Lesson 10
Chapter 21-22
1.
Which of the following can cause lung and/or respiratory problems?
a.
Formaldehyde
b.
Asbestos
c.
Mold
d.
Radon
e.
All of the above
2.
Which of the following statements is true?
a.
Homeowners are required to test for lead.
b.
PCBs can damage the ozone layer.
c.
Asbestos can be encapsulated.
d.
Older people are the most vulnerable to lead poisoning because of a longer
exposure period.
3.
An environmental site assessment
a.
would help a potential buyer avoid buying contaminated property.
b.
is required for federally funded projects.
c.
would be of little use to a lender.
d.
would be of little use in a defense against liability.
4.
For properties constructed prior to 1978, purchasers must be given a disclosure
form for the use of
a.
asbestos
b.
radon
c.
formaldehyde
d.
lead based paint
e.
none of these
5.
The primary cause of mold is
a.
heat.
b.
moisture.
c.
too much ventilation.
d.
related to flower pollen.
6.
Which of the following types of underground storage tanks are exempt from
federal regulations?
a.
tanks holding toxic waste
b.
tanks that hold petroleum products with at least 10% of the volume
underground
c.
tanks that hold heating oil burned on the premises
d.
None of the above, all types of storage tanks are subject to federal
regulation.
7.
The Brownfields Legislation
a.
b.
c.
d.
8.
An inspection of the property by the buyer shortly before closing that ensures that
necessary repairs have been made and all fixtures are in place is known as a (n)
a.
b.
c.
d.
e.
9.
passing papers
face to face closing
closing in escrow
all of these
none of these
Closing in escrow may be done by
a.
b.
c.
d.
e.
12.
sales contract
survey
appraisal
RESPA Uniform Settlement Statement
Closing is known by many names, including
a.
b.
c.
d.
e.
11.
appraisal
survey
walk-through
open house
none of these
This gives information about the exact location and size of the property
a.
b.
c.
d.
10.
makes developers responsible for existing site pollution.
requires states to pay developers up to $250 million a year for five years to
clean up polluted industrial sites.
was passed to create tombs to store toxic waste.
encourages the clean-up and development of abandoned industrial sites.
the seller’s broker
the buyer’s broker
a title or trust company
a or b
all of these
Assume a sale is to be closed September 15. Current real estate taxes are to be
prorated. How much will the buyer be debited for this unpaid bill?
a.
b.
c.
d.
e.
$856.66
$854.88
a or b depending on the method used
none of these amounts are correct
none of these, the buyer should receive a credit
13.
A property tax levied for a specific purpose such as paving a road or buying a
water main is known as
a.
b.
c.
d.
14.
Debits to the buyer usually include
a.
b.
c.
d.
e.
15.
a special assessment
a lien
a Cba
none of these
tenant’s security deposit
buyer’s earnest money
unpaid utility bills
selling price of property
a, b, & c
Debits to the seller usually include
a.
b.
c.
d.
e.
tenant’s security deposit
buyer’s earnest money
unpaid utility bills
selling price of property
a and c
16.
Carbon monoxide is
a.
easy to detect.
b.
a result of incomplete combustion.
c.
quickly absorbed in the body.
d.
a natural result of combustion.
17.
Capping is a method of
a.
piling waste into a hill at surface level and covering with clay.
b.
compacting waste and sealing it in a container.
c.
laying soil over the surface of a landfill and planting vegetation.
d.
burying waste and covering with soil.
18.
Urea formaldehyde is found in residential properties in
a.
lead-based paints.
b.
insulating foam.
c.
home appliances.
d.
electromagnetic fields.
19.
All of the following are true about underground water contamination EXCEPT
a.
It is a minor problem in the United States.
b.
c.
d.
Any contamination of underground water can threaten the supply of pure,
clean water from private wells and from public water systems.
Protective state and federal laws concerning water supply have been
enacted.
Real estate licenses need to be aware of potential contamination sources.
20.
Contamination from underground storage tanks is
a.
found only in petroleum stations.
b.
addressed by EPA regulations.
c.
only caused by tanks currently in use.
d.
easily detected and eliminated.
21.
In a closing statement, a prepaid item is a(n)
a.
item paid in advance by the buyer.
b.
item that is prepaid by the seller.
c.
accurate expense.
d.
a charge to the seller.
22.
The Real Estate Procedures Act (RESPA) applies to the activities of
a.
licensed real estate brokers when selling commercial and industrial
properties.
b.
licensed securities salespersons when selling limited partnership interests.
c.
lenders financing the purchase of residential properties.
d.
Fannie Mae and Freddie Mac when purchasing residential mortgages.
Use the following to answer 23-24.
Purchase price: $125,000 cash
Earnest money: $1,000
Commission rate: 7 percent
Revenue stamps to be paid by seller: $125
Real estate taxes: $1,600 paid in full for the current year
Title insurance policy to be paid by seller: $250
Deed recording fee: $20
Escrow fee: $350
Existing mortgage loan balance: $29,450 including credit for the reserve account
Closing date: July 31st
Prorate using a 30-day month and a 360-day year.
Prorate the taxes as of the close of escrow.
Split the escrow fee 50-50 between the parties.
23.
What amount is the seller debited for the broker’s commission?
a.
$1,785
b.
$8,088
c.
$8,750
d.
24.
$1,680
What are the seller’s proceeds from the sale?
a.
$86,395.83
b.
$86,916.67
c.
$95,550
d.
$85, 833.34
Use the following to answer 25.
Purchase price: $278,000 cash
Earnest money: $5,000
Commission rate: 7 percent split 50-50 between two brokers
Appraisal fee: $350
Existing mortgage loan balance: $113,576.82
Title insurance policy to be paid by the seller: $550
Attorney fee: $450
Deed recording fee: $25
Termite and wood infestation report to be paid by seller: $200
Real estate taxes: $1,950 paid in full through December 31st
Closing date: August 31st
Prorate using the actual number of days in the month and the year.
Split the closing fee 50-50 between the parties.
25.
What is the balance due from the purchaser at closing?
a.
$274,476.78
b.
$274, 251.78
c.
$279, 251.78
d.
$274, 063.11
26.
Which of the following describes the process of creating a landfill site?
a.
Waste is liquefied, treated and pumped through pipes to tombs under the
water table.
b.
Waste and topsoil are layered in a pit, mounded up, and then covered with
dirt and plants.
c.
Waste is compacted and sealed into a container, then placed in a tomb
designed to last several thousand years.
d.
Waste is buried in an underground vault.
27.
Radon poses the greatest potential health risk to humans when it is
a.
contained in insulation material used in residential properties during the
1970s.
b.
found in high concentrations in unimproved land.
c.
trapped and concentrates in inadequately ventilated areas.
d.
emitted by malfunctioning or inadequately ventilated appliances.
28.
What do UFFI, lead-based paint and asbestos have in common?
a.
They all pose a risk to humans because they emit harmful gases.
b.
They were all banned in 1978.
c.
All three were used in insulating materials.
d.
They were all used at one time in residential construction.
29.
Under the federal Lead-Based Paint Hazard Reduction Act, which of the
following statements is true?
a.
All residential housing built prior to 1978 must be tested for the presence
of lead-based paint before being listed for sale or rent.
b.
A disclosure statement must be attached to all sales contracts and leases
involving residential properties built prior to 1978.
c.
A lead hazard pamphlet must be distributed to all prospective buyers, but
not tenants.
d.
Purchasers of housing built before 1978 must be given five days to test the
property for the presence of lead-based paint.
30.
Which of the following is true of asbestos?
a.
The removal of asbestos can cause further contamination of a building.
b.
Asbestos causes health problems only when it is eaten.
c.
The level of asbestos in a building is affected by weather conditions.
d.
HUD requires that all asbestos-containing materials be removed from all
residential buildings.
31.
Liability under the Superfund is
a.
limited to the owner of record.
b.
joint and several and retroactive, but not strict.
c.
voluntary.
d.
strict, joint and several, and retroactive.
32.
At the closing of a real estate transaction, the person performing the settlement
gave the buyer a credit for certain accrued items. These items were
a.
bills relating to the property that have already been paid by the seller.
b.
bills relating to the property that will have to be paid by the buyer.
c.
all of the seller’s real estate bills.
d.
all of the buyer’s real estate bills.
33.
Which of the following statements is true of a computerized loan origination
(CLO) system?
a.
The mortgage broker or lender may pay any fee charged by the real estate
broker in whose office the CLO terminal is located.
b.
Consumers must be informed of the availability of other lenders-those not
shown in the real estate broker’s CLO.
c.
The real estate broker in whose office the CLO terminal is located may
charge a fee of up to two points for the use of the system.
d.
The fee charged by the real estate broker for using the CLO terminal may
not be financed as part of the loan.
34.
Legal title always passes from seller to buyer
a.
on the date of the execution of the deed.
b.
when the closing statement has been signed.
c.
when the deed is placed in escrow.
d.
when the deed is delivered and accepted.
35.
The earnest money left on deposit with a broker is a
a.
credit to the seller.
b.
credit to the buyer.
c.
balancing factor.
d.
debit to the buyer.
36.
Which of the following would a lender generally require at the closing?
a.
Title insurance commitment
b.
Market value appraisal
c.
Application
d.
Credit report
37.
A mortgage reduction certificate is executed by a(n)
a.
abstract company.
b.
attorney.
c.
lending institution.
d.
grantor.
38.
Which of the following statements is true of real estate closings in most states?
a.
Closings are generally conducted by real estate salespersons.
b.
The buyer usually receives the rents for the day of closing.
c.
The buyer must reimburse the seller for any title evidence provided by the
seller.
d.
The seller usually pays the expenses for the day of closing.
39.
All encumbrances and liens shown on the report of title other than those waived
or agreed to by the purchaser and listed in the contract must be removed so that
the title can be delivered free and clear. The removal of such encumbrances is
usually the duty of the
a.
buyer.
b.
seller.
c.
broker.
d.
title company.
40.
The RESPA Uniform Settlement Statement must be used to illustrate all
settlement charges for
a.
b.
c.
d.
every real estate transaction.
transactions financed by VA and FHA loans.
residential transaction financed by federally related mortgage loans.
all transactions involving commercial property.
Essay questions are for your convenience to prepare for the midterm and final. You do
not have to turn them in for a grade.
1.
Discuss the issue of liability under the Comprehensive Environmental Response,
Compensation, and Liability Act and the Superfund Amendments and
Reauthorization Act.
2.
List and explain the disclosure requirements at the time of loan application and
loan closing.
3.
Several items are split between the buyer and seller in a prorated manner. List and
describe several items that are and are not prorated.
4.
List and describe what items you would expect to find in a closing statement.