National Real Estate Salesperson Supplemental Exam

Key Concepts

Real vs. personal property - Real property is transferred by deed; personal property (chattel) is transferred by a bill of sale (Chapter 2 – Real Property and the Law, Real property vs. personal property). - The bundle of legal rights is DEEP C: Disposition, Enjoyment, Exclusion, Possession, Control. Exclusion = the right to keep others from entering or using the property (Chapter 2, Real property). - Four economic characteristics = SIPS: Scarcity, Improvements, Permanence of investment, Situs. The three physical characteristics are immobility, indestructibility, and uniqueness (nonhomogeneity) (Chapter 2, Economic characteristics of real property). - Fixture tests = MARIA: Method of attachment, Adaptability for the land's ordinary use, Relationship of the parties, Intention of the person placing the item, Agreement of the parties (Chapter…

Key Concepts

The four government powers — PETE (Unit 3, Interests in Real Estate — Governmental Powers, pp. 42–44):

• Police power — "Every state has the power to enact legislation to preserve order, protect the public health and safety, and promote the general welfare of its citizens." The state's authority passes to municipalities and counties through enabling acts. Police power is the source of "environmental protection laws, zoning ordinances, and building codes."
• Eminent domain — the government's right to acquire privately owned real estate for public use; condemnation is the actual process of taking. The Fifth Amendment requires that the owner be given just compensation.
• Taxation — a charge on real estate to raise funds for government facilities and services.
• Escheat —…

Key Concepts

Appraisal basics (Real Estate Appraisal, "Appraising," p. 316). An appraisal is an opinion of value based on supportable evidence and approved methods, usually an opinion of market value given to a lender. An appraiser is an independent professional providing an unbiased opinion; it is a breach of ethics to collect a commission for an appraisal based on the value of the property appraised.

FIRREA / when an appraisal is required (Regulation of appraisal activities (FIRREA), pp. 316–317). - Any appraisal used in a federally related transaction must be performed by a person licensed or certified by the state where the appraiser practices. - The state appraiser licensing agency must be separate from the agency that licenses real estate professionals. - Residential property valued at…

Key Concepts

Loan terminology - One point equals 1% of the loan amount (not the purchase price). Points are prepaid interest paid at closing to reduce the interest rate. (Unit 12 – Discount points) - A loan origination fee typically is about 1% of the loan amount, covering the lender's expenses in generating the loan. (Unit 12 – Loan origination fee) - PITI = principal, interest, taxes, and insurance — the basic costs of owning a home. (Unit 12 – Ownership expenses and ability to pay, p. 215) - DTI: a buyer providing at least 10% down could be expected to incur monthly PITI of no more than 28% of gross (pretax) monthly income; total monthly debt payments (including car payments, student loans, other mortgages) not…

Key Concepts

Essential elements of a contract (Unit 11 – Contract Law): a contract is a voluntary agreement or promise between legally competent parties, supported by lawful consideration, to perform (or refrain from performing) some legal act. The listed elements are offer and acceptance, consideration, legally competent parties, consent, and legal purpose.

Validity classifications (Unit 11 – Validity of a contract): - Void — no legal force or effect because it lacks essential elements. A listing with a forged signature was never a legal contract. - Voidable — appears valid on its face but may be rescinded by the injured party. Created by mistake of fact or law, misrepresentation, fraud, undue influence, or duress, all of which deprive a party of voluntary consent. A contract with…

Topic: Agency

Key Concepts

Sources of agency law. Agency relationships in real estate transactions are governed by three kinds of law: common law (rules established by tradition and court decisions), statutory law (laws enacted by the legislature), and administrative law (rules and regulations created by real estate commissions and departments). (Unit 9 — History of Agency)

Types of agents. (Unit 9 — Types of Agency Relationships) - A special agent is authorized to represent the principal in one specific transaction only. A broker acting for a seller-client or a buyer-client is usually a special (limited) agent and may not bind the principal to any contract. - A general agent may bind the principal to any contract within the scope of the agent's authority. A **sales associate…

Key Concepts

Seller's duty to disclose. In residential transactions involving property of up to four dwelling units, the seller has a duty to disclose known defects that threaten structural soundness or personal safety (Unit 9 – Property conditions). The reference text adds that a state-mandated disclosure about property condition and known environmental issues "is usually required by a seller of property with one to four dwelling units" (Unit 21, p. 427).

Latent defects. A latent defect is a structural defect not visible or discoverable by ordinary inspection. Where a seller fails to reveal a known latent defect, the buyer may cancel the sales contract or receive damages (Unit 9 – Property conditions / Latent defects).

Key Concepts

Role and licensing of the property manager - The three principal responsibilities of the property manager are to achieve the objectives of the property owners, generate income for the owners, and preserve and/or increase the value of the investment property (Unit 19, The Property Manager, p. 384). - In many states property managers must hold a real estate broker's or property manager's license; a sales associate may manage property only with the consent of the employing broker and in the broker's name (Unit 19, p. 384). Some states require an on-site manager above a set unit count — California requires one for residential properties of 16 or more units (Unit 19, In Practice, p. 384). - Most states have landlord-tenant laws requiring the landlord-owner…

Key Concepts

Valid deed requirements (Chapter 6, Requirements for a valid deed) - A grantor must be of lawful age, usually at least 18 years old. A deed executed by a minor is generally voidable, not void — the minor may disaffirm it or treat it as valid after reaching legal adult age (Chapter 6, Grantor). - A deed executed by someone mentally impaired at the time is voidable; if the grantor has been judged legally incompetent, the deed is void, and the property can be conveyed only with court approval (Chapter 6, Grantor). - The habendum clause begins with the words "to have and to hold" and its provisions must agree with the granting clause (Chapter 6, Habendum clause). - Title passes on **delivery of…

Key Concepts

Federal Fair Housing Act (Title VIII of the Civil Rights Act of 1968, as amended) prohibits discrimination based on race, color, national origin, religion, sex, familial status, or disability — seven classes — and also prohibits discrimination because of a person's association with members of a protected class (Fair Housing chapter, Fair Housing Act section). Sex was added by the Housing and Community Development Act of 1974; disability and familial status by the Fair Housing Amendments Act of 1988. Sexual orientation is not one of the seven enumerated federal classes, though HUD interpretations read it into "sex" and state/local laws may protect it.

Key Concepts

• Measurement constants. 1 acre = 43,560 square feet; 1 mile = 5,280 feet; 1 square mile = 640 acres (Unit 5, Land Description, p. 71). A section is one square mile (640 acres) with 43,560 sq ft per acre (Unit 5, p. 76).
• Quarter-section shortcut. "To calculate acres in a rectangular survey system description, multiply all the denominators and divide that number into 640 acres" (Unit 5, p. 77, Math shortcut). Verified item: NW ¼ of the SE ¼ = 40 acres.
• Match the unit of cost. "Costs quoted per square foot must be multiplied by the proper number of square feet; costs quoted per acre must be multiplied by the proper number of acres" (Unit 5, p. 71, MATH CONCEPTS).…