Real Estate Agency Disclosures and Contracts, Exams of Real Estate Management

Download Real Estate Agency Disclosures and Contracts and more Exams Real Estate Management in PDF only on Docsity! P a g e 1 | 14 REAL ESTATE - WISCONSIN EXAM STUDY GUIDE 2024 A seller signs a listing contract with a firm. Who is the agent and who is the principal? ______________ - ANS; The seller is the principal. The firm is the agent. A buyer asks a listing agent to draft an offer. The buyer does not sign a buyer agency agreement. Is the buyer a customer or a client? - ANS; The buyer is a customer. What kind of agency is a firm practicing if the firm represents just one party in the transaction? - ANS; Single agency When can a firm engage in multiple representation? - ANS; Written consent of both parties, agency disclosure to both parties In what kind of transactions must a firm provide agency disclosure? ____________________________ - ANS; All transactions (residential, commercial, vacant land etc.) By when must a firm provide agency disclosure to a client? A customer? _________________________ - ANS; Before or at the time of entering into the agency agreement By when must a buyer's agent disclose the buyer agency relationship to the seller or the listing firm? _____ - ANS; The earliest of first contact, a showing, or any other negotiations with the seller or the listing firm. What are a listing firm's agency disclosure obligations when working with a customer who wants to write an offer on a duplex? What if the buyer wants to write an offer on a commercial warehouse? - ANS; Provide agency disclosure to buyer for duplex and ask that buyer to sign the agency disclosure because this is a 1-4 family transaction. Provide agency disclosure to buyer for commercial warehouse but you do not have to ask that buyer to sign because it is not a 1-4 family property. When does a property manager need to have a real estate license? ____________________________ - ANS; If signing or negotiating leases on behalf of the property owner. P a g e 2 | 14 If a licensee is representing a family member who is writing an offer on a property, what are the licensee's disclosure obligations? customer? _____ - ANS; Disclose the relationship in writing and obtain consent of both parties. What are a licensee's disclosure obligations if the licensee is going to receive a fee from referring a lawn maintenance company? What if the licensee is a listing agent who is referring a client to a buyer's agent? - ANS; For the lawn maintenance company, disclose the potential referral fee in writing before or at the time of making the referral. Referral fees from license to license do not need to be disclosed. When must a licensee disclose that the licensee holds a real estate license when selling the licensee's own home? What if the licensee is selling commercial property owned by the licensee? ____ - ANS; The earliest of first contact, a showing, or any other negotiations. The disclosure shall be in writing and is the same whether selling personally owned home or commercial property. What tie-in arrangements are legal? - ANS; +Condition the sale of vacant land owned by the licensee upon the buyer's agreement to use a specific builder if the builder co- owns the property with the licensee. +Condition the sale of vacant land owned by the licensee upon the buyer's agreement to use a specific builder if the builder and the licensee are the same person. +Condition the sale of vacant land owned by the license upon the buyer's agreement to use a specific builder if the agreement to use the builder is a legitimate effort to maintain developmental quality/ architectural uniformity and no compensation passes from the builder to the licensee. Who can retain an unlicensed personal assistant? Who can retain a licensed personal assistant? _______ - ANS; Unlicensed personal assistant - anyone. Licensed personal assistant - just the firm. Which agency duty survives the transaction? - ANS; Confidentially 16. What duties does a firm owe to all parties in a transaction? _______________________________________ - ANS; Provide brokerage services to all parties honestly and fairly. Provide brokerage services with reasonable skill and care. Timely disclose material adverse facts in writing that the firm knows and that the party does not know or cannot discover through reasonably vigilant observation, unless the disclosure is prohibited by law. Keep confidential any information given to the firm, or any information obtained by the firm that the firm knows a reasonable party would want to be kept confidential, unless the information must be disclosed by law or the person whose interests may be adversely affected by the disclosure specifically authorizes the disclosure of particular information. P a g e 5 | 14 $16,000/ .08 = $200,000 On what lines of the WB-1 Residential Listing Contract does the firm address the marketing plan? - ANS; Marketing is at lines 18-26, firm's specific plans go on lines 20- 12 Who are the parties to the listing contract - ANS; Seller and listing firm, line 264 How long is the listing period extended for protected buyers in the WB-1 Residential Listing Contract Extension of Listing provision? - ANS; One year, line 220 How many days does a firm have to deliver to the seller the list of protected buyers? _________________ - ANS; Three days, line 212 The seller accepts the responsibility for preparing the property to minimize the likelihood of injury, damage and/or loss of personal property during open houses and individual showings. When will a firm be held responsible? - ANS; Negligence or intentional wrongdoing, lines 257-258 On what lines of the WB-4 Residential Condominium Listing Contract is the right of first refusal of the condominium association addressed? - ANS; Lines 25-26 On what lines of the WB-36 Buyer Agency/Tenant Representation Agreement is the authorization for the buyer's firm to accept compensation from the seller or listing firm? - ANS; Lines 50-53 Once a buyer's firm earns compensation, when is it due and payable? - ANS; Closing or the date set for closing, lines 41-42 On what lines in the WB-1 Residential Listing Contract does the seller address the incentives the seller wants to offer to potential buyers? - ANS; Lines 18-26 are marketing, seller incentives are on lines 22-23 How many days does the seller have to provide the new listing firm with the previous listing firm's protected buyer list? - ANS; Seven days, line 161 Where in the WB-1 Residential Listing Contract does the client indicate the agency model the client wants to structure the relationship with the firm? - ANS; Lines 113-119 On what line of the WB-1 Residential Listing Contract does it state that the buyer may accompany inspectors? - ANS; Lines 260-262 Where in the WB-36 Buyer Agency/Tenant Representation Agreement does the client indicate the agency model the client wants to structure the relationship with the firm? - ANS; Lines 117-123 P a g e 6 | 14 Where in the WB-36 Buyer Agency/Tenant Representation Agreement do the parties indicate if the agreement terminates upon the purchase of the property? - ANS; Line 336 When is a licensee associated with a firm allowed to advertise without mentioning the firm's name in the advertisement? - ANS; Advertising for tenants for personally owned rental property What must a licensee do with the results of a third party's inspection report? What must a licensee do if the licensee's own knowledge or observation of the property is contradictory to the report? - ANS; Provide a copy to all parties. If the licensee haw information that contradicts the report, the licensee must disclose it. Within how many days does a condominium seller have to provide condominium documents to a buyer? - ANS; Within 10 days of acceptance, no later than 15 days prior to closing Sellers of what types of property must complete the Real Estate Condition or Disclosure Report? - ANS; Residential (1-4 family) and vacant land Which sellers are exempt from providing a real estate condition or vacant land disclosure report? - ANS; Exceptions to RECR/VLDR a. Personal representatives, trustees and other court appointed officials who have never lived on the property New construction Transfers exempt from the transfer fee A licensee is showing a property to a buyer and observes what may be a material adverse fact. The seller did not mention the problem in the seller's real estate condition report. What should the licensee do? - ANS; Disclose in writing to all parties in a timely manner What information is a licensee is NOT required to disclose, even if asked? - ANS; Not required to disclose: Information in a 3rd party report provided to all the parties (like a home inspection report) Stigmatized factors (haunted/crime) Group homes and nursing homes Sex offenders as long as give DOC website and phone number for sex offender registry If a buyer does not receive a real estate condition report within 10 days of acceptance, how many days does the buyer have to rescind the contract? How should the buyer rescind? - ANS; Two business days, rescind in writing A seller becomes aware of a defect after an Offer to Purchase has been accepted. Does the seller have to amend the real estate condition report and deliver a copy to the P a g e 7 | 14 buyer? - ANS; No. if there is no accepted offer on the property and the seller becomes aware of information that would change sellers answers on condition report, then seller amends. A seller of target housing wants to accept an offer without the lead-based paint attachment. The licensee tells the seller that is fine. Is this a permissible act by the licensee under the LBP disclosure law? - ANS; No. Lead based paint disclosure must be a part of all transactions involving target housing (pre-1978 housing). Which in-use underground storage tanks must be tightness tested every two years? - ANS; 1,100 gallons or greater Asbestos is considered most dangerous when it is: - ANS; Friable Fair housing laws do not apply to what types of properties? - ANS; Commercial and industrial What are the 13 protected classes under federal and state fair housing laws? - ANS; 1. Race: A person's membership in a group possessing characteristics and traits transmitted by descent. 2. Color: A person's skin color. 3. Religion: A person's religious or spiritual beliefs and practices, or denominational affiliations. 4. National Origin: The country where a person or their ancestors originated or came from. 5. Sex: Gender. 6. Familial Status: The presence of children under age 18 in the household. Familial status also protects a person who is pregnant and a person who is in the process of securing sole or joint legal custody, physical placement, or visitation rights of a minor child. 7. Disability: A physical or mental impairment that substantially limits one or more major life activities, a record of having such an impairment, or being regarded as having such an impairment. 8. Ancestry: A person's racial and ethnic background. 9. Age: Any person at least 18 years of age. 10. Sexual orientation: Having a preference for heterosexuality, homosexuality, or bisexuality, having a history of such a preference, or being identified with such a preference. 11. Marital status: A person is single, married, divorced, separated, or widowed. 12. Lawful source of income: The source of a person's income provided that it is legal. This may include lawful compensation or remuneration in exchange for goods or services provided, profit from financial investments, and any negotiable draft, coupon, or voucher representing monetary value such as food stamps, Social Security, public assistance, unemployment compensation, or worker's compensation payments. Status as a victim of domestic abuse, sexual assault, or 13. stalking: A person is or is believed to be a victim of domestic abuse, sexual assault, or stalking. P a g e 10 | 14 What type of lien attaches to both real and personal property? - ANS; General lien (like a money judgement for credit care debt/ medical debt) If a property has a market value of $175,000 and is assessed at 97% of its value, what is the assessed value? - ANS; Assessed value a. $175,000 x .97 = $169,750 A property is assessed at $280,000. The mill rate in the city where the property is located is 28 mills. What is the annual tax bill? - ANS; $280,000 x .28 = $7480 A property has a market value of $136,000 and is assessed at 90% of value. The mill rate in the community is 20. What is the annual tax bill? - ANS; Tax bill $136,000 x .90 = $122,400 $122,400 x .02 = $2448 The owners of a property paid a tax bill of $10,725. The assessed value of the property is $325,000. What is the mill rate? - ANS; $10,725/$325,000 A seller's property sold for $150,000. How much was the transfer fee? - ANS; $150,000 x .003 = $450 A buyer just purchased a property for $210,050. What was the transfer fee? - ANS; Transfer fee Round up to $210,100 Multiply by .003 $630.30 What is the purpose of a comprehensive plan? - ANS; Guide and coordinate growth, health and safety and welfare, accounting for existing and future needs, morals, order, convenience, prosperity, general welfare How does one determine the permitted uses for a particular area? - ANS; Zoning ordinance What type of zoning allows land to be used in a way that was already in existence when a zoning ordinance was enacted but does not comply with current zoning regulations? - ANS; Non-conforming use A vacant parcel of land that was zoned residential has been re-zoned to conservancy. What type of zoning has occurred? - ANS; Downzoning An owner of a property would like to transfer title. Will the existing deed conditions stay in place or are they terminated upon transfer of title? - ANS; Stay in place, they "run with the land." P a g e 11 | 14 Describe a planned unit development. - ANS; A zoning district written and negotiated specifically for the subject property. It may allow a developer to cluster buildings together The buyers have a home inspection. The buyers are wondering if some of the information disclosed on the report constitutes a defect and if they should give notice to the seller. Can the licensee give them advice on whether there is a defect? - ANS; Do not answer, refer buyer to the definition in offer and buyer can talk to attorney if needed. What must occur before a licensee gives a third-party buyer's offer to a party holding a right of first refusal? - ANS; Disclose in writing to the potential buyer. When is a licensee prohibited from submitting a personal offer to purchase on a property listed with the licensee's firm? - ANS; If the licensee have knowledge of the term of a pending offer, the licensee cannot submit an offer. A buyer submits earnest money with an Offer to Purchase. The offer is rejected. To whom is the earnest money disbursed? - ANS; The buyer. See lines 67-69 of the WB- 11 Residential Offer to Purchase. When can a licensee refuse to draft or submit any offer? - ANS; If drafting or submitting would be contrary to the party's instructions. Any income, taxes or expenses shall accrue to the seller and be prorated through: - ANS; Day prior to closing. See 364 of the WB-11 Residential Offer to Purchase. When the buyer is drafting the WB-11 Residential Offer to Purchase and wants to represent that the buyer has reviewed a seller's real estate condition report, where will buyer indicate this? - ANS; Line 107 of the WB-11 Residential Offer to Purchase. In the Inspections and Testing section of the WB-11 Residential Offer to Purchase, an "inspection" is defined as an observation of the property which does not include testing of the property other than: - ANS; Leaking carbon monoxide, leaking LP gas, natural gas used as a fuel source. See lines 179-181 of the WB-11 Residential Offer to Purchase. If "time is of the essence" does not apply to a date or deadline, when must performance occur before a breach? - ANS; Reasonable time. See lines 92-93 of the WB-11 Residential Offer to Purchase. Where in the WB-13 Vacant Land Offer to Purchase is the optional right to cure provision? - ANS; Lines 518-524 In the WB-14 Residential Condominium Offer to Purchase, on what line does the buyer indicate that there is a storage unit? - ANS; Line 43 of the WB-11 Residential Offer to Purchase. P a g e 12 | 14 The party that issues the loan is called the - ANS; Mortgagee After a borrower pays off a loan, what should the borrower expect to be recorded by the lender? - ANS; Satisfaction of mortgage To originate a loan at a rate lower than is being charged on the open market, a buyer most likely - ANS; Discount points. For test purposes, the cost of 1 point = 1% of the loan amount. Fannie Mae, Ginnie Mae, and Freddie Mac are part of the - ANS; Secondary market A borrower is able to originate a loan that is amortized for 30 years; however, the borrower only has five years to pay the loan back. What type of loan did the borrower receive? - ANS; Balloon loan During a land contract, what type of title does the seller hold? What type of title does the buyer hold? - ANS; The seller has legal title and the buyer has equitable. Private mortgage insurance is typically required when a borrower does not have what percentage of the loan for a down payment? - ANS; Less than 20% down payment Are FHA loans guaranteed or insured? - ANS; Insured Provide an example of secondary mortgage fraud. - ANS; A buyer writes an offer for $10,000 over asking price and makes a deal with the seller whereby the seller will return $10,000 to the buyer after closing to address needed repairs. What federal law prohibits the payments of kickbacks? - ANS; Real Estate Settlement Procedures Act (RESPA) What form would a seller use to propose a change in terms of an accepted offer to purchase? - ANS; WB-40 Amendment to Offer to Purchase What form would a licensee use to notify a secondary buyer that the secondary offer was being elevated to primary position? - ANS; WB-41 Notice Relating to Offer to Purchase What is the form a seller would use to negotiate with more than one buyer at the same time? - ANS; WB-46 Multiple Counter-Proposal The seller issues an amendment to the buyer, which the buyer rejects. What is the status of the contract? - ANS; No change. An amendment only changes terms of an offer to purchase if both parties sign it