Massachusetts Real Estate Salesperson License Correct 100%

RE Salesperson License requirements? - Answer 18 years old, 40 hour class, pass the exam, must affiliate with a broker to practice and may not accept direct client payments Broker's License requirements? - Answer 3 years salesperson experience, 40 hour class, pass the exam, $5,000 bond and pay a fee. What is MLS? - Answer Multiple Listing Service. It's a marketing tool used by Salespeople to show their listings. Difference between RE Salesperson and RE Broker? - Answer Salesperson works for a Broker. Broker has at least 3 years experience, $5,000 Bond, 40 Hour Class and pass the Exam. Cannot hold both licenses at the same time. Broker can operate independently, accept direct client payments and handle Escrow Funds. Define Realtor? - Answer It is National, not state and is optional. NAR (National Assoc. of Realtors) Largest Trade Assoc. and one of the most powerful lobbying groups in North America. Pay a fee to join your local chapter (MAR). Also, if a Broker is a Realtor, all Salespeople/Agents associated with the office must be Realtors as well. What is an Escrow Fund/Trust Accounts? - Answer 1. Special bank accounts for holding Client's deposits to be handled by Broker only. 2. Brokers may have only one Escrow account. 3. Commingling is strictly forbidden. 4. No Salesperson Access. 5. Interest not mandatory but if yes the client must agree who gets it in writing. (Statute of Fraud) 6. Brokers must maintain Escrow Records (copies of checks, dates, transaction info) for 3 years which the RE Board may inspect at any time. 7. Conversion of a deposit into commission requires written permission from both parties. If not, can result in loss of license. 8. Court order needed to remove funds if there is a dispute. State Law -v- Federal Law? - Answer Fed=US/State=Massachusetts State law builds on Fed law and is more specific. In a conflict, Fed law usually wins. Who needs a RE License? - Answer Anyone who does any of the following for a fee: Advertises, holds herself out as engaged in the biz of selling, renting, leasing, negotiation, exchanging, purchasing and dealing in RE or options for RE. Where do licenses come from? - Answer State Legislature creates the laws about licenses. The Board of Registration of RE & Salespersons deals with issuing licenses and rule administration and enforcement. The Board is part of the Division of Professional Licensure. Why do we have licenses? - Answer To protect the public, for the public good. Much of the Government's ability to regulate private transactions stems from Police Power which is the right of the Gov to enact laws to protect the public. Who makes up the Board of Registration of RE & Salespersons? - Answer - 5 Member Board est. in 1960 - Appointed by the Governor - One is appointed Chairperson - 3 are Brokers with at least 7 years experience - 2 are not licensed, represent the public - 5 year terms, no pay - Meet 4 times a year with at least 3 of the Members present. Written records of meetings are available to the public on Division of Pro Licensure's website 1099 -v- W2 Employee? - Answer 1099=Independent Contractor, paid by job or commission, set own hours, can turn down work, etc, no taxes withheld, but may take many write-offs (Many Residential RE Agents) W2=Salaried of paid hourly, employer controls what and how you do (Commercial RE Agents), taxes withheld by employers What is FSBO? - Answer For Sale by Owner Types of RE Advertising? - Answer MLS, Open House, Trulia, Zillow, Neighbors, etc. Define Qualified Buyer? - Answer Client who is ready, willing and able! What is the average commission? - Answer NONE - ALWAYS NEGOTIABLE!!!!! What is the basic RE Transaction? - Answer - Hired to list property - Market/list on MLS, etc - Buyer's contact you to see - Show the property - Offer submitted - Inspection - Contingencies - Creation and signing of P&S, 5% of Sales Price is Deposited in Escrow Account. Finance Contingencies apply here as well. - Sale takes place (settlement/closing) - You and buyer's agent will be paid - Approximately 3-6 months average time Rental commissions? - Answer Up to one month's rent How often are RE Licenses renewed? - Answer 2 years from you next birthday. 12 hours of Continuing Ed Classes must be completed before renewal. What are the two types of Insurance carried by Brokers? - Answer Professional Liability Insurance (errors and omissions insurance)-Provides protection against mistakes made by Brokers or Salespersons providing RE Services to their clients. Human and Innocent mistakes happen... General Liability Insurance Principal, Special Agent, Subagent? - Answer Principal=Client, hires Special Agent Special Agent=Broker, hired and paid by Principal directly Subagent(Agent's Agent)=Salesperson/Agent Broker pays you as a subagent working on their behalf. You will be client's subagent and the Broker's agent What is Real Property? - Answer The land, anything attached to the land, and all of the various rights associated with ownership of the land. aka: Real Estate(just the land and property attached) , Realty or Immovable Property. What is Personal Property? - Answer Anything not attached to the Land or improvements on the land. aka chattel or moveable property. What is a Deed? - Answer Receipt for Real Estate. Ownership of property is transferred/conveyed using a deed. Grantor and Grantee? - Answer Grantor= gives the deed "or" - giving Grantee=receives the deed "ee" - receiving Bundle of Rights? - Answer Grouping of property rights that can be separately transferred. Rights include: possession, exclusion, control, disposition and enjoyment Land and Surface Rights? - Answer Land is the surface of the earth. Surface Rights often extend to approx. 30 feet below the land's surface. Improvements on the land? - Answer Anything permanently attached (directly or indirectly) to the land. Ex. a house is an improvement. Fixtures? - Answer Individual Improvements attached to the property, eg window blinds. Air Rights? - Answer Rights to the space above the land. Vertical Interests may be sold or leased separately from the surface rights. Up to 80 feet now. 80-500 feet belong to FAA. Used to be "heaven to hell" Cuius est solum..." Mineral Rights? - Answer Right to the space below the land along with any natural resources such as oil, precious metals, etc. Solid Mineral Rights and Liquid Mineral Rights. Liquid Mineral Rights? - Answer In many states Liquid Mineral Rights are not owned by the landowner, instead she has the right to capture them under the Doctrine of Capture. Other states use Utilization Pooling where the landowner does own a fraction of whatever liquid mineral rights exist under the property. Riparian Rights? - Answer Ownership rights for land owners whose property borders a river or other waterway. Property bordering a navigable river has rights up to the accretion line (the edge). Those adjoining non-navigable rivers have rights to the midpoint of the water. Mostly used by Eastern States. Littoral Rights? - Answer Ownership rights of property bordering lakes and oceans. Land owners own up to the accretion line (edge of the water, most often high tide) in most states. Easement? - Answer Right of Access Appurtenances? - Answer Property Rights that exist outside the boundaries of the property itself. Easement, right of way, is an example or a deeded parking space in a condo. Personal -v- Real Property? - Answer Attachment, Adaptability, Intention and Agreement. Intention is most important because it creates 2 exceptions: Trade Fixtures (business property), Emblements (crops planted and harvested not intended to be permanent) Statute of Frauds? - Answer Law requiring that RE contracts to be in writing to be legally enforceable. Annexation? - Answer When property was personal and is now real, planting a sapling... Severance? - Answer When property was real and is now personal, digging up a tree... Freehold Interests in RE? - Answer Ownership. Non-freehold Interests? - Answer Possessory rights that don't include ownership, ie rentals. Fee Simple Absolute Interests? Also Fee? - Answer A type of Freehold that is the default type of ownership, it is not limited, and is inheritable. Owner entitled to entire bundle of rights. Indefinite and only limited by public and private restrictions, i.e. zoning and building codes. Fee Simple Defeasible Interests? - Answer A type of Freehold that is limited in some way and can be lost if some limitation is violated or condition triggered. Two types of Defeasible interests? - Answer Fee Simple Determinable-automatically lost when the limitation is violated. Fee Simple Subject to a Condition Subsequent-lost when legal action is brought pursuant to the violation of the limitation. Life Estates? - Answer Freehold Interests that exist as long as the owner of the property (the "life tenant") is alive. The life tenant's deed will state who receives the life estate (usually "remainderman") upon their death in a habendum clause. Life Estate in reversion? - Answer Life Estate when the life tenant dies, legal title/ownership will transfer back to the original grantor. Life Estate in remainder? - Answer Life Estate when the life tenant dies, legal title will transfer to some third party originally names by the grantor (remainderman). Pour Autre Vie? - Answer Life Estate based not on the life of the tenant's term of life but on some arbitrary third party's life as named by the original grantor. "for another's life". Legal Life Estate? - Answer Life Estate created by low often in cases of Dower rights (surviving spouse is grated a lie estate for real property that was not willed to them but that was owned by their spouse at their spouse's time of death). Dower Rights have been abolished in MA. Many states entitle up to a 1/3 interest in deceased spouse's RE in lieu of what was in the will. The right is inchoate before the spouse's death. Inchoate? - Answer Inactive. Homestead? - Answer Legal life Estate granted to the owners of a family home. Provides protections from the forced sale of the home to satisfy debts up to a certain amount. Usually you can only have one Homestead at at time. Who has present interest? - Answer Life Tenant/owner. May not commit waste (property damage, legally compromised or risk of foreclosure) which would compromise the remainderman's future interest. Who has future interest? - Answer Remainderman/grantor in a life estate in reversion. Severalty? - Answer Ownership held by one person. Ownership of RE severed from any co-owners. Co-Ownership? - Answer Ownership shared by two or more persons, including corporations. Tenancy in Common? - Answer Default form of Co-ownership. Co-owners who purchase property w/out specifying type of ownership own in common. Ownership may be equal or unequal, bu all have an interest in th entire property that cannot be compromised. It is inheritable. Attorney in Fact? - Answer A person who is authorized to perform business-related transactions of behalf of someone else. The principal must sign a Power of Attorney. When was the RE Board of Registration founded? - Answer 1960 Who can recommend an Inspector? - Answer Agents representing the seller may not recommend specific home inspectors, but must instead provide the state provided list of all inspectors since it is a potential conflict of interest. Exclusive buyer's agents are allowed to recommend specific inspectors to their clients. What is the fine for acting as a Broker without a License? - Answer $500 How are Easements appurtenant created? - Answer By Deed Due on Sale Clause - Answer It is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such a circumstance. ie. closing of a sale of property, giving property as gift, transferring of property ownership. What is the FHA? - Answer The Federal Housing Administration (FHA) is a government program that insures lenders that make loans with more than 80% loan-to-value ratio (LTV) for homebuyers. These loans are meant to make homeownership more easily achievable for American homebuyers. Who is required to disclose known facts that materially affect the property? - Answer Both seller's and buyer's agents are required to inform the buyer of any material defects impacting the subject property, even if the seller wants to keep the defects confidential. Who is a Devisee? - Answer Devisees are heirs who receive real property in a will. When you sign a contract it is... - Answer Accepted - When you sign, the contract is accepted. During the term of the contract it is executory. When the contract is completed, it is executed. What is Inverse Condemnation? - Answer Inverse condemnation is something that property owners can claim to receive compensation when an adjacent public land use lowers their property value. What are the maximum damages under MGL 93A? - Answer The maximum damages under Massachusetts General Law 93A (the Massachusetts Consumer Protection Act) are triple (or "treble") damages plus attorney's fees. What is the most common deed in MA? - Answer In Massachusetts, there are three types of deeds: a quitclaim deed, a warranty deed, and a release deed. By far the most common deed used in Massachusetts is the quitclaim deed What happens when landlord sells the place during your lease? - Answer Leases run with the land, which means that if the landlord sells the leased premises before the lease has ended the new owner is obligated to honor the lease. Wetlands Protection Act? - Answer The Wetlands Protection Act is a Massachusetts state law requiring a buffer zone of 100 feet from wetlands for development, with minor changes permitted after 50 feet subject to approval. Excise Fee? - Answer An excise fee is another term for recording stamps, and are an expense paid by the grantor (seller) when the deed is recorded at the county registry of deeds. What is one link equal to? - Answer One link is equal to approximately 7.9 inches. Do Not Call List Fines? - Answer The FTC Do Not Call List prohibits unsolicited business calls to residential phone numbers on the Do Not Call List, as well as mobile phone numbers. Fines for violations are up to approximately $40,000 ($40,654) per call as of 2017 Lis Penden? - Answer A Lis Pendens is a publicly recorded notice that a property's ownership is subject to litigation. It is an issue with property ownership, and is therefore classified as a "cloud on title." When must a real estate agent provide a prospective tenant with a fee notice? - Answer Agents renting real estate must provide each tenant with a written notice at their first meeting which states whether the prospective tenant will pay any fee, the amount, manner, and time the fee is to be paid, and whether any fee will be payable if a tenancy is not created. Special Agent? - Answer Brokers are the special agent to the transaction (the agent hired by the seller to conduct a specific transaction). Life Estate in Reversion? - Answer In a Life Estate in Reversion the grantee's death title passes back to the original grantor. The duration of ownership is thus limited by the grantee's life. Freeholds and Ownership in Severalty are unlimited by default, and Estates for Years are leaseholds (and thus not a form of ownership). Blind Advertising? - Answer Real estate licensees (both brokers and salespersons) may not advertise under their own name only; this is known as blind advertising and is prohibited. Salespersons must include their broker affiliation, and brokers must note that they are a broker. Tom purchases an investment property, puts work into it, and receives a return of 44% over his total investment. He did $27,000 in renovations on the property, and sold for $303,000. What was the purchase price? - Answer This is a tricky one. Tom's total investment is his purchase price plus his renovations. We don't know what that total investment is, but we do now what he sold the property for ($303,000), and his return on his total investment (44% over his investment, or 144% total). We can therefore calculate his total investment as $303,000 / 1.44 = $210,416.67. This investment, less the costs of renovations, is his purchase price: $210,416.67 - $27,000 = $183,416.67 (rounded to $183,417 in the answer). Habendum Clause? - Answer The habendum clause (latin for "to have and to hold") transfers any limited estate being granted. The clause in a deed stating that the grantors are conveying all interests and rights that they have and hold. When do you pay property RE taxes in MA? - Answer Property taxes are payable on 8/1, 11/1, 2/1, and 5/1 in Massachusetts. Fiscal year for MA Real Estate? - Answer July 1, 2016-June 30, 2017 = Fiscal 2017 How many acres are in a square mile? - Answer 640 Tenancy by the Entirety? - Answer Is co-ownership for married couples only. It gives married couples and their families special creditor protections that are not available to other owners of real estate. It means that property may not be sold without the agreement of both parties. The right of survivorship exists to the extent that if one spouse dies, his/her interest reverts to the other spouse. The tax rate in a town is $50 per $1000 of assessed value. How much would tax be on a home assessed at $223,400? - Answer Since we already know the assessed value of the home, we can calculate the tax bill based on the rate of $50 per $1000 like so: $223,400 / $1,000 = 223.4 x $50 = $11,170 tax bill (rounded up to $11,200 in answer A, which they sometimes do on the real estate test - watch out for that!). Essential Elements of a Real Estate Contract? - Answer COLIC •To remember elements of a valid and enforceable real estate contract: C Competent parties. O Offer and acceptance (meeting of the minds) L Legal purpose. I In writing and signed (statute of fraud) C Consideration (valuable or good) COLIC What are the Fiduciary responsibilities of a RE Agent/Salesperson? - Answer OLDCAR-Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care. Severalty? - Answer Ownership by one person (even a corporation) is ownership in severalty. Estate in severalty. (Law) an estate which the tenant holds in his own right, without being joined in interest with any other person; Massachusetts Real Estate Board? - Answer The Massachusetts Real Estate Board is made up of three real estate brokers with at least seven years of experience, and two unlicensed persons ("lay people") who represent the public. One of the members is appointed the chairperson. All members of the Board are appointed by the governor and have five year terms, including the chairperson. Accretion? - Answer Accretion is the gradual deposit of land by wind or water (e.g. sand washing up on a beach). How must buyers be notified of the agency relationship at an open house? - Answer By sign, poster, literature, or property description forms. Who must sign an Option Contract? - Answer The Seller. An option is a type of contract between an owner and a potential buyer or lessee to buy or lease in the future at specified terms. The owner granting the option is the grantor or optionor; the person giving consideration is the optionee. Battery operated CO Detectors? - Answer Effective March 31, 2006 all homes in Massachusetts equipped with fuel burning equipment that produce carbon monoxide or have indoor parking (garage) adjacent to living areas must have Carbon Monoxide (CO) detectors installed on every level of the home. New home construction or renovations must have hard-wired detectors; older homes may be brought into compliance with battery-operated detectors. Thus, the minimum requirement for ALL homes is battery operated detectors. What is a Trust? - Answer A trust is a legal arrangement where property is held by an independent entity (the trust) on behalf of a beneficiary, and administered by a trustee. Gross Lease? - Answer A gross lease is a type of commercial lease where the tenant pays a flat rental amount, and the landlord pays for all property charges regularly incurred by the ownership, including taxes, utilities and water.? Net Lease? - Answer Net lease refers to a contractual agreement where a lessee pays a portion or all of the taxes, insurance fees and maintenance costs for a property in addition to rent. Net leases are most commonly used with commercial real estate. In the purest form of a net lease, the tenant is expected to pay for all the costs related to a property as if the tenant were the actual owner. Percentage Lease? - Answer A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. It is a term used in commercial real estate. Ground Lease? - Answer A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner. Reciprocity Agreement? - Answer A reciprocity agreement allows a state to recognize another state's license. This permits licensees to receive a license in another state without retaking the real estate classes, or test. Massachusetts has full reciprocity with a number of states: CT, RI, WV, NE, IA, TN, MI, CO, GA, PA, and NM. Four Unities of Joint Tenancy? - Answer Unity of interest (each joint tenant must have an equal interest including equality of duration and extent), Unity of title (the interests must arise from the same document), Unity of possession (each joint tenant must have an equal right to occupy the entire property) and Unity of time: the interests of the joint tenants must arise at the same time. What do you need to put a sign on someone's property? - Answer Massachusetts law requires written permission to place a for sale sign on someone's property (though you do not need a written LISTING agreement, since the listing could be an open listing). How big is an acre? - Answer 43,560 feet Tammy is looking to invest in property, and develop a number of lots sized 125' x 125', the minimum sized permitted by zoning. The site she is considering is 3 acres in size. Zoning will also require that she set aside 50,000 square feet for access ways. If she sells each lot for $100,000 what will she make? - Answer The first thing we need to know to solve this problem is how big an acre is: 43,560 square feet. We can use this to convert the acres to square feet by performing the following calculation: 43,560 x 3 = 130,680 square feet. Tammy has to set aside 50,000 sqft for roads, so she will have 130,680 - 50,000 = 80,680 buildable square feet of land. Each lot Tammy will build is 125 by 125 feet, so each lot is 125 x 125 = 15,625 square feet. She can therefore build: 80,680 / 15,625 = 5 lots x $100,000 = $500,000. Always round DOWN on the number of lots, since you can't sell a partial lot. REMIC? - Answer Real Estate Mortgage Investment Conduits, or REMICs, invest in portfolios of mortgages. A real estate mortgage investment conduit (REMIC) is a special purpose vehicle that is used to pool mortgage loans and issue mortgage-backed securities (MBS). Real estate mortgage investment conduits hold commercial and residential mortgages in trust and issue interests in these mortgages to investors. Grantor? - Answer The grantor is the one who transfers title to real estate to the grantee. Blockbusting? - Answer A business process of U.S. real estate agents and building developers to convince white property owners to sell their house at low prices, which they do by promoting fear in those house owners that racial minorities will soon be moving into the neighborhood. After what date must homes in MA have carbon monoxide detectors? - Answer March 31, 2006 A brokerage pays an agent 1.5% commission on the first $500,000 of any sale, plus 2% of any selling price over that. What was the sale price if the total commission was $10,000? - Answer We would first determine what the commission would be on the first $500,000 (500,000 x .015) which is $7500. We would then subtract from the total amount of the commission which was $10,000 (10,000 - 7,500) which equals $2,500. We would then divide by the commission rate over $500,000, which is 2% (2,500 / .02) which equals $83,334. We would then add that back to $500,000. The total sale price was $583,334. Attorney in fact.? - Answer A power of attorney creates an attorney in fact, who can sign documents and have them be legally binding on the grantor of the power of attorney. Do you need a RE License to sell your own home? - Answer NO. Note that people doing real estate transactions for themselves and NOT acting as an agent do not need to hold a real estate license to sell their property. Selling your own property is potentially a conflict of interest issue, and it requires written disclosure to prospective purchasers of the property. An agent shall not buy, sell, rent, mortgage or acquire any interest in property, or represent a client in which the agent or agent's kin (by blood, marriage, or business associate) has a personal financial interest unless the agent fully discloses in writing to all parties of the transaction the nature of their interest, and the parties provide the agent with a written acknowledgement of the disclosure. Dual Agent - Answer A broker can work for both buyer and seller on the same property if the broker obtains the informed consent of both parties; this is known as disclosed dual agency. This applies even when broker designates two other agents in his office; the broker is still the agent for both the buyer and the seller, since the broker is legally hired by their agents' clients. Quitclaim Deed - Answer A quitclaim deed is a deed that makes no promises about the quality of title (ownership) being conveyed. Banks typically use quitclaim deeds when selling foreclosed property so that they do not have liability for title defects affecting the property. The Federal Reserve/The Fed? - Answer The Federal Reserve was established with the goal of maximizing employment, stabilizing prices, and moderating interest rates. Its powers and authorities have expanded over time, but the three most relevant relate to the discount rate, reserve requirement, and FOMC. Depreciation is a tax concern controlled by the IRS, not the Federal Reserve. Tenancy in Common? - Answer Tenancy in common is the holding of title by different persons, under different titles, each person having an equal right to occupy all of the property involved. Default form of co-ownership. Co-owners who purchase property without specifying a type of ownership own in common. Ownership interests may be equal or unequal. All co-owners have an interest in the entire property that cannot be compromised. It is inheritable. Joint Tenancy? - Answer Must be chosen by all co-owners and specified in the deed. All co-owners must hold four unities. It creates Right of Survivorship meaning that if one of the co-owners dies, their interest is divided amongst the surviving co-owners. NOT Inheritable Four Unities? - Answer Unity of possession, unity of time, unity of interest and unity of title. Tenancy/Owners by the Entirety? - Answer Only for MARRIED COUPLES. Same as joint tenancy but includes creditor protections and an automatic homestead protection for $500,00 in MA. On Divorce, defaults back to tenancy unless the couple chooses otherwise. Separate Property States (MA)? - Answer Tenants by the entirety may sell or devise separately, like joint tenants. Community Property States? - Answer Property acquired during the marriage cannot be sold or devised without the consent of both spouses even if only on actually bought it. Condominiums? - Answer Condos are a way to subdivide a building into separate units, creating fee simple ownership of individual units and shared ownership of the common areas as tenants in common. Most states have condominium laws referred to as a horizontal property act. What is Fee Simple? - Answer Fee simple is sometimes called fee simple absolute because it is the most complete form of ownership. A fee simple buyer is given title (ownership) of the property, which includes the land and any improvements to the land in perpetuity. Master Deed? - Answer Describes how the building and it's condominium or homeowner's association (the building's governing body) will be set up. Declaration of Trust? - Answer Sets up a Board of Trustees to manage the condo association. Bylaws of the Association? - Answer Rules of the condo building. Condo Conversion? - Answer A building made into Condominiums. Unit Deed? - Answer Each individual owner owns their own condo and a shore of the common areas in proportion to their unit's fair market value via a Unit Deed. Condo Fees? - Answer Owners are responsible for there proportionate share of common area expenses. Super priority lien? - Answer Owners who fail to pay condo fees are at risk of foreclosure. Up to 6 months of unpaid fees against the Unit. 6D Closing Certificate? - Answer For the sale of every condo unit. Establishes the status of the condo fees as of the date the unit is sold. Condo fees never go away...the run with th land! Things to watch out for when buying a condo: - Answer Special Assessments (extra fees to repair or upgrade building), Lack of Capital Reserve ($ held in reserve fund account by condo assoc and investors for building improvements), Low Owner Occupancy Rates. Cooperatives? - Answer Indirect ownership. LLC is formed for limited purpose of providing housing. People living in the building own stock/shares in the company (LLC) which gives them a right to a proprietary lease to their unit. They do not own their unit, the own the company that