Superior NC Real Estate Important Final Exam Questions and Answers

Superior NC Real Estate Important Final Exam Questions and Answers RESPA -Answer--Real Estate Settlement Procedures Act: applies ONLY to 1-4 family residential transactions, transactions involving a "federally related" mortgage (conventional, FHA, VA) Which party's signature is required on a deed of trust? A. the trustee B. the beneficiary C. the trustor(s) D. the grantee(s) -Answer-C. the trustor(s) The trustor is the borrower in a lending situation using a trust deed. The borrower is giving the lender security or collateral interests in the property. Because those rights and interests belong to the borrower and they are surrendering them, only the trustor (or borrower) must sign the trust deed. Under which of the following types of mortgage loans would a buyer have to produce a certificate of reasonable value? A. VA Guaranteed Loan B.VA Insured Loan C.FHA Insured Loan D.Conventional Loan -Answer-A. VA Guaranteed Loan The certificate of reasonable value or CRV is the name for the appraisal in a VA loan. VA loans are guaranteed, FHA loans are insured. The appraisal in an FHA loan is called a Conditional Committment. Encapsulation refers to: -Answer-The sealing away of friable asbestos Radon becomes a material fact in North Carolina: A. Only in regard to properties located in the western part of the state B. In all residential real estate transactions C. Only when the presence of radon can be sensed by smell D. When the level of radon is 4.0 picocuries or higher -Answer-D. When the level of radon is 4.0 picocuries or higher. The major difference between an installment land contract and a purchase money mortgage is: A.Seller financing only exists in purchase money mortgages. B.The buyer receives legal title and the seller receives equitable title. C.The time in which delivery of the deed is made. D.Installment carryback is also known as seller carryback financing. -Answer-A purchase money mortgage, seller financing or a seller carryback occurs when the seller is transferring title to a buyer at closing and the seller is acting as the lender. Typically the buyer would execute a promissory note and deed of trust for the seller. An installment land contract or a contract for deed is a situation where the seller remains in title to the property and the borrower is in the process of acquiring it by making payments to the seller and title transfers with final payment. A buyer is to assume an existing loan of $80,000 at 9.5% with the approval of the lender. The interest on the loan, which is paid in arrears, would appear on the closing statement as: A.A single entry; debit to the seller B.A single entry: credit to the buyer C.A double entry: debit to the seller, credit to the buyer D. A double entry: credit to the seller, debit to the buyer -Answer-C. a double entry: debit to the seller, credit to the buyer. When a loan is assumed there is no new loan being established. The buyer's obligation will begin with the very next payment. Since interest is paid in arrears that next payment paid by the buyer will include interest for the month in which they acquired the property. The seller will have to provide a credit to the buyer for that portion of the month in which they occupied the property and it will appear as a debit to the seller and a credit to the buyer. If a person obtains property through a ground lease, which of the following rights does he/she typically receive? A. The right to build structures on the property B.The right to transfer ownership of the property to a 3rd party, during term of the ground lease. C.The rights to all minerals beneath the ground. D.The rights to oil and gas deposits beneath the ground. -Answer-A. The right to build structures on the property. Although the actual rights and interests that the tenant may acquire will be contained in the lease, a ground lease, which is usually for a long term, does typically allow the lessee to construct a building on the property. At the end of the lease term those improvements will become the property of the lessor. Ground leases do not usually transfer mineral or subsurface rights to the lessee. Concerning the residential property disclosure statement, which of the following is/are TRUE? A. Licensees are required to advise and assist the seller with the disclosure. B. The disclosure must be provided at first substantial contact. C. Failure to provide the disclosure creates a 5-day right of recission period for the buyer. D. A For Sale by Owner is exempt from providing the disclosure. -Answer-A. Licensees are required to advise and assist the seller with the disclosure. The role of the agent in regard to the Property Disclosure Statement is to advise and assist the seller. The seller may choose to answer questions, "yes," "no," or "no representation." However, the licensee should not tell the seller to respond to any question in a particular manner. What type of homeowner's insurance policy is typically required on a condominium? A. HO-1 B. HO-3 C. HO-5 D. HO-6 -Answer-D. Ho-6 An HO-6 policy is the condominium policy. It mainly covers the contents and the interior of the unit as well. A typical residential property management agreement would impose all of the following duties upon a property manager, EXCEPT: A. cleaning and maintai