Study guide for the Illinois realtor license test.
what is 36 sections or 36 sq miles?
What is 640 acres or 1 sq mile?
What is 43,560 sq ft?
How many feet are in a mile?
1 cubic yard = ?
27 cubic feet.
What is a point?
1% of the total loan.
What is "testate?"
Means there is a will.
What is "intestate?"
Whats does IRV stand for?
I - annual net Income
R - Rate of Return
V - Value.
(remember, I/V =R)
What does "latent" mean?
What are the five categories of real property?
How does supply and demand work in real estate?
When supply increases and demand remains stable, prices go down.
When demand increase and supply remains stable, prices go up.
What are the 2 characteristics of land that have the most impact on market value?
Uniqueness and immobility
Uniqueness - No matter how similar two parcels of real estate may appear, the are never exactly alike.
Immobility - refers to the fact that property cannot be relocated
There is no standard commission amount. What determines the commission?
a negotiation between the sponsoring broker and the client.
What is a life-estate?
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person(s)
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another
What is radon?
A naturally occurring gas that comes from natural decay in the ground. It is suspected of causing lung cancer.
What is the "metes-and-bounds description"?
A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the beginning.
i.e. start at the fence post, go north to the old oak tree, go east to about 15 feet to giant statue of Zeus and yadda yadda yadda
What is an open listing?
a listing contract under which the sponsoring broker's commission is contingent on the sponsoring broker is producing a ready, willing, and able buyer before the property is sold by the seller or another sponsoring broker.
What is an amortized loan?
a loan in which the principal as well as the interest is payable in monthly or other periodic installments of the term of the loan
Term loan payments only include _______ so that there is no amortization of the loan balance?
A term loan is also known as an interest-only loan. It is a nonamortized loan that essentially divides the loan into two ammounts to be paid off separately.
What is a net lease?
a lease requiring the tenant pay not only rent, but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.
How does a balloon loan work?
The balance is not fully amortized (split into equal payments) so the final payment is big.
in other words, the monthly payments alone will NOT pay down the loan, and the remaining balance is due in full at the end of the loan term.
There are 4 forms of co-ownership;
1 tenancy in common
2 joint tenancy
3 tenancy by the entirety
4 community property
Briefly describe what makes them different, please
Tenancy in common = each owner holds and undivided interest in the real property as if they were sole owner. Each owner has the right to partition. Tenants in common have the right of inheritance.
Joint tenancy is the ownership between parties who have been named in one conveyance as joint tenants. When one dies, the interest passes to the surviving joint tenant(s) (cannot be passed to heirs) by right of survivorship until its down to one. The last survivor takes title in severalty has all rights of sole ownership.
Tenancy by the entirety is a special form of co-ownership is for husbands and wives.
Illinois is NOT a community property state. The closest thing in Illinois to this is marital property.
Does tenancy in common have the right of survivorship?
Nope. A deceased tenant's share goes to their heirs.
Tenancy in common = treat is as if it was yours.
Joint Tenancy = last man standing wins.
What is the function of an escrow account?
Used by the lender to pay real estate taxes or insurance on the property.
What is commingling?
the illegal act of a real estate licensee (broker) mixing client and personal money.
What is an encroachment?
a physical intrusion on another's property.
i.e. a fence or something going over the property line.
Does a receipt of another offer from a third party end the original buyer's offer?
No. In a case like this, the seller now has choice which offer to accept.
What is curable physical depreciation?
Normal wear and tear that is cost justified to fix.
It would be incurable if the cost to fix it is not economically feasible.
What happens to property in Illinois if the owner dies and there are no heirs?
It will escheat (e-sheet) to the county it's in. The county then auctions it.
Does joint tenancy have the right of survivorship?
YES! Remember, this is last man standing (last one to survive). The four unities necessary to create a joint tenancy are PITT:Possession
(PITT fight, last man standing)
How many days does the CAN-SPAM Act give a real estate company to stop sending e-mails to the requestor's address?
What does an appraiser estimate?
the property's market value.
What type of ownerships involve paying assessments levied by the building's associations?
Condominium and cooperative ownerships.
What is a purchase-money mortgage (PMM)?
A note secured by a mortgage or deed of trust given by a buyer, as a borrower, to a seller, as lender, as part of the purchase price of the real estate.
It's a loan made by the seller to help finance the purchase of the property.
Are independent contractors allowed to receive an hourly wage or benefits from the employing contractor?
What is a special warranty deed?
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the time period of his/her tenure and ownership of the property and not against defects exisiting before that time.
(only vouches for the time they had the title)
When a tenant typically has a leasehold interest in the property with the intention of constructing a building, what type of lease is this?
a ground lease.
A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default.
Each party must give consideration for there to be a valid contract.
What is consideration?
(1) that received by the grantor in exchange for his deed.
(2) something of value that induces a person to enter into a contract.
Each party must give something of value (consideration) for there to be a valid contract.
What is a government power that regulates the use of a property?
Local zoning ordinances.
In Illinois, when can a real estate license be suspended or revoked?
After a hearing before the disciplinary board.
Who determines the amount of earnest money?
The buyer and seller. There does not have to be any earnest money to have a valid sales contract.
What is adverse possession?
The actual, open, notorious, hostile, and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title. In Illinois, it's 20 years.
What is the capitalization rate?
The rate of return a property will produce on the owner's investment.
The purpose of the License Act is to protect ______ and evaluate the competency of individuals seeking or receiving licensure.
What is an "option?"
An agreement to keep open for a set period an offer to sell or purchase property.
An option gives the buyer the right to purchase, but the buyer is not required to purchase.
What happens when the sponsoring broker's license is suspended or revoked?
The licensees working for that broker are considered inoperative and must find a new sponsoring broker.
What is an easement?
A right to use another person's land for a specific purpose, such as utilities, or driveways.
When you driveway goes into your neighbor's property line, which estate is the servient tenement and which is the dominant tenement?
The neighbor's land is the servient tenement and your land is the dominant tenement.
the neighbor's estate is serving your need for a driveway and your estate takes what it needs because it's dominant.
What do restrictive covenants do?
Limit the way real estate ownership may be used.
restrictive covenants - a clause in a deed that limits the way the real estate ownership may be used.
The practice of real estate in Illinois is governed by what?
the Real Estate License Act of 2000.
What are "ministerial acts" and what has a list of them?
In Illinois, acts that a licensee may perform for a consumer that are informative and do not constitute active representation.
The License Act lists many actives that count as ministerial.
What does "outmoded" mean?
What does functional obsolescence pertain to?
Outmoded (out-of-date) features or poor design of a property.
i.e. a five bedroom home with only 1 bathroom, or having a furnace that still runs on steam.
According to the Illinois Real Estate License Act, what is a "consumer?"
Someone seeking or receiving real estate brokerage services.
When a rental unit requires maintenance, who is usually responsible for the maintenance expense?
The property owner.
What is a bill of sale used for?
Purchase of personal property.
To determine taxes: A.) Remember the assessed value, which is ______.
B.) Subtract any exemptions
C.) Multiply adjust assessed value by tax rate
D.) Always "equalize" assessed value first
and that gives you the real estate tax amount.
A.) 33.3 percent (0.333) of market value.
(this multiple choice question has been scrambled)
ASSESSED VALUE x EQUALIZATION FACTOR - EXEMPTIONS x TAX RATE = __________
What is "specific performance?"
It is a legal action to compel a party to carry out the terms of a contract.
It's available to either party if the other breaches contract.
Then they can sue for specific performance.
Who typically pays for recording a buyer's new mortgage?
The buyer. Duh. Why would anyone else do it?
Who usually pays the sponsoring broker's commission?
Are purchase contracts typically recorded?
No, such they're such a short period of time.
With an exclusive right to sell listing, who gets the commission no matter who sells it?
The sponsoring broker.
The seller made an exclusive contract saying, "Hey bro, I promise you'll get paid."
What type of easement grants the right of ingress and egress to a landlocked property?