Free UT Real Estate Exam Flashcards

A fixture is personal property so permanently attached that it becomes real property and conveys with the land unless excluded in writing. A trade fixture is installed by a business tenant for commerce and stays personal property the tenant may remove before the lease ends. Consequence: a trade fixture left behind passes to the landlord by accession.

Metes and bounds traces a boundary by direction and distance from a point of beginning and must close back at that point. The rectangular (government) survey uses principal meridians and baselines: a section is 1 square mile or 640 acres, and a township holds 36 sections. Lot and block references a recorded subdivision plat and is the shortest of the three.

Police power regulates land use for public welfare (zoning, building codes) with no payment owed. Eminent domain takes title through condemnation and requires just compensation. Escheat transfers property to the state when an owner dies with no heirs and no will. Taxation is the fourth government power; together they are remembered as PETE.

An easement appurtenant benefits an adjoining dominant tenement and runs with the land to every later owner. An easement in gross benefits a person or company, such as a utility, with no dominant tenement. A license is mere personal permission that the owner can revoke at will. Consequence: only the appurtenant easement automatically transfers on sale.

Joint tenancy needs the four unities of time, title, interest and possession and carries right of survivorship, so a deceased co-owner's share passes to the survivors outside probate. Tenancy in common allows unequal, freely transferable shares that pass to heirs by will or intestacy. Consequence: a joint tenant cannot will away their interest, but selling it severs the joint tenancy as to that share.

Fee simple absolute is the largest estate: unlimited duration, fully inheritable and freely transferable. A life estate lasts only for a measuring life, and the life tenant must not commit waste. Consequence: when the measuring life ends, the property goes to the named remainderman or reverts to the grantor as a reversion, no matter what the life tenant's will says.

Most liens rank by the date and time they were recorded: first in time, first in right. Ad valorem property tax liens and special assessments jump ahead of all private liens regardless of when they attached. Consequence: at a foreclosure sale, unpaid property taxes are satisfied before an earlier-recorded first mortgage, and junior liens can be wiped out with nothing left to pay them.

A general warranty deed carries the full covenants (seisin, right to convey, against encumbrances, quiet enjoyment, further assurance, warranty forever) and covers defects from the entire chain of title. A quitclaim conveys only whatever interest the grantor may have, with no warranties, which is why it is used to clear a cloud on title. Neither protects a buyer who fails to record: recording gives constructive notice to the world.

Market value is the most probable price a property should bring in an arm's-length sale with informed parties, no duress and reasonable market exposure. Market price is what a property actually sold for, which can be distorted by a rushed sale, a family relationship or poor marketing. Consequence: an appraiser estimates value; a closed transaction only establishes price.

Always adjust the comparable, never the subject. If a comp is superior to the subject in a feature, subtract from the comp's sale price; if it is inferior, add. Consequence: the adjusted comp prices bracket the subject's indicated value. This is the primary approach for single-family residences because buyers price homes by substitution.

Value = land value + replacement or reproduction cost new of the improvements - accrued depreciation. Physical deterioration and functional obsolescence (a bad floor plan, outdated systems) may be curable. External or economic obsolescence comes from off-site causes such as a new freeway and is always incurable. Best used for new construction and special-purpose buildings with few comps.

A comparative market analysis is a licensee's pricing opinion drawn from comparable listings and sales. A broker price opinion is a written value opinion usually prepared for a lender or servicer. An appraisal is an independent opinion of value, and only a state-licensed or state-certified appraiser may perform one for a federally related transaction. Consequence: calling a CMA an appraisal invites discipline.

A void contract never had legal effect, usually because its purpose was illegal. A voidable contract is valid and binding until the protected party (a minor, a defrauded buyer) elects to rescind it. An unenforceable contract was validly formed but a court will not enforce it, for example an oral land sale barred by the Statute of Frauds or a claim past the limitations period.

A bilateral contract trades a promise for a promise, so both sides are obligated from the moment of acceptance; a purchase agreement is the classic example. A unilateral contract promises performance in exchange for an act, binding only the offeror until the act is done; an option and an open listing work this way. Consequence: an optionee may simply walk away and forfeit the option fee, while the optionor must stand ready to sell.

Contracts for the sale of real property, and leases longer than one year, must be in writing and signed by the party to be charged before a court will enforce them. Consequence: an oral listing or an oral purchase agreement is unenforceable even when both parties admit it was made, which is why a broker who takes an oral listing usually cannot collect a commission.

Earnest money is the buyer's good-faith deposit, held in a trust account and credited to the buyer at closing. A liquidated damages clause fixes in advance the sum the seller may keep if the buyer defaults, which caps the seller's recovery. Consequence: where liquidated damages are agreed, the seller normally cannot also sue for actual damages or specific performance.

Express agency arises from a written or spoken agreement; implied agency arises from conduct that leads a customer to reasonably believe they are being represented. Agency ends by completion, expiration, mutual agreement, revocation, renunciation, death or incapacity of either party, or destruction of the property. Consequence: the duty of confidentiality survives termination of the agency.

A client is owed care, obedience to lawful instructions, loyalty, disclosure, confidentiality and accounting. A customer is an unrepresented party owed only honesty, fair dealing and disclosure of known material facts. Consequence: telling the other side that your seller will accept less is a breach of loyalty and confidentiality, not merely poor negotiating.

An exclusive right-to-sell pays the listing broker no matter who produces the buyer, including the seller. Exclusive agency pays the broker unless the seller personally finds the buyer. An open listing is non-exclusive and pays only the broker who is the procuring cause. A net listing, where the broker keeps everything above a set price, is a conflict of interest and is prohibited or restricted in most states.

Race, color, religion, national origin, sex (including sexual orientation and gender identity), disability and familial status. Race alone is also protected by the Civil Rights Act of 1866, which has no exemptions at all. HUD investigates administrative complaints, which must generally be filed within one year of the discriminatory act.

Steering directs buyers toward or away from neighborhoods based on a protected class. Blockbusting induces panic selling by suggesting that members of a protected class are moving in. Redlining is a lender's or insurer's refusal to serve an area because of its composition. Consequence: all three are illegal even when the licensee believes they are being helpful, because effect matters more than intent.

The four classic Sherman Act violations are price fixing (agreeing on commission rates), market allocation, group boycotts and tying arrangements. Consequence: commission rates are always negotiable between a broker and a client, and even a hallway conversation with a competing brokerage about the going rate can support a conspiracy claim - penalties are criminal, not just administrative.

For residential housing built before 1978, the seller or landlord must disclose known lead-based paint and hazards, hand over any reports, give the EPA pamphlet, and allow the buyer a 10-day opportunity to inspect or test unless the buyer waives it in writing. Consequence: a licensee who fails to ensure compliance shares liability, and violators can face treble damages.

A latent defect is a known material problem not discoverable by ordinary inspection, such as a cracked foundation behind finished drywall, and it must be disclosed. A patent defect is obvious to a reasonable observer. Consequence: staying silent about a known latent defect is actionable misrepresentation, while an obvious condition the buyer could have seen is generally the buyer's responsibility to investigate.

CERCLA imposes strict, joint and several, and retroactive liability for cleanup on current and past owners and operators, so a buyer who contaminated nothing can still be liable for the full cost. Consequence: a Phase I environmental site assessment done before purchase supports the innocent landowner defense, which SARA added along with the cleanup fund.

In a lien-theory state the borrower keeps title and the lender holds only a lien; in a title-theory state the lender or a trustee holds legal title until the debt is paid. A deed of trust adds a neutral third-party trustee holding title in trust with a power of sale. Consequence: that power of sale usually allows non-judicial foreclosure, which is far faster than the judicial foreclosure a mortgage requires.

The Loan Estimate must be delivered within three business days of a complete application. The Closing Disclosure must be received at least three business days before consummation. Consequence: only three changes restart the three-day waiting period - the APR becomes inaccurate, the loan product changes, or a prepayment penalty is added. Other corrections are made at the table without a new waiting period.

RESPA Section 8 bans kickbacks, fee splits and unearned fees paid for referring business on a federally related mortgage loan. Consequence: a licensee may not accept a gift card or thank-you payment from a title company, lender or home warranty firm for sending business, but may be paid fair market value for services actually performed. Violations carry fines and up to a year in prison.

Memorize 43,560 square feet per acre and 5,280 feet per mile - the Pearson VUE handbook states these are not provided at the test center. A proration question will tell you whether to use a 360-day or 365-day year and whether the day of closing belongs to the buyer or the seller. Calculators are not required but financial calculators without alpha keys are allowed.

Cap rate = net operating income / value, so value = NOI / cap rate and NOI = value x cap rate. NOI is effective gross income minus operating expenses; it never subtracts debt service, depreciation or capital improvements. Consequence: for the same NOI, a higher cap rate produces a lower value, because a higher required return signals greater risk.

In a fully amortized loan every level payment covers the interest accrued on the outstanding balance first, and only the remainder reduces principal. Early payments are mostly interest and the principal share grows each month until the balance reaches zero at maturity. A straight or term loan pays interest only during the term and the entire principal in one balloon at the end.

The Division is the state agency that licenses, audits, investigates and disciplines. The Real Estate Commission is five governor-appointed members - four licensees with at least five years of experience and one public member, with three constituting a quorum - who make rules and set standards with the Division's concurrence. An Association of REALTORS is a private trade group whose Code of Ethics is not state law.

You must be at least 18, hold a high school diploma or GED, and complete 120 classroom hours of Division-approved prelicensing education within the year before licensing. Consequence: you must apply within 90 days of passing both exam portions and within 12 months of finishing the education. Missing the 90 days means retaking the exam; missing the 12 months means retaking the course.

A Utah real estate license is issued for a period of not less than two years. Ongoing renewals require 18 hours of certified CE with at least 9 core topic hours, including the Division's 3-hour mandatory course. Consequence: at the very first renewal a new sales agent instead completes the 12-hour New Sales Agent course, the 3-hour mandatory course and 3 more non-duplicative hours.

A license is required to buy, sell, exchange or offer real estate for another for valuable consideration - even a single act triggers it. Owners dealing in their own property, certain salaried employees of an owner, court-appointed fiduciaries and attorneys acting as attorneys are exempt. Consequence: under 61-2f-409 only a principal broker may bring an action to recover a commission, and no one may sue for compensation on an act that required a license they did not hold.

The principal broker must deposit client money received in a real estate transaction into the brokerage trust account, or with an agreed title company or escrow agent, within three business days of receipt. The three-day rule does not apply if the written agreement says the money is held for a stated period or is deposited upon the seller's acceptance. Consequence: a sales agent never holds funds - they must be delivered to the principal broker immediately.

The trust account must sit in a bank or credit union located in Utah and must be non-interest-bearing unless all parties agree in writing to direct the interest to a qualifying affordable-housing nonprofit. The broker may keep no more than $1,000 of personal funds in it, must reconcile it with the bank statement at least monthly, and must move earned commissions to the operating account within 60 days of closing.

Engaging in property management for another for consideration requires a Utah license, and an affiliated licensee may do it only under their principal broker. Narrow exemptions include a regular salaried employee managing property for a single owner-employer and an on-site manager who receives free or reduced rent at the apartments where they live. When a brokerage regularly manages seven or more units, property management money must be held in a separate property management trust account; six or fewer units may run through the real estate trust account (R162-2f-403b).

Every advertisement must clearly and conspicuously identify the brokerage by the exact name shown on Division records, and a team, group or marketing entity is held to the same standard as an individual licensee. Consequence: a team name may never stand alone, and when an electronic ad has no room for the brokerage name it must link directly to a display that shows it.

A sales agent or associate broker may accept valuable consideration for licensed acts only from the principal broker with whom they are affiliated; the sole exception is a payment instrument prepared by a title insurance agent following the principal broker's written instructions. Consequence: taking a bonus directly from a seller, builder or lender is grounds for discipline, and if the principal broker's license is revoked or suspended, every affiliated licensee's license is automatically inactivated.

Limited agency is Utah's term for dual agency: one brokerage representing both principals in the same transaction. It requires prior informed consent in writing from both parties, explaining that each may instead have a separate agent, what information will be kept confidential and what will be disclosed. Consequence: the limited agent must not reveal anything that would weaken either party's bargaining position, so neither side gets an advocate.

A licensee must disclose that they hold a Division license on initial contact with the other party, disclose the agency relationship on initial contact with another agent in the transaction, and confirm the relationship in writing when a binding sales agreement or a lease or rental agreement is executed. Consequence: the disclosure happens before confidential information changes hands, not at closing.

A Utah licensee may fill in only the blanks on legal forms approved by the Real Estate Commission and the Attorney General, such as the Real Estate Purchase Contract, or forms provided by statute. Consequence: drafting new contract language, writing custom legal provisions or advising on the legal effect of a clause is the unauthorized practice of law and is separate discipline from any contract problem it causes.

A licensee owes the principal loyalty, obedience to lawful instructions, disclosure of any material fact learned about the other party or the transaction, reasonable care, and safekeeping and accounting for entrusted funds. Confidentiality protects information that would weaken the client's bargaining position, but it never covers a known material defect in the property or a party's inability to perform.

A licensee must respond in full within 10 business days when the Division requests information or documents for an investigation, and the Division cannot enforce that duty more than four years after the violation. Separately, a licensee must send the Division a signed statement within 10 business days after a principal broker's bankruptcy filing, after any occupational license anywhere is suspended, revoked, surrendered, canceled or denied, or after a cease and desist order or injunction involving real estate or fraud.

The Division may audit a principal broker's trust accounts at any time and may require records be produced for inspection. Brokerage records - including monthly trust account reconciliations and jointly executed documents - must be kept at least three calendar years after the year an offer is rejected, a transaction closes or fails, or, in a lease transaction, the lease terminates. Consequence: if an audit shows commingling or misuse, the Division may order a CPA audit at the licensee's expense and seek an injunction or receiver.

The fund pays a claimant holding an unpaid final judgment against a licensee for conduct in a real estate transaction, but liability is capped at $15,000 for a single transaction and $50,000 for any one licensee, regardless of how many claimants or parcels are involved. Punitive damages, attorney fees, interest and court costs are excluded. Consequence: the licensee's license is automatically revoked when the fund pays, and they may not reapply until they repay the fund in full with interest.

All water in Utah, above or under the ground, is declared the property of the public; a person acquires only a right to use it by appropriation, and beneficial use is the basis, measure and limit of that right. Priority runs first in time, first in right under the State Engineer. Consequence: a water right appurtenant to land passes to the grantee with the land unless the grantor specifically reserves it or conveys it separately, while shares of stock in a water company are not appurtenant and transfer as stock.

A debit is a charge a party must pay; a credit is an amount in that party's favor. The purchase price is a debit to the buyer and a credit to the seller. Earnest money and new loan proceeds are buyer credits. The payoff of the seller's existing loan and the seller's share of the commission are seller debits. Consequence: seller's net proceeds = total seller credits - total seller debits.

Accrued items the seller has used but not yet paid, such as unpaid property taxes and accrued mortgage interest, are debited to the seller and credited to the buyer. Prepaid items the seller has already paid beyond closing are credited to the seller and debited to the buyer. Consequence: rent collected in advance and tenant security deposits held by the seller are credited to the buyer, because the buyer inherits the obligation to return them.