Determine your answer, then click the arrow to see the correct response.
What Is "REIT" in the Context of Real Estate Investment?
A) Real Estate Independent Trust
B) Real Estate Investment Trust
C) Real Estate Income Tax
D) Real Estate Institutional Transaction
Correct Answer: B) Real Estate Investment Trust
Explanation: A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. REITs allow individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.
What Is a "Novation" in Real Estate Contracts?
A) The cancellation of a contract without any replacement
B) The substitution of a new contract in place of an old one, with the consent of all parties involved
C) The addition of new terms to an existing contract
D) The transfer of property rights without altering the contract terms
Correct Answer: B) The substitution of a new contract in place of an old one, with the consent of all parties involved
Explanation: Novation is the act of replacing an existing contract with a new one, while releasing the original party from any obligations or liabilities and creating new obligations between the original party and a new party.
What Is "Pro Forma" in Real Estate Investment?
A) An official property appraisal report
B) A financial statement that projects the future income and expenses of a property
C) A legal document confirming property ownership
D) A list of repairs needed for a property
Correct Answer: B) A financial statement that projects the future income and expenses of a property
Explanation: Pro forma is a Latin term meaning “for the sake of form.” In real estate, it refers to a financial statement that projects the future income, expenses, and net operating income of a property, often used by investors to assess potential returns.
What Does "Build-To-Suit" Mean in Commercial Real Estate?
A) A property that is sold as-is
B) A leasing arrangement where a landlord constructs a building to the tenant's specifications
C) A type of property with flexible zoning
D) A property that can be easily remodeled
Correct Answer: B) A leasing arrangement where a landlord constructs a building to the tenant’s specifications
Explanation: Build-to-suit is a commercial real estate term where the landlord constructs a building based on the specific needs and specifications of the tenant, who agrees to lease the property upon completion.
What Is "Mechanic's Lien" in Real Estate?
A) A lien placed on a property by a lender
B) A lien placed on a property for unpaid construction or repair work
C) A lien that protects tenants from eviction
D) A lien that guarantees property taxes are paid
Correct Answer: B) A lien placed on a property for unpaid construction or repair work
Explanation: A mechanic’s lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. If the property owner fails to pay for the work or materials, the contractor or supplier can file a mechanic’s lien against the property.
Lauren, a Licensed Real Estate Agent in Utah, Receives a Non-Refundable Deposit From a Tenant Without Providing a Written Notice Stating That the Deposit Is Non-Refundable. What Is the Legal Consequence of This Action Under Utah Law?
A) No consequences if the tenant doesn't ask for a refund
B) The deposit must be refunded upon tenant's request
C) Lauren can keep the deposit without any issues
D) Lauren must provide a written notice within 30 days
Correct Answer: B) The deposit must be refunded upon tenant’s request
Explanation: According to Utah Code § 57-17-2, if any part of a deposit is to be non-refundable, it must be stated in writing at the time the deposit is taken. Failure to do so requires the landlord or agent to refund the deposit.
Ryan, a Property Owner in Utah, Wants To Enforce a Rental Restriction in His Condominium Association. What Conditions Must Be Met for the Restriction To Be Legally Enforceable?
A) The restriction must be approved by a simple majority of unit owners
B) The restriction must receive unanimous approval by all unit owners and comply with all other requirements for amending the association's declaration
C) The restriction must be filed with the county recorder
D) The restriction can be enforced immediately without any formalities
Correct Answer: B) The restriction must receive unanimous approval by all unit owners and comply with all other requirements for amending the association’s declaration
Explanation: Utah Code § 57-8-10.1 states that an association of unit owners may restrict or prohibit rentals without the exceptions if the restriction or prohibition receives unanimous approval by all unit owners and fulfills all other requirements for amending the association’s declaration.
A Utah Real Estate Agent Mishandles Trust Money By Depositing It Into Their Personal Account. What Potential Disciplinary Actions Can Be Taken Against the Agent Under Utah Law?
A) The agent will receive a warning letter
B) The agent could face suspension or revocation of their license, and may be subject to fines
C) The agent can correct the mistake within 30 days without penalty
D) The agent will be required to attend a training session
Correct Answer: B) The agent could face suspension or revocation of their license, and may be subject to fines
Explanation: Under Utah Code Title 61, Chapter 2f, mishandling trust money is a serious violation that can result in disciplinary actions including suspension or revocation of the agent’s license, as well as fines.
A Property in Utah Is Sold for $400,000. The Seller Pays a 6% Commission to Their Real Estate Agent and $10,000 in Closing Costs. How Much Does the Seller Net From the Sale After These Expenses?
A) $366,000
B) $368,000
C) $374,000
D) $376,000
Correct Answer: A) $366,000
Explanation: The commission paid to the real estate agent is 6% of $400,000, which is $24,000. Therefore, the total expenses are $24,000 (commission) + $10,000 (closing costs) = $34,000. The net amount the seller receives is $400,000 – $34,000 = $366,000.
A Homeowner in Utah Refinances Their Mortgage to a New Loan Amount of $200,000 at an Annual Interest Rate of 4.25% Over a 15-Year Term. What Will Be the New Monthly Mortgage Payment (Principal and Interest Only)?
A) $1,400.45
B) $1,502.45
C) $1,503.87
D) $1,507.84
Correct Answer: C) $1,503.87
Explanation: Using the mortgage payment formula, P = $200,000, r = 0.0425 / 12 = 0.00354167, and n = 1512 = 180. M = 200,000[0.00354167(1+0.00354167)^180] / [(1+0.00354167)^180 – 1] ≈ $1,503.87.