Condemnation
C) Zoning laws
D) Building regulations

B) Condemnation
The use of the power of eminent domain is often referred to as condemnation. Building regulations, zoning laws, and subdivision development regulations are all examples of police power.


A certain lender has the following lending policies and characteristics: makes many loans on commercial properties; makes relatively few construction loans; usually seeks to avoid administering loans; prefers to make long-term loans. This describes which lender?
A) Life insurance companies
B) Federal savings and loans
C) Mortgage companies
D) Savings and loan associations

A) Life insurance companies