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Real Estate Fundamentals: Texas State Exam Preparation Guide, Exams of Real Estate Management

This comprehensive document provides 163 solved questions and answers on various aspects of real estate, including land, personal property, easements, leins, appraisals, and mortgages. It covers topics such as the characteristics of land, economic characteristics, adverse possession, government rights, riparian rights, litoral rights, and more. It also delves into appraisal principles, approaches, and characteristics of value, as well as the steps in the appraiser's process. This guide is essential for anyone preparing for the texas real estate state exam.

Typology: Exams

2023/2024

Available from 05/23/2024

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Texas Real Estate State Exam with 163 solved questions and answers

Real Property - >>>land, Improvements attached to the land, and the rights to use them Personal Property - >>>right or interest in things of a temporary or movable nature chattel personalty. Ownership transferred by a BILL OF SALE Fixture - >>>Personal Property attached in such a way to make it real property. Annexation - >>>Process of attaching personal property to real property making it a fixture Severed or Severance - >>>Real property being removed becoming personal property Trade Fixtures - >>>required to carry out a business example would be commercial cooking equipment in a restaurant Accesion - >>>Acquiring trade fixtures by non removal prior to termination of lease Land 3 physical characteristics - >>>nonhomogeneity, immobility, indestructibility Nonhomogeneity - >>>no to pieces are exactly alike immobility - >>>land cannot be moved - a person must go to the land indestructibility - >>>durability - it will always be there

Land 4 economic characteristics - >>>scarcity, modification, fixity, situs scarcity - >>>short supply where demand is great example lot in Manhattan v. a lot in upstate NY modification - >>>land use and value are greatly influenced by improvements made by man to land and to surrounding parcels of land fixity - >>>land and buildings and other improvements to land are consideration fixed or permanent investments- they are not liquid assets Situs - >>>location preference location,location,location Metes and Bounds - >>>legal description of land that always has a point of beginning that is also the end. The oldest used in 13 original colonies Lot,Block, and Subdivision - >>>recorded map or plat, it is the most common description in residential listing agreements Monuments - >>>permanent surveyors markers often starting point for metes and bounds example Iron pipe, oak tree Rectangular/ Government Survey - >>>takes into consideration base lines, meridians, townships and sections.Townships and Sections are located in Ranges. Example S7T3R2 means Section 7 Townships 3 Range 2 Township - >>>36 Sections Section - >>>640 Acres 1 square mile

Acre - >>>43,560 square feet Plat - >>>map of a town, section, or subdivision Plot - >>>map or layout of improvements on a property site. The property site is also called a lot or parcel Encumbrance - >>>limitation on your rights. It may also called cloud on a title. Voluntary lein - >>>created by the borrowers actions such as taking out a mortgage Involuntary lein - >>>created by law ie. ad valorem tax lein Specific lein - >>>attaches to one or more specific properties ex mortgage General lein - >>>attaches to all property of the debtor example tax lien Lein - >>>created by recording a judgement writ of execution - >>>party wins and is unable to collect,he can secure a writ of execution from the courts to enforce payment. reservation - >>>withholds title of part of the land Ex. easement or mineral rights encroachment - >>>structure or improvements overlaps onto another's property

easement - >>>limited use or enjoyment of another's land written or verbal or implied easements can be terminated - >>>merger of adjacent property, release, or abandonment Easement appurtenant - >>>Dominant estate uses driveway of servient estate to access their property Easement in Gross - >>>belongs to a person or corporation example would be utility easement License - >>>permission to do a particular act , go fishing or ticket to Football game Adverse Possession (Squatters rights) - >>>occurs when property is acquired from the rightful owner through the State of Limitations Estate - >>>interest in real property Freehold estate - >>>ownership, Bundle of Rights, for indeterminate length,Ownership with the greatest bundle of rights Fee Simple or Fee Simple Absolute Non-Freehold estate or lease-hold - >>>has a termination date Defeasible Fee, Conditional Fee, Qualified Fee, Qualified Defeasible Fee - >>>ownership with conditions or terms which if violated could cause the ownership interest to be defeated or terminated. Life Estate - >>>ownership for the duration of someone's life. Owner called Life tenant. Remainderman person getting the estate after owner dies

Reversion - >>>life estate is setup so that at the end of the life estate the property goes back to the original owner Estate in severalty or Sole ownership - >>>Ownership by one person Tenancy in common - >>>Ownership by two or more without rights of survivorship goes to your heirs not the other owners Joint Tenancy - >>>Ownership by two or more with rights of survivorship goes to other owners overrides a will Trust - >>>if a property is held by one party for the benefit of another Syndicate - >>>when two or more parties join together to create and operate a real estate investment 4 leasehold estates - >>>Estate for years, periodic Tenancy, Estate at will, tenancy at sufferance Estate for years - >>>lease with specific starting and ending date EX.12 Month lease on a Apt. Periodic Tenancy - >>>fixed period of time that automatically renewed EX. Month to Month Estate at will - >>>Lease can be terminated by either party at will without notice Tenancy at Sufferance - >>>Lease expires and tenant refuses to move out Holdover Tenancy - >>>holdover tenant pays rent and it is accepted

Statutory Estate - >>>created by law,vary from state to state, in TX community property and homestead are statutory estate Government rights in land (PETE) - >>>Police Power, Eminent Domain,Taxation, Escheat Police Power - >>>Power given to a municipality to regulate and control the character and use of property for the health,safety,and general welfare of the public Zoning - >>>Common example of Police Power, non conforming use still grandfathered in, Example Old Apartment building in a now all residential neighborhood Variance - >>>if you violate zoning you can request this in order to fix or prevent a violation Buffer zone - >>>area of land separating one land use for another Eminent Domain - >>>The right of the government to take private property for public use through the action of condemnation Inverse Condemnation - >>>When an individual forces the govt to buy his property Taxation - >>>Property taxes are the highest priority lein on real property Assessed Value - >>>value of property for tax purposes Special assessment tax - >>>Ex. Govt provides new side walk in neighborhood can charge the owner's of neighborhood this tax

Escheat - >>>Property reverts to the state dies with no will,no heirs, no kindred. Also property is abandoned Riparian rights - >>>rights for rivers,streams, small bodies of water Littoral rights - >>>Lakes, Oceans, large bodies of water Prior Appropriation Theory - >>>first landowner to claim riparian rights exclusive rights Market Value - >>>price a willing seller will sell for, and price willing buyer will pay 4 Characteristics of Value (DUST) - >>>Demand, Utility,Scarcity,Transferability CMA Comparative Market Analysis - >>>a tool licensee use to determine price for their property using current listings,recent sales and expired listings 3 Basic approaches to Appraisals - >>>market data or sales comparison,income or capitalization method, and replacement cost or summation approach Market data approach - >>>mostly residential properties compares sales to similar properties in the area 3-5 sales no more than 6 months old Income approach - >>>or capitalization method used for income producing properties GRM x rent = Price or use GIM Cost approach - >>>also know as summation approach how much it would cost to reproduce or build examples are churches or govt buildings,new construction

3 types of depreciation in cost approach - >>>Physical deterioration,Functional obsolescence, Economic obsolescence Appraisers Principles to Value (9) - >>>Highest and Best use, Principle of Substitution, Principle of Conformity, Principle of Increasing and Decreasing Returns, Principle of Contribution, The Principle of Regression, The principle of Competition, The Principle of Change, The Principle of Anticipation Assemblage or plottage - >>>combining several parcels of land into one Steps in Appraisers process (5) - >>>1.Purpose 2. Collect and Verify info 3. Est. value using as many approaches as needed 4. Reconciliation 5. Prepare report Appraisers - >>>must follow USPAP (Uniform standards of Professional Appraisal Practice) some lenders require Fannie Mae appraisal Chronological age - >>>age of property in years Deferred Maintenance - >>>type of physical depreciation (ordinary wear and tear) Straight line method - >>>a method of depreciation of equal annual installment amounts. MAI designation - >>>Member, Appraisal Institute Licensed appraiser is required - >>>for any property worth 250,000 or more mortgage - >>>a pledge of real property as security for a promissory note

Deed of trust - >>>Texas uses instead of traditional mtg contains "Power of Sale" Clause that allows for "Non-judicial foreclosure" quick foreclosure Acceleration Clause - >>>in the state of default whole amt of principal is due Alienation Clause - >>>Due on sale clause states balance is due if sold w/o mortgagee's approval Defeasance clause - >>>release of lein when debt is repaided Escalation Clause - >>>allows lender to raise existing interest rate Prepayment Clause - >>>Prepayment of mtg there is fee Subordination Clause - >>>allows lender to move or take a lower lien position Assumption clause - >>>if loan is assumed new buyers obligated to pay off loan straight assumption - >>>new buyer responsible, can not impact seller's credit score subject to assumption - >>>buyer not liable for loan can impact seller's credit score FHA Loan - >>>require occupancy, assumable, insures the loan, the insurance on a FHA loan MIP- mtg ins. Premium VA Loan - >>>Guarantees repayment of loan, The guarantee is for the top 25% of the loan, assumable, require occupancy

Qualifications for VA - >>>obtain certificate of Eligibility from VA,VA loan interest rates are set by mkt conditions, O down payment Blanket loan - >>>Covers one than one piece of property Package loan - >>>Includes real and personal property ex. furnished condo Budget loan - >>>includes PITI examples are FHA,VA, and most amortized fixed rate loans are budget mortgages Escrow acct - >>>taxes and insurance placed also called impound, trust, or reserve acct GPM Graduated pmt loan - >>>payments rise over years and then level off remaining term Conforming loans - >>>Loans qualified to be purchased in the secondary market Truth in Lending Regulation Z - >>>allow consumers understand the true cost of borrowing, must be giving within 3 business days ECOA Equal Credit Opportunity ACT - >>>Lenders can deny traditional financing if income is commission based.Child support is most likely reason for denial. FCRA Fair Credit Reporting ACT - >>>an individual who has been denied credit is entitled to a free credit report to determine reason for denial Redlining - >>>the refusal to lend in a particular geographic area only lenders can be guilty of this

Mtg Brokers - >>>acts as intermediary between the borrower and lender Mtg Banker - >>>person or firm not otherwise in banking that normally provides his/its own funds for mortgage Usury - >>>charging an interest rate higher than the legal limit protects consumers Predatory lending - >>>lender takes advantage of a consumers lack of knowledge regarding lending practices Lien Theory state - >>>TX the lender has a lien and the borrower has title Principals duties (CRIP) - >>>Compensation, Reimbursement, Indemnification, Performance Agents duties (OLD CAR) - >>>Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care *Trust is not a duty Blockbusting - >>>panic selling Exclusive Agency - >>>broker exclusive agent but owner can sell Exclusive Right to sell - >>>broker exclusive agent receives commission no matter who sells the property Ratification - >>>agent acts w/o permission Estoppel - >>>court prevents the principal from denying that agency, agency by estoppel

To be a Valid and enforceable (COLIC) - >>>competent parties, Offer and Acceptance, Legal Purpose, In writing, Consideration Sherman Anti-Trust Act - >>>prohibits monopolies Radon mitigation - >>>term used to describe methods used to lower levels of radon in homes and other buildings HUD does not require radon testing for FHA loans Unilateral contract - >>>binds only one party example an option Bilateral contract - >>>exchange promises which binds two birds ex sales contract Effective date - >>>contract is the date on which the last party signs Chain of title - >>>list of all owners of the property Abstract of title - >>>complete history of all recorded events affecting the title Title Report - >>>preliminary report the current condition of title RESPA - >>>regulates closing on 1-4 family residential property w TREC was created - >>> TREC consist of - >>>9 3 represent general public and 6 are RE Brokers

Broker Lawyer Committee - >>>writes promulgated contracts 13 members 6 are brokers 6 lawyers and 1 public member Dual agency same as - >>>Intermediary only a broker can be one Not required to disclose - >>>death by natural causes or suicide. Never disclose death due to HIV/Aids Stigmatized - >>>property where there has been a murder or alleged haunting, or in vicinity of the residence of a known sex offender Megan's law - >>>federal law requiring all states to release info to public about known sex offenders Puffing - >>>marketing use adj. and opinions rather than facts ex. Best water in the world Errors and Omissions insurance - >>>protects broker if the seller misrepresents property condition, the broker is unaware, and could not have detected by visual inspection Federal interstate land sells Full Disclosure Act - >>>applies to all unimproved land sold interstate. If a buyer or tenant does not receive this report before signing, he may void his contract or lease HOW program - >>>Home owners warranty corporation for new construction 10 yr plan covering defects in material, faulty workmanship, and structural problems Lead Based Paint Disclosure - >>>prior 1978 CERCLA - >>>passed 1980 est. superfund to clean up hazardous waste

Void/Invalid contract - >>>ex. with a person who is documented as insane Voidable - >>>one party has the right to withdraw (a minor, or under the influence) Unenforceable - >>>ex oral contract Express contract - >>>written or stated implied contract - >>>actions or evidence REAL ESTATE TRUST ACCT - >>>below 1,000,000 access a fee 10.00 to bring balance to 1,700,000 invest in Treasury bills or notes,exceeds 3.5 million goes to state's general fund Paid out by the RE Trust Acct - >>>100,000 per license and 50,000 per transaction Salesman education requirements - >>>180 hrs w/min 180 core real estate courses, 60 hrs prin, 60 hrs contracts, 30 hrs law of agency,30 hrs finance Brokers edu requirements - >>>900 classroom hrs 30hrs in RE Brokerage 4yrs active sales licensee Renewal Sae - >>>90 core hrs in the nxt 2 years Conversion - >>>spending commingled funds Senate Bill 489 - >>>allows broker to act as intermediary, must give IABS at first substantive dialogue, must disclose representation oral or written

Seller's Disclosure - >>>must be given to a buyer before he signs an offer, not given has 7 days to terminate his offer MLS - >>>a licensee has 5 days to enter new listing into MLS Rule P53 - >>>Title companies are not permitted to provided food and beverages for a picnic or party for a single firm may have annual party