MO Real Estate Exam Practice Graded A+

Mo Statute 339 - ANSWER-License Law RSMO 1986 License Law - ANSWER-Any person who performs a RE service on behalf of another party for CONSIDERATION must be licensed; i.e. broker transactions, managing property, appraising, counseling, syndicating, auctioning Consideration - ANSWER-Includes $ compensation, exchange of free services, or any other valuable good or service that a person expects to be paid (Vital in license law requirement) MO Real Estate Commission (MREC) - ANSWER--authority is: 1. Regulatory 2. Judicial 3. Administrative State level gov't entity that regulates and administers license law by passing rules and making known in license law - violate MO license law and guilty= Class B Misdemeanor MREC - State regulator of RE licenses, established by legislature, 7 members 5 years, protect the public: suspend, revoke, or probation - can never fine a licensee and will not involve in a commission $ dispute -subpoenas -civil penalty $2,500 fine/occurrence - can investigate without complaint - can file complaint in ANY COURT OF COMPETENT JURISDICTION MREC CAUSES COMPLAINT FILED WITH ADMIN HEARING COMMISSION; The Missouri Real Estate Commission was created by an act of the 61st General Assembly and approved by the governor on July 31, 1941. The Commission consists of seven voting members. Six of those members must have at least 10 years experience as real estate brokers. A public member serves as the seventh member. Each commissioner is appointed for a five-year term. Under the provisions of the real estate act, no real estate broker or salesperson may act as such without first procuring a license from the Commission. Other responsibilities include investigating complaints generated by consumers against the acts of a real estate licensee and auditing real estate escrow accounts to verify proper handling of buyers' earnest money. The Commission also approves all real estate prelicensing and continuing education courses. The Commission meets regularly to review complaints, investigations and audits and to take up other matters. The Missouri Real Estate Commission performs duties necessary to carry out the provisions of the real estate license law. MO Admin Hearing Commission (MAHC) - ANSWER-Determines guilt/innocence; if guilty, sent to MREC for punishment or dismissal. - 3 attorneys, work for attorney general - public crimes (other than license laws) sent to attorney general for disposition Brokers License Types - ANSWER-- Individual: active or inactive - corporation - LLC - Partnership - Non resident VOIDED: expiration, suspension, revocation Salesperson's License Types - ANSWER-Individual: active or inactive Broker Salesperson: Active or Inactive Branch Offices - ANSWER-- Broker salesperson office (NOT salesperson) can manage branch office - branch office under a principal broker would operate under principal broker's license Licensing - Renewals/ Termination Etc - ANSWER-Brokers license renews by 6/30 of even years ($50) Salesp must renew by 9/30 of even years ($40) -2 yrs salesperson before broker - broker must notify MREC within 72 hours of termination - Salesperson has 6 months to find new broker or place on inactive - Listings belong to broker (transfer req written consent) - "Dual Contracts" to deceive lender = federal offense Broker Requirements - Place of Biz - ANSWER-Sufficient size sign est RE office, maintain pl of biz in state during biz hrs, supervise all salesp, same name at branch off Broker Reqs - Deposits / $ - ANSWER-Brokers must have Escrow or Trust accts unless exempted by MREC Deposits - broker must deposit $ w/in 10 days of accepting purchase offer - unless other agrmt, cobroker transfer funds deposit into listing brokers escrow acct Accounts must be NON int bearing unless otherwise agreed in writing; must clarify who receives interest - only negotiable items can be placed in escrow (check, cash, or money order); Seller must agree to other items as earnest deposit (i.e. ring, boat, note, etc) -salesperson must deliver earnest $ to broker IMMEDIATELY -if dispute over earnest $, broker should hold $ until all parties sign a release, or within 365 days, if no agrmt, release and to state treasury - Contract failed: AFTER 60 days broker sent registered letter saying would give earnest $ to seller; lacking response from either party could release $ AFTER 15 DAYS Broker has 15 days to notify buyer and seller of escrow problem Net Listing - ANSWER-Illegal in MO; An owner sets a minimum amount that he wants to receiver from the sale of the property and lets the broker have as commission any amount above the set minimum. Commingling/ Conversion - ANSWER-=doing something wrong with someone's money; i.e. depositing late, taking out too soon, or using $ without permission Advertising Laws (sec 6)**** - ANSWER-Discrimin. Adv - illegal and violation of Federal Fair Housing Law - NO inducements: valuable consideration for secure customer to lease, purchase, list, sell - Guaranteed profit: guaranteeing future profits if resale not allowed - Co name must always appear - Salesp contact info, equivalent brokerage info - Blind Advertising: must include broker's reg biz name Institutional Advertising: Advertise company or individual, not specific property Listing Agreements must include: - ANSWER-Price, commission (incl any bonuses), beginning & expiration date, seller & listing broker signature, type of listing (exclusive agency, exclusive right to sell, or open) Any changes initialed and sig of all parties Dual Agency - ANSWER-Must disclose, commission source must be wirtten, sig/date of all parties, copies Listing broker FIRST disclose to buyer the broker agency relationship with the seller BEFORE buyer gives personal or financial info Listing licensee = transaction broker unless otherwise specified in writing Dual Agents = Transaction Brokers Broker Record Keeping - ANSWER-Must retain true copies of records for minimum of 3 years, if not class B misdemeanor Carry Over clause - ANSWER-legal; broker collect commission after listing over if buyer introduced "ready willing, and able" prospective buyer to seller during listing Going behind the sign - ANSWER-licensee from another co contacts seller with property listed with another broker - violation of license law Exclusive Right to Represent - ANSWER-Licensee representing a buyer or TT is limited agent with specific duties and obligations Salesperson can close transaction IF - ANSWER-under direct supervision of manager or broker Hulse v. Criger - ANSWER-=MO court decision what RE licensees can and cannot do. Earn commission for producing ready, willing, and able buyer, use standard contract forms approved by counsel; complete form by filling in blanks, forms include: - Warranty deeds - Quitclaim deeds - Promissory notes - bill of sale - deed of trust - security agreements - lease - listing agreements - buyer agency agreements - purchase agreements 12 hours of continuing education: 3 hrs core + 9 elective - failure to complete continuing ed and 3 months later renew > late fee of $50/mo not to exceed $200, and take MO Practices 24 hr course Salesperson: 9/30 even years Broker: 6/30 odd years Quit claim deeds - ANSWER-- to transfer property or correct mistakes made in previous transfers of property - one of the forms licensees can use Warranty deed - ANSWER-used to transfer title from one party to another one of the forms licensees can use Bill of sale - ANSWER-when personal property (movable in nature, "Chattel" or "Personalty") not listed on sales contract one of the forms licensees can use deed of trust - ANSWER-deed held by 3rd party until obligation made one of the forms licensees can use Security agreements (form licensees can use) - ANSWER-between parties as to holding and disposition of funds held by escrow agents Addendum - ANSWER-Addition to contract, aka Rider Escrow/Trust Acct Vs PM Escrow Acct - ANSWER-Escrow or Trust Account = Longterm moneys belonging to clients (SD & ppd rent) - only negotiable items in escrow (check, cash, $ order), non negot. (ring, boat, etc) as earnest dep with seller approval PM Escrow Account = for handling current rents, paying rents, commission, etc. - $ for repairs on rental property - fees and commission removed from PM account at least once a month, PM written stmt of prop income to owners at least ONCE PER YR Branch Office Mgmt - ANSWER-Manager must have broker, broker salesperson, broker officer, broker partner, or broker associate license - salesperson may be an officer of a corporation, but not involved in management Real estate includes: Freehold estates Leasehold estates Corporeal property Incorporeal property in MO or elsewhere - ANSWER-freehold est: est for at least a lifetime because willed to heirs leasehold est: less than freehold that a TT possesses in real property corporeal prop: buildings, fences, fixtures, etc incorporeal prop: intangibles i.e. rents, easements, and goodwill Interest in RE & Bundle of Rights - ANSWER-=ownership of any combo of the bundle of rights to real property including rights to: Possess Use Transfer Encumber Exclude Interests in RE: -Possession (estate) -Nonpossession (encumbrance=private interest holder, public interest=not private,i.e. govt entity) Encumbrance enables nonowning party to restrict owner's bundle of rights, i.e. tax liens, mortgages, easemts, and encroachments Freehold vs Leasehold Estates in land - ANSWER-Freehold: duration of right can't be determined, assoc with prop ownership Leasehold: dist by specific duration; not associated with ownership bc temporary Both are tenancies Freehold TT: owner of freehold estate Leasehold TT: the renter or lessee Fee Simple Freehold Estate ??? - ANSWER- Life Estates (pg 30) Conventional Vs. Legal - ANSWER-Conventional: - Ordinary: ends w/ death of life est owner & reverts back to orig owner - Pur Autre vie= another's life Legal (created by state law): -Homestead: principal residence -Dower & Curtesy: d: wife's right, c: husbands right -Elective share: state level statute, surviving spouse makes mininmum claim Leasehold Estates Define & types - ANSWER-=non-ownership possessory estates of LIMITED DURATION 1. Estate at Will (tenancy at will): no definite expiration and no auto renewal; terminate by proper notice or by death of either party 2. Estate at Suffrance: TT occupies without consent or agrmt 3. Est for years: Specific, stated duration, per LEASE 4. Est from Period to Period: lease term renews automatically upon acceptance of monthly or periodic rent, "periodic tenancy", ex: apt lease Ownership - sole ownership Tenancy in severalty - ANSWER-=single party owns the fee or life estate AKA sole ownership, ownership in severalty, estate in severalty Ownership - coownership Tenancy in Common Joint Tenancy Tenancy by the Entireties - ANSWER-Coownership (cotenants)= if 1+ party owns an estate in land 1. Tenancy in common: most common coownership if own and not married. 2+ owners, indivisible, identical rights, interestes individually owned, electable ownership shares, no survivorship (heirs), no unity of time 2. Joint tenancy: 2+ own property as if a single person. Rights are indivisible and equal. Joint TTs can only convey ints to outside parties as TT in common ints; unity of ownership (single title), equal ownership shares, transfer of interests, surviivorship, X pass to heirs, to create joint TT all owners must have 4 UNITIES: - Unity of time, Unity of Title (same deed of conveyance), Unity of Interest, Unity of Possession -terminate by partition suit (court to divide prop phys), foreclosure, bankruptcy 3. Tenancy by the Entireties: MARRIED COUPLES; survivorship (passes to spouse), equal interests, limited exposure to foreclosure; Terminate by death, divorce, mutual agreement, judgements for mutual joint debt - Community property: all other prop earned or acq by either party during marriage - Separate property: owned at time of marriage, acquired by spouse by inheritance/gift, acquired by separate property funds or income 4. Tenancy in Partnership= ownership by biz partners by Uniform Partnership Act; equal rights to all partners, but property must be used in connection with part of business; invid rights not assignable Estate in trust - ANSWER-created by a deed, will or trust agreement Trustee holds title Living trust - ANSWER-trustor, during his/her lifetime, conveys title to a trustee for benefit of 3rd party Testamentary trust - ANSWER-same as living, but takes effect when trustor dies Land trust - ANSWER-Trustor conveys fee estate to trustee and names self the beneficiary (real property only); LIMITED TERM - Agrmt (aka deed in trust) grants beneficiary the rights to possess and use property, and exercise control over actions of the trustee, not on public records - beneficiary's interest in long term is personal property, not real property Condos - ANSWER-Buyer of unit obtains a fee simple interest in airspace of unit and a tenancy in common interest in pro rata share of the common elements Cooperatives - ANSWER--developer creates cooperative association -proprietary lease of a unit, and ownership of shares in owning corporation; corporation has sole, undivided ownership - share holder interest is personal property subject to control of the corporation -hybrid of residential and recreational