MO Final Exam Questions With Complete Solutions, Exams of Mock Trial and Moot Court

Download MO Final Exam Questions With Complete Solutions and more Exams Mock Trial and Moot Court in PDF only on Docsity! MO Final Exam Questions With Complete Solutions Which of the following ways of specializing is common in the real estate brokerage business? -CORRECT ANSWER By type of property Which of the following is included in the legal concept of land? -CORRECT ANSWER A lake A property abuts a non-navigable stream. What does the owner own? -CORRECT ANSWER Underlying land to the middle of the waterway. A retailer installs special display counters to exhibit her products. At the end of the lease term, the retailer moves to another state, leaving the counters in the store. At this point the counters are considered which of the following? -CORRECT ANSWER Real property, since the trade fixtures were abandoned How is a legal life estate created? -CORRECT ANSWER By operation of law Which of the following is true of a homestead? -CORRECT ANSWER A homestead interest is a form of legal life estate Three people have identical rights in a property, share an indivisible interest, but may sell or transfer their interest without consent of the others. This type of ownership is - CORRECT ANSWER tenancy in common. A condominium estate is distinguished by -CORRECT ANSWER fee simple ownership of a unit and an undivided share of the common areas. An easement by prescription requires that -CORRECT ANSWER the use be continuous, open, and hostile for a required period of time. In a lien-theory state -CORRECT ANSWER the lender records a lien while the borrower retains title to the mortgaged property. Five liens have been recorded against a certain house, in the following order: first mortgage, mechanic's lien, second mortgage, real estate tax lien, special assessment lien. Which lien will be the last one to be paid from the proceeds of the sale of the house? -CORRECT ANSWER Second mortgage lien For a conveyance by deed between private parties to be valid, the deed must be - CORRECT ANSWER accepted by the grantee. If a person dies with legal heirs and has left no valid will, what happens to real property owned by that person? -CORRECT ANSWER It is probated and passes to the heirs by laws of descent. A miner openly lives and prospects on a 20,000-acre ranch. After twenty years, the owner notices the miner and kicks him off the property. The miner makes a claim of MO Final Exam Questions With Complete Solutions ownership to the property. This claim will likely be -CORRECT ANSWER upheld, because the possession was not concealed. A tenant obtains a low rental rate for a building, but agrees to pay all operating expenses. This is an example of a -CORRECT ANSWER net lease. In accordance with the statute of frauds, -CORRECT ANSWER a five-year lease must be in writing to be enforceable. A property owner in a development is required to have a shake roof. This requirement is most likely to come from -CORRECT ANSWER a deed restriction. A master plan can be best described as -CORRECT ANSWER a fusion of land use laws and local land use objectives and strategies. A zoning board of adjustment might give favorable consideration to a land use variance if -CORRECT ANSWER compliance would cause the owner undue and unjustified hardship. What are the dimensions of a township? -CORRECT ANSWER Six miles by six miles. A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 of Section 16. What is its acreage? -CORRECT ANSWER 40 acres 2 * 2 * 4 = 16 640 acres / 16 = 40 acres As an economic product, real estate is unique because -CORRECT ANSWER the demand must come to the supply. A critical determinant of commercial and residential property demand in a market is - CORRECT ANSWER employment. If rents are declining in office properties in a market, it is likely that -CORRECT ANSWER supply exceeds demand for space. Highest and best use of a property is that use which -CORRECT ANSWER is legal, physically and financially feasible, and most productive. A strength of the sales comparison approach to value is that -CORRECT ANSWER the approach is based on the principle of substitution. A major employer relocates, leaving many homes in an area vacant and unmaintained. This is an example of -CORRECT ANSWER incurable economic obsolescence. MO Final Exam Questions With Complete Solutions - total depreciation expense 0 = adjusted basis of property $187,000 amount realized (ending basis) $202,000 - adjusted basis of property 187,000 = capital gain $15,000 A certain investor wants an 11% return on investment from any real estate investment. A property priced at $360,000 has gross income of $60,000 and expenses of $22,000. Approximately how much too high or too low is the price of this property for the investor to obtain her desired return exactly? -CORRECT ANSWER $15,000 overpriced $60,000 - $22,000 = $38,000 38,000 / 360,000 = x / 100 x = 10.56% 38,000 / 345,000 = x / 100 x = 11.01% The function of a board of equalization is to -CORRECT ANSWER minimize wide discrepancies of assessed values within the district. A tax rate is derived by -CORRECT ANSWER dividing the tax requirement by the tax base. A special assessment tax differs from other tax levies in that -CORRECT ANSWER properties that receive no benefit do not pay the tax. A homeowner's rented residence has an assessed valuation of $150,000, and a market value of $170,000. The homestead exemption is $25,000. Tax rates for the property are 7 mills for schools; 3 mills for the city; 2 mills for the county; and 1 mill for the local community college. What is the homeowner's tax bill? -CORRECT ANSWER $1,625 Taxable Value of Property x Tax Rate for Each Jurisdiction = Total Tax $150,000 - $25,000 = $125,000 Taxable Value of Property School Tax: $125,000 x 7 mills = $875 City Tax: $125,000 x 3 mills = $375 County Tax: $125,000 x 2 mills = $250 Library Tax: $125,000 x 1 mill = $125 ------------------------------------------- Total Tax: $1,625 The president of a local bank wants to sell her home. She instructs an agent to inform a buyer moving to town that her bank, along with others, is about to curtail mortgage MO Final Exam Questions With Complete Solutions lending for the rest of the year. Hearing this, the buyer hurries to make a full-price offer in order to get the loan application in before the freeze. The seller accepts the offer. This contract is -CORRECT ANSWER voidable. A seller accepts a buyer's counteroffer and mails the accepted contract to the buyer two days after receiving it. Because of confusion in the post office, it takes four days for the accepted contract to reach the buyer. In the meantime, the buyer's offer has expired. Which of the following is true? -CORRECT ANSWER The buyer is bound to the contract. A buyer submits an offer to the seller. While the seller is considering the offer, the buyer calls and cancels the offer, saying the home was too expensive. The seller protests, claiming she was going to accept the contract. Which of the following is true? - CORRECT ANSWER The original offer is cancelled, and the protest means nothing. A principal instructs an agent to inform any minority buyer that the property was just put under contract an hour ago and is no longer available. The agent refuses to comply. In this case, -CORRECT ANSWER the agent has not violated fiduciary duty. An agent fails to discover crumbling wallboard on the basement ceiling beneath a bathroom. The agent sells the property, and the buyer later sues the agent for not discovering and disclosing a clearly visible and obvious problem. In this case, the agent -CORRECT ANSWER has an exposure to negligent misrepresentation. A buyer representative locates a suitable property through an owner broker. The buyer buys the property, the seller pays a commission, and the two agents split the commission. In this instance, the owner broker is acting as -CORRECT ANSWER a single agent for the owner. The nature and import of the agency relationship should be disclosed to the client - CORRECT ANSWER prior to completing a listing agreement. A landlord agrees to pay a broker for procuring a tenant unless someone else finds the tenant first. This is an example of a(n) -CORRECT ANSWER open listing. A property owner wants to put $240,000 in the bank after selling a property and accounting for all expenses. A broker finds a buyer and sells the property for $280,000. Closing costs come to $10,000, not including the broker's commission. According to agreement, the remainder of the amount over $240,000 goes to the broker as commission. The listing agreement is probably a(n) -CORRECT ANSWER net listing. Under a special agency agreement, a broker is not authorized to -CORRECT ANSWER execute a contract for sale agreement. Spenser, who works for selling broker Smith, sells a house listed by listing broker Adams. The house sells for $425,000. The co-brokerage split between Smith and MO Final Exam Questions With Complete Solutions Adams is 50-50. Spenser is on a 65% commission schedule with Smith. If the total commission rate is 7%, what is Spenser's commission? -CORRECT ANSWER $9,669 $425,000 x 7% = $29,750 $29,750 / 2 = $14,875 $14,875 x 65% = $9,668.75 A broker and salesperson agree to a 40-60 commission split. This commission rate - CORRECT ANSWER is probably a reflection of competitive commission rates. The primary jeopardy of overpricing a property is that -CORRECT ANSWER the client's expectations may not be achieved. Commingling is the practice of -CORRECT ANSWER mixing escrow funds with the broker's operating funds. A business buyer wants to acquire a business in its totality, including the business identity and all rights, obligations, liabilities, and assets. The type of transaction that would accomplish this aim is -CORRECT ANSWER a stock sale. In which of the following situations would Fair Housing laws allow discrimination? - CORRECT ANSWER A retirement community whose residents are all over 62 refuses to allow families with children to buy in the community. A family is looking for a home in a certain price range. The wife suggests several listings on the east side of town, and the agent agrees to show the family the suggested properties. En route to the targeted neighborhood, the agent drives a certain route to show the family certain retail services and two schools. What has this agent done wrong? -CORRECT ANSWER He has done nothing wrong. At the direction of a seller-client, an agent tells a pregnant working woman that the property is not in a good neighborhood for a single woman, particularly if she regularly works late hours. The neighborhood has an increasing crime rate, and people are moving out. What has this agent done wrong? -CORRECT ANSWER Engaged in steering During the executory period of a sale contract, the buyer enjoys which of the following interests? -CORRECT ANSWER equitable title. A sale contract contains a one-month financing contingency to allow the buyer to procure a loan. Thirty- two days later, the buyer still has no loan commitment. At this point the seller may -CORRECT ANSWER put the property back on the market. While a property is under a contract for deed, the buyer, or vendee, takes possession of the property and makes timely payments of principal and interest. At the end of the term, the vendee obtains a loan and uses the funds to pay off the vendor. Given these