Real Estate Real Estate Law & Regulations 3

Question 1

Foreclosure is the legal process by which a lender:

Accepted Answer

Forces the sale of a property to recover an unpaid mortgage debt

Answer

Foreclosure is the legal process allowing a lender to terminate the borrower's equity of redemption and force the sale of the property to satisfy the outstanding debt.

Question 2

A 1031 exchange (like-kind exchange) allows a real estate investor to:

Accepted Answer

Defer capital gains taxes by reinvesting proceeds into a like-kind property

Answer

Under IRC Section 1031, investors can defer capital gains tax on the sale of investment property by reinvesting the proceeds into another like-kind investment property within specified timeframes.

Question 3

In a non-judicial (trustee's sale) foreclosure, the property is sold without:

Accepted Answer

Court supervision, using the power of sale clause in the deed of trust

Answer

Non-judicial foreclosure is carried out under the power of sale clause in a deed of trust, allowing the trustee to sell the property without court oversight after proper notice.

Question 4

FIRPTA (Foreign Investment in Real Property Tax Act) requires that when a foreign seller sells US real property, the buyer must:

Accepted Answer

Withhold a percentage of the sales price and remit it to the IRS

Answer

FIRPTA requires buyers to withhold typically 15% of the gross sale price from a foreign seller and remit it to the IRS to ensure payment of US capital gains taxes.

Question 5

A certificate of occupancy (CO) is issued by a local government agency to certify that:

Accepted Answer

A building complies with applicable building codes and is safe to occupy

Answer

A CO is issued after inspections confirm a newly constructed or substantially renovated building meets zoning, building codes, and safety requirements.

Real Estate Practice Test

Real Estate Practice Test

Real Estate Real Estate Law & Regulations 3