Michigan Real Estate Exam Questions and Answers Rated A+

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Michigan Real Estate Exam Questions and Answers Rated A+ Special Assessment ✔✔A category of property tax levied upon a property according to specific benefits that it receives. Special assessme... nts are levied for those improvements that only benefit a limited number of properties such as street paving, water & sewer lines, sidewalks and lighting. Riparian Land ✔✔Land which is bounded by or touches a natural water source, such as river or stream. Littoral Land ✔✔Land that borders an ocean, sea, or one of the Great Lakes. Land ✔✔The immediate surface area, subsurface area, and air above. Bill of Sale ✔✔This is the document used to transfer ownership of personal property items. It accompanies the deed to the real property at the closing. Statute ✔✔A formal, written enactment of a state or federal legislative body; also known as an Act. Common Law ✔✔A body of law that stems from judicial decisions; for example, judgements and court decrees. Administrative Law ✔✔Law created by administrative agencies. A body of law that administrative agencies such as licensing departments use to carry out its regulatory function; for example, license laws and rules. Puffing ✔✔Statements of opinion made during the sale process. They do not amount to fraud since they are not intended to be a representation of fact upon which a person can rely; for example, a listing agent tells a buyer that a home is located in the "most beautiful" neighborhood in town. Abstract Title ✔✔History of title chain. Acceleration Clause ✔✔Speeds up repayment of unpaid principal upon default, Accretion ✔✔Land accumulated through the gradual motion of water. Accrue ✔✔Add to an amount. Acknowledgment ✔✔The notarization of a signature. Acre ✔✔43,560 square feet Act ✔✔Legislative enactment Actual Agency ✔✔Arises when an agent has, in fact, been hired. Actual Damages ✔✔Damage award for actual losses. Actual Eviction ✔✔Expulsion of a tenant by a landlord. (Physical ouster of a tenant by a landlord from leased property.) ADA ✔✔Americans with Disabilities Act Addendum (Addenda) ✔✔Something added such as a provision to a contract. Address ✔✔A location (not a legal description). Adjacent ✔✔Lying nearby. Adjusted Cost Basis ✔✔Cost (+) improvements (-) depreciation Administrator ✔✔Court appointee who handles a decedent's estate. Ad Valorem ✔✔According to value. A type of tax based on the value of property. Most estate property taxes are ad valorem in nature. Adverse Possession ✔✔Acquiring title to land through long-term possession. (Squatter...openly and continuously for 15 years.) Affidavit ✔✔A written statement of fact sworn to under oath. Affiliated Licensees ✔✔Individuals licensed under the same broker. Affirmative Easement ✔✔An easement giving the right to enter and exit. Agency ✔✔Legal relationship between a principal and an agent. Customer ✔✔A non-agent relationship. Client ✔✔An agency relationship. Agency by Estoppel ✔✔Agency created through the actions of the principal. Agency by Ratification ✔✔Agency not originally authorized by which a principal later agrees to be bound. Agency Disclosure ✔✔Requirement that all consumers be made aware of agency relationships. Agent ✔✔One who formally represents another Alienation ✔✔Real property transfer. The transfer of title and possession of real property from one party to another by any voluntary means. Alienation Clause ✔✔Clause that prevents the transfer of title. Alluvion ✔✔The soil carried by the natural movement of water which is deposited on the shore and increases the land mass. Amendment ✔✔Change in contractual terms and conditions after a contract has been created. May result from contin- gency release or from changes to original contract. Amenity ✔✔Pleasure value. Annexation ✔✔To attach one thing to another APR ✔✔Yearly cost of credit. The actual cost incurred in connection with borrowing money. Antitrust ✔✔Laws governing unfair trade practices. In real estate, brokers are barred from conspiring to fix commission rates or agreeing to limit market areas. Appraisal ✔✔Estimation of value. Appurtenance ✔✔A right which attaches to property. A benefit such as an easement which is, by right, used with the land and passes with any subsequent conveyance. Appurtenant means "attached". Appurtenances, as they relate to real property run with the land unless otherwise agreed in writing. Arrears ✔✔Overdue payments. Arm's Length Transaction ✔✔Transaction involving unrelated parties. Article ✔✔The subdivisions of code. Assessed Value ✔✔Value placed on real property by a taxing authority. In Michigan, the legal requirement for assessed value is 50% of market value. This value is established by the assessor on an annual basis as of dates established by law. Assessment ✔✔Valuing property for tax purposes. Assessor ✔✔One who determines assessed value. Assignee ✔✔The party to whom an assignment is made. Assignment ✔✔Transfer of a contract right. Assignor ✔✔The party who assigns an interest in a contract. Associate Broker ✔✔An individual broker who is licensed under another broker. Type of license issued to real estate practitioner who has completed 3 years of real estate sales experience or the equivalent, 90 hours of statutory classes, has attained the age of 18, and passed the broker's license examination. This license can be issued only under a broker license. It may be held by a designated decision-maker for a real estate company (principal associ- ate broker) if the broker is a non-living entity such as a part- nership, LLC or corporation. In this case, at least one party must hold an associate broker license in order for a broker license to be issued. Assumption of Mortgage ✔✔The adoption and promise to pay the debt of another. Writ of Attachment ✔✔A seizure of personal property to satisfy judgement. Attestation ✔✔The act of witnessing. Avulsion ✔✔Sudden washing away of land through natural forces such as flooding. Bargain and Sale Deed ✔✔Type of deed which conveys an absolute interest in real property but which does not make any guarantees about the quality or quantity of the interest. Base Line ✔✔East-west lines used in rectangular survey. Base Rent ✔✔Fixed rent in a percentage lease. The minimum, fixed monthly rent charged under a percentage lease to be paid in addition to a percentage of the tenant's gross sales for the month. Bequeath ✔✔Gift of personal property by will. Bilateral Contract ✔✔Promise given in exchange for a promise. Binder ✔✔A preliminary agreement to insure; A receipt for a deposit. Bird Dog ✔✔One who seeks listings or sales opportunities for an agent. Blanket Mortgage ✔✔Mortgage that covers more than one parcel of land. Blight ✔✔Urban decay Block ✔✔Portion of a city bounded by streets. Blockbusting ✔✔Illegal practice of promoting panic selling Board ✔✔Official body exercising control or management. Bond ✔✔Evidence of a debt. Borrower ✔✔One who takes money in exchange for a promise to pay. Bottom Land ✔✔The land under a body of water. Boundary ✔✔Border Bounds ✔✔Boundary markers. BPO ✔✔Broker's Price Opinion Branch Office ✔✔Any office other than the principal office. Breach of Contract ✔✔Failure to perform the terms of the contract. Broker ✔✔One whose business is to bring two parties together. Brownsfield ✔✔Environmentally contaminated land. Budget Mortgage ✔✔A mortgage that includes property taxes and insurance. Buffer Zone ✔✔Zone separating incompatible zones. Building Code ✔✔Minimum construction standards Building Permit ✔✔Permission to build. Building Restriction ✔✔Limitations on building. Bundle of Rights ✔✔Rights associated with owning property. Property ownership includes a package or bundle of legal rights associated with the land including, among other rights, the right to possess, control, enjoy, encumber, and transfer. By-laws ✔✔The regulation of an association. Cancel ✔✔To revoke, recall, or destroy. Cancellation Clause ✔✔Clause that cancels a contract. Capital ✔✔Money invested for the purpose of producing wealth. Capital Gain ✔✔Profit realized from the sale of a capital asset. Capitalization ✔✔Income property appraisal formula. Capitalization Rate ✔✔Used to determine the value of income property. Cash Flow ✔✔Cash generated from property. Casualty ✔✔Any unexpected misfortune. Caveat Emptor ✔✔Let the buyer beware. Certificate of Occupancy ✔✔Permission to occupy. Certificate of Reasonable Value ✔✔Certificate verifying the value of a property being guaranteed by a VA loan. Chain of Title ✔✔History of title. Chattel ✔✔Personal property. Items of property not fixed or otherwise attached to real property. i.e. cows Chattel Mortgage ✔✔Land secured by personal property. Chattel Fixture ✔✔AKA Trade Fixture. An item, generally used in a trade or occupation, which is attached to the real property of another, but lacks the intent of permanence. i.e. dental sinks Circuit Court ✔✔$25k+ Civil Action ✔✔Private lawsuit Civil Rights ✔✔The right to be free from discrimination. Civil Rights Act of 1866 ✔✔Law prohibiting racial discrimination. Closed Mortgage ✔✔Prepayment penalty Closing ✔✔Settlement of the transaction. Closing Costs ✔✔Final expenses Closing Date ✔✔Settlement day Closing Statement ✔✔Statement of debits and credits. AKA: Settlement Statement Cloud on the Title ✔✔Any claim affecting a title. Cluster Zoning ✔✔Zone placing emphasis on space preservation. Coinsurance Clause ✔✔Provision requiring a certain level of insurance. Collateral ✔✔Security for a loan. Common Elements ✔✔Areas of shared ownership and use in a condominium. Communication ✔✔Delivery of an offer or an acceptance. Comparable ✔✔Similar property used to establish a market value estimate. Comparative Market Analysis (CMA) ✔✔A simplified market data appraisal report (prepared by real estate agents for quick estimate of value of property). Competitive Market Analysis ✔✔A limited CMA. A shorter version of the CMA, comparing the subject property only to currently listed properties rather than including references to recently sold and expired properties. Compound Interest ✔✔Interest on Interest Concession ✔✔An incentive offered to induce a party to take action. Condemnation ✔✔Process used to take property under eminent domain. Condition ✔✔An event which is not certain to occur. Condominium ✔✔Individual and common ownership in a multi-unit building. Condominium Act ✔✔Michigan's condominium-enabling legislation. Controls the creation and sale of units. It governs the Master deed, Association records, Preliminary reservation agreement, and 9-day right to withdrawal (new construction only). Condominium Conversion ✔✔Change from apartment to condominium. Condominium Declaration ✔✔Master deed Conservator ✔✔Guardian Consideration ✔✔Inducement to enter into a contract. Anything of value which induces a contracting party to enter into a contract. May consist of good consideration or valuable consideration. Constructive Eviction ✔✔Interference with a tenant's right of possession. Disturbance of or interference by a landlord with a tenant's right to possession and quiet enjoyment as opposed to a breach of material lease provision. The tenant may legally vacate the premises and consider the lease void. Constructive Notice ✔✔Information attributed by law. Information that the law presumes one to have, regardless of whether the information is actually known; imputed information. Contiguous ✔✔Adjoining (close to or touching the boundary of an adjoining property. Contract ✔✔Enforceable agreement Contract Rent ✔✔Rent amount stated in a lease. Contractual Lien ✔✔Consensual lien. i.e. a mortgage; The debtor agrees to place a lien on his property to secure the repayment of the debt. Construction Lien ✔✔A lien acquired upon the improvement of real property. Conveyance ✔✔Title Transfer Cooperative ✔✔Corporation owns the apartment building, occupants own stock. Cost Approach ✔✔Appraisal method using costs to duplicate the property; used mainly for new construction and custom properties. Corporation ✔✔Artificial legal entity. Co-Tenants ✔✔Co-owners of real property. Counteroffer ✔✔Rejection and proposal of a new offer. Covenant ✔✔A promise Covenant Against Encumbrances ✔✔Promise of no encumbrances. Covenant for Further Assurance ✔✔Promise to perfect defects in title. Covenant for Quiet Enjoyment ✔✔Promise of peaceful enjoyment. Covenant of Right to Convey ✔✔Assurance of grantor's power to convey. Covenant of Seisin ✔✔Assurance of extent of grantor's interest. Covenant of Warranty of Title ✔✔Protection by grantor against adverse claimants. Damages ✔✔Compensation awarded by a court. Debtor ✔✔One who is in debt (one who owes money to a creditor). Deed ✔✔Document conveying title. Deed Exception ✔✔Excludes an interest in a deed that would otherwise be passed to the grantee. Deed in Lieu of Foreclosure ✔✔Deed used to avoid foreclosure. A deed used to voluntarily convey title to the mortgaged property to a mortgagee by a mortgagor who is in default. The deed is issued when the mortgagor does not wish to undergo the foreclosure process. Deed in Trust ✔✔Deed held in escrow. A deed which is held in trust by a neutral third party for the benefit of another. Deed of Trust ✔✔Deed that operates as a security device. The deed is reconvened upon repayment of the loan. Deed Restriction ✔✔Deed clause restricting use. Default ✔✔Nonperformance of a duty. Defeasance Clause ✔✔Mortgage clause transferring title upon satisfaction of debt. Deficiency Judgement ✔✔Suit to collect the debt remaining after foreclosure. Dereliction ✔✔The gaining of land when a body of water shrinks below the usual water mark. Descent ✔✔Succession to title by inheritance. Designated Agency Agreement ✔✔A contract appointing a designated agent for a client. Devise ✔✔A gift of property by way of a will. Devisee ✔✔Recipient of property via a will. Devisor ✔✔One who transfers via a will. Disclaimer ✔✔Denial of liability. Disclosure ✔✔Notice requirements pertaining to special relationships. Disparate Impact Doctrine ✔✔Fair housing rule invalidating practices that have a dissimilar impact. Dispossession ✔✔An ouster from possession of land. Distress ✔✔Sale of a tenant's personal property by a landlord. Distressed Sale ✔✔A sale to liquidate an asset, typically because the owner has failed to pay his debts as they come due. Doctrine ✔✔Rule or principle of law. Document ✔✔Official writing Domicile ✔✔A residence intended to be one's permanent home. Dominant Estate ✔✔Land that benefits from an easement. Dower ✔✔A widow's estate that vests upon the death of her husband. Dual Agent ✔✔An agent who represents two principals in one transaction. Dual Rate Commission ✔✔A variable rate commission. Due Diligence ✔✔The standard of care a person is owed. Due-On-Sale Clause ✔✔Mortgage clause accelerating unpaid principal balance. (Used by mortgagee if the mortgagor sells or transfers an interest in the mortgaged property.) Due Process ✔✔Notice and fair hearing. Duress ✔✔Forcing someone into a contract. Duty ✔✔A legal requirement. Dwelling ✔✔A residence. Earnest Money ✔✔A deposit of funds to show good faith. Easement ✔✔Right to use the property of another. Legal document evidencing granting of a right of way or a right to use. Generally contractual in na- ture, but may also be legally required. Limitation placed on property by a government for set backs or by a private individual to provide ingress or egress. Easement Appurtenant ✔✔Easement whose benefit runs to an adjoining parcel. Easement by Implication ✔✔Easement that is implied from the use of land. Easement by Necessity ✔✔Easement necessary for the enjoyment of land. i.e.: Landlocked land & shared driveways Easement by Prescription ✔✔Easement acquired through adverse use. A type of Easement by Implication which results if the public has had continuous, hostile, notorious use against the wishes of the owner for a statutory period of time. (The statutory period in Michigan is 15 years.) Upon giving proof of the legally required use of the right of way, a court can grant a right of way across the claimed property. Also called Prescriptive Easement. Easement in Gross ✔✔Personal right to use the land of another. i.e.: utility company & billboards Economic Life ✔✔Period of profitable utilization. Egress ✔✔Exit. The means by which a property is exited. Ejectment ✔✔Action to recover possession of land. Elliott-Larsen Civil Rights Act ✔✔Michigan's fair housing regulation Emblements ✔✔Crops annually produced by labor of a tenant. i.e.: wheat, corn, & garden vegetables Eminent Domain ✔✔Government taking property, with just compensations, for public use. Encroachment ✔✔Intrusion onto the property of another. Encumbrance ✔✔Anything that affects title to land and diminishes value. i.e.: mortgage, lease, easement, tax lien. EPA ✔✔Federal agency to guard the environment. Equal Credit Opportunity Act (ECOA) ✔✔Law prohibiting discrimination in obtaining credit. Equalization ✔✔Process of making equal (taxes). Equitable Title ✔✔Non-title, true ownership. Equity of Redemption ✔✔Period between default and foreclosure sale. Property can be recovered from the mortgage lien by paying the outstanding debt plus interest and costs. Erosion ✔✔A wearing away of soil, usually by action of water. Escalation Clause ✔✔Lease clause that increases payments over time. Escheat ✔✔Government's right to unclaimed property. Escrow ✔✔Third party trustee. Estate ✔✔An interest in property. Estate at Sufferance (AKA Tenancy at Sufferance) ✔✔An estate which arises after a tenant comes into lawful possession of a premise, meaning with permission, and then fails to vacate it after expiration. Estate at Will (AKA Tenancy at Will) ✔✔Any lease for an indefinite period of time. The estate is terminable at the will or desire of either party. Estate for Years ✔✔Fixed term lease. Estate from Period to Period (AKA Periodic Tenancy) ✔✔Any lease which lasts for an indefinite or uncertain period of time and calls for payments to be made on a monthly, yearly, or other time-period basis. i.e.: Month-to-month Estoppel ✔✔To prevent one from claiming a right. Eviction ✔✔Landlord's interference with tenant's possession. Exchange ✔✔A swap of like-kind properties. Excluded Party Listing ✔✔Listing excluding certain buyers. Listing wherein the broker agrees to exclude from the obligation to pay a commission certain identified buyers with whom the seller has already attempted to negotiate a sale. Exclusionary Zoning ✔✔Zoning ordinances that have the effect of discriminating. Exclusive Agency Listing ✔✔Listing with one broker wherein the owner also has the right to sell. Exclusive Right to Sell Listing ✔✔Listing with one broker wherein the owner releases the right to sell. Executed Contract ✔✔Fully performed obligations Executor ✔✔Person named in a will to administer a decedent's estate. Executory Contract ✔✔Obligations not fully performed. Express ✔✔Direct, definite, and deliberate. Express Contract ✔✔Written contract Extender Provision (AKA Carryover Provision) ✔✔Protects commission for a limited time after a listing expires. External Obsolescence ✔✔Value loss from factors outside property boundaries. Extortion ✔✔Acquiring property through threats. Facilitator (AKA Transaction Coordinator) ✔✔Non-agent broker Fair Credit Reporting Act ✔✔Law designed to protect consumer credit records. Federal Fair Housing Act of 1968 ✔✔Prohibits discrimination in housing. Federal Home Loan Mortgage Corporation (FHLMC) (AKA Freddie Mac) ✔✔Secondary mortgage market participant. Purchases loans originated by savings and loan associations. Federal Housing Authority (FHA) ✔✔Insures certain loans Federal National Mortgage Association (FNMA) ✔✔Secondary mortgage market participant Federal Trade Commission (FTC) ✔✔Federal agency that promotes fair business practices. Fee ✔✔An ownership interest in land. May be absolute or conditional in nature. Fee Simple Absolute ✔✔Highest degree of ownership Fee Simple Defeasible ✔✔A conditional fee. 3 Categories: 1) Fee simple determinable; 2) Fee simple subject to a condition subsequent; Fee simple subject to an executory limitation. Fee Simple Determinable ✔✔A fee with automatic expiration if an event occurs (prevents a property from being put to a certain use to which the grantor is opposed). Fee Simple Subject to a Condition Subsequent ✔✔A fee that leaves the grantor the right to reenter and terminate the estate. Fee Simple Subject to an Executory Limitation ✔✔Qualified fee. Feudal Law ✔✔Ancient system of land ownership. (Medieval England) Finder's Fee ✔✔Referral fee First Lien ✔✔Highest priority lien First Right of Refusal ✔✔First opportunity to purchase. Fixture ✔✔Personal property affixed to realty. Flood Insurance ✔✔Protection for owners against flood damage. Floodplain ✔✔An area near a river which tends to flood. Forbearance ✔✔Refraining from action. Giving up the right to do something which a person has a legal right to do. Foreclosure ✔✔Forced sale of a property to satisfy a debt. Forfeiture ✔✔Loss of property due to an illegal act. Fraud ✔✔Inducing one into a contract through deceit Freehold ✔✔Ownership interest of indeterminable duration. [Show More]

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