US Oklahoma Broker License Exam

The fundamental principle guiding a sponsoring broker’s conduct in Oklahoma is their ultimate responsibility for the accuracy and legality of all aspects of a real estate transaction conducted under their license. This duty is established by the Oklahoma Real Estate Commission (OREC) rules and is non-delegable. Even when a third party, such as a title company, prepares the settlement statement (Closing Disclosure), the broker retains the responsibility to review it for accuracy and ensure it reflects the true and complete terms of the agreement between the buyer and seller. A verbal agreement, while potentially made in good faith, is not sufficient for modifying the terms of a real estate closing. Real estate contracts and their modifications must be in writing to be enforceable under the Statute of Frauds. Furthermore, the federal Real Estate Settlement Procedures Act (RESPA) and the TILA-RESPA Integrated Disclosure (TRID) rule mandate that the Closing Disclosure must accurately itemize all charges and credits for both the buyer and seller. Allowing a side agreement or a payment “outside of closing” is a serious violation that circumvents these disclosure laws, misleads the lender who is underwriting the loan based on the figures in the CD, and creates potential liability for all parties. The broker’s primary duty is to ensure compliance and protect the public. Therefore, the correct procedure is to formalize the agreement with a written addendum to the contract. This addendum must then be provided to the lender and the closing agent so that a revised, accurate Closing Disclosure can be prepared and issued to the parties for review before the closing can lawfully proceed. This may cause a delay, but upholding legal and ethical duties to ensure accuracy and full disclosure takes precedence over the convenience of an on-time closing.

No calculation is required for this question. This scenario tests the understanding of different types of fee simple defeasible estates, specifically the distinction between a fee simple determinable and a fee simple subject to a condition subsequent. The language used in the conveyance is critical for determining the nature of the estate granted. A fee simple determinable is created using durational language, such as “so long as,” “while,” or “until,” which causes the estate to terminate automatically upon the happening of a specified event, with the title immediately reverting to the grantor or their heirs. This future interest is called a possibility of reverter. In contrast, a fee simple subject to a condition subsequent is created using conditional language, such as “on the condition that,” “provided that,” or “but if.” When the specified condition occurs, the estate does not automatically terminate. Instead, the grantor or their heirs gain the power to terminate the estate by taking affirmative action, such as making a formal demand or filing a lawsuit to quiet title. This future interest is called a right of re-entry or power of termination. In this case, the deed’s language, “on the express condition that the property be used exclusively for a museum,” creates a fee simple subject to a condition subsequent. Therefore, when the Historical Society ceases to operate the museum, the title does not automatically revert to Odessa’s heirs. The heirs must take legal action to exercise their right of re-entry. Until they successfully do so, the Historical Society continues to hold the fee simple estate.

The legal principle central to this scenario is the concept of uniqueness in real property. Under Oklahoma law, as in most jurisdictions, each parcel of real estate is considered unique and not interchangeable with any other. Consequently, when a seller breaches a valid contract for the sale of real property, monetary damages are often considered an inadequate remedy for the buyer. The buyer contracted for a specific property, not just any property, and financial compensation may not fully account for the loss of that particular piece of real estate, especially one with distinct historical or personal value. The most suitable remedy to provide the buyer with the “benefit of the bargain” is an equitable remedy known as specific performance. A suit for specific performance asks the court to issue an order compelling the breaching party, the seller, to fulfill their obligations under the contract and convey the property as agreed. This remedy is specifically designed for situations where the subject of the contract is unique. Other remedies, such as rescission, would only terminate the contract and return the parties to their pre-contract positions, which would not achieve the buyer’s goal of acquiring the property. Similarly, while compensatory damages could address financial losses, they do not deliver the unique asset itself. Liquidated damages are typically a remedy for the seller in the event of a buyer’s default and are not the primary recourse for a wronged buyer in this context.

Under the Oklahoma Brokerage Relationships Act, a real estate licensee’s duties and responsibilities are defined by statute, not common law agency principles. A key provision of the Act is that a licensee, by default, acts as a transaction broker unless a written agreement establishes a different relationship, such as a single-party broker. The Act specifies the duties a licensee owes to all parties in a transaction, even when acting as a transaction broker without a formal agency relationship. One of the most critical statutory duties owed to any party for whom a broker provides services is the duty to keep confidential information confidential. Confidential information is defined as information that a party would not want disclosed because it could weaken their bargaining position. This explicitly includes a buyer’s willingness to pay a higher price than offered or a seller’s willingness to accept a lower price than asked. This duty is absolute for a transaction broker concerning the parties they are assisting. It is distinct from the duty to disclose adverse material facts about the property itself. The buyer’s financial strategy or maximum price is not an adverse material fact about the property; it is confidential information belonging to the buyer. Therefore, the broker is legally prohibited from revealing this information to the other party or the other party’s agent, as it would violate a core statutory duty owed to the party who shared it. This duty of confidentiality remains in effect even after the transaction is completed or terminated.

No calculation is required for this question. A Phase I Environmental Site Assessment (ESA) is a non-invasive investigation designed to identify potential environmental liabilities associated with a property. It involves reviewing historical records, government databases, and aerial photographs, conducting a site reconnaissance, and interviewing people familiar with the property’s history. The primary goal is to identify Recognized Environmental Conditions (RECs), which are defined as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property due to a release to the environment; under conditions that indicate a release; or under conditions that pose a material threat of a future release. If a Phase I ESA reveals one or more RECs, it does not confirm contamination. Instead, it indicates a potential risk that warrants further investigation. This is the trigger for a Phase II ESA. A Phase II ESA is an intrusive process that involves collecting and analyzing physical samples of soil, groundwater, or building materials. Its purpose is to confirm or deny the presence of contamination suspected in the Phase I report. If contamination is confirmed, the Phase II assessment will also quantify the nature and extent of the contamination. This information is critical for a prospective purchaser to make an informed decision, estimate potential remediation costs, and negotiate the transaction terms. Furthermore, properly conducting these assessments is a key component for a buyer seeking to establish the Innocent Landowner Defense under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which can protect them from liability for pre-existing contamination. A broker’s professional duty is to explain this process and its implications for the client’s risk management and legal liability.

The foundational principle of risk management for a sponsoring broker in Oklahoma is the duty of supervision over their associated licensees. According to the Oklahoma Real Estate Commission (OREC) rules, a broker is responsible for all real estate related activities conducted by their associates. When a potential violation, such as misrepresentation by a provisional sales associate, is discovered after a transaction has closed, the broker’s liability is already engaged. The most critical and immediate action is not to reactively discipline the associate or prematurely engage with third parties, but to control the situation by establishing a factual basis. This requires launching a thorough and documented internal investigation. This investigation should include reviewing all transaction files, correspondence like emails and text messages, marketing materials, and conducting a formal interview with the associate in question. Creating a detailed, factual record is paramount. This internal report serves as the basis for all subsequent risk management decisions, including whether and when to notify the Errors and Omissions insurance carrier, what disciplinary action is appropriate for the associate, and how to approach any potential claims from the aggrieved party. Taking any other step first, such as notifying an insurance carrier without facts or attempting a settlement, would be procedurally unsound and could exacerbate the brokerage’s legal and financial exposure. The investigation is the primary tool for mitigating the existing risk and preventing its escalation.

The core issue involves prioritizing competing claims of involuntary alienation against a single property. The three relevant legal concepts are adverse possession, tax sale, and escheat. In Oklahoma, to establish title by adverse possession, a claimant must prove their possession was actual, open, notorious, exclusive, and hostile under a claim of right for a continuous period of 15 years. The neighbor’s use, based on a mistaken survey, can satisfy the “hostile” requirement as it represents a claim of right adverse to the true owner’s title, even if the mistake was innocent. Therefore, the neighbor has a colorable claim to the 10-foot strip of land. Simultaneously, the property is subject to escheat, the process where title reverts to the state because the owner died intestate and without heirs. However, the most powerful and immediate claim against the entire parcel is the county’s lien for delinquent ad valorem taxes. Under Oklahoma law, property tax liens are superior to almost all other liens and private claims. The county has the statutory authority to initiate a tax foreclosure and sale to satisfy the unpaid taxes. This process is designed to ensure the collection of public revenue and, when completed, typically conveys title free and clear of prior claims and encumbrances, including a potential adverse possession claim that has not yet been perfected in court and the state’s interest in escheat. The tax sale is the primary mechanism that will force the resolution of the title for the whole property.

The core issue rendering the promissory note non-negotiable is its failure to state a “fixed amount of money,” a requirement under Oklahoma’s Uniform Commercial Code (UCC), Title 12A. For an instrument to be negotiable, a subsequent holder must be able to determine the principal amount due by looking only at the face of the document itself. The clause specifying payment as “30% of the net monthly profits” introduces a variable that cannot be determined from the instrument alone. It requires an external inquiry into the cafe’s financial performance. While the provision includes a floor payment of $800, the total amount due each month above this floor is not a fixed, ascertainable sum. This uncertainty violates the “sum certain” principle. The purpose of this requirement is to ensure liquidity and predictability in the secondary market, allowing potential buyers of the note to know exactly what they are purchasing without conducting an audit of the underlying business. The promise is not made conditional on profitability, as a minimum payment is required, and the signature of the maker is presumed to be present. The lack of a specific acceleration clause does not in itself invalidate negotiability, though it is a common feature. The primary defect is the variable payment structure tied to profits, which directly contravenes the “fixed amount” rule for negotiable instruments.

The logical determination of the correct answer is as follows: 1. Identify the governing statute: The Oklahoma Time Share Act (Title 60, Oklahoma Statutes). 2. Define the subject property interest: The Act defines a “timeshare interest” broadly to encompass any right to occupy a unit during separate periods, including fee simple estates, leases, and right-to-use or license arrangements. Therefore, the “vacation license” sold to the Patels falls under the Act’s regulations. 3. Identify the purchaser’s right of rescission: The Act grants a purchaser an unequivocal right to cancel a timeshare purchase contract. This right cannot be waived. 4. Determine the rescission period’s duration and start date: The period is five calendar days. Crucially, the period begins to run from the later of two events: (1) the date the purchase contract is executed, or (2) the date the purchaser receives the public offering statement. 5. Apply the facts from the scenario: The contract was executed on Monday. The public offering statement was received on Wednesday. Wednesday is the later date, so the five-day cancellation period commences on Wednesday. 6. Calculate the deadline: The five-day period includes Wednesday (Day 1), Thursday (Day 2), Friday (Day 3), Saturday (Day 4), and Sunday (Day 5). The right to cancel expires at midnight on the fifth calendar day, which is Sunday. 7. Conclusion: The developer’s claim is false. The Patels’ interest is covered by the Act, and their right to cancel extends until midnight on Sunday. The Oklahoma Time Share Act provides significant consumer protections for individuals purchasing timeshare interests within the state. A key provision of this act is the non-waivable five-day right of rescission. This right allows a purchaser to cancel their purchase contract for any reason without penalty. The definition of a “timeshare interest” under Oklahoma law is intentionally broad to prevent developers from circumventing the regulations by using alternative terminology. It includes not only deeded ownership, known as a timeshare estate, but also any contractual right-to-use, membership, or license agreement that grants occupancy rights for specific periods. The developer’s claim that a “vacation license” is exempt is a direct violation of the Act. Furthermore, the timing of the rescission period is critical. The five-day clock does not begin until the purchaser has both signed the contract and received the legally required public offering statement, whichever occurs later. This ensures the buyer has the mandated disclosure document in hand for the full duration of their cancellation window, allowing for an informed decision. Any notice of cancellation is considered timely if it is delivered by midnight of the fifth calendar day following the start of this period.

The determination of ownership hinges on the legal principles governing the transfer of real property through a deed versus a will in Oklahoma. A will is a testamentary instrument, meaning it only takes effect upon the death of the testator. In contrast, a deed is an inter vivos conveyance, transferring title during the grantor’s lifetime. For a deed to be effective, it must be executed (signed) and delivered by the grantor to the grantee with the intent to immediately pass title. In this scenario, the holographic will, while potentially valid under Oklahoma law, only governs the assets owned by the decedent at the time of her death. If the quitclaim deed was validly delivered to the caregiver before the property owner’s death, the property was no longer part of the decedent’s estate. The act of conveyance removed it from the assets to be distributed through probate. The concept at play is ademption by extinction; the specific gift of real property mentioned in the will fails because the testator no longer owned that property when she died. The fact that the deed was a quitclaim deed is relevant in that it transfers whatever interest the grantor possessed without warranties, but it is still a valid method of conveyance. Furthermore, the recording of the deed after death does not invalidate the transfer. Recording provides constructive notice to the public, but the transfer of title between the grantor and grantee occurs upon valid delivery and acceptance. Therefore, if evidence supports that the grantor intended to pass title when she handed the deed to the caregiver, the caregiver’s ownership claim through the deed would supersede the nephew’s claim through the will.

The property in the scenario exhibits three distinct forms of depreciation. First, the worn roof is a direct result of wear and tear on a physical component of the improvement. This loss in value is categorized as physical deterioration. Because the roof can be replaced, and the cost of replacement is likely less than the value it would add to the property, this is considered curable physical deterioration. Second, the outdated floor plan with four bedrooms served by only one bathroom, along with a single-car garage in an area where two-car garages are the standard, represents a loss in value due to design deficiencies or features that are no longer considered adequate by the market. This is classified as functional obsolescence. The problem is inherent to the property’s design. This could potentially be cured by remodeling, such as adding another bathroom or expanding the garage, but the cost-effectiveness of such a cure would need to be analyzed. Third, the planned construction of a high-traffic distribution center nearby is a negative influence originating from outside the property’s boundaries. The property owner has no control over this external factor. This loss in value is known as external obsolescence, sometimes called economic or locational obsolescence. This type of depreciation is almost always considered incurable from the perspective of the individual property owner. Therefore, a comprehensive analysis must identify and separate these three distinct sources of value loss.

The legal analysis begins by identifying the property’s status as a constitutional homestead under Oklahoma law. The Oklahoma Constitution, specifically Article 12, Section 2, provides stringent protections for the family homestead. This provision mandates that any mortgage, deed, or contract relating to the homestead cannot be valid unless it is in writing and subscribed by both husband and wife, where both are living and not divorced. This requirement is known as the joinder of spouses. The fact that the property title is solely in one spouse’s name is irrelevant; the homestead character of the property is the determining factor. When only one spouse signs a contract to sell the homestead, the contract fails to meet this constitutional mandate. Consequently, the instrument is not merely voidable by the non-signing spouse, but is considered absolutely void from its inception. It has no legal force or effect and cannot be enforced by any party to the agreement. The contract is a legal nullity because it attempts to alienate a constitutionally protected interest without the required consent and signature of both spouses. Therefore, the purchase agreement is void at the moment of its execution.

In a cooperative form of ownership, the entire property, including the land and all the individual apartment units, is owned by a single entity, which is typically a corporation. An individual who wishes to live in the building does not purchase real property. Instead, they purchase shares of stock in the corporation that owns the property. This ownership of shares is considered personal property, not real property. Coupled with the purchase of these shares, the individual receives a proprietary lease. This lease grants the shareholder the exclusive right to occupy a specific unit within the building. Therefore, the resident is both a shareholder in the corporation and a tenant of the corporation. The monthly payment made by the shareholder, often called a maintenance fee or carrying charge, covers their proportionate share of the building’s expenses, including the blanket mortgage on the entire property, real estate taxes, insurance, and operational costs. If a shareholder defaults on these payments, they are in breach of the terms of their proprietary lease. The cooperative corporation’s primary and most powerful remedy is derived from the landlord-tenant relationship established by the lease. The corporation can terminate the proprietary lease due to the default. Following termination, the corporation can initiate eviction proceedings, also known as a summary proceeding, to remove the defaulting shareholder from the unit. This process is generally much faster and less costly than a judicial foreclosure required for real property. Once the corporation regains possession of the unit, it can then sell the corresponding shares to a new, approved buyer to satisfy the debt.

Logical Analysis Framework: Property A (Norman Residence) -> Governed by Will -> Creates Testamentary Trust -> Requires Probate Court Process -> Authority to sell granted to Executor -> Property transferred to Trustee -> Sale. Property B (Edmond Rental) -> Governed by Living Trust Document -> Death of Grantor triggers Successor Trustee -> Immediate Authority for Successor Trustee -> Sale. Conclusion: The authority to act and the timeline for sale are fundamentally different. Property B allows for immediate action by the successor trustee, while Property A is delayed by the mandatory probate court process. A critical distinction for any Oklahoma real estate broker lies in understanding how different types of trusts affect the transfer of real property upon the death of the property owner. When property is held in a revocable living trust, the trust is the legal owner. Upon the death of the grantor, the successor trustee, as named in the trust instrument, immediately gains the authority to manage and dispose of the trust’s assets according to its terms. This process completely bypasses the probate court system, allowing for a swift and private transfer of control. The successor trustee can list and sell the property without needing court approval. Conversely, a testamentary trust is a trust created within a person’s will. It does not exist until the person dies and the will is submitted to the probate court. The property designated for the trust must first go through the entire probate process. An executor is appointed by the court to administer the estate, pay debts, and handle legal notices. Only after the probate process is complete and the court approves the distribution of assets can the property be formally transferred into the testamentary trust. At that point, the appointed trustee can then manage or sell the property. Therefore, a broker cannot immediately list a property destined for a testamentary trust; they must wait for the conclusion of probate and confirmation of the executor’s or trustee’s authority to sell.

The core legal issue revolves around the specific obligations of a landlord or property manager under the federal Fair Credit Reporting Act (FCRA) when they take an “adverse action” against a rental applicant based on information from a consumer report. An adverse action in this context includes denying an application for tenancy. When such a denial occurs, the landlord cannot simply inform the applicant that the decision was based on their report. The FCRA mandates a formal adverse action notice that must contain specific information to protect the consumer’s rights. This notice must include the name, address, and telephone number of the consumer reporting agency (CRA) that furnished the report. It must also include a statement that the CRA did not make the decision to take the adverse action and cannot provide the reasons for it. Critically, the notice must inform the applicant of their right to obtain a free copy of their consumer report from that CRA if they request it within 60 days, and their right to dispute the accuracy or completeness of any information in the report with the CRA. Failing to provide this detailed notice is a direct violation of the FCRA, regardless of whether the landlord’s underlying reason for the denial was legitimate and non-discriminatory. The broker’s action was insufficient because it lacked these legally required disclosures, which are designed to empower the applicant to check their report for errors and understand their rights.

Step 1: Identify the central conflict. The conflict is a dispute between a buyer and a seller over earnest money after a contract termination. Step 2: Identify the broker’s role and governing authority. The broker is a fiduciary holding funds in trust and is governed by the Oklahoma Real Estate Commission (OREC) rules. Step 3: Recall the specific OREC rule for disputed funds. OREC Rule 605:10-13-1(e) dictates the broker’s required actions. The broker must not disburse the funds based on their own interpretation of the contract. Step 4: List the permissible actions for the broker under OREC Rule 605:10-13-1(e). The broker may (1) hold the funds until receiving a signed, written agreement from all parties directing the disbursement, or (2) file an interpleader action in a court of competent jurisdiction, allowing a judge to decide the disbursement. Step 5: Analyze the broker’s considered action. The broker is contemplating releasing the funds to one party (the buyer) based on a unilateral demand and the threat of a lawsuit from that party’s attorney. Step 6: Determine compliance. This action is not a mutually signed agreement nor is it an interpleader action. Therefore, unilaterally disbursing the funds, even under legal pressure, constitutes a violation of the broker’s duty to remain neutral and follow OREC rules for handling disputed trust funds. Under the Oklahoma Real Estate License Code and Rules, a broker holding earnest money in a trust account acts as a neutral stakeholder. When a transaction fails and a dispute arises over the disposition of these funds, the broker is strictly prohibited from making a unilateral decision regarding who is entitled to the money. The broker cannot act as an arbiter or judge, even if the contract terms appear to clearly favor one party. The Oklahoma Real Estate Commission provides specific, mandatory procedures for handling such disputes. The primary and safest course of action is for the broker to hold the funds until all parties to the contract provide a mutual, written release agreeing to the disbursement. If the parties cannot agree, the broker’s proper legal remedy is to file an action of interpleader with the court. This process transfers the funds to the court’s custody and allows a judge to legally determine the rightful recipient, thereby releasing the broker from further liability regarding the funds. Acting on the demand of one party, even under threat of legal action, is a serious breach of fiduciary duty and a violation of commission rules.

In Oklahoma, foreclosure can proceed through two primary paths: judicial and non-judicial. A judicial foreclosure is a lawsuit filed by the lender, where the court supervises the entire process, from the initial filing to the final sale of the property. This method is always available to lenders. A non-judicial foreclosure, also known as a power of sale foreclosure, is permitted only if a “power of sale” clause is explicitly included in the mortgage or deed of trust. This clause contractually authorizes the lender or trustee to sell the property upon default without court supervision, making it a generally faster and less expensive process. The Oklahoma Power of Sale Mortgage Foreclosure Act outlines the strict notice requirements and procedures for this method. However, federal laws can supersede state procedures and contractual agreements. The Servicemembers Civil Relief Act (SCRA) is a critical federal law that provides financial and legal protections to active-duty military personnel. A key protection under SCRA is related to foreclosure. Regardless of whether the mortgage contains a power of sale clause and is in a state that permits non-judicial foreclosure, SCRA prohibits the foreclosure on a servicemember’s property during their period of military service and for one year thereafter without a specific court order. This effectively forces what would have been a non-judicial foreclosure into a judicial proceeding, as the lender must seek the court’s permission to proceed. Other issues, such as the presence of junior liens or a borrower’s bankruptcy filing, introduce procedural complexities like notice requirements or an automatic stay, but they do not inherently convert a non-judicial process into a mandatory judicial one in the same way SCRA does.

Compliance Calculation: 1. Identify the relevant Oklahoma regulation: Oklahoma Administrative Code (OAC) 605:10-9-4, specifically subsections (a) and (b) concerning advertising. 2. Analyze the advertisement’s elements: The team’s name, “The Sooner State Sellers,” is displayed at twice the size of the brokerage’s registered trade name, “Prestige Realty.” 3. Apply the regulatory standard: OAC 605:10-9-4(b) mandates that all advertising by a license associate or a group of associates must be under the direct supervision of their broker and that the broker’s trade name shall be featured more prominently than the associate’s name. 4. Determine the conclusion: The advertisement is in direct violation of the prominence requirement. The supervising broker, Kenji, is ultimately responsible for ensuring all advertising originating from the brokerage or its associates is compliant with Commission rules. The primary issue is the subordination of the brokerage’s identity to the team’s identity in the marketing materials. The Oklahoma Real Estate License Code and Rules place a strong emphasis on clear and non-misleading advertising to protect the public. A core principle is that the public must always be able to identify the licensed brokerage firm that is ultimately responsible for the real estate services being offered. To this end, OAC 605:10-9-4 stipulates that any advertisement, regardless of the media used, must be done under the broker’s direct supervision. A critical component of this rule is the prominence requirement. The registered trade name of the brokerage must be displayed more conspicuously than the name of any sales associate or real estate team. In the described scenario, making the team name significantly larger than the brokerage name creates a misleading impression that the team is an independent entity or the primary firm. This is a clear violation. The responsibility for correcting this and for any potential penalties from the Oklahoma Real Estate Commission falls upon the supervising broker, as they are accountable for all actions, including advertising, performed by their associated licensees.

The deed’s language, “on the express condition that” coupled with the specific reservation of a “right to re-enter and repossess,” creates a Fee Simple Subject to a Condition Subsequent. This type of defeasible fee estate does not terminate automatically when the specified condition is violated. Instead, the violation of the condition gives the grantor, or the grantor’s heirs, a future interest known as the power of termination or right of re-entry. This power is not self-executing. The grantor or their heirs must take affirmative legal action, such as filing a lawsuit to quiet title or physically re-entering the property, to terminate the grantee’s estate. Therefore, at the moment the historical society breached the condition by leasing the barn, their estate did not automatically end. They continued to hold the fee simple title, but it became subject to being defeated by the future action of Silas’s heirs. Until the heirs successfully exercise their power of termination, the society remains the legal owner of the property. This is the critical distinction from a Fee Simple Determinable, which uses durational language like “so long as” or “until” and results in an automatic reversion of title to the grantor upon the occurrence of the stated event, without any action required from the grantor.

The core principle being tested is the identification of a “triggering term” under the federal Truth in Lending Act (TILA), as implemented by Regulation Z. This law is designed to ensure that when creditors advertise specific credit terms, they provide a complete and accurate picture of the cost of that credit to avoid misleading consumers. An advertisement that includes a triggering term must also provide a set of full disclosures. Triggering terms are specific statements about credit, such as the amount or percentage of a down payment (e.g., “10% down” or “$15,000 down”), the number of payments or the repayment period (e.g., “360 monthly payments”), the specific dollar amount of any payment (e.g., “payments of $1,200”), or the dollar amount of any finance charge. In this scenario, the phrase “Secure this home with only a $15,000 down payment!” explicitly states the amount of the down payment. This is a classic example of a triggering term. Consequently, using this phrase legally obligates the advertiser to also clearly and conspicuously disclose the amount or percentage of the down payment, the terms of repayment over the full life of the loan, and the Annual Percentage Rate (APR). Conversely, general, non-specific phrases like “flexible financing options” or “low-interest loan” are not triggering terms because they do not state a specific credit term. Similarly, stating the Annual Percentage Rate by itself is not a triggering term; in fact, the APR is one of the required disclosures when a triggering term is used. Therefore, an advertisement that contains a specific down payment amount without the other required disclosures is in violation of TILA’s advertising regulations.

The core of this problem rests on a broker’s dual responsibilities under the Oklahoma Real Estate License Code and Rules: the duty to disclose known material defects and the duty to advise clients to seek expert counsel. First, the broker, Chen, personally observed what appears to be significant mold in the utility closet. This observation constitutes actual knowledge of a potential material defect, as mold can affect the property’s value and the health of its occupants. Under Oklahoma law, a licensee has an affirmative duty to disclose all known material defects to all parties in the transaction. This duty is independent of the seller’s disclosures. Simply relying on the seller’s statement that it is “minor” would be a breach of this duty. Second, the seller’s disclosure regarding the former meth lab is a major red flag. While the seller has disclosed their knowledge, the key issue is the lack of certified remediation. Oklahoma has specific, stringent protocols managed by the Department of Environmental Quality for decontaminating properties used as clandestine drug labs. A seller’s personal “cleanup” does not meet these legal standards. Therefore, the property’s legal status for habitation is in question. Chen’s professional obligation is not to confirm the contamination but to disclose the known facts and strongly advise the buyer to perform their due diligence by hiring certified professionals to conduct both a mold assessment and a meth lab contamination test to verify the property’s safety and legal compliance before proceeding.

The correct course of action is for the broker, Leto, to maintain confidentiality. Under the Oklahoma Broker Relationships Act, when two different associates within the same brokerage represent the seller and the buyer respectively, this does not create a dual agency situation for the associates. Alia remains a single agent for the seller, and Gurney remains a single agent for the buyer. Each owes full fiduciary duties, including confidentiality, to their respective client. The sponsoring broker, Leto, has a supervisory role. A key duty of the broker in this situation is to ensure that confidential information is not shared between the two associates. The information Leto acquired about the seller’s financial distress was obtained from an external source, not through the agency relationship with the seller. However, a seller’s financial situation and motivation are classic examples of confidential information. Disclosing this information to the buyer’s agent would undermine the seller’s negotiating position and would be a breach of the duty of loyalty and confidentiality that the brokerage, through its agent Alia, owes to the seller Duncan. Leto’s primary responsibility is to supervise his agents and maintain the integrity of the separate representations. He must not personally breach the confidentiality that is owed to one client, even to assist the other client. The duty of honesty does not extend to disclosing confidential information of a client. The structure is designed to function with a “wall” between the agents, and the broker must uphold that structure.

A post-tensioned slab foundation is a specific type of slab-on-grade construction highly suitable for areas with expansive soils, such as the red clay prevalent throughout much of Oklahoma. In this system, high-strength steel cables, or tendons, are placed in a grid pattern within the formwork before the concrete is poured. After the concrete has cured to a specific strength, these tendons are hydraulically jacked and tensioned from the edges of the slab. This tensioning process places the entire concrete slab under a state of compression. This internal compressive force actively counteracts the tensile forces that develop when expansive soil swells and pushes upward or shrinks and settles, which would otherwise cause a conventional slab to crack and fail. This method significantly increases the foundation’s strength and resistance to differential movement, protecting the structural integrity of the home built upon it. Similarly, roofing materials are a critical consideration in Oklahoma due to the high frequency of severe weather, particularly hail. A Class 4 impact rating, determined by the UL 2218 standard, is the highest available for roofing materials. To achieve this rating, the material must withstand impacts from a two-inch steel ball dropped from twenty feet without splitting or tearing. This superior durability makes Class 4 shingles far more resistant to hail damage than standard architectural shingles, reducing the likelihood of costly roof replacements after a storm. Many insurance carriers in Oklahoma offer substantial premium discounts for homes with Class 4 rated roofs, providing a direct and ongoing financial benefit to the homeowner in addition to the enhanced protection.

The core of this issue lies in the interpretation of Section 8 of the Real Estate Settlement Procedures Act (RESPA). This section prohibits giving or accepting any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person. In this scenario, the title company’s sponsorship of the client appreciation event is a “thing of value.” The brokerage’s agreement to prominently feature and verbally recommend the title company constitutes an “agreement or understanding” for the “referral of business.” The critical factor is whether the payment (the sponsorship) is solely for legitimate marketing and advertising services at fair market value, or if it is, in fact, a payment for referrals. A large-scale event sponsorship, coupled with an explicit understanding of verbal recommendations, creates a strong inference that the payment is for the referrals themselves, not just for the advertising exposure. The value of the sponsorship would likely be seen as disproportionate to the fair market value of having a logo on a banner and a verbal mention. Therefore, this arrangement creates a significant risk of being deemed an illegal kickback scheme under RESPA Section 8, as it appears to be a disguised payment for the referral of settlement service business. The absence of a written contract or forcing a client to use the service does not negate the potential violation, as RESPA covers oral agreements and patterns of conduct.

No calculation is required for this question. The fundamental concept tested here is the nature of real property as a “bundle of rights” and the principle that these rights are severable. In Oklahoma, as in other states, a fee simple ownership of real property includes the rights of possession, control, enjoyment, exclusion, and disposition. However, a property owner can convey, lease, or reserve certain rights, effectively unbundling them. When a property is purchased, the buyer acquires only the rights that the seller possessed and conveyed, subject to any pre-existing encumbrances or reservations. In this scenario, two significant rights were severed from the bundle before the new owner acquired the property. First, the subsurface mineral rights were leased. In Oklahoma, the mineral estate is often considered dominant, meaning the mineral rights owner or lessee has an implied right to use the surface as is reasonably necessary to explore for and extract the minerals. This right of surface use is an encumbrance on the surface estate. Second, the original owner retained an express easement, which is a non-possessory right to use a portion of the land for a specific purpose. This easement runs with the land and binds subsequent owners. Therefore, the new owner’s rights of exclusion and enjoyment are not absolute. They are limited by the legally established rights of the mineral lessee and the easement holder. The new owner cannot unilaterally prevent the reasonable exercise of these prior rights.

The capitalization rate for each property is calculated using the formula: Capitalization Rate = Net Operating Income / Property Value. For the Tulsa property: \[ \text{Cap Rate} = \frac{\$120,000}{\$1,500,000} = 0.08 \text{ or } 8.0\% \] For the Lawton property: \[ \text{Cap Rate} = \frac{\$115,000}{\$1,045,455} \approx 0.11 \text{ or } 11.0\% \] The capitalization rate, or cap rate, is a fundamental concept in commercial real estate used to indicate the rate of return that is expected to be generated on a real estate investment property. It is a measure of an investor’s potential return on their investment and serves as a crucial indicator of market-perceived risk. A lower capitalization rate generally implies that the market perceives the investment as having lower risk and or greater potential for future growth in income and value. Investors are willing to pay a higher price for each dollar of net operating income, signaling confidence in the stability and future prospects of the asset and its market. This is often characteristic of properties in prime locations or in economically robust and diverse metropolitan areas. Conversely, a higher capitalization rate suggests that investors perceive a higher level of risk and demand a greater return to compensate for it. This perceived risk could stem from factors like economic uncertainty in the area, less predictable tenancy, or limited prospects for future appreciation. Therefore, the market assigns a lower value to each dollar of income generated by the property. The relationship between perceived risk and the cap rate is inverse; as perceived risk decreases, the cap rate tends to decrease, and as perceived risk increases, the cap rate tends to increase.

The calculation to determine the annual ad valorem tax liability is as follows. First, determine the assessed value of the property. In Oklahoma, the assessment ratio for real property is set by statute and must be between 11% and 13.5% of the fair cash value. Assuming an assessment ratio of 12% for this commercial property, the assessed value is calculated. \[ \$500,000 \text{ (Fair Cash Value)} \times 0.12 \text{ (Assessment Ratio)} = \$60,000 \text{ (Assessed Value)} \] Next, the annual tax is calculated by applying the total millage rate to the assessed value. A mill is one-tenth of one cent, so 110 mills is equivalent to a tax rate of 0.110. \[ \$60,000 \text{ (Assessed Value)} \times \frac{110}{1000} = \$6,600 \text{ (Annual Tax Liability)} \] This unpaid amount of \( \$6,600 \) forms the basis for the ad valorem tax lien. In Oklahoma, ad valorem property tax liens hold a special, superior priority over all other types of liens, regardless of when those other liens were recorded. This principle is a critical exception to the general rule of “first in time, first in right,” which typically governs lien priority. The state legislature has granted this super-priority to ensure the collection of tax revenues, which are essential for funding local government services like schools, police, and fire departments. Therefore, even if a mortgage was recorded many years prior to the tax delinquency, the subsequent ad valorem tax lien will take precedence. If the property is sold at a tax sale to satisfy the delinquent taxes, the sale will extinguish all junior liens, including the pre-existing first mortgage. The purchaser at the tax sale receives a tax deed, which conveys title free and clear of the prior mortgage and other encumbrances. This underscores the significant risk that delinquent property taxes pose to mortgage lenders and other lienholders.

Let the Cost to Cure (C) be the expense of acquiring the land and building the required parking structure, estimated at \(\$1,800,000\). Let the anticipated Increase in Value (V) that would result from curing the defect be \(\$1,100,000\). The determination of curability is based on economic feasibility. The condition is considered incurable if the cost to cure is greater than the value that the cure adds to the property. Calculation: \[ C > V \] \[ \$1,800,000 > \$1,100,000 \] Since the cost to cure is greater than the resulting increase in value, the depreciation is classified as incurable. Depreciation in real estate appraisal refers to a loss in value from any cause. It is categorized into three types: physical deterioration, functional obsolescence, and external obsolescence. External obsolescence, also known as economic obsolescence, is a loss of value resulting from factors outside of the subject property’s boundaries. These factors are typically beyond the control of the property owner. Examples include changes in zoning or building codes, proximity to environmental nuisances, or negative economic shifts in the area. A key aspect of analyzing any form of depreciation is determining if it is curable or incurable. This distinction is not based on whether a physical fix is possible, but on economic feasibility. A defect is considered curable if the cost to correct it is less than or equal to the increase in property value that would result from the correction. Conversely, a defect is incurable if the cost to fix it exceeds the value it would add. In the given scenario, the value loss stems from a new municipal ordinance, which is a factor external to the property. The analysis shows the cost to comply with the ordinance is significantly higher than the value that compliance would add. Therefore, even though a physical solution exists, the condition is classified as incurable external obsolescence from an appraisal standpoint.

This question does not require a mathematical calculation. The core principle of advertising under the Oklahoma Real Estate Commission (OREC) rules is to prevent any public confusion about who is providing the licensed real estate services. All advertising, regardless of the medium, must be done in a manner that clearly and conspicuously identifies the licensee’s sponsoring broker. This is to ensure the public knows they are dealing with a regulated entity. An advertisement that only features a sales associate’s name, a team name, or a personal logo without the broker’s official trade name is considered a “blind advertisement” and is a serious violation. The OREC rules stipulate that the broker’s trade name must be included in all advertisements and must be prominent. While team names are permitted, they cannot be more prominent than the broker’s name, nor can they imply that the team is a separate real estate brokerage. The fundamental requirement is that the public can easily identify the brokerage firm responsible for the advertisement and the licensee. Failing to include the broker’s name is a direct violation of this foundational rule, making the advertisement non-compliant, irrespective of other elements like team name registration or the inclusion of individual contact information. This rule applies universally across all forms of advertising, from yard signs and print ads to social media posts and websites.

The core of this scenario involves the interaction between a standard alienation clause, also known as a due-on-sale clause, and the specific rules governing VA-guaranteed loans. An alienation clause typically gives a lender the right to demand full payment of the remaining mortgage balance if the property is sold or transferred. However, federal law governing VA loans creates a significant exception. VA loans are generally assumable, meaning a buyer can take over the seller’s existing loan, often preserving a favorable interest rate. This right of assumption applies even if the buyer is not a veteran. The lender cannot unilaterally invoke the alienation clause to block the sale simply because the property is being transferred. However, the assumption is not automatic. The prospective buyer must be deemed creditworthy and must qualify for the loan under the lender’s and the VA’s standards. The most critical element for the original veteran borrower is the release of liability. If the veteran seller allows the buyer to assume the loan without obtaining a formal release of liability from the lender and the VA, the veteran remains secondarily liable. This means if the new buyer defaults on the loan, the lender and the VA can seek repayment from the original veteran borrower. Therefore, the lender’s power is not to block a qualified assumption but to approve the new borrower, and the veteran’s primary risk is remaining liable without a formal release.