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Minnesota State Real Estate Test Review
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A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor? ✔✔A license.
Legal descriptions using the government survey system are NOT generally used in ✔✔: the original 13 states.
Real property can be converted to personal property by ✔✔Severance
A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? ✔✔Conditional use permit or zoning variance.
Ordinances that specify construction standards are ✔✔Building Codes
A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of ✔✔anticipation
If an older building cannot be air-conditioned, it is an example of ✔✔functional obsolesence
According to the principle of progression, a three-bedroom, one-story home is MOST likely to bring the highest sales price if located in a neighborhood in which ✔✔most homes are larger than the sale home
According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the ✔✔prepayment penalties and rebates.
The FHA functions MOST like ✔✔an insurance company
In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT ✔✔more variety of loan programs available.
such as FHA, ✔✔require the buyer to acknowledge disclosure of the presence of any known lead paint.
A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if ✔✔the owner withdraws the counteroffer before it is accepted.
When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should ✔✔have short deadlines.
A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as ✔✔Void
A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when ✔✔the seller accepts the offer
An equal housing opportunity notice MUST be ✔✔displayed in the brokerage office.
Salesperson Susan was at the local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. Susan should ✔✔advise her friends this could constitute a violation of Sherman Antitrust Act.
A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes maintenance of value over profitability? ✔✔Department of Housing and Urban Development
Which restrictive covenant would be considered illegal? ✔✔A covenant that restricts the type of building that may be constructed.
Even with title insurance, the policyholder may still suffer losses arising from ✔✔land use change due to zoning ordinances.
To be valid, every deed must ✔✔be executed by the grantor.
For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? ✔✔Mortgage loan interest, local property taxes, mortgage loan origination fees.
with an active license must submit a letter of certification to the Minnesota Department of Commerce providing proof of an active salesperson's license.
Own Brokerage ✔✔A broker must first apply for a business entity license, unless he or she is going to be affiliated with an active Minnesota licensed real estate company.
Broker Requirements ✔✔The requirements for licensure as a broker include at least 3 years of licensure as a real estate salesperson within the previous 5 years. All applicants for a broker license must successfully complete the 30-hour broker course and pass the exam.
Expired Broker License ✔✔If a broker license has expired for over 2 years the broker may apply for waiver of salesperson's experience if they can prove 3 years of licensed MN real estate salesperson experience in the last 5 years. If not a broker would need to start over as new salesperson.
Reactiviation of license ✔✔A broker or salesperson has 2 years from the date of termination to reactivate a license without having to re-test.
Title systems in MN ✔✔Minnesota uses the Abstract system and also adopted the Torrens system in 1901.
How to become Torrens property ✔✔An application for registration shall be addressed to the District Court in and for the county wherein the land being registered is situated.
What is the title fee? ✔✔The fee for registering a first certificate of title is $46.
Joint registration under Torrens system ✔✔Owners of separate tracts of land may join in a single application to register the title to their individual tracts. The application must list separately each individual owner's information. The process is known as "Adjacent land; common title defect."
Adverse possession of Torrens property ✔✔Even though a person can claim adverse possession after 15 years in Minnesota, after a property is registered as Torrens title no one can gain adverse possession rights against the title of that property.
Unpaid taxes consequences ✔✔Each tract or lot of real property against which the County Auditor determines that taxes remain unpaid, shall be deemed delinquent, and thereupon an additional penalty of 2% on the amount of the original tax remaining unpaid shall immediately accrue and thereafter be charged upon all such delinquent taxes.
arrests for insurance fraud offenses. The Commerce Fraud Bureau shall: review reports of insurance fraud; conduct investigations into insurance fraud; and report its investigations to law enforcement agencies and assist those law enforcement authorities.
When licensees move ✔✔Licensees or applicants for licenses must notify the Commissioner of any change in business address, business e-mail address, residential address and residential telephone number within 10 days.
Fines for real estate offenses ✔✔The Commissioner may impose a civil penalty not to exceed $10,000 per violation upon a person who violates any law, rule, or order related to the duties and responsibilities entrusted to the Commissioner.
What happens if you supply false information to the commissioner? ✔✔The Commissioner may deny, suspend, or revoke an agent's license if the person has provided false, misleading, or incomplete information to the Commissioner or has refused to allow a reasonable inspection of records or premises.
What to do with earnest money? ✔✔Fran's obligation is to communicate the offer with the listing agent, not the seller. In addition, Fran must submit the earnest money along with the offer for deposit by the listing broker after the offer is accepted.
Earnest money must be deposited into an account specifically for escrow funds. Although the account need not separate one client's funds from another client's funds, in no circumstances may the money be commingled with the broker's personal funds.
A real estate salesperson or broker engaged by another broker shall immediately turn over all deposit money or other money received to the employing broker. No salesperson shall at any time hold client funds.
Trust fund records ✔✔Every brokerage shall keep trust fund records which must include: date funds received; party from who funds were received; date funds deposited; the check number or date of related disbursements; and monthly balance of the trust account.
Broker money in trust fund ✔✔A broker may maintain the his own funds in a trust account only if the financial institution requires a minimum balance be maintained to keep the account open or a service to avoid a service charge for the account.
Nonmoney escrow payments ✔✔In the event earnest money is received in the form of a nondepositable item such as a bond, stock certificate, or any other instrument or equity or value, in lieu of cash, it shall be deposited immediately with an authorized escrow agent, whose
Surcharge for recovery fund? ✔✔If the balance of the Recovery Fund is at any time less than the Commissioner believes necessary to carry out the purposes of the Fund, every licensee will be assessed a sum not to exceed $100 to restore a balance in the fund of an amount adequate to carry out its purposes.
- What is the maximum amount that may be paid from the Education, Research and Recovery Fund for each violation? ✔✔The Recovery Fund will issue $150,000 per claimant, per transaction violation. The Fund is not obligated to pay more than $250,000 per licensee in total, regardless of the number of claimants.
Known wells ✔✔Before signing an agreement to sell or transfer real property, the seller MUST disclose to the buyer information about the status and location of all known wells on the property,
Consequences of an undisclosed well. ✔✔A seller who fails to disclose the existence or known status of a well at the time of sale is liable to the buyer for costs relating to sealing of the well and attorney fees for collection of costs from the seller. This action must be taken within 6 years after the date the buyer closed the purchase of the property.
What if you don't know about damage? ✔✔A seller must disclose any property conditions of which he has knowledge. However, a seller cannot disclose information of which they are unaware and have no knowledge.
What if a realtor wants to buy property? ✔✔A disclosure must be made to the seller of the real estate agent's status prior to submitting any offer of purchase.
Agency disclosure forms ✔✔The salesperson must provide the consumer with an agency disclosure form at the FIRST substantive (person-to-person) meeting.
Disclosure of realtor status? ✔✔No disclosure is necessary if the property is listed with a separate real estate company.
Material Defects ✔✔Both the seller and the broker have a legal obligation to disclose known material defects to a buyer prospect, and the buyer can sue both for failure to fulfill that obligation.
Showing a buyer a home when you are the agent ✔✔A salesperson must provide prospective buyers agency disclosure agreements which state he or she represents the seller.
accessible unit to a disabled person or a family with a disabled family member who will reside in the unit.
Discriminatory acts are.. ✔✔Every person who commits an unfair discriminatory act or aids, abets, incites, compels, or coerces another to do so, is guilty of a misdemeanor.
Affirmative action plan ✔✔A firm or business certified to be in compliance with affirmative action requirements of a local human rights agency or the federal government, shall be deemed to be in compliance upon receipt by the Commissioner of an affirmative action plan approved by a local human rights agency or the federal government.
What happens with discrimination complaint? ✔✔The Commissioner may refer a matter involving discrimination for study and report to a local Commission. Upon referral by the Commissioner, the local Commission shall make a report and make recommendations to the Commissioner and take other appropriate action within the scope of its powers.
What constitues a discriminatory act? ✔✔Discriminationary acts are acts made against someone based on their race, color, religion, sex, creed, disability, marital status, status with regard to public assistance, national origin, age, sexual orientation, or familial status.
When are written leases require? ✔✔A landlord of a residential building with 12 or more residential units must have a written lease for each unit rented to a residential tenant.
When do tenants get a copy of the lease? ✔✔Where there is a written lease, a landlord must give a copy to a tenant occupying a dwelling unit whose signature appears on the lease agreement. If a verbal agreement is in effect, no written copy need to be given to the tenant.
Receipts for cash payment of rent ✔✔A landlord receiving rent or other payments from a tenant in cash must provide a written receipt for payment immediately upon receipt if the payment is made in person, or within three business days if payment in cash is not made in person.
When rented property is damaged severely. ✔✔A tenant of a building that is destroyed or becomes uninhabitable or unfit for occupancy through no fault or neglect of the tenant may vacate and surrender such a building.
When landlord's property gets foreclosed ✔✔The landlord may only enter into (i) a periodic residential lease agreement with a term of not more than two months or the time remaining in the contract cancellation period or the mortgagor's redemption period, whichever is less or (ii) a fixed term residential tenancy not extending beyond the cancellation period or the landlord's period of redemption.
PRofits and expenses of condos ✔✔The common profits of the property shall be distributed among, and the common expenses shall be charged to, the apartment owners according to the percentage of the undivided interest in the common areas and facilities.
Condo insurance ✔✔The manager or the board of directors has the authority to obtain insurance for the property against loss or damage by fire and other hazards for the full insurable replacement costs of the common areas and facilities and the apartments. This insurance coverage is written on the property in the name of the manager or the board of directors of the apartment owners' association. Premiums shall be common expenses.
Taxes and assessment of condos ✔✔Each apartment and its percentage of undivided interest in the common areas and facilities shall be deemed to be a parcel of real property and shall be subject to separate assessment and taxation by the state of Minnesota
When is seller disclosure required ✔✔The transfer of interest in residential real estate between buyer and seller. Seller disclosure requirements do NOT apply to: real property that is not residential real property; a transfer to a government or governmental agency; a transfer by foreclosure; a transfer made to a spouse, parent, grandparent, child, or grandchild of the seller; a transfer to a tenant who is in possession of the residential real property.
Requirements of a listing agreement ✔✔A listing agreement must contain a description of the real property involved; the list price and any terms required by the seller; details of the broker's commission; cancellation conditions; and signed by both the broker and seller to be valid. Broker commissions and fees do not need to be included in a listing agreement.
Lease for more than 1 year. ✔✔Every contract for the leasing for a longer period than 1 year shall be void unless the contract is in writing and subscribed by the party by whom the lease is to be made, or by the party's agent.
Additional clauses to property sales. ✔✔Only a licensed attorney may prepare a clause for inclusion in a real estate sales contract.
Collecting commission when accepted offer is canceled. ✔✔Since Rose accepted the offer in writing, the broker is entitled to receive compensation in the form of his commission. A change of heart simply does not cancel the transaction, because Rose accepted the offer in writing. The broker may sue Rose to collect that commission.
Referral Fees ✔✔A referral fee from a lender to a licensed salesperson, even handled under the table, so to speak, is wrong. Patricia's only compensation for her hard work must be only from her employing broker.
