Alabama Real Estate License Exam 175 Questions Correct Answers. 100% Graded A+

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Alabama Real Estate License Exam 175 Questions Correct Answers After passing state exam, you have ___ days to apply for a Temporary License, either on an Active or Inactive basis. >>90 Temporary L... icenses are only valid for ___ year(s), and cannot be renewed. >>1 For an Original License, you must pass a ___ hour post-license course. >>30 If Temporary License is ACTIVE, the post-license course must be completed within ___ months. >>6. If the post-license course is not completed within ___ year(s), the Temporary License lapses. This period begins on the FIRST DAY of the month AFTER passing the state exam. >>1 For Broker's License, applicant must have ACTIVE Salesperson License for ___ out of ___ years immediately preceding the application. >>2/3 The fee to transfer your Salesperson License to a new Qualifying Broker is $___. >>$25 An owner's mortgage includes a clause requiring a prepayment penalty. Three percent of any outstanding loan principal would be charged by the lender if the owner paid off the principal before the scheduled time. Payments were $296.88, due on the first of each month, and included both principal and interest in arrears at 8% per annum. After the owner's July 1 payment, her loan balance was $8,946.23. On August 1, after handing her lender the check for her August 1 payment, the owner paid off the entire remaining loan balance. What is the approximate prepayment penalty? >>The monthly house payment, $296.88, includes both interest and principal. The prepayment penalty is charged only on the principal, not on interest. Therefore, one must determine how much the new principal loan balance will be after the August 1st house payment is made. The calculations are as follows: The loan balance after the July 1 payment is $8,946.23 x 0.08 interest rate = $715.70 a year ÷ 12 months = $59.64 interest for July. $296.88 monthly house payment $59.64 interest = 237.24 principal payment on August 1 payment. $8946.23 loan balance $237.24 principal paid in August leaves new principal balance of $8708.99 after August 1st payment. This is the amount on which the prepayment penalty will be based:$8708.99 x 0.03 penalty = $261.27 A managing broker requires his licensees to mention a particular lender to buyers. The broker has a financial interest in this particular mortgage lender. Which of the following should the licensee recommend to buyers? >>Consider this lender, disclosing the broker's interest, and other lenders. Licensees should generally avoid recommending only one lender, and if a financial interest is involved, it should be disclosed. Since rates can change, a licensee most likely would not know which lender has the best rates. Licensees may provide a list of lenders without having to display the lenders in any particular order. When using the sales comparison approach, a licensee determines that a comparable property's tile floor in the entry hall is worth $2,000. The subject property does not have tile floors at all. Which of the following adjustments should be made? >>The comparable should be adjusted downward. In the sales comparison (market data) approach to appraisal, it is always the comparables that are adjusted, never the subject property. If the comparable is better than the subject property, the adjustment to it is downward. If the comparable is not as good as the subject property, the adjustment to it would be upward. On February 1, a licensee with ABC Realty takes a 3month exclusive right-to-sell listing on a house. On March 1, the licensee moves out of state and inactivates his license. What happens to this listing? >>It remains a valid exclusive right-to-sell listing contract with ABC Realty. The listing belongs to the brokerage firm; it does not belong to an individual licensee. The licensee takes the listing on behalf of the firm, and, if the licensee leaves or becomes unlicensed during the listing, the listing would remain in whatever form it was originally taken. The listing would still be in effect with the firm until it expires or is terminated. A person bought property from a seller and received a general warranty deed. Two years later, the seller's brother came forth and claimed he had an ownership interest in the property. The brother stated he knew the court would uphold his interest. In a general warranty deed, the buyer is protected from this situation by the covenant-- >>-- of seisin. Although all covenants in a general warranty deed work together to protect the buyer, the covenant of seisin specifically guarantees that the owner owned the real estate at the time of the sale and had the right to convey it. A listing licensee has what obligations to a buyer? >>A licensee's duties to a buyer or customer are fairness, honesty, and accuracy.A builder is obtaining a construction loan of $95,000 for a single-family residence. Under the Truth-in-Lending Act, disclosure of a prepayment penalty by the lender is-- >>--not required for a business loan. The Truth-in-Lending Act is applicable to individual home owners, but it does not apply to a construction loan for a builder because the loan is for a business purpose. To qualify as a tax-deferred exchange, a property must be-- >>--held for productive use in trade or business. To defer the gain on the sale of an income-producing property, a tax-deferred exchange may be used. An office building is valued at $800,000 when the annual net income is capitalized at a rate of 20%. If the operating expenses and vacancy and rent loss total 40% of the gross income, what is the approximate gross annual income? >>$266,667 The income approach to value is calculated as follows: Annual net income divided by capitalization rate equals value. Therefore, net income ÷ 0.2 $800,000. The net income is $800,000 × 0.2 = $160,000. The net income is 60% (100% 40%) of the gross income. The gross income is $160,000 ÷ 0.6 = $266,667. AREC has ___ commissioners; each commissioner serves a ___ year term, with no more than ___ consecutive terms. >>9 commissioners; 5 years per term; 2 consecutive term max. AREC commissioners are appointed by the ___ with the advice and consent of the ___. >>Governor; Senate. Commissioners must have been an Alabama resident for ___ years, and licensed in real estate for ___ years. >>10; 10. AREC commissioners are paid ___. >>$300/month. Salesperson applicants must pass State Exam within ___ months of finishing the prelicense course. >>6 months.After passing State Exam, candidate can apply for a Temporary License and pay a fee of $___. >>$150. After completing the post-license course, candidate can apply for an Original License and pay a fee of $___. >>$85/year or $185/two years. A broker other than the Qualifying Broker. >>Associate Broker A Company License must be obtained for each separate location or branch. >>True. If a Qualifying Broker dies or becomes disabled, the company can designate a temporary Qualifying Broker within ___ days, and that temporary Qualifying Broker can serve a maximum of ___. >>30 days; 6 months. A licensee shall notify AREC in writing of any change of business or residential address within 30 days of the change. >>True. The Alabama Center for Real Estate (ACRE) is supported by a $___ fee at the time of licensure, then a fee of $5 per renew period afterward. >>$30 Licensees pay $___ to the Recovery Fund at the time of application for an original license. >>$30 Recovery Fund maximums are $___ per transaction or $___ per licensee. >>$25,000/transaction; $50,000/licensee. A ______ Misdemeanor is committed by any person or corporation (even nonlicensees) who violate any provision of AL license law or files false information with the commission. >>Class A. Licensee has ___ days to notify commission when an action BEGINS involving criminal prosecution, civil complaint involving a real estate transaction, or goodwill of an existing real estate business. >>10 days. AREC Disciplinary Timeline >>10-10-15-30-30 2 Kinds of Fraud >>-Intentional Misrepresentation (Active Fraud) -Intentional Concealment (Constructive Fraud) 2 Kinds of Misrepresentation >>-Negligent Misrepresentation (agent fails to do something that a responsible agent would have done) -Innocent Misrepresentation.To claim Fraud or Misrepresentation, a buyer must show: >>-Misrepresentation: A false representation of an important fact or issue. -Reliance: Upon the misrepresentation. -Damage: From said reliance. Suppression: Withholding of material fact(s) that the agent knows is important to the client. Requires 3 conditions: >>-Knowledge of defect. -A duty to disclose (due to a fiduciary relationship or by way of direct inquiry). -Failure to disclose. Four pieces of determining whether something is real or personal property: >>-Intent -Method of Attachment -Adaptation for the Property -Agreement of Parties A ______ is personal property that has been attached, making it real property. >>Fixture ______ fixtures are fixtures that belong to the tenant, but are removed at the end of the lease. >>Trade Fixtures (salon chairs, etc.) 1 mile = ___ ft. >>1 mile = 5,280 ft. 1 acre = ___ sq. ft. >>1 acre = 43,560 sq. ft. 1 section = 1 sq mile = ___ acres. >>1 section = 1 sq. mile = 640 acres. 1 township = ___ sections. >>1 township = 36 sections. A Lot and Block legal description is also called a _______, and is used in subdivisions. >>Recorded Plat Map (or just Plat). Estates in Land >>Refers to the amount of "legal interest" that someone has in real property. Loan-to-Value Ratio (LTV) >>Loan Amount / Value of Property Qualifying Ratio >>Front-End Ratio / Back-End RatioFront-End Ratio >>Total Housing Debt / Gross Monthly Income Back-End Ratio >>Total Installment Debt / Gross Monthly Income Total Housing Debt >>P-I-T-I (P)rincipal (I)nterest (T)axes (I)nsurance Conventional Qualifying Ratio >>28% / 36% FHA Qualifying Ratio >>29% / 41% Mortgage Insurance for Conventional Loans >>Private Mortgage Insurance (PMI) PMI automatically terminates when borrower is current on payments and has at least 22% equity based on actual loan reduction. If appreciation is to be factored in, borrower must get an appraisal. Mortgage Insurance for FHA Loans >>Mortgage Insurance Premium (MIP) MIP is for the life of the loan. Purchase Money Mortgage >>A type of seller financing where the seller CONVEYS TITLE to a buyer and holds a mortgage as security. Seller "lends" the buyer money to purchase the property by agreeing to wait for cash to be paid over a period of time. A mortgage is given by the buyer (MORTGAGOR) to the seller (MORTGAGEE). Land Contract (also called Installment Contract or Contract for Deed, etc.) >>A type of seller financing where NO TITLE PASSES until the buyer finishes making all payments. Buyer has NO MORTGAGE, only EQUITABLE INTEREST/TITLE. Buyer also carries insurance, pays property taxes, and performs maintenance on property.Straight (Term) Loan >>Borrower pays ONLY INTEREST for the term of the loan, then pays the ENTIRE PRINCIPAL (including the last month's interest) at the end of the loan. Balloon Payment Loan >>Payments are PARTIALLY AMORTIZED. Entirety of remaining principal (and last month's interest) is paid at the end of the loan. Amortized Loan >>Paid off slowly over time in equal payments (principal + interest) until the balance is zero. Adjustable Rate Mortgage (ARM) >>Interest rate changes according to a standard index. Two components of an ARM are: -Index -Margin (profit) Growing Equity Mortgage (GEM) >>Monthly payments increase annually, and increased amount is applied directly to the principal. Also known as a rapid-payoff mortgage. Reverse-Annuity Mortgage (RAM) >>Payments are made to the BORROWER by the LENDER. Interest rate is fixed. Aimed at the elderly. Property is sold after death. Open-End Mortgage >>Allows for additional borrowing without rewriting the mortgage or incurring additional costs. Example: Home Equity Line of Credit Buy-Down Mortgage >>Borrower buys down the interest rate on a mortgage buy paying discount points (1%). Public Land Use Controls >>-Zoning Laws -Building Codes -Environmental Protection Laws Private Land Use Controls >>-Deed Restrictions -Subdivision Covenants (CC&R's)Urban and Regional Planning >>Purpose is to create orderly growth for the welfare of the people otherwise haphazard growth occurs. Enabling Legislation provides the legal basis for this long-range planning. Non-Conforming Use >>Preexisting use of property is different from new zoning code for that area. Limitations to Non-Conforming Use: -Abandonment of nonconforming use. -Cannot expand (repairs only). -May not be transferred to a new owner. -Cannot change from one nonconforming use to another. Variance >>Permanent exception to the zoning law (owner petitions [Show More]

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