Mixed Deck — All Real Estate Topics Flashcards

The debt-to-income (DTI) ratio most commonly used by lenders for conventional loans should not exceed:

Answer: 43%

Most conventional lenders require a back-end DTI of 43% or less, meaning total monthly debt payments should not exceed 43% of gross monthly income.

Which federal law requires sellers and landlords to disclose the presence of lead-based paint in housing built before 1978?

Answer: The Residential Lead-Based Paint Hazard Reduction Act

The Residential Lead-Based Paint Hazard Reduction Act (Title X) requires sellers and landlords of pre-1978 housing to disclose known lead-based paint hazards and provide buyers/tenants with an EPA pamphlet.

The principle of regression states that a higher-value property placed among lower-value properties will:

Answer: Experience a decline in value

Regression holds that a superior property's value is pulled down when surrounded by inferior properties, the opposite of the principle of progression.

Highest and best use is defined as the use that is:

Answer: Physically possible, legally permissible, financially feasible, and maximally productive

Highest and best use is the reasonably probable and legal use of property that produces the highest value, considering physical, legal, and financial factors.

In an exclusive right-to-sell listing, the listing broker earns a commission if the property is sold by:

Answer: Any of the above

Under an exclusive right-to-sell listing, the broker earns a commission regardless of who procures the buyer, including the seller.

When a municipality changes a property's zoning from higher-density residential to lower-density residential, this is known as:

Answer: Downzoning

Downzoning refers to changing a property's zoning classification to one that permits less intensive use or lower density, which often reduces the property's development potential and value.

FHA loans are attractive to first-time buyers primarily because they allow:

Answer: Down payments as low as 3.5% with lower credit score requirements

FHA loans, insured by the Federal Housing Administration, allow down payments as low as 3.5% and accept lower credit scores than conventional loans.

RESPA (Real Estate Settlement Procedures Act) primarily protects consumers by:

Answer: Requiring disclosure of settlement costs and prohibiting kickbacks

RESPA requires lenders to provide a Loan Estimate and Closing Disclosure, and prohibits kickbacks, referral fees, and unearned charges in the settlement process.

Eminent domain allows the government to:

Answer: Take private property for public use with just compensation

Eminent domain is the government's constitutional authority to acquire private property for public use, provided just compensation is paid.

Under the Americans with Disabilities Act (ADA), commercial property owners must provide:

Answer: Reasonable accommodations and accessible facilities for people with disabilities

The ADA requires places of public accommodation and commercial facilities to be accessible to people with disabilities, including accessible entrances, restrooms, and common areas.

A buffer zone in zoning is primarily used to:

Answer: Separate incompatible land uses such as industrial and residential areas

Buffer zones are areas of land used to separate incompatible land uses, reducing conflicts between zones such as placing a park or landscaped strip between a factory and a neighborhood.

Economic obsolescence (external obsolescence) is generally considered:

Answer: Incurable because the cause is beyond the owner's control

Economic obsolescence stems from factors outside the property, such as neighborhood decline or nearby nuisances, which the owner cannot control or cure.

A deed restriction (restrictive covenant) is enforceable by:

Answer: Neighboring property owners or homeowners associations

Deed restrictions run with the land and can be enforced by parties who benefit from them, such as HOA members or neighboring owners.

Familial status as a protected class under the Fair Housing Act protects:

Answer: Families with children under 18 and pregnant women

Familial status protects households with one or more children under 18 in the care of a parent or guardian, as well as pregnant women.

Private Mortgage Insurance (PMI) is typically required when the borrower's down payment is:

Answer: Less than 20% of the purchase price

PMI protects the lender when the borrower puts down less than 20%, compensating for the higher default risk associated with a high LTV loan.

For a real estate contract to be legally valid, it must include all EXCEPT:

Answer: Notarization

Notarization is required for recording a deed but is not one of the essential elements for a contract to be valid and enforceable.

The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against loan applicants based on:

Answer: Race, color, religion, national origin, sex, marital status, age, or receipt of public assistance

ECOA requires lenders to evaluate all credit applicants equally without regard to protected characteristics, ensuring fair access to mortgage financing.

A conditional use permit (CUP) differs from a variance in that a CUP:

Answer: Allows a use that is permitted in a zone only under specific conditions

A conditional use permit allows a use that is listed in the zoning ordinance as acceptable in a zone under certain conditions, whereas a variance waives a specific zoning dimension requirement.

Tenancy in common differs from joint tenancy primarily because:

Answer: There is no right of survivorship

In tenancy in common, each owner's interest passes through their estate upon death; there is no automatic right of survivorship.

A lien is best described as a:

Answer: Financial claim against a property

A lien is a legal claim placed against a property as security for a debt or obligation.