Real Estate - The CE Shop Exam Questions And Correct Answers
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Course
CE Shop
Institution
CE Shop
Real Estate - The CE Shop Exam Questions
And Correct Answers
1031 tax-deferred exchange - answer"Section 1031 of the Internal Revenue Code allows the
owner of real property to sell that property and then reinvest the proceeds in a "like-kind"
property and defer paying any capital gains taxes.
...
Real Estate - The CE Shop Exam Questions
And Correct Answers
1031 tax-deferred exchange - answer✔✔"Section 1031 of the Internal Revenue Code allows the
owner of real property to sell that property and then reinvest the proceeds in a "like-kind"
property and defer paying any capital gains taxes.
Ex. Real estate investors can take advantage of the 1031 tax-deferred exchange to defer capital
gains taxes when selling a property provided the money is rolled into another """"like""""
purchase
"
abutting - answer✔✔"Land sharing a common border
Ex. Many neighbors find that fences make abutting properties more tolerable.
"
acceleration clause - answer✔✔"Allows a lender to demand immediate and full payment of all
debt owed if a buyer defaults
Ex. When Wendy stopped making home loan payments, her lender told her she must pay off her
entire balance or risk foreclosure.
"
accession - answer✔✔"The addition of value to property through labor or the addition of new
materials, including an increase in land through natural processes
Ex. Jonathan's property borders a bay. The bay receded, and Jonathan gained an extra 10 feet of
property to his land through accession.
"
accessory use - answer✔✔"An incidental or subordinate use to the primary use of the property
Ex. Andy's military bunker in his back yard constituted an accessory use of the property.
"
accounting - answer✔✔"One of the fiduciary duties, accounting means an agent is accountable
for any funds or properties entrusted to the agent. This is a duty that survives termination of an
agency agreement.
Ex. Cameron accepted an earnest money deposit from his buyer. His duty of accounting means
that he must safeguard the funds and handle them according to the agreement with his client and
the policies of his firm.
"
accretion - answer✔✔"Land build up over water by sand, silt, or gravel
Ex. Jillian's property grew through accretion when a landslide wiped out an adjacent creek.
"
accrued items - answer✔✔"Expenses that are accruing but are not yet payable (e.g., property
taxes)
Ex. At closing, accrued items must be accounted for on the settlement statement. If the seller has
accrued expenses not yet payable, the amount accrued will be a seller debit and buyer credit.
"
acknowledgment - answer✔✔"A requirement for deed transfer; a public official must
acknowledge the grantor's signature
Ex. Gary purchased a duplex. The grantor signed the deed; a notary public acknowledged his
signature.
"
acre - answer✔✔"43,560 square feet
Ex. The Jones farmhouse was on 10 acres. Their parcel had 435,600 square feet.
"
active fraud - answer✔✔"Intentional misstatement of a material fact
Ex. ""Sure, the foundation is perfectly safe!"" Lisa said, even though she knew full well that
there was a crack the size if Toledo in it.
"
act of waste - answer✔✔"Abuse of a property by a person who holds possession through a life
estate
Ex. When Minerva inherited the historic mansion and turned it into an illegal video gaming
parlor, this was an act of waste that caused her to lose title to the property.
"
actual notice - answer✔✔"Express notice given directly to a person
Ex. Karen told her neighbors she would be moving; this was actual notice.
"
addendum - answer✔✔"An addition to a real estate contract that's added before contract
acceptance
Ex. Steve decided to ask for the washer and dryer after all, so he asked his broker to write up an
addendum to the sales contract.
"
adjustable rate mortgage (ARM) - answer✔✔"A mortgage with a rate that adjusts based on
changes in a market index
Ex. Caleb had a 5/1 ARM. His loan had a fixed interest rate for the first five years, and after 5
years, it could change annually depending changes to the market index.
"
adjusted basis - answer✔✔"The final basis for taxing purposes computed by taking acquisition
costs plus capital improvements and subtracting depreciation taken
Ex. When Mark computed the adjusted basis in his property, he had to subtract $10,000 in
depreciation he had taken over the years.
"
adjustment - answer✔✔"The dollar value or percentage added to or subtracted from the sales
price of a comparable to arrive at an indicated value for the subject
Ex. Whether the adjustment is made for a "good" or a "bad" feature, it is made to the
comparable, not to the subject.
"
adjustment date - answer✔✔"The date on which the interest rate changes on an adjustable rate
mortgage.
Ex. Karey made sure to refinance before her adjustment rate. Rates had dropped and she could
get a better rate than the one she'd face once her ARM adjusted.
adjustment (loan) - answer✔✔"A debit or credit at closing to coincide with appropriate closing
costs
Ex. When the document preparation fees were more than anticipated, both sides received an
adjustment at closing.
"
Administrative Procedure Act - answer✔✔"Helps to ensure that no governmental entity acts
without an opportunity for public input by requiring public disclosure and discourse before
rulemaking
Ex. The Administrative Procedure Act was partially enacted in response to FDR's New Deal, in
an effort to prevent the federal government from having too much power.
"
adverse material fact - answer✔✔"A fact that might cause the buyer to change his mind about
purchasing the property
Ex. When Chet learned that a railway was being built behind the property, he withdrew his
offerr. That was an adverse material fact he couldn't live with.
"
aesthetic zoning - answer✔✔"Specifies style or architecture of buildings in an area in order to
preserve charm, feel, etc.
Ex. Zoning required that all homes in Ocean City be either Victorian or Tudor in design, and no
taller than three stories.
"
air rights - answer✔✔"Rights to use the airspace above the land may be sold or leased
independently of the land itself
Ex. In Burlesque, "Ali" saved the day when she told the club's owner (played by Cher) that she
could sell her air rights to the luxury condominium developer across the street.
"
alluvion - answer✔✔"Newly formed land mass belonging to the property owner
Ex. When a landslide occurred on Jillian's property that wiped out the adjacent creek, she was
able to use the alluvion—the new land mass that formed—as her own property.
"
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