Colibri Practice Test All Answers Rated A+
Real Estate Concepts Overview
Title and Closing Disclosure - Title: Refers to the legal ownership of property. - Escrow Account on Closing Disclosure: The account is shown on Page 2 under "Other Costs," where
taxes, prepaids, and initial escrow payme...
- Title: Refers to the legal ownership of property.
- Escrow Account on Closing Disclosure: The account is shown on Page 2 under "Other Costs," where
taxes, prepaids, and initial escrow payments (usually two months) are itemized.
Sales Price and Closing
- Sales Price Reflection: The sales price is a debit to the buyer and a credit to the seller; the seller
receives the price less adjustments at closing.
- Habendum Clause: Also known as the "to have and to hold" clause, it defines the ownership taken by
the grantee and clarifies the purpose of the deed.
Cap Rate and Property Values
- Cap Rate Relationship: A high cap rate indicates high risk, resulting in a lower sales price for investment
properties.
Types of Value Loss
- Loss of Value from External Factors: Economic or external obsolescence occurs (e.g., property near a
busy freeway). This loss is beyond the owner's control and is typically incurable.
Homestead Exemption
- Florida Base Homestead Exemption: $25,000 is the base exemption available for qualifying primary
residences. An additional $25,000 applies to qualified property owners but does not apply to school
taxes.
Tax Proration Calculation
- Tax Proration Example: For a closing on March 5 with an annual tax bill of $2,800, using the 365-day
method:
, - Daily rate: $ = $7.67
- Total days seller owns property (January 31 + February 28 + March 4): 63 days
- Total amount seller owes: 63 x $7.67 = $483.29
- Debit Seller: $483.29; Credit Buyer: $483.29.
Violations and Penalties
- Maximum Fine for John: For repeated violations, a maximum fine of $10,000 can be imposed.
Validity of Deeds and Agreements
- Valid Deeds and Agreements: Require an adequate legal description of the property.
Mortgage Clauses
- Defeasance Clause: A benefit to the borrower, requiring the lender to record a release document once
the loan is paid off.
Delinquent Property Taxes
- First Step for Delinquency: When a homeowner is delinquent on property taxes, names of delinquent
taxpayers are published in a local newspaper.
Bankruptcy and Contracts
- Bankruptcy Effect: May terminate existing contracts.
Voluntary Title Transfers
- Forms of Voluntary Title Transfer: By will (deceased) and by deed (during grantor's lifetime).
Responding to Complaints
- Response Time: Licensees must answer formal complaints within 20 days.
, Mutual Recognition and License Acquisition
- Georgia Licensee in Florida: John can obtain a Florida license by passing a 40-question law exam due to
mutual recognition agreement.
Transfer Tax Charges
- Transfer Tax Charges Calculation:
- Doc stamps on the note: $731
- Intangible tax on the mortgage: $417.60
Florida transfer taxes at closing are 70 cents per 100 or fraction thereof. The note is $232,000 less 10% =
$208,800/100 = 2088 one hundreds X .70 = $730.80. This is rounded to $731 (fraction thereof). The
intangible tax on the mortgage is: $208,800 X .002 = $417.60.
Which appraisal approach to value would be most suitable for a waterfront home with a high-end
remodel on a lot that cannot be duplicated, in an area with many other remodels and sales?
A market data or sales comparison approach
The market data approach compares like property and makes adjustments based on the date of sale,
physical features, and location. The income approach evaluates income and expenses. Where the cost
approach is used for properties where costs to duplicate can be calculated, and there are no
comparables. In this case, there are like properties.
A broker's records must be available for inspection during business hours. Who inspects the records?
A DBPR employee or authorized representative
All business records must be available for inspection during business hours; inspections are done by the
DBPR investigator or an authorized representative.
Which of the items listed below is NOT a tax advantage of real estate ownership?
Property can depreciate
Property can also go down in value which may leave the homeowner owing more than he borrowed.
Property taxes and interest are deductible, and the capital gain exclusion benefits most homeowners
when the primary residence is sold.
The purpose of the owner's title policy is to protect the:
owner from forgery in the record and claims that may not have surfaced prior to closing.
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