REAL ESTATE - THE CE SHOP EXAM
QUESTIONS AND ANSWERS
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.
"
amendment - Answer-"A change to an existing contract
Ex. Bill decided not to include the washer and dryer since the buyers were asking for
the moon in the inspection. He wrote up an amendment to their original agreement,
which they reluctantly signed.
,"
Americans with Disabilities Act of 1990 - Answer-"A federal anti-discrimination law to
protect persons with disabilities from discrimination in public accommodations and
commercial facilities; also mandates easy access in new multi-family housing with four
or more units
Ex. The Americans with Disabilities Act requires landlords of properties covered under
the Act to allow disabled tenants to make reasonable accommodations at their expense.
"
amortization - Answer-"The paying off of a debt with regular installments over a fixed
repayment schedule
Ex. A 30-year fixed rate loan provides amortization for the debt—in 30 years it is fully
paid off.
"
amortization schedule/chart - Answer-"A table that shows how much of each payment
will apply toward principal and how much toward interest for the loan term; also shows
decrease in loan balance until paid off
Ex. If borrowers want to see how much of their payment is going toward principal, they
can check their mortgage statement, or an amortization schedule.
"
amperage - Answer-"Amount of current or electricity flowing through electrical wires
Ex. The pulses were of high voltage but low amperage, which makes them, like static
electricity, safe but an unpleasant experience.
"
anchor store/anchor tenant - Answer-"A large commercial tenant that draws in traffic to
a mall or shopping center
Ex. Janice was excited to place her boutique in the same shopping center as
Bloomingdales. Having such a great anchor store nearby was good for business.
"
annexation - Answer-"The conversion of personal property into real property
Ex. When Mrs. Goldman planted the rosebushes in her yard, the resultant annexation
meant that the rosebushes were now made part of the property.
"
annual percentage rate (APR) - Answer-"A rate derived according to a government
formula that's intended to reflect the true cost of financing that allows consumers to
compare loan products; includes financing fees, so it will always be higher than the
actual interest rate on a loan
Ex. An interest rate of 6% may sound better than one of 6.25%, but it's important to also
compare annual percentage rate (APR) figures to see the true cost of financing.
"
,appraisal - Answer-"An estimate of value as of a specific date and for a specific use
Ex. The appraisal on Myra's property was for its use as a bed-and-breakfast today.
"
appraisal contingency - Answer-"Contract clause that, if the property doesn't appraise at
or above the sales price, the buyer is allowed to terminate
Ex. If the appraised value is close to the sales price, often the parties can reach
agreement. If not, and an appraisal contingency is in place, the buyer can use the fact
that the property didn't appraise to terminate and receive a refund of earnest money
deposited.
"
appraised value - Answer-"An estimate of value as of a specific date, and for a specific
use
Ex. Barbara refinanced her property two years ago. At that time, the appraised value
was $450,000. If she puts it on the market today, she can't use the appraised value as
list price, because it's no longer valid.
"
appraiser - Answer-"One who performs an appraisal
Ex. Vladimir the appraiser is certified to provide real estate appraisals for his clients.
"
appreciation - Answer-"Increase in property value
Ex. Due to appreciation, Kerry's investment property had doubled in value over the eight
years she had held it.
"
appurtenances - Answer-"Automatic rights inherent in property ownership
Ex. Jason loved being a property owner. He decided not to sell off any of his
appurtenances to others. He kept all of his bundle of sticks together.
"
asbestos - Answer-"A fibrous mineral found in rocks and soil, previously used in
construction materials for its insulating and fire-retardant strength
Ex. Many homes built before 1973 likely contain asbestos products. These might be in
insulation, ceiling or floor tiles, or in exterior shingles.
"
asbestosis - Answer-"A chronic lung disease caused by breathing asbestos fibers
Ex. Asbestosis makes breathing difficult and can lead to death.
"
assemblage - Answer-"The process of combining separate adjacent parcels of land into
one piece
, Ex. Through the princple of assemblage, by purchasing several adjoining parcels, the
combined parcel was worth far more.
"
assessed value - Answer-"The dollar amount to which the local tax rate is multiplied to
determine property tax owed
Ex. Although the appraised value of Myra's bed and breakfast was $600,000, her tax
assessed value was only $475,000.
"
assessment - Answer-"Charge against a property; for instance, condominiums will have
periodic assessments for maintenance and repairs of common areas
Ex. Before a condominium owner can close on a sale of the condo, the owner must
bring all assessments up to date so the buyer is not left paying for assessments owed
from the time the seller was in possession.
"
asset - Answer-"Items of value owned by an individual; often used when qualifying for
financing
Ex. Liquid assets include checking and savings accounts. Other assets include real
property, automobiles, and accounts receivable.
"
assignment (rentals) - Answer-"The substitution of tenants, putting the responsibility for
the lease contract in the new tenant's hands. Requires written permission of landlord.
Ex. Daniel is moving out of state, and assigns his lease to Benjamin. Benjamin
becomes responsible for the lease.
"
assignment (contracts) - Answer-"When a new party to a contract agrees to satisfy the
former party's obligations. Unless there is a novation (a new contract) the original
parties remain liable for the contract terms.
Ex. Ty decided to take an African Safari in the middle of his transaction. His brother
agreed to have the contract assigned to him. However, Ty remains responsible unless a
new contract is drawn up, naming his brother as the contracted party.
"
assignment (mortgages) - Answer-"The transfer of a mortgage from the original lender
to another
Ex. Sima must not have been paying attention to her disclosures because she was
surprised with EZ Well Bank assigned her mortgage to another lender.
"
assumable mortgage - Answer-"A mortgage that can be assumed when property
transfers ownership (requires borrower to qualify for the loan).
QUESTIONS AND ANSWERS
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.
"
amendment - Answer-"A change to an existing contract
Ex. Bill decided not to include the washer and dryer since the buyers were asking for
the moon in the inspection. He wrote up an amendment to their original agreement,
which they reluctantly signed.
,"
Americans with Disabilities Act of 1990 - Answer-"A federal anti-discrimination law to
protect persons with disabilities from discrimination in public accommodations and
commercial facilities; also mandates easy access in new multi-family housing with four
or more units
Ex. The Americans with Disabilities Act requires landlords of properties covered under
the Act to allow disabled tenants to make reasonable accommodations at their expense.
"
amortization - Answer-"The paying off of a debt with regular installments over a fixed
repayment schedule
Ex. A 30-year fixed rate loan provides amortization for the debt—in 30 years it is fully
paid off.
"
amortization schedule/chart - Answer-"A table that shows how much of each payment
will apply toward principal and how much toward interest for the loan term; also shows
decrease in loan balance until paid off
Ex. If borrowers want to see how much of their payment is going toward principal, they
can check their mortgage statement, or an amortization schedule.
"
amperage - Answer-"Amount of current or electricity flowing through electrical wires
Ex. The pulses were of high voltage but low amperage, which makes them, like static
electricity, safe but an unpleasant experience.
"
anchor store/anchor tenant - Answer-"A large commercial tenant that draws in traffic to
a mall or shopping center
Ex. Janice was excited to place her boutique in the same shopping center as
Bloomingdales. Having such a great anchor store nearby was good for business.
"
annexation - Answer-"The conversion of personal property into real property
Ex. When Mrs. Goldman planted the rosebushes in her yard, the resultant annexation
meant that the rosebushes were now made part of the property.
"
annual percentage rate (APR) - Answer-"A rate derived according to a government
formula that's intended to reflect the true cost of financing that allows consumers to
compare loan products; includes financing fees, so it will always be higher than the
actual interest rate on a loan
Ex. An interest rate of 6% may sound better than one of 6.25%, but it's important to also
compare annual percentage rate (APR) figures to see the true cost of financing.
"
,appraisal - Answer-"An estimate of value as of a specific date and for a specific use
Ex. The appraisal on Myra's property was for its use as a bed-and-breakfast today.
"
appraisal contingency - Answer-"Contract clause that, if the property doesn't appraise at
or above the sales price, the buyer is allowed to terminate
Ex. If the appraised value is close to the sales price, often the parties can reach
agreement. If not, and an appraisal contingency is in place, the buyer can use the fact
that the property didn't appraise to terminate and receive a refund of earnest money
deposited.
"
appraised value - Answer-"An estimate of value as of a specific date, and for a specific
use
Ex. Barbara refinanced her property two years ago. At that time, the appraised value
was $450,000. If she puts it on the market today, she can't use the appraised value as
list price, because it's no longer valid.
"
appraiser - Answer-"One who performs an appraisal
Ex. Vladimir the appraiser is certified to provide real estate appraisals for his clients.
"
appreciation - Answer-"Increase in property value
Ex. Due to appreciation, Kerry's investment property had doubled in value over the eight
years she had held it.
"
appurtenances - Answer-"Automatic rights inherent in property ownership
Ex. Jason loved being a property owner. He decided not to sell off any of his
appurtenances to others. He kept all of his bundle of sticks together.
"
asbestos - Answer-"A fibrous mineral found in rocks and soil, previously used in
construction materials for its insulating and fire-retardant strength
Ex. Many homes built before 1973 likely contain asbestos products. These might be in
insulation, ceiling or floor tiles, or in exterior shingles.
"
asbestosis - Answer-"A chronic lung disease caused by breathing asbestos fibers
Ex. Asbestosis makes breathing difficult and can lead to death.
"
assemblage - Answer-"The process of combining separate adjacent parcels of land into
one piece
, Ex. Through the princple of assemblage, by purchasing several adjoining parcels, the
combined parcel was worth far more.
"
assessed value - Answer-"The dollar amount to which the local tax rate is multiplied to
determine property tax owed
Ex. Although the appraised value of Myra's bed and breakfast was $600,000, her tax
assessed value was only $475,000.
"
assessment - Answer-"Charge against a property; for instance, condominiums will have
periodic assessments for maintenance and repairs of common areas
Ex. Before a condominium owner can close on a sale of the condo, the owner must
bring all assessments up to date so the buyer is not left paying for assessments owed
from the time the seller was in possession.
"
asset - Answer-"Items of value owned by an individual; often used when qualifying for
financing
Ex. Liquid assets include checking and savings accounts. Other assets include real
property, automobiles, and accounts receivable.
"
assignment (rentals) - Answer-"The substitution of tenants, putting the responsibility for
the lease contract in the new tenant's hands. Requires written permission of landlord.
Ex. Daniel is moving out of state, and assigns his lease to Benjamin. Benjamin
becomes responsible for the lease.
"
assignment (contracts) - Answer-"When a new party to a contract agrees to satisfy the
former party's obligations. Unless there is a novation (a new contract) the original
parties remain liable for the contract terms.
Ex. Ty decided to take an African Safari in the middle of his transaction. His brother
agreed to have the contract assigned to him. However, Ty remains responsible unless a
new contract is drawn up, naming his brother as the contracted party.
"
assignment (mortgages) - Answer-"The transfer of a mortgage from the original lender
to another
Ex. Sima must not have been paying attention to her disclosures because she was
surprised with EZ Well Bank assigned her mortgage to another lender.
"
assumable mortgage - Answer-"A mortgage that can be assumed when property
transfers ownership (requires borrower to qualify for the loan).
