California Principles questions Ch15-Ch19
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Principles Ch15 quiz
(correct answers will be revealed with correct subscription)
1 of 10 A first-time buyer has applied for a large mortgage loan at ABC Bank. The first-timer has good credit, good debt-to-income ratio, a stable position and adequate income. The lender still has concerns. Which of the following is not one of the lender’s concerns?
A. The current and future value of the property.
B. The attractiveness of other investments that could be made for a better return.
C. The income and income potential of the loan applicant.
D. The loan applicant’s need of financial assistance.
2 of 10 Patrice and Jacque have secured a mortgage loan. They must provide at least a 20% down payment, but are not required to have a government guarantee or private mortgage insurance. What type of mortgage loan have they obtained?
A. A Conventional Insured Loan
B. An Exchange
C. Conventional Loan
D. Syndicate Financing
Principles
3 of 10 Why are sales contracts no longer a popular financing instrument in California?
A. It is very difficult for the seller to remove a buyer that is in default.
B. The buyer is at risk because he holds no immediate title to the property.
C. Court battles involving both the seller and buyer could be lengthy and costly.
D. All of the Above
4 of 10 Why would a Contract for Deed (Installment Sale Contract) be attractive to certain buyers?
A. Buyers who cannot come up with a down payment may lease to own for a period of time, usually five years.
B. Buyers who can only make a small down payment with monthly installments. Usually they must meet certain conditions and the contract does not require conveyance within six months.
C. Buyers who can only make a small down payment with monthly installments. Usually they must meet certain conditions, and the Contract for Deed does not require conveyance (transfer) within the same year.
D. Buyers have the title conveyed to them, usually after two years, when certain conditions are met and monthly installments are made toward the down payment.
5 of 10 Gordon makes a trip to his financial institution one morning. He has conducted all of his banking transactions at the institution for more than twenty years. Today he walks out with a loan on his new home and one for a new boat. What method of financing has Gordon secured?
A. Exchange
B. Commercial
C. Conforming loan
D. Bonds or Stocks
6 of 10 Who benefits from a long-term lease?
A. The tenant – 100% of rent is deductible as an expense.
B. The landlord – The property is leased for a long period of time, guaranteeing a return on investment.
C. The tenant – The total debt load of the tenant remains the same.
D. Both A and C
7 of 10 Jack owns a small home near a school. He doesn’t have any children, and doesn’t plan on having any in the future. Jack is a writer and works out of his home. All of the noise from the playground during the day interrupts Jack while he is trying to work. Tina, a friend of Jack’s, also owns a small home. Her home is in a quiet, little secluded neighborhood. She has a child that will be entering first grade in the fall and wishes she lived closer to a school. One day, Jack asked Tina if she would want to exchange homes. Is this a possibility?
A. Yes, a trade of properties (Exchange) is possible if the trade involves no financing and the properties are not mortgaged.
B. Yes, a trade of properties (Exchange) is possible if the trade involves no financing.
C. No, it is not a possibility. Simply “trading” real estate is not recognized under California Real Estate Law.
D. None of the Above
8 of 10 What category of investors sees Syndicate Equity Financing as a good opportunity?
A. Consumers with damaged credit.
B. Consumers with more than one home loan.
C. Small investors.
D. Borrowers who have previously declared bankruptcy.
9 of 10 Tyoka has a small retail store in San Diego. He sells imported items such as clothing, arts, and crafts. He has recently sold the store to a group of investors. In the arrangement with the investors, Tyoka now leases his former store from the new investors. What type of financing applies to Tyoka’s new arrangement?
A. Exchange
B. Long-Term Lease
C. Sale-Leaseback
D. Straight Lease
10 of 10 Who is the largest private mortgage insurer?
A. Mortgage Guarantee Insurance Corporation
B. Fannie Mae
C. Freddie Mac
D. VA
Principles Ch16 quiz
(correct answers will be revealed with correct subscription)
1 of 10 Sam is selling one of his rental homes. His advertisement reads: “For Sale By Owner – Owner Will Finance – No Down Payment!” What are the criteria for being considered a creditor under Truth in Lending?
A. A lender must lend funds 25 times a year and/or must lend the funds for at least five housing loans annually.
B. A lender must lend funds five times a year and/or must lend the funds for at least 25 housing loans annually.
C. A lender must lend funds 20 times a year and/or must lend the funds for at least five housing loans annually.
D. Every lender is considered a Truth in Lending creditor and must follow all of the law’s regulations.
2 of 10 What are the steps set forth for a real property securities dealer? Which Article do the regulations fall under?
A. Obtaining a Commissioner’s Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 6.
B. Obtaining a Commissioner’s Permit and proof of a $10,000 surety bond. The regulations fall under Article 5.
C. Obtaining a Commissioner’s Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 4.
D. None of the Above
3 of 10 Lily, a licensee, has been referring her first-time home buyers to Safe Insurance Company for all of their insurance needs. The insurance company has been providing Lily with “motivation” in the form of cash to keep the referrals coming. Which law or act prohibits this type of violation?
A. Fair Lending Laws
B. RESPA
C. Equal Credit Opportunity Act
D. Both A and C
4 of 10 Jacinda makes collections on real estate loans. Last year, she made approximately 20 collections and collected $38,000. Must Jacinda be licensed?
A. Yes, if a collector makes more than ten annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker.
B. No, if a collector makes more than forty annual collections, or collects more than $10,000, he/she must be licensed as a California real estate broker.
C. Yes, if a collector makes more than fifteen annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker.
D. Yes, if a collector makes more than twenty annual collections, or collects more than $30,000, he/she must be licensed as a California real estate broker.
5 of 10 What is the true purpose of Truth in Lending Law?
A. Closing Costs
B. Controlling Interest Rates
C. Disclosure
D. APR
6 of 10 Beverly, an African-American woman, has applied for a mortgage on a new home. She has a reliable job as a court reporter and has been employed for ten years. Her income is substantial enough to pay a mortgage, in her budget, and still have seventy percent of her income remaining. She has, however, been at least ninety days late on several bills one year ago. Beverly has since caught up on her credit card bills, paid them on time, and reduced their balances by half. She has just been turned down for a mortgage by her bank. Has she been discriminated against?
A. Perhaps. She may have been turned down because she is an African -American woman. She has a steady job with a decent income. Her small brush with delinquency should not have led to a refusal.
B. No. Beverly’s brush with delinquency is too fresh on her record for the bank to issue a mortgage. Although she has taken the steps to correct the issues, ninety days late on several debts is substantial. She more than likely did not meet the bank’s financial requirements.
C. No. Beverly’s income must not be substantial enough for the home she is wanting to buy.
D. None of the Above
7 of 10 Jim and Kim Scott have been working very hard to rebuild their credit. They are now in good financial shape to buy their first home. The couple has been working with a mortgage broker, Ted, to assist them in finding the best loan. They complete the application, are approved for a loan, complete other paperwork, and are now obligated to complete the loan. A week before they are due to close, they receive the Mortgage Disclosure Statement, outlining all of the costs and terms associated with the loan. The costs and terms are not what they had previously understood. Are they stuck with this loan?
A. Yes, they have had several opportunities to fully question and understand the terms and costs associated with their loan.
B. No, the Mortgage Disclosure Statement should have been presented to them within three days of the broker’s receipt of their written loan application, or before the Scotts were obligated to take the loan.
C. No, the Mortgage Disclosure Statement should have been presented to them within seven days of the broker’s receipt of their written loan application, or before the Scotts were obligated to take the loan.
D. Yes, unfortunately they are stuck with the loan. It was the Scotts’ responsibility to ask for the Mortgage Disclosure Statement so they were clear on the terms and costs associated with the loan.
8 of 10 Deanna is thinking of taking the step from renter to homeowner. She has a very stable position as a surgical nurse and excellent credit. She doesn’t, however, have a large sum of cash handy for the down payment. One Sunday morning, she notices advertising for new condos where “no down payment is required.” Should she look for any other information in the ad?
A. No, the “no down payment required” gives her the initial information to peak her interest and take a look at the condos. After taking a look at the property, they can fill her in on all the details.
B. Yes, she should make sure the amount or percentage of down payment is there; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates.
C. Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates.
D. Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; and total number of payments and due dates.
9 of 10 Under Article 7, what is the maximum amount that may be charged to the borrower for loan costs and expenses? Also, under Article 7, if the home is not occupied by the owner, under what circumstance is the loan exempt from a balloon payment?
A. The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $490.00, to a maximum of $800.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
B. The maximum amount that may be charged to the borrower for loan costs and expenses is 3% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
C. The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
D. The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is six or more years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
10 of 10 What is included in the APR?
A. The total cost of the loan including: the finance charge, all legal fees, survey fees, recording fees, broker’s fees, and title insurance premiums.
B. The total finance charge to the total amount to be financed.
C. The total finance charge (including a computation of unearned finance charges) to the total amount to be financed.
D. None of the Above
Principles Ch17 quiz
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1 of 10 Marita and Alexandra set up a Limited Partnership. Marita is named General Partner and Alexandra is named Limited Partner. Marita embezzles funds from the investors. Is Alexandra liable for Marita’s indiscretion?
A. Alexandra is only liable if she is named as a general partner in the certificate or if she participates in control of the business.
B. Alexandra is as liable to the investors as Marita. However, unless she was involved in the crime, she is only financially liable.
C. Alexandra is liable and a partner, whether it be a general or limited partner.
D. Both B and C
2 of 10 Alexandra and Marita have formed a REIT. They have their investors and resources and are ready for business. The REIT will be investing in an assorted portfolio of real estate and mortgage investments. What type of REIT have Alexandra and Marita formed?
A. An Equity Trust
B. A Mortgage Trust
C. A Combination Trust
D. A Joint Venture Trust
3 of 10 This is the most frequently used organizational form for real estate syndicates. Which form fits the description?
A. The General Partnership or Joint Venture
B. The Corporate Form
C. The Limited Partnership
D. The Combination
4 of 10 This form of syndication allows limited liability for the investors but has negative tax features. Which form fits the description?
A. The General Partnership
B. The Joint Venture
C. The Limited Liability Company
D. The Corporate Form
5 of 10 Alexandra and Marita’s company has qualified as a trust. It has distributed 96% of its income to its shareholders. Which earnings require the payment of federal taxes?
A. The company only pays federal taxes on the retained earnings.
B. The company only pays federal taxes on the retained earnings, which are taxed at corporate rates.
C. The company only pays federal taxes on the distribution to its shareholders.
D. The company is exempt from federal taxes due to its trust qualification. It is required only to pay state and local taxes.
6 of 10 A small group of investors are in the initial stages of putting together a real estate investment trust (REIT). Which of the following is not a qualification?
A. A REIT must be beneficially owned by at least 100 investors.
B. The company must distribute at least 85% or more of its income to its shareholders.
C. Each share of certificate of interest must carry with it an equivalent vote.
D. No five, or fewer, persons may hold more than 50 percent of the beneficial interests.
7 of 10 Marita tells Alexandra they must obtain their broker-dealer license from the Department of Corporations to engage in the sale of real estate syndicate security interests. Alexandra disagrees with Marita, explaining they both have their broker licenses and that is sufficient. Who is correct and why?
A. Marita is correct. Section 15632 was added to The Real Estate Syndicate Act requiring real estate brokers to obtain a broker-dealer license.
B. Alexandra is correct. Section 25206 was added to the Corporations Code making obtaining a broker-dealer license optional.
C. Marita is correct. Section 25206 has an added provision dealing with brokers violating the Corporations Code and requiring the broker-dealer license.
D. None of the above
8 of 10 What is the correct order of regulatory agency jurisdiction changes to non-corporate California real estate syndicates since The Real Estate Syndicate Act’s inception in 1970?
A. The Department of Corporations, The California Department of Real Estate, The Department of Corporations
B. The California Department of Real Estate, The Department of Corporations, Real Estate Commissioner
C. Real Estate Commissioner, The California Department of Real Estate, The Department of Corrections
D. Real Estate Commissioner, The California Department of Real Estate, The Department of Corporations
9 of 10 This form of syndication avoids double taxation but has a lack of centralized management. Which form fits the description?
A. The Corporate
B. The General Partnership
C. The Joint Venture
D. Both B and C
10 of 10 Alexandra and Marita are forming a real estate syndicate. They have their initial investments and are ready to proceed. What happens next?
A. Operation, Origination, Completion or Liquidation
B. Syndication, General Partnership, REIT
C. Origination, Operation, Completion or Liquidation
D. Origination, Exemption, Corporation
Principles Ch18 quiz
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1 of 10 The cost approach to value may be derived by:
A. Total Land Valuation + Depreciated Value of Building = Value of Property Cost Approach
B. Total Land Valuation + Undepreciated Value of Building = Value of Property Cost Approach
C. Total Land Valuation – Building Valuation = Value of Property Cost Approach
D. Total Land Valuation + Building Valuation = Value of Property Cost Approach
2 of 10 Mrs. Jenkins has lived in her little 1940s cottage for forty years. Her home is immaculately maintained; it has a beautiful, well-manicured garden, and is just as lovely inside as outside. Unfortunately, the same cannot be said for the rest of her neighborhood. Other neighbors have let their properties go downhill. There is absolutely no curb appeal to any of the other homes in her neighborhood. Mrs. Jenkins’ neighborhood is definitely in decline. Which type/types of depreciation applies/apply?
A. Economic, Environmental, or External Obsolescence
B. Physical Deterioration
C. Functional Obsolescence
D. Physical Deterioration and Functional Obsolescence
3 of 10 An appraiser is appraising a property that was built 65 years ago. The home has wonderful architectural charm, hardwood floors, and beautiful original molding, but it also has tiny bathrooms, and the closet space is nonexistent. Which type/types of depreciation applies/apply?
A. Physical Deterioration and Functional Obsolescence
B. Economic and Functional Obsolescence
C. Economic, Environmental, and Internal Obsolescence
D. Functional Obsolescence
4 of 10 Which of the following equations is the correct application of the capitalization rate?
A. Net Operating Income divided by Capitalization Rate = Value Memory Tool – IRV = Value.
B. Capitalization Rate divided by Net Operating Income = Value Memory Tool – IRV = Value.
C. Net Operating Income divided by Capitalization Rate = Value
D. Value divided by Net Operating Income = Capitalization Rate
5 of 10 Shanta, a property manager of a retail center, is using the Income Capitalization Approach in trying to project future earnings for the partners who own the center. She first estimates the annual potential gross income, subtracts an appropriate allowance for vacancy and collection losses to arrive at a gross income, deducts operating expenses (including debt service and mortgage payments). This gives her the Net Operating Income. She then applies a capitalization rate to the net income to determine the value. Did she use the correct steps?
A. Yes, Shanta went through all four steps correctly, debt service and mortgage payments may be included.
B. No, when Shanta was deducting operating expenses, she included debt service and mortgage payments when they shouldn’t have been included.
C. No, Shanta should have added an appropriate allowance for vacancy and collection losses instead of subtracting these items.
D. None of the Above.
6 of 10 A local school has been destroyed by fire. Nothing has been salvaged and the school will have to completely rebuilt. What are the three methods of determining the cost of rebuilding?
A. Estimate the value of the land; Determine the replacement or reproduction cost; and Deduct all accrued depreciation.
B. Square Foot Cost; Unit in Place; and Quantity Survey Method
C. Square Foot Cost; Value of Land Estimation; and Quantity Survey Method
D. Value of Land Estimation; Unit in Place; and Deduct all accrued depreciation.
7 of 10 Which of the following is not a level of licensing for real estate appraisers?
A. Residential License
B. Certified Residential Real Estate Appraiser
C. Certified General Real Estate Appraiser
D. Certified Specialized Real Estate Appraiser
8 of 10 Jose has heard rumors that a zoning change will be taking place involving a piece of undeveloped sale property. Jose buys the property in hope the zoning change will take place, making the property much more valuable on the market. Which principle of value applies?
A. Regression and Progression
B. Anticipation
C. Contribution
D. Conformity
9 of 10 Maria, a single mother of three, has been saving to buy the family’s first home. Her budget is limited, but there is a home she can easily afford on the market. Unfortunately, there have been zoning changes in the area, and a twenty-four hour convenience store is located across the street. Is this deterioration curable or incurable?
A. Curable
B. Incurable
C. It may be curable if the surrounding neighborhood is well-maintained and the upkeep is good. If the remainder of the area is on the decline, it is probably incurable.
D. Both A and C
10 of 10 Judy and Xavier are planning a very large addition to their home. The kitchen will be doubled in size with a new hearth room, and a large new master suite will complete the renovation. They live in a neighborhood of houses in the $500,000 range. This addition will change the appraisal value of their home substantially. Which principle of value applies?
A. Assemblage
B. Competition
C. Contribution
D. Regression and Progression
Principles Ch19 quiz
(correct answers will be revealed with correct subscription)
1 of 10 A taxing jurisdiction has a mill rate of 14.7. What is an owner’s tax bill if his taxable value is $250,000?
A. $36.75
B. $367.50
C. $3,675.00
D. The tax bill is based on assessed value, not taxable value.
2 of 10 John and Thom purchased a home that only had one previous owner. It is a simple three-bedroom, two-bath ranch. The previous owner built the home in 1964 and recently passed away. John and Thom had looked at the previous owner’s property taxes and found them to be quite manageable. When they received their first assessment, they were shocked. Which proposition is attributed to this dramatic increase in property taxes?
A. Proposition 60
B. Proposition 13
C. Proposition 218
D. Proposition 90
3 of 10 The sewers in Mary’s neighborhood need replacing. In fact, the entire sewage system for her city needs replacing. The city has imposed a tax that will pay for all of the sewer updates in the area. What type of real estate tax applies?
A. General Tax
B. Special Assessment Tax
C. Ad Valorem
D. Both A and C
4 of 10 Ken has fallen behind on his property taxes. He has received the “intent to sell” notice and is terrified of losing his home. Ken lost his job and cannot immediately repay the back taxes. How can Ken keep from losing his residence?
A. Ken has already lost the title to his home by falling behind in his taxes.
B. After the “intent to sell” notice, a three-year period of redemption begins. Ken can redeem his property from delinquency by paying all back taxes, interest, penalties, and any other applicable fees.
C. After the “intent to sell” notice, a five-year period of redemption begins. Ken can redeem his property from delinquency by paying all back taxes, interest, penalties, and any other applicable fees.
D. After the “intent to sell” notice, Ken must repay all back taxes, interest, penalties, and any other applicable fees within one year, and pay the current taxes on time to avoid losing the title to his home.
5 of 10 Sydney has inherited her grandmother’s estate worth approximately $4.5 million. She is worried about paying taxes on the estate and the inheritance. How will these taxes affect her new estate and inheritance?
A. While the federal government sometimes taxes the estates of deceased persons, California has eliminated inheritance taxes altogether.
B. California has eliminated all estate and inheritance taxes. Due to the elimination, federal estate taxes do not apply in California.
C. Sydney will have to pay the applicable estate and inheritance taxes on her grandmother’s estate based on her particular taxable situation.
D. None of the above
6 of 10 The Smiths have decided to move to Antigua. They are transferring the ownership of their $950,000 home in Oakland to their daughter, Renee. Renee has heard about Proposition 13 and is nervous about not being able to afford the increase in property taxes. Does she need to worry?
A. In the state of California, transferring a principal residence of $2 million or less from a parent to a child is considered a transfer exclusion. The property will not be reappraised and the taxes increased.
B. When the property is transferred from the Smiths to Renee, the full cash value for tax purposes will be adjusted to the current market value of the property. This will increase the property taxes considerably.
C. In the state of California, transferring a principal residence of $1 million or less from a parent to a child is considered a transfer exclusion. The property will not be reappraised nor the taxes increased.
D. None of the Above
7 of 10 A mill rate is used in real estate
A. appraisal, to determine market value.
B. finance, to determine the points charge on a loan.
C. taxation, to determine the owner’s tax bill.
D. assessment to determine the jurisdiction’s budget.
8 of 10 Which of the following is the dollar value of the mill rate 86.5?
A. 86.5
B. 0.865
C. 0.0865
D. 8.065
9 of 10 Louise recently turned 65, retired, and is downsizing to a smaller home. She was concerned about moving from the home she owned for 40 years with its low assessment to a smaller home, but with a much larger assessment. Which proposition eases her worries?
A. Proposition 60 allows homeowners 55 years and older to transfer their base-year property tax value to another home of equal or lesser value.
B. Proposition 60 allows homeowners 65 years and older to transfer their base-year tax value to another home of equal or lesser value.
C. Proposition 90 allows homeowners 55 years and older to transfer their base-year property tax value to another home of equal or lesser value.
D. Proposition 60 allows homeowners 55 years and older to transfer their base-tax value to another home of lesser value.
10 of 10 Tim owns a mobile home he wants to transform into real property. He attaches the mobile home to an approved foundation; records a document reflecting that the mobile home has been affixed to an approved foundation system; and obtains a certificate of occupancy. Which step, if any, did Tim leave out?
A. Tim forgot to ensure the axles are attached to the frame.
B. Tim forgot to obtain a building permit.
C. Tim forgot to have the piece of property on which the mobile home is located mapped and recorded.
D. Tim fulfilled every prerequisite for transforming his mobile home into real property.
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