MN National Real estate Exam Questions With Multiple Choices And Verified Answers.

Six types of real property (SIMCAR) - correct answer 1. Special Purpose 2. Industrial 3. Mixed Use 4. Commercial 5. Agricultural 6. Residential Proprietary Lease - correct answer A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment. Condominium Owner - correct answer Owns an individual unit and shares ownership with other unit owners of common facilities (called common elements), such as halls, elevators, reception area, laundry room, exercise room, main entrance security system, and surrounding grounds, which may include a swimming pool, clubhouse, tennis court, or other amenities. a popular form of residential ownership, offering the security of owning property without the care and maintenance responsibilities a house demands - correct answer Condominium Owner Appraisal licensing or certification is required for ___________ related transactions. - correct answer federally name 3 factors affecting the supply of real estate - correct answer a) Demand b) Construction costs (labor, materials, and fees) c) Interest rates name 3 factors affecting the demand for real estate - correct answer a) Demographics b) Economy c) Wages 6 Advantages of investing in real estate - correct answer 1. high rate of return 2. greater control over the investment than other options 3. property appreciation / equity buildup 4. leveraging of funds / greater purchasing power 5. tax benefits of depreciation, and deductions, and the use of a property exchange to avoid taxation 6. treatment of income from a property sale as capital gain. 2 disadvantages of real estate investing - correct answer 1. lack of liquidity (it generally takes a long time to convert real estate into cash) 2. active management to ensure it is being managed properly. Investors may defer capital gains by using a - correct answer 1031 tax-deferred exchange. The federal income tax code offers homeowners numerous tax benefits, including the deduction of mortgage interest, property taxes and points, and the exclusion of a gain of up to $___,___(single) or $___,____(married) on the sale of a principal residence owned for at least two of the previous five years. - correct answer $250,000, $500,000 Emblements - correct answer Annually cultivated crops that belong to the party who rightfully planted the seed 5 Legal Tests of a Fixture (MARIA) - correct answer Method of annexa-tion/attachment Adaptability of item to land's use Relationship of parties Intention in placing item on the land Agreement of the parties Name the 4 types of easements - correct answer 1. Appurtenant easement 2. Easement in gross 3. Easement by necessity 4. Ways of termination Define Trade fixtures - correct answer Tenant-installed additions to a property for use in a trade or business. Examples of fixtures are heating systems, elevator equipment in highrise buildings, radiators, kitchen cabinets, light fixtures, and plumbing. Almost any item that has been added as a permanent part of a building is considered a fixture. define Severance - correct answer When real property becomes personal property. transfers in a bill of sale. define appurtenances - correct answer An appurtenance is connected to the property (runs with the land), and ownership of the appurtenance normally transfers to the new owner when the property is sold. ex) parking space, Air rights, easements 4 economic characteristics of real property - correct answer 1. Scarcity 2. Improvements 3. Permanence of investment 4. Area preference 3 Physical characteristics of real property - correct answer 1. Immobile—cannot be moved 2. Indestructible 3. Nonhomogeneous—unique in that all parcels differ geographically Define Legal Descriptions - correct answer Methods used to describe real property Name 4 methods used to describe legal descriptions - correct answer 1. Metes & bounds 2. rectangular survey 3. township 4. recorded plats Metes and Bounds Survey - correct answer A description using distances and compass degrees moving in a set direction. Starts and ends at point of beginning (POB) referenced from a monument. Measure clockwise rectangular survey system - correct answer Uses imaginary reference lines— meridian lines (north/south) base lines (east/west) Range (north/south) tier (east/west) lines make up townships Township (survey system) - correct answer Bundle of Rights - correct answer 1. right of possession, 2. right to control the property within the framework of the law 3. right of enjoyment (to use the property in any legal manner) right of exclusion (to keep others from entering or using the property) 4. right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property). Four governmental powers PETE - correct answer Police Power Eminent Domain Taxation Escheat Police power - correct answer Enacts and enforces laws governing land use. ex) zoning, building codes, planning, and safety codes Eminent domain - correct answer the right to "take" private land for public use. Condemnation is the process by which: - correct answer eminent domain is enforced if the government and the owner cannot agree. Property taxes - correct answer Ad valorem (at assessed value) taxes are based on assessed value, NOT on current market value. Rate may be expressed as a mill rate, percentage rate, or decimal. Special assessment - correct answer Special assessments are paid with property taxes and enforced by a lien. T/F Property taxes and special assessments take priority over other liens - correct answer True Escheat - correct answer Abandoned property or property of intestate owners with no heir may revert to the state. - correct answer