Washington State Brokers Exam Cram Test #1 Questions and Answers (2024 / 2025) (Verified Answers)

Washington State Brokers Exam Cram Test #1 Questions and Answers (2024 / 2025) (Verified Answers) A contract must be - ANSWER-○ Voluntary - no one can be forced into a contract ○ An agreement or promise - a contract is essentially a promise or set of promises ○ Made by legally competent parties - the parties must be viewed by the law as capable of making a legally binding promise ○ Supported by lawful consideration - a contract must be supported by something of value that induces a party to enter into the contract For a legal act - a contract is invalid if it attempts to have an illegal objective .accession - ANSWER-Acquiring title to additions or improvements to real property as a result of annexation of fixtures or the accretion of alluvial deposits along the banks of streams. Related to the legal principle of constructive annexation. .accretion - ANSWER-The increase or addition of land by the deposit of sand or soil washed up naturally from a rive, lake or sea; An owner is entitled to all land created through accretion .Acre in square feet - ANSWER-43,560 sq ft .ad valorem tax - ANSWER-A tax levied according to value, generally used to refer to real estate tax. Also called the general tax. .advantages & disadvantages of real estate investment - ANSWER-• Advantages ○ Rate of return ○ Control over investment ○ Property appreciation: equity build up, leveraging ○ Tax benefits: depreciation, deductions, property exchange to avoid taxation ○ Capital gain • Disadvantages ○ Lack of liquidity ○ Requires active management .agency - ANSWER-forms whenever one party delegates another the right to act on their behalf in certain business transaction .Agency by Estoppel - ANSWER-Principal causes a third person to believe that another person is the Principal's Agent, and the third person acts to her detriment in reasonable reliance on that belief. .annexation - ANSWER-process of converting personal property into real property .Approaches to Value (Appraisal) - ANSWER-1. Sales comparison approach 2. Cost approach 3. Income approach .appurtenance - ANSWER-A right, privilege, or improvement belonging to, and passing with, the land; "runs with the land". Examples: parking spaces, easements, water rights, and other improvements. .areas of law and regulation important to real estate professional - ANSWER-1. Contract Law: Agreement between the parties in a real estate brokerage, agency relationship, or transaction 2. General Property Law 3. Agency Law: Representation of clients 4. Specific State Real Estate License Law: Requirements to become a real estate professional 5. Consumer Protection Law 6. Environment Protection Law: Disposition of hazardous materials found on a property 7. Federal, state and local tax laws: Deduction of interest paid on home mortgage 8. Land-use & Zoning Laws: Regulations on use of land .avulsion - ANSWER-Sudden loss of land by an act of nature (i.e. landslide); The property line is generally maintained even if the land is no longer there. .bilateral contract - ANSWER-A type of contract that arises when a promise is given in exchange for a return promise. .Blanket loan - ANSWER-A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt. .Budget Comparison Statement - ANSWER-Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses. .bundle of legal rights - ANSWER-The concept of land ownership that includes ownership of all legal rights to the land - possession, control within the law, enjoyment, exclusion (to keep others from entering or using the property) and disposition (to sell, will, transfer, or otherwise dispose of or encumber the property). .Buydown - ANSWER-A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time. .Cash Flow Report - ANSWER-A monthly statement that details the financial status of the property. gross rental income + other income - losses incurred = total income total income - operating costs = net operating income net operating income - debt service - reserves = cash flow .caveat emptor - ANSWER-buyer beware .Certificate of Reasonable Value (CRV) - ANSWER-A form indicating the appraised value of a property being financed with a VA loan. .chattel - ANSWER-Personal property; tangibles such as chairs, tables, clothing, money, bonds, and bank accounts. .common elements - ANSWER-Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condo or are normally in common use by all condo residents. Each condo owner has an undivided ownership interest in the common elements. Typically include: land, courtyards, lobbies, exterior structures, hallways, elevators, stairways, the roof, recreational facilities; owned as tenants in common; referenced in horizontal property acts .community property - ANSWER-A system of property ownership for real & personal property based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in the western US states; the system was unknown under English common law. Alaska allows married residents to choose the option of community property. Below are the current 9 states that uphold this concept: 1. Arizona 2. California 3. Idaho 4. Louisiana 5. Nevada 6. New Mexico 7. Texas 8. Washington 9. Wisconsin .Community Reinvestment Act of 1977 (CRA) - ANSWER-Under the act, which was revised most recently in 2008, financial institutions are expected to meet the deposit and credit needs of their communities; participate ad invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms. .Components of a valid contract - ANSWER-○ Offer and acceptance: also called mutual assent; offer is a promise made by one party, requesting something in exchange for that promise. An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. ○ Consideration: something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act. ○ Consent: must be entered into by consent as free and voluntary act of each party. ○ Legal purpose: must be for legal purpose - that is even with all other elements, the contract must have a legal reason for existence. A contract for an illegal purpose or for the performance of an act against public policy is not a valid contract. Legally competent parties: all parties to the contract must have legal capacity, meaning they must be of legal age and have enough mental capacity to understand the nature of consequences of their actions in the contract.