Florida Real Estate Sales Associate — All Questions

The rights of a landowner whose property borders a flowing river or stream are called:

• a.Littoral rights along an ocean shore
• b.Prior appropriation water rights
• c.Riparian rights✓
• d.Prescriptive use rights

Riparian rights belong to owners of land bordering flowing water such as rivers and streams, generally allowing reasonable use of the water. Florida follows riparian and littoral doctrines rather than prior appropriation.

An owner of property bordering a large navigable lake or the ocean holds:

• a.Littoral rights✓
• b.Appropriative rights granted by permit
• c.Riparian rights along a flowing stream
• d.Percolating groundwater rights only

Littoral rights attach to land bordering a sea, ocean, or large navigable lake, generally extending to the mean high-water mark. Riparian rights, by contrast, apply to flowing watercourses such as rivers.

In deciding whether an item is a fixture, courts weigh method of attachment, adaptation, and, most importantly, the:

• a.The color and decorative style of the item
• b.Original purchase price paid for the item
• c.Intention of the party who attached it✓
• d.Whether the item is currently insured

The tests for a fixture include the method of attachment, adaptation to the property, the relationship of the parties, and the intention of the person who installed it, with intention often given the most weight. Fixtures generally transfer with the real estate.

A commercial tenant's shelving and equipment installed to operate a business are:

• a.Personal property owned by the landlord
• b.Emblements belonging to the landlord
• c.Trade fixtures the tenant may usually remove✓
• d.Real property that must remain with the building

Trade fixtures are items a commercial tenant attaches to conduct business; the tenant generally may remove them before the lease ends, repairing any damage. This is an exception to the usual rule that fixtures stay with the real estate.

Annual crops produced by a tenant farmer's labor and cultivation are known as:

• a.Fixtures attached to the soil
• b.Trade improvements owned by the landlord
• c.Emblements✓
• d.Appurtenances that pass with title

Emblements are annual cultivated crops treated as the tenant farmer's personal property, which the tenant may harvest even after the tenancy ends. This doctrine protects the labor invested in growing the crops.

A right or benefit that transfers with the land, such as an easement that benefits the parcel, is a(n):

• a.Encumbrance held by a creditor
• b.Reversionary future interest
• c.Chattel that remains personal property
• d.Appurtenance✓

An appurtenance is a right, privilege, or improvement that belongs to and passes with the land, such as an easement appurtenant or water rights. When the land is sold, its appurtenances generally transfer with it.

In Florida, a claim of adverse possession generally requires continuous possession for at least:

• a.7 years✓
• b.3 years with any casual use
• c.10 years, but only against the state
• d.21 years, the traditional common-law period

Florida requires seven years of continuous, open, and hostile possession, typically with color of title or payment of taxes, to establish adverse possession. The requirements are strict and statute-based.

Property taxes levied in proportion to the assessed value of real estate are called:

• a.Ad valorem taxes✓
• b.Special assessments for improvements
• c.Intangible personal-property taxes
• d.Documentary stamp transfer taxes

Ad valorem means 'according to value,' so ad valorem taxes are based on the assessed value of the property. They fund local government services. A property's assessed value and any exemptions determine the tax owed.

A charge levied only on properties that benefit from a specific public improvement, such as a new sidewalk, is a:

• a.Documentary stamp tax on the deed
• b.Special assessment✓
• c.State intangible tax on the mortgage
• d.General ad valorem property tax

A special assessment is a charge imposed on properties that directly benefit from a public improvement like paving, sewers, or sidewalks. Unlike general ad valorem taxes, it applies only to the benefited parcels.

A property owner who wants to use land in a way that slightly departs from zoning requirements may apply for a:

• a.Private restrictive covenant
• b.Deed in lieu of foreclosure
• c.Legal nonconforming-use certificate
• d.Variance✓

A variance is permission to deviate from specific zoning requirements, often due to hardship, without changing the zoning classification. It is granted by the local zoning board of adjustment under set criteria.

A lawful land use that existed before a new zoning ordinance and is permitted to continue is a:

• a.Conditional easement of record
• b.Legal nonconforming use✓
• c.Special exception granted by variance
• d.Spot-zoning violation of the plan

A legal nonconforming use, often called grandfathered, is a use that was lawful before a zoning change and is allowed to continue despite no longer conforming. Restrictions may limit expanding or rebuilding it.

Local long-range land-use goals in a Florida community are set out in its:

• a.Comprehensive plan✓
• b.Recorded deed restrictions
• c.Multiple listing service rules
• d.Uniform building code

A comprehensive plan (or general plan) states a community's long-range goals for growth, land use, and infrastructure. Zoning ordinances are enacted to implement the plan. Florida requires local governments to adopt such plans.

Illegally rezoning a single parcel to benefit one owner, contrary to the surrounding area, is called:

• a.Lawful downzoning of a district
• b.A properly granted variance
• c.Inclusionary zoning for housing
• d.Spot zoning✓

Spot zoning is the improper rezoning of a single parcel in a way inconsistent with the surrounding area and the comprehensive plan, usually to benefit one owner. Courts may strike it down as invalid.

The deed that offers a buyer the greatest protection through full covenants of title is a:

• a.Bargain-and-sale deed
• b.Special warranty deed with limited covenants
• c.General warranty deed✓
• d.Quitclaim deed with no warranties

A general warranty deed provides the broadest protection, with the grantor warranting title against all defects, even those arising before the grantor owned the property. A quitclaim deed, by contrast, offers no warranties.

A deed that transfers only whatever interest the grantor may have, with no warranties of title, is a:

• a.Quitclaim deed✓
• b.Trustee's deed containing warranties
• c.General warranty deed with full covenants
• d.Special warranty deed with limited covenants

A quitclaim deed conveys whatever interest, if any, the grantor holds, without any warranties. It is often used to clear clouds on title or transfer between family members, but it offers the grantee the least protection.

For fair housing purposes, 'familial status' protects:

• a.Only legally married couples
• b.Households with one or more children under 18✓
• c.Persons who are over the age of 62
• d.Extended families of any composition

Familial status protects families with children under 18, pregnant individuals, and those securing custody of a child. It prohibits discrimination against households with minor children, subject to the older-persons housing exemption.

A landlord's duty to permit a disabled tenant to install a wheelchair ramp at the tenant's own expense is a reasonable:

• a.Modification✓
• b.Variance obtained from the zoning board
• c.Accommodation that the landlord must pay for
• d.Exemption from the fair housing laws

A reasonable modification is a physical change to the premises, generally at the tenant's expense, needed for a disabled person's full use. A reasonable accommodation, by contrast, is a change in rules or policies, which the landlord provides.

The federal Fair Housing Act's limited exemption for an owner-occupied building applies to buildings with:

• a.Any single-family home in all cases
• b.Four or fewer units✓
• c.Only government-subsidized housing
• d.Up to ten units in any location

The 'Mrs. Murphy' exemption may apply to owner-occupied buildings of four or fewer units, in limited circumstances. However, the exemption never permits discriminatory advertising or racial discrimination barred by the 1866 Civil Rights Act.

Which of the following is NOT one of the four government powers over private property?

• a.Police power to regulate land use
• b.Novation✓
• c.Eminent domain to take for public use
• d.Taxation to fund public services

The four government powers over real estate are police power, eminent domain, taxation, and escheat (PETE). Novation is a contract-law concept involving substitution of parties, not a government power.

The right within the bundle of rights that allows an owner to sell, lease, or will the property is the right of:

• a.Physical possession
• b.Exclusion of others
• c.Quiet enjoyment
• d.Disposition✓

Disposition is the right to transfer the property by sale, gift, lease, or will. It is one of several rights in the bundle, along with possession, control, enjoyment, and exclusion. All are subject to governmental powers.

When a growing tree is cut down and removed from land, it changes from real property to personal property through:

• a.Accession to the land
• b.Annexation to a building
• c.Severance✓
• d.Accretion by water

Severance is the act of detaching something from the land, converting real property (such as a standing tree) into personal property (such as cut timber). Annexation is the opposite process.

When personal property is permanently attached so that it becomes part of the real estate, the process is called:

• a.Annexation✓
• b.Reliction of water
• c.Severance from the land
• d.Emblement of crops

Annexation occurs when personal property is affixed to real estate and becomes a fixture, part of the real property. Severance is the reverse process. Whether an item became a fixture depends on the fixture tests.

For a deed to be valid, it must be signed by the:

• a.Listing broker of record
• b.Grantor✓
• c.County property appraiser
• d.Grantee receiving the property

A valid deed must be executed (signed) by the grantor, the party conveying the property. The grantee need not sign. Other requirements include a competent grantor, legal description, granting clause, and delivery and acceptance.

Title to real estate actually passes to the buyer when the deed is:

• a.Notarized by a licensed notary
• b.Recorded in the public records
• c.Delivered and accepted✓
• d.Signed by the grantor alone

Title passes upon delivery of the deed by the grantor and acceptance by the grantee during the grantor's lifetime. Recording is not required to pass title, though it protects the grantee by giving constructive notice.

The primary purpose of recording a deed in the public records is to:

• a.Make the deed valid between the parties
• b.Give constructive notice of the owner's interest✓
• c.Satisfy and release the mortgage lien
• d.Actually transfer title from grantor to grantee

Recording provides constructive notice to the world of the grantee's interest, protecting priority against later claims. A deed is valid between the parties without recording, but recording guards against subsequent purchasers and lienholders.

Title insurance protects the insured against:

• a.Default by the borrower on the mortgage loan
• b.Physical damage to the structure from fire or storms
• c.Future declines in the property's market value
• d.Losses from title defects that existed before the policy date✓

Title insurance protects against losses from covered defects in the title that existed on or before the policy's effective date, such as undisclosed liens or forged deeds. It does not cover physical damage or future value changes.

A title that a reasonable buyer would accept without objection, free of serious defects, is a:

• a.Marketable title✓
• b.Color of title without real ownership
• c.Equitable title held by the buyer
• d.Clouded title with unresolved claims

Marketable title is title free from significant defects, liens, or reasonable doubt that a well-informed buyer would accept. Purchase contracts typically require the seller to convey marketable title at closing.

A claim or encumbrance that may impair an owner's title, such as an old unreleased lien, is a:

• a.Constructive eviction of a tenant
• b.Cloud on the title✓
• c.Marketable and insurable title
• d.Valid legal description

A cloud on title is an outstanding claim or encumbrance, such as an unreleased mortgage or a recording error, that could challenge the owner's title. Clouds are often removed through a quitclaim deed or a quiet-title action.

When selling Florida homestead property owned by a married person, the deed generally must be signed by:

• a.Either spouse acting individually
• b.Both spouses, even if only one holds title✓
• c.Only the spouse whose name appears on the deed
• d.The listing broker as attorney-in-fact

Because of Florida's homestead protections, both spouses generally must sign a deed conveying homestead property, even if title is in only one spouse's name. This spousal joinder requirement safeguards the family's homestead rights.

A co-owner who wants to end the co-ownership and force a division of the property may file a court action for:

• a.Escheat back to the state
• b.Novation of the ownership agreement
• c.Partition✓
• d.Subordination of the other owners' shares

Partition is a legal action that allows a co-owner, such as a tenant in common or joint tenant, to divide the property or force its sale and split the proceeds. It provides a remedy when co-owners cannot agree.

The three traditional approaches an appraiser uses to estimate value are the sales comparison, cost, and:

• a.Income approach✓
• b.Gross-profit accounting approach
• c.Assessment ratio approach
• d.Mortgage-equity approach used alone

The three approaches to value are sales comparison, cost, and income. An appraiser applies the approaches relevant to the property type and then reconciles the results into a final opinion of value.

Which approach is generally most reliable for valuing vacant residential land?

• a.Income capitalization approach
• b.Sales comparison approach✓
• c.Cost approach using reproduction cost
• d.Gross rent multiplier method

Vacant land is best valued by the sales comparison approach, analyzing recent sales of similar parcels. The cost approach does not apply well because there are no improvements to cost out, and land itself is not depreciated.

An appraiser valuing a 40-unit apartment complex would rely most heavily on the:

• a.Cost approach with depreciation
• b.Gross living area measurement method
• c.Income approach✓
• d.Sales comparison approach used alone

Income-producing properties such as apartment complexes are best valued using the income approach, which converts net operating income into value using a capitalization rate. Other approaches may support the conclusion.

The cost approach estimates value as:

• a.Net operating income divided by the capitalization rate
• b.The simple average of three recent comparable sales
• c.Gross rent multiplied by the gross rent multiplier
• d.Land value plus the depreciated cost of improvements✓

The cost approach adds the value of the land to the current cost of building the improvements, then subtracts accrued depreciation. It works best for new or special-purpose properties where comparable sales are limited.

Reproduction cost differs from replacement cost in that reproduction cost is the cost to build:

• a.An exact duplicate using the same design and materials✓
• b.A functionally equivalent building with modern materials
• c.The single most profitable building allowed on the site
• d.A structure of any size that physically fits the lot

Reproduction cost is the cost to construct an exact replica of the improvement, using the same design and materials, including any outdated features. Replacement cost is the cost of a building with equivalent utility using current methods.

Land is worth $90,000, the replacement cost of the home is $260,000, and accrued depreciation is $40,000. What is the indicated value by the cost approach?

• a.$310,000✓
• b.$210,000
• c.$390,000
• d.$350,000

Cost approach value equals land plus improvement cost minus depreciation: $90,000 + $260,000 - $40,000 = $310,000. Depreciation is subtracted from the improvement cost, and land is added at its own value.

A building costs $500,000 to reproduce and has an estimated economic life of 50 years. Using the straight-line method, what is the annual depreciation?

• a.$50,000
• b.$5,000
• c.$10,000✓
• d.$25,000

Straight-line (age-life) depreciation divides cost by economic life: $500,000 / 50 = $10,000 per year. This assumes the improvement loses value evenly over its useful life. Land is not depreciated.

A building reproduced at $400,000 has a 40-year economic life. Using the straight-line method, how much depreciation accrues over 8 years?

• a.$320,000
• b.$80,000✓
• c.$10,000
• d.$40,000

Annual depreciation is $400,000 / 40 = $10,000; over 8 years that is $10,000 x 8 = $80,000. The remaining depreciated improvement value would be $400,000 - $80,000 = $320,000.

An appraiser assigns a well-maintained 30-year-old home an effective age of 15 years. Effective age is based on the property's:

• a.Remaining term on the current mortgage loan
• b.Condition and remaining utility, not its actual age✓
• c.Number of years since it last sold on the market
• d.Chronological age as recorded on the deed

Effective age reflects a property's condition and usefulness rather than its literal chronological age. Good maintenance and updates can make effective age lower than actual age, while neglect can make it higher.

A property has effective gross income of $120,000 and operating expenses of $46,000. What is the net operating income?

• a.$74,000✓
• b.$120,000
• c.$46,000
• d.$166,000

Net operating income equals effective gross income minus operating expenses: $120,000 - $46,000 = $74,000. NOI excludes debt service (mortgage payments) and is the figure capitalized in the income approach.

Potential gross income is $100,000 and vacancy and collection losses are 5%. What is the effective gross income?

• a.$50,000
• b.$105,000
• c.$95,000✓
• d.$5,000

Effective gross income equals potential gross income minus vacancy and collection loss: $100,000 - (5% x $100,000) = $100,000 - $5,000 = $95,000. Operating expenses are then subtracted to reach NOI.

A property with net operating income of $60,000 sells for $750,000. What is the indicated capitalization rate?

• a.12.5%
• b.6%
• c.8%✓
• d.0.8%

The capitalization rate equals NOI divided by value: $60,000 / $750,000 = 0.08, or 8%. A higher cap rate generally reflects higher risk and a lower value for the same income.

Using a 6% capitalization rate, what is the indicated value of a property with $48,000 in net operating income?

• a.$2,880
• b.$720,000
• c.$800,000✓
• d.$288,000

In the income approach, value equals NOI divided by the cap rate: $48,000 / 0.06 = $800,000. A lower cap rate produces a higher value for the same net operating income.

A rental home sells for $240,000 and rents for $2,000 per month. What is its monthly gross rent multiplier?

• a.12
• b.20
• c.1,200
• d.120✓

The monthly gross rent multiplier equals price divided by monthly rent: $240,000 / $2,000 = 120. The GRM is a quick screening tool that does not account for operating expenses.

If comparable homes show a monthly GRM of 110 and a subject property rents for $1,800 per month, its indicated value is:

• a.$16,364
• b.$198,000✓
• c.$19,800
• d.$1,980,000

Value equals the GRM times monthly rent: 110 x $1,800 = $198,000. The GRM is derived from comparable sales and applied to the subject's rent to estimate value.

A comparable that sold for $300,000 has a pool worth $15,000 that the subject property lacks. To value the subject, the appraiser adjusts the comparable's price to:

• a.$315,000
• b.$300,000
• c.$285,000✓
• d.$270,000

When a comparable is superior (it has a feature the subject lacks), the appraiser subtracts that value from the comparable: $300,000 - $15,000 = $285,000. Adjustments are always made to the comparables, never the subject.

A comparable sold for $250,000 but lacks a garage worth $12,000 that the subject property has. The adjusted price of the comparable is:

• a.$238,000
• b.$250,000
• c.$262,000✓
• d.$274,000

When a comparable is inferior (it lacks a feature the subject has), the appraiser adds that value to the comparable: $250,000 + $12,000 = $262,000. This makes the comparable equivalent to the subject.

A 2,400-square-foot home sold for $360,000. What is the price per square foot?

• a.$100
• b.$240
• c.$1,500
• d.$150✓

Price per square foot equals sale price divided by area: $360,000 / 2,400 = $150. Price-per-square-foot figures help compare properties of different sizes in the sales comparison approach.

Estimating reproduction cost at $140 per square foot for a 2,000-square-foot home yields a cost of:

• a.$14,000
• b.$280,000✓
• c.$2,800,000
• d.$28,000

Reproduction cost equals area times cost per square foot: 2,000 x $140 = $280,000. This figure is used in the cost approach before subtracting depreciation and adding land value.

A property has operating expenses of $40,000 and effective gross income of $100,000. Its operating expense ratio is:

• a.40%✓
• b.25%
• c.60%
• d.250%

The operating expense ratio equals operating expenses divided by effective gross income: $40,000 / $100,000 = 40%. It measures the share of income consumed by operating costs.