With regard to the general operation of a real estate brokerage, which of the following activities of ABC Brokerage, Inc. is illegal under federal law?
Statement #1: ABC Brokerage, Inc. advertises that, at the close of escrow, it will refund $500 of the commission to every buyer and seller the firm represents. Statement #2: While golfing together, the managing licensees at ABC Brokerage, Inc. and DEF Brokerage, Inc. divide up a particular geographic area between themselves. Statement #3: ABC Brokerage, Inc. lays off a long-term licensee who, because of illness, performed poorly during the last two fiscal quarters.
a. Statement #1
b. Statement #2
c. Statement #3
d. Statements #1 and #2
Which of the following lists the essential elements of an enforceable real estate contract?
a. acceptance, consideration, performance, lawful object
b. lawful object, competency, offer and acceptance, consideration
c. tender, consideration, deposit, performance
d. signatures, consideration, mutuality, competence
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Mr. James Abioye and Mrs. Catherine Abioye have been married for 30 years. James just turned 63-years-old, and recently retired because of health issues. Catherine is 59-years-old, and is still working as a Surgical RN. Several decades ago, they jointly purchased—and currently own—a single parcel of real estate, their primary residence. There is a substantial amount of equity in the home, and it is free and clear of all liens, except current year taxes. Now that Catherine is the only spouse still working, the married couple is looking for real estate financing that will allow them to remain in their home and support their lifestyle. The Abioyes found one loan product that would support their goals, but were warned by the lender that the loan amount would be lower than they anticipated because of Catherine’s age. When, if ever, is this accurate advice on the part of a lender?
a. Under federal rules related to senior housing.
b. Under the federal Equal Credit Opportunity Act.
c. Under federal rules related to reverse mortgages.
Seller sold buyer a single-family residence for a purchase price of $1,000,000. Buyer made a down payment of $100,000, and financed the rest of the purchase with an $800,000 purchase money mortgage from a major institutional lender, and a $100,000 seller carryback. One month after the close of escrow, buyer took out a third loan, a home equity line of credit (HELOC), for $10,000. Several years later, buyer decided to refinance the $800,000 purchase money mortgage, and found a different lender willing to refinance the property on better terms. Buyer does not want to pay off either of the two junior liens on the property (i.e., the $100,000 seller carryback and the $10,000 HELOC). There is a boilerplate clause in the recorded HELOC stating the lender's consent to remain in junior position should the primary mortgage ever be refinanced. However, there is no comparable language in the $100,000 seller carryback mortgage. What is the name of the document needed to protect the lien priority of the refinance lender, and who is required to sign this document?
a. A Subordination Agreement signed by the buyer and the $800,000 lender.
b. A Subordination Agreement signed by the seller.
c. A Subordination Agreement signed by the $10,000 HELOC lender.
d. A Seniority Preservation Agreement signed by the seller.
Donna Trumply, an investor, has approximately one million dollars to invest; and wants to choose an investment with at least a 12% rate of return. Donna's financial advisor tells her that based in the forecasts; she could realize a rate of return of up to 11% if she invests in gold bullion or 9% if she invests in a certain mutual funds. Donna calls real estate broker Ben to discuss the possibility of investing her money in real estate. Broker Ben knows of a 5-unit office building that is listed for $715,000; and generates an annual gross income of $79,680, with an annual operating and maintenance cost of $15,320. Ben believes he can negotiate a purchase price for Donna that, if accepted, will enable Donna to meet her desired 12% rate of return on her money over the next ten years – even if Donna must pay a 4% commission to Ben. The maximum purchase price Ben should negotiate for Donna is _____. (Round all calculations to the nearest penny.)