SAMPLE
PROGRAM
The purpose
of this sample program is to give you an insight into the subject matter
and vocabulary that you will be tested-on when taking your actual State
License Examination and to additionally introduce you to the study process
involved in your preparation for that exam.
To
start, simply read the information provided in AREA I through AREA
VII and then complete the Sample Test.
When you have finished the test you may find that you have missed some
of the answers to the questions. If so, this would most likely be due to
your having only had the opportunity to have read the material one
time.
This
the very reason why we have developed a study program that not only makes
available to you the States "Top Instructor"
but also gives
you 24-hour a day, 7 day a week access to the course study material, that
provides you with the repetition that we have found to be absolutely crucial
in order to properly understand and memorize this large scope of subject
matter that you will eventually be tested on.
We
call this Process our…
"FLEX STUDY SYSTEM"
I.
PROPERTY OWNERSHIP
LAND
(Boundaries)
1.
Surface: The area on the surface of the Earth.
2.
Material beneath the surface: Extends to the center of the Earth. Reasonable
rights to surface entry implied unless entry is expressly limited to a
footage below the surface.
3.
Airspace:
Infinite height. Due to modern changes it is subject to air
travel and may be used only to a "Reasonable And Enjoyable Height"
II.
ENCUMBRANCES
HOMESTEADING - DECLARATION
OF HOMESTEAD
(Not an encumbrance - Provides
protection against the forced sale of a residence)
Purpose:
A California Law that allows an owner to protect their home
from foreclosure sale resulting from unsecured judgment liens up to specified
limited sums.
Eligible Property (Only
one residence can be homesteaded at a time)
| Will Terminate a Homestead |
Will Not Terminate a Homestead |
| 1. Sale of property (Title transferred
to another). |
1. Improvements partially or totally destroyed
by fire. |
2. Filing a "Declaration Of Abandonment
of Homestead". |
2. Moving from the premises
e.g. - Property not sold, but leased
to another . |
III. REAL ESTATE LAW
THE DEPARTMENT OF REAL
ESTATE
An agency of the Department
of Business, Transportation, and Housing Agency.
Purpose: To
enforce California Real Estate Laws .
Maintains Real Estate
Accounts For Education, Research and Recovery.
The Department of Real Estate is a self
supporting agency, supported by collected fees . Of fees
collected, a port ion is required to be placed into two separate accounts:
1.
Education &
Research Fund
Earmarks
funds for real estate Education and Research.
2. Recovery Fund
| | Underwrites
payment of uncollectable judgments against insolvent licensees
for amounts limited to:
a. $20,000
per each individual claim
b. $100,000 maximum
(total claims) per licensee
|
IV. LAWS OF AGENCY
CREATING A VALID CONTRACT
Four Essential Elements
Required
1. Parties Capable
Of Contracting
2. Mutual Consent
3. Lawful Object
4. Sufficient Consideration
V. VALUATION AND MARKET
ANALYSIS
FOUR ELEMENTS THAT INFLUENCE
VALUE
(Value and Worth have
the same meaning)
A. UTILITY (Most
Important)
To have value, an item must have
a use. The use to which an item is put which produces the "Greatest Net
Return " is known as it's Highest and Best Use .
B.
SCARCITY
A shortage of available
supply compared to demand for item.
C. DEMAND
The desire to possess.
In order to be effective it must be backed by Purchasing Power .
D. TRANSFERABILITY
(Critical to value, but least important of the four)
The condition and
capability of the title to be conveyed.
NOTE: Cost is not an element
of value. Cost represents what was paid for an item.
Example: Buyer paid $3000
(Cost) in 1931 and resold for $120,000 (Value)
in 1993.
VI. FINANCING
TWO TYPES OF LENDERS -
Institutional vs. Non-Institutional
Institutional
Commercial Banks (State or Nationally
chartered)
Savings and Loan Associations (State or
Federally chartered)
Life Insurance Companies
Mutual Savings Banks (Located Predominantly
in Northeastern U.S.)
Credit Unions
Non-Institutional
Thrift Companies
Endowed Universities
Private Investors (Individuals
or groups. e.g. - sellers, brokers)
Pension Funds
Mortgage Companies - Only
considered lenders if they loan money directly to the borrower.
VII. PERSONAL PROPERTY
That property which
is not real property.
A. Personal property can
be Tangible or Intangible
1. Tangible: Items
that may be physically possessed.
2. Intangible: Items having
no physical substance.
e.g. - Rights given by contract, labor, etc.
B. Title is transferred by: Delivery
of possession
C. Evidence of title transfer: Bill
of Sale
D. Security interest created by use
of a: Security Agreement
E. Security interest perfected by filing
a: Financing Statement
SAMPLE TEST
Area I
The classic definition
of boundaries of real property is:
a. a reasonable distance
down, unlimited airspace
b. pratical or reasonable
use of the earth and unlimited airspace
c. surface area indicated
on a map
d. use of airspace to a
reasonable and enjoyable height and extended to center of the Earth
Area II
Of the following, which
could automatically terminate a Homestead?
a. moving from the property
b. movefrom California
c. house partially destroyed
by fire homestead
d. prior homestead recorded
Area III
The main purpose of the
Department of Real Estate's Recovery Fund is:
a. to develop education
in the real estate field
b. for brokers to receive
uncollectable commissions
c. for the public to collect
damages against a licensee
d. for the public to collect
a limited amount of damages from insolvent licensee
Area IV
In a contract there are
essential elements that must be present to create a valid and binding contract.
All of the following would describe one of these elements, except:
a. proper writing
b. capability
c. mutual consent
d. lawful object
Area V
Of the four major characteristics
that create value, which would be the least important?
a. utility
b. scarcity
c. demand
d. Transferabliity
Area VI
Concerning institutional
lenders. All the following are incorrect, except:
a. pension funds
b. insurance companies
c. universities
d. mortgage companies
Area VII
The transfer of personal
property is evidenced by the use of a:
a. Chattel Mortgage
b. Land Contract of Sale
c. Deed
d. Bill of Sale
Fill-in correct answer….
I. [ ] II. [ ] III. [ ] IV. [ ] V. [ ] VI. [ ] VII. [ ]
ANSWERS
1. (d) This is the best
description of the four answers. None are complete. Prior to the invention
of the airplane, the definition included indefinite ownership of the airspace
into infinity. The airways are now a public domain. Therefore today's ownership
of airspace has limited the use to "A Reasonable and Enjoyable Height."
Also owned as part of the real property is the surface of the earth and
the material beneath the surface to the center of the earth.
2. (d) Only one property
at a time can be homesteaded! A prior homestead would invalidate a second
one recorded, unless the first one should be released prior through a DECLARATION
OF ABANDONMENT. Moving from the property does not terminate a homestead
as long as you have the intention of returning to the property to use it
some time in the future. Destruction of the improvements also does not
terminate a homestead. However, selling (transfer of ownership) DOES TERMINATE
THE HOMESTEAD.
3. (d) This answer identifies
the purpose of the Recovery Fund and of the four is the most complete.
The current protections are $20,000 per claim and $100,000 coverage per
licensee. The claimant must have filed an action against the licensee,
have been rendered a judgment, had attempted to collect and then had proven
the judgment was uncollectable due to insolvency of the licensee. Then
the claimant must have filed a proper claim with the proper department.
4. (a) Relating to the
four essentials to create a valid contract. We need…Competent Parties (capacity),
Mutual Consent, Legal Objective (lawful Object) and the fourth essential
is CONSIDERATION , not Proper Writing.
5. (d) Statement of
fact. TRANSFERBILITY is the LEAST IMPORTANT of the four characteristics
of value. (a) UTILITY is the MOST IMPORTANT of the four. (c) DEMAND is
the characteristic that must be backed or implemented by "Purchasing Power"
to be effective.
6. (b) An INSURANCE
COMPANY is the only organization considered to be an INSTITUTIONAL LENDER
of the four choices shown. PENSION FUNDS, UNIVERSITIES and MORTGAGE COMPANIES
are classified as NON-INSTITUTIONAL LENDERS.
7. (d) A BILL OF SALE
is the receipt (evidences the transfer) that conveys PERSONAL PROPERTY.
(a) A CHATTEL MORTGAGE was an instrument that held personal property as
security for a loan, which has been replaced by the use of the Security
Agreement. (b) A LAND CONTRACT OF SALE is a personal agreement regarding
the conditions under which a future transfer of real property may occur.
(c) A DEED evidences the conveyance of real property.
