US Alaska Broker License Exam Set Two

The calculation to determine the semi-annual property tax is as follows: First, identify the correct value for taxation, which is the assessed value, not the market value. Assessed Value = \(\$920,000\) Mill Levy = \(16.8\) mills Second, convert the mill levy into a decimal tax rate. A mill is one-thousandth of a dollar (\(1/1000\)). \[ \text{Tax Rate} = \frac{16.8}{1000} = 0.0168 \] Third, calculate the total annual property tax by multiplying the assessed value by the decimal tax rate. \[ \text{Annual Tax} = \$920,000 \times 0.0168 = \$15,456 \] Finally, since the question asks for the semi-annual tax payment, divide the annual tax by two. \[ \text{Semi-Annual Tax} = \frac{\$15,456}{2} = \$7,728 \] Property tax calculations in Alaska are based on the assessed value of a property as determined by the local municipal assessor’s office, not on its current market value or a recent appraisal for a loan. The assessed value is the foundation upon which the tax liability is built. The tax rate itself is expressed as a mill levy, or millage rate. One mill represents one dollar of tax for every one thousand dollars of assessed value. To use the mill levy in a standard calculation, it must be converted into a decimal format by dividing the mill number by one thousand. Multiplying this resulting decimal tax rate by the property’s total assessed value yields the full annual tax obligation. Many municipalities, for the convenience of the taxpayer, split this annual obligation into two equal payments. Therefore, to find the amount for a single semi-annual installment, the calculated total annual tax must be divided by two. It is a critical distinction for a licensee to understand that market fluctuations do not immediately alter the tax bill; only the official assessed value and the set mill levy do.

The core issue is the enduring fiduciary duty of confidentiality owed to a former client within a designated agency framework under Alaska law. The brokerage, through its licensee Ben, previously represented Mr. Chen. During this representation, Ben acquired confidential information: Mr. Chen’s financial distress and his minimum acceptable price. According to Alaska Statute 08.88.625, the fiduciary duty of confidentiality survives the termination of an agency relationship. This means that even though the listing agreement with Mr. Chen has expired, the brokerage and its designated agent, Ben, are still legally bound to protect his confidential information. The current situation involves another licensee, Chloe, from the same brokerage representing a buyer for that same property. This creates a potential conflict. However, Alaska law permits designated agency precisely to manage such in-house transactions by creating a firewall between the designated agents. The supervising broker, Anya, has a critical supervisory responsibility under 12 AAC 64.115 to ensure all licensees comply with state law. When she learns that Chloe is attempting to solicit confidential information from Ben, her primary legal obligation is to actively prevent the breach of confidentiality. She must instruct Ben not to disclose the information and educate Chloe that her actions are improper and violate the duty owed to the former client, Mr. Chen. This action upholds the integrity of the designated agency model and ensures compliance with the enduring duty of confidentiality.

Alaska water law is governed by the doctrine of prior appropriation, as established by the Alaska Water Use Act. This legal framework is fundamentally different from the riparian rights system used in many other states. Under prior appropriation, the right to use water is not tied to land ownership adjacent to the water source. Instead, rights are acquired by diverting water and applying it to a beneficial use. The core principle is “first in time, first in right,” meaning the first person to obtain a legal right to the water has priority over those who obtain rights later. In Alaska, a water right must be perfected by obtaining a permit from the Department of Natural Resources (DNR). An application is filed, and if the DNR determines the proposed use is beneficial and will not harm the public interest or the rights of prior appropriators, it issues a permit. Upon completion of the water project and verification of the beneficial use, the DNR issues a certificate of appropriation, which is the final proof of the water right. A person who has used water for many years without a permit has an unadjudicated, unperfected claim. This historical use does not, by itself, grant a legally defensible right against someone who later obtains a formal, permitted water right from the same source. The permitted right, even if its priority date is more recent than the start of the unpermitted use, is considered the senior and superior right in the eyes of the law. Therefore, in a conflict during a water shortage, the holder of the DNR-issued certificate of appropriation is entitled to their full allotment of water before the unpermitted user can take any.

The tenant, Lena, retains the right to exercise her option to purchase the property at the predetermined price, but she would be acquiring it in its current, post-earthquake condition. An option to purchase is a unilateral contract where the seller (optionor) grants the buyer (optionee) the exclusive right to purchase a property under specified terms within a certain timeframe. When the optionee decides to exercise the option, it becomes a bilateral purchase and sale agreement. The core of this issue revolves around the concept of risk of loss. Under Alaska law, and general real estate principles, unless the contract stipulates otherwise, the risk of loss from damage or destruction remains with the seller until legal title or possession is transferred to the buyer. However, the option contract binds the seller to sell the property as it exists at the time the option is exercised. The landlord is not obligated to restore the property to its original condition before the sale. The tenant’s right is to enforce the purchase of the real property interest as it currently stands for the price agreed upon in the option. Therefore, Lena can compel Greg to sell her the damaged property for the fixed price, and the cost of repairs would become her responsibility after the purchase. The damage does not automatically void the contract nor does it compel the landlord to make repairs prior to closing the sale based on a standard option agreement.

The core of this problem rests on understanding the purpose of federal lending laws, specifically the Truth in Lending Act (TILA) and its integration with the Real Estate Settlement Procedures Act (RESPA) through the TILA-RESPA Integrated Disclosure (TRID) rule. The primary goal is to ensure consumers can make an informed comparison of loan products. Logical Deduction: 1. Two loans are presented with different structures: one with a low nominal interest rate and high upfront fees (points, origination fees), and another with a higher nominal rate but low fees. 2. TILA mandates the disclosure of the Annual Percentage Rate (APR). The APR is designed to be a comprehensive “cost of credit” metric. It incorporates the nominal interest rate PLUS most upfront finance charges, such as points and origination fees, amortized over the life of the loan. 3. Simply comparing nominal interest rates is misleading because it ignores the impact of these upfront fees. A loan with a lower rate could have a higher overall cost if the fees are substantial. 4. The TRID rule requires lenders to provide a standardized Loan Estimate (LE) form to applicants within three business days. This form prominently displays the APR, allowing for a direct, apples-to-apples comparison of different loan offers. 5. Therefore, the most critical and legally sound advice is to use the APR as presented on the official Loan Estimate forms from each lender to determine the true, long-term cost of each loan. The Truth in Lending Act, implemented by Regulation Z, exists to protect consumers in their dealings with lenders and creditors. Its central tenet is the mandated disclosure of the total cost of credit, which allows a borrower to compare offers from different lenders effectively. The single most important metric for this comparison is the Annual Percentage Rate, or APR. The APR is not the same as the nominal interest rate; it represents the true annual cost of borrowing by factoring in the interest rate along with other finance charges, such as loan origination fees, discount points, and mortgage insurance premiums. A loan with a deceptively low advertised interest rate might carry high upfront fees, resulting in a higher APR and a more expensive loan over its term. The TILA-RESPA Integrated Disclosure rule streamlines this process by requiring lenders to use the standardized Loan Estimate form. This form clearly and consistently presents all key loan terms, including the APR, enabling a straightforward comparison. A broker’s fiduciary duty to their client includes guiding them to understand and utilize these federally mandated tools to make a fully informed financial decision, steering them away from potentially misleading advertisements that focus only on the nominal rate.

The primary challenge is that the property’s failure to meet the Alaska Housing Finance Corporation’s (AHFC) energy efficiency standards directly prevents the client from accessing the most advantageous financing terms available in the state, even though she qualifies for a zero-down payment VA loan. The analysis proceeds as follows. The client, a veteran with limited savings, is an ideal candidate for a VA-guaranteed loan, which typically requires no down payment and eliminates the need for private mortgage insurance. This addresses her initial capital constraint. However, her goal is to secure the most favorable loan terms possible, which in Alaska often involves participating in programs offered by the Alaska Housing Finance Corporation. AHFC provides various benefits, such as lower interest rates or energy efficiency rebates, but these are frequently contingent upon the property meeting a specific Building Energy Efficiency Standard (BEES). The scenario states the older home does not currently meet these standards. Therefore, the property’s physical condition and its energy rating become the most significant impediment. While she can likely secure a standard VA loan, as long as the property meets the VA’s own less stringent Minimum Property Requirements (MPRs), she cannot access the superior, cost-saving AHFC programs without first addressing the energy deficiencies. This makes the property’s condition, specifically in relation to state-level financing prerequisites, the central and most critical challenge to achieving her overall financing objectives. Other factors are secondary to this primary qualification barrier for enhanced terms.

The core issue revolves around a real estate broker’s non-delegable duty to disclose known material facts, as mandated by Alaska law. Under Alaska Statute 08.88.351, a licensee must disclose to all parties in a transaction any known adverse material facts concerning the physical condition of the property. This duty is independent of the seller’s disclosure obligations under AS 34.70.010 (Residential Real Property Transfer Disclosure Statement). Even if the seller, Ben, omits the information from the official disclosure form, the broker, Anya, who has actual knowledge of the potential defect, is not absolved of her responsibility. The fact that the seller claims the issue is “fixed” without documentation does not negate its status as a material fact that a potential buyer would want to know. The duty to disclose a known adverse material fact supersedes the fiduciary duty of confidentiality owed to the seller client in this specific circumstance. Furthermore, the designated agency structure does not insulate the supervising broker from this fundamental disclosure requirement. While the designated licensee, David, owes fiduciary duties to the buyer, Anya, as the supervising broker and a neutral dual agent in this context, has an overarching statutory obligation to ensure fair and honest dealing, which includes disclosing known material defects to all parties. Her primary legal obligation is to ensure the disclosure happens, either by persuading the seller to amend the disclosure or by making the disclosure herself if the seller refuses.

The initial ownership structure is a joint tenancy among Anya, Boris, and Chen. Each holds an equal one-third interest. A key feature of joint tenancy is the right of survivorship, which requires the four unities of possession, interest, time, and title. When Boris conveys his one-third interest to Daria, the unities of time and title are broken for that specific share. This action severs the joint tenancy with respect to Boris’s original interest. Consequently, Daria takes title as a tenant in common, holding a one-third interest. However, the original joint tenancy between the remaining co-owners, Anya and Chen, is not affected. They continue to hold their combined two-thirds interest as joint tenants with each other. The right of survivorship remains intact between Anya and Chen. When Anya subsequently dies, her one-third interest is subject to the right of survivorship that she shared with Chen. Therefore, her interest automatically passes to Chen, the surviving joint tenant. Anya’s interest does not pass to her heir, Erik, through her will, because the right of survivorship takes legal precedence over testamentary dispositions. After Anya’s death, Chen’s ownership interest becomes his original one-third share plus Anya’s one-third share, for a total of a two-thirds interest. Daria still holds her one-third interest as a tenant in common. At this point, the joint tenancy is fully terminated, and Chen and Daria hold the property as tenants in common.

The core responsibility of a property manager in Alaska, when faced with a habitability issue like an active water leak, is governed by the Alaska Uniform Residential Landlord and Tenant Act (AURLTA), specifically AS 34.03.100 which outlines the landlord’s duty to maintain fit premises. This duty requires prompt action to protect the tenant’s health and safety and to preserve the property. The most critical initial step is triage: addressing the immediate threat to the tenant and mitigating the source of the damage concurrently. This involves dispatching an emergency vendor to stop the cause of the problem, such as an ice dam causing a leak, to prevent further structural damage and water intrusion. Simultaneously, the manager must engage with the affected tenant to assess the extent of the interior damage, address their immediate safety, and explain the remedial steps being taken. This immediate, dual-pronged response fulfills the legal duty of care to the tenant while also acting in the best interest of the property owner by mitigating a larger, more costly repair. All actions, communications, and observations must be meticulously documented. Notifying the property owner is a crucial subsequent step, but it should not precede the initiation of emergency mitigation efforts, as any delay could exacerbate the damage and increase liability for both the owner and the manager. The management agreement typically authorizes the manager to make emergency repairs up to a certain monetary threshold without prior owner approval precisely for these situations.

The fundamental issue in this scenario is securing legal access to water for a new, large-scale agricultural use in Alaska. Alaska’s water law is governed by the doctrine of prior appropriation, as established by the Alaska Water Use Act. This legal framework dictates that the right to use water is not inherent to land ownership, unlike in states that follow riparian or littoral doctrines. Instead, water is considered a public resource managed by the state. A person, corporation, or government agency must apply for and receive a permit from the Alaska Department ofNatural Resources (DNR) to legally appropriate, or divert, water for a beneficial use. The principle of “first in time, first in right” applies, meaning earlier permits have priority over later ones. In the given situation, the seller’s historical, unpermitted use for a small garden does not establish a transferable water right sufficient for Anya’s large-scale agricultural development. While some pre-1966 uses may have been grandfathered in, Anya’s intended use is new and substantially larger, requiring a new appropriation. Relying on the seller’s history, riparian assumptions, or amendments to the land’s legal description would be incorrect and legally precarious. The only way for Anya to secure a legally defensible right to the quantity of water needed for her project is to go through the formal state process. Therefore, the most critical step and the most prudent advice a broker could offer is to make the purchase agreement contingent on successfully obtaining a new water rights permit from the DNR for the specified agricultural purpose. This protects the buyer’s investment and ensures the viability of her development plans.

\[ \$450,000 \text{ (Purchase Price)} \times 0.035 \text{ (FHA Minimum Down Payment)} = \$15,750 \text{ (Down Payment)} \] \[ \$450,000 \text{ (Purchase Price)} – \$15,750 \text{ (Down Payment)} = \$434,250 \text{ (Initial Loan Amount)} \] In Alaska, the most common security instrument for real estate loans is the deed of trust. This instrument involves three parties: the trustor (borrower), the beneficiary (lender), and the trustee (a neutral third party). When a borrower defaults, the beneficiary can instruct the trustee to begin foreclosure proceedings. Alaska law permits non-judicial foreclosure, also known as foreclosure by power of sale, which is governed by Alaska Statute 34.20. This process is significantly different from a judicial foreclosure. The trustee’s role is paramount and defined by statute, not by a direct agency relationship with the lender. The trustee holds a duty of fairness and impartiality to both the trustor and the beneficiary. Their primary obligation is to meticulously follow the procedural requirements set forth in the law. This includes recording a formal notice of default in the district where the property is located, mailing copies of the notice to the trustor and any junior lienholders of record, and publishing the notice of sale for a specified period. The trustee must ensure every step, from the initial notice to the final auction, is conducted in strict compliance with the statute. Any deviation can render the foreclosure sale voidable. This statutory adherence ensures the property is sold fairly and legally, protecting the interests of all involved parties without court intervention.

The fundamental operational distinction between a mortgage banker and a mortgage broker lies in the source of funding for the loan. A mortgage banker is a direct lender. This means the institution uses its own funds, or more commonly, a warehouse line of credit, to underwrite, approve, and fund the mortgage at the closing table. The loan is originated in the mortgage banker’s name. After the loan is closed, the mortgage banker’s primary business model is to sell the loan to an investor on the secondary mortgage market, such as Fannie Mae, Freddie Mac, or a private institution. This sale replenishes the banker’s capital, allowing them to originate more loans. In many cases, the mortgage banker may retain the mortgage servicing rights, meaning they continue to collect the borrower’s monthly payments, manage the escrow account, and handle customer service for a fee, creating an ongoing revenue stream even after the loan is sold. In contrast, a mortgage broker does not lend money. A broker acts as an intermediary or a liaison, connecting the borrower with various wholesale lenders who actually provide the funds. The broker’s role is to take the borrower’s application, gather the necessary documentation, and shop for the best loan terms among their network of lenders. The loan is ultimately underwritten and funded by the chosen wholesale lender, and the transaction closes in that lender’s name, not the broker’s. The broker is compensated for their services with a fee at closing and has no further involvement with the loan after it is funded. Therefore, the critical difference is that one entity funds the loan directly while the other facilitates the connection to the funding source.

The core of this scenario revolves around the interplay between a standard habendum clause and a Pugh clause within an Alaskan oil and gas lease. The habendum clause typically defines the lease duration, extending it beyond the primary term as long as oil or gas is produced in paying quantities from any part of the leased premises. Under this clause alone, production on a small portion, such as the 40-acre unit, would be sufficient to maintain the lease over the entire 640-acre parcel indefinitely. However, the inclusion of a Pugh clause fundamentally alters this outcome. A Pugh clause is a provision negotiated by the lessor to prevent a lessee from holding a large area of land with minimal production. It severs the lease horizontally, meaning at the end of the primary term, the lease expires for all acreage that is not part of an established, producing unit. In this case, the primary term is ten years, and production is only established on a 40-acre unit. When the ten-year term expires, the Pugh clause is triggered. Consequently, the lease continues only for the 40 acres actively held by production. The lease on the remaining, non-producing 600 acres terminates. This frees the mineral owner, Anya, to re-lease those 600 acres to another company or develop them herself, promoting diligent development of the mineral estate.

The core issue revolves around the correct application of the Uniform Standards of Professional Appraisal Practice (USPAP), specifically the Jurisdictional Exception Rule. This rule is intended to be used only when a law or regulation directly prevents an appraiser from complying with a part of USPAP. In such a case, the law supersedes the conflicting USPAP provision, and the appraiser must disclose the specific law and the part of USPAP that is being disregarded. However, the rule is not a tool for an appraiser to bypass legal or regulatory requirements that are additive to USPAP standards. If a state law, like the hypothetical one in the scenario requiring seismic fault line disclosure, imposes an additional requirement on a report used in a transaction, it does not inherently conflict with USPAP’s valuation methods or ethical obligations. Instead, it expands the scope of required disclosures. Complying with this state law does not prevent the appraiser from also complying with all parts of USPAP. Therefore, citing the Jurisdictional Exception Rule to omit the legally required information is a misapplication of the rule. The appraiser’s duty is to comply with both USPAP and applicable laws. The failure to include the mandated disclosure would render the report non-compliant with the jurisdiction’s law and could be misleading, potentially violating the USPAP Ethics Rule which requires an appraiser to not produce a misleading report.

Let \(V_{Intrinsic}\) represent the value of a subject property based solely on its own physical characteristics and construction cost. Let \(V_{Neighborhood}\) represent the average value of the surrounding properties. The principle of regression dictates the relationship between these values when a property is an over-improvement for its area. The logical valuation adjustment can be expressed as: If \(V_{Intrinsic} > V_{Neighborhood}\), then the appraised market value, \(V_{Market}\), will be less than its intrinsic value, such that \(V_{Market} < V_{Intrinsic}\). This downward pull on the value is a direct consequence of the lower-valued surrounding properties. The property's value regresses toward the average value of the neighborhood. This is distinct from the principle of progression, where a lesser-quality property's value is pulled up by more valuable neighboring properties. The principle of regression is a fundamental concept in real estate appraisal that addresses the impact of dissimilar properties on value. It posits that the value of a superior property will be adversely affected by its association with properties of lesser quality. In the given scenario, the newly constructed, high-end home is an over-improvement for its location among older, less-maintained houses. An appraiser would conclude that the market will not pay the full cost of the luxury features because the surrounding environment does not support such a high value. This effect is a specific application of the broader principle of conformity, which holds that maximum value is achieved when a property is in harmony with its surroundings. While the principle of contribution is also relevant, as it questions how much value the luxury finishes add, regression is the overarching principle that explains why that contribution is diminished. The presence of the inferior properties actively pulls down the perceived and appraised value of the superior home, a classic example of regression.

The duration of the license lapse is calculated from the expiration date of January 31, 2022, to the current date of March 2025. This period exceeds \(24\) months. According to Alaska Administrative Code 12 AAC 64.063(d), if a real estate license has been lapsed for more than \(24\) months but less than five years, the individual must meet the requirements for an initial license to become active again. For a broker license, this means the applicant must re-qualify as if they were a new applicant. The primary requirements for an initial broker license, as stipulated in Alaska Statute 08.88.171, include completing a commission-approved \(30\)-hour broker pre-licensing course and passing the state broker examination. While the applicant must also demonstrate having been licensed as a salesperson for \(36\) of the preceding \(60\) months, Kenji’s prior ten years of licensure would satisfy this experience requirement. The critical point is that the extended lapse period negates the possibility of simple reinstatement by paying back fees and completing past-due continuing education. The regulations mandate a full re-qualification process, which involves demonstrating current knowledge by completing the pre-licensing coursework and successfully passing the comprehensive broker exam. Simply catching up on missed continuing education credits is insufficient after a two-year lapse.

First, calculate the seller’s adjusted taxable value by applying the Alaska Senior Citizen Property Tax Exemption. The exemption removes up to \( \$150,000 \) from the assessed value. Seller’s Taxable Value = Assessed Value – Exemption \[ \$520,000 – \$150,000 = \$370,000 \] Next, calculate the seller’s annual tax liability based on this adjusted taxable value and the given mill rate. A mill rate of 16 mills is equivalent to a tax rate of \(0.016\). Seller’s Annual Tax = Seller’s Taxable Value × Mill Rate \[ \$370,000 \times 0.016 = \$5,920 \] Then, determine the number of days the seller owned the property during the year. The closing is on September 1st, and the seller is responsible for the day of closing. Days of Ownership = Jan(31) + Feb(28) + Mar(31) + Apr(30) + May(31) + Jun(30) + Jul(31) + Aug(31) + Sep(1) = 244 days. Finally, calculate the seller’s prorated portion of the annual taxes, which will be a debit to the seller at closing since the taxes are paid in arrears. Seller’s Prorated Debit = (Seller’s Annual Tax / 365) × Days of Ownership \[ \left( \frac{\$5,920}{365} \right) \times 244 \approx \$16.219178 \times 244 \approx \$3,957.48 \] Property tax proration is a standard procedure at closing to ensure that both the buyer and seller pay their fair share of the annual property taxes for the time they owned the property. In Alaska, this calculation can be more complex due to specific state statutes, such as the Senior Citizen Property Tax Exemption found in AS 29.45.030(e). This statute allows qualifying seniors to exempt up to one hundred fifty thousand dollars of the assessed value of their primary residence from taxation. When a property is sold by a qualifying senior to a non-qualifying buyer, the proration must reflect this change in tax status. The seller’s responsibility is calculated based on their actual, lower tax liability resulting from the exemption. The buyer’s responsibility is calculated based on the full, non-exempted tax liability. Therefore, one cannot simply prorate a single annual tax bill. The seller’s prorated share is determined by calculating their hypothetical annual tax with the exemption applied, finding the daily rate, and multiplying it by the number of days they owned the property. This amount is debited to the seller on the settlement statement, as taxes are typically paid in arrears.

The core of this issue lies in the interplay between Alaska’s legal framework as a lien theory state and the mechanics of a deed of trust. In a lien theory state like Alaska, the borrower, referred to as the trustor in a deed of trust context, retains both legal and equitable title to the property throughout the loan’s duration. The lender, or beneficiary, does not hold title; instead, they possess a lien against the property as security for the promissory note. The deed of trust introduces a third party, the trustee, who holds a specific, limited form of title often called “bare legal title” or “naked title.” This is not full ownership. The trustee’s role is dormant until one of two events occurs: either the loan is fully paid, triggering a duty to execute a deed of reconveyance back to the trustor, or the trustor defaults on the loan. Upon default, the beneficiary instructs the trustee to act. The deed of trust contains a critical “power of sale” clause, which is authorized by Alaska statutes. This clause empowers the trustee to sell the property in a non-judicial foreclosure process to satisfy the debt. Therefore, even though the trustor holds title under lien theory, the lender’s most efficient remedy is not through the courts but by leveraging the power of sale granted to the trustee in the security instrument. The lender can initiate a non-judicial foreclosure, which is typically faster and less expensive than a judicial foreclosure.

The governing principle for water rights in Alaska is the doctrine of prior appropriation, as established by the Alaska Water Use Act. This doctrine is commonly summarized as “first in time, first in right.” The priority of a water right is determined not by the physical location of the user on the watercourse (upstream or downstream) or by the type of beneficial use, but by the date the right was established. In this scenario, the priority dates are the key determinants. Anika established her water right in 1975, making her the most senior rights holder. Chen established his right in 1990, making him junior to Anika but senior to Ben. Ben, having acquired the land and its associated water needs in 2022, is the most junior rights holder. During a water shortage, the system of priorities is strictly enforced. Anika, as the senior rights holder, is entitled to receive her full, legally permitted quantity of water before any other users. After Anika’s right is fully satisfied, Chen, the next in line, is entitled to his full permitted quantity, if sufficient water remains. Ben, as the most junior user, is only entitled to use any water that is left after both Anika’s and Chen’s senior rights have been completely met. The fact that Ben’s intended use is domestic does not grant him priority over pre-existing, senior rights for other beneficial uses like agriculture or aquaculture. The Department of Natural Resources would enforce this temporal priority system, not a system of pro-rata sharing or one based on the perceived importance of the use.

The core issue revolves around the enforceability of a commission claim after a listing agreement has expired, specifically concerning the application of a broker protection clause under Alaska law. The listing agreement expired on August 31st. The subsequent sale was to the seller’s cousin, who was procured through the seller’s own efforts after the expiration date. A broker protection clause, also known as a safety or extender clause, is designed to protect a broker’s commission for a limited time after the listing expires, but only if the property is sold to a buyer with whom the broker negotiated or who was introduced to the property by the broker during the listing term. For this clause to be effective, the broker must typically provide the seller with a written list of these protected parties shortly after the expiration of the listing. In this scenario, the broker, Kenai, did provide a list that included a potential buyer, Boris. However, the property was not sold to Boris or anyone else on that list. The sale was to the seller’s cousin, a party with whom the broker had no prior contact and who was not on the protected list. Therefore, the conditions required to trigger the broker protection clause were not met with respect to the actual buyer. The listing agreement, including all its commission provisions, terminated on the expiration date, and the subsequent sale to an unprotected party does not obligate the seller to pay a commission to the former broker.

The legal analysis hinges on the Alaska Uniform Residential Landlord and Tenant Act, specifically AS 34.03.140, which governs the landlord’s right to enter a dwelling unit, and AS 34.03.300, which outlines remedies for a tenant’s refusal of lawful access. Under AS 34.03.140, a landlord may enter a rental unit to exhibit it to prospective tenants after giving at least 24 hours’ notice. The entry must be at a reasonable time. The tenant cannot unreasonably withhold consent to the landlord to enter. In this scenario, the tenant’s consistent refusal, despite proper notice and a valid lease clause, likely constitutes an unreasonable withholding of consent. When a tenant unreasonably denies access, the landlord cannot resort to self-help measures like entering without permission. Instead, AS 34.03.300(a) provides the landlord with specific legal remedies. The landlord may obtain injunctive relief, which is a court order compelling the tenant to allow access. Alternatively, the landlord may terminate the rental agreement by providing the proper written notice as required for a lease violation. After the lease is properly terminated, if the tenant remains, the landlord could then pursue an eviction. Simply filing for eviction without first terminating the lease for the breach is procedurally incorrect.

The legal analysis begins by identifying the relationships created by the two agreements. First, a master lease exists between Kenai Commercial Properties (the landlord) and Anya (the original tenant), establishing both privity of contract and privity of estate. Second, a sublease exists between Anya (the sublessor) and Ben (the sublessee). Crucially, a sublease does not create a direct legal relationship between the original landlord and the sublessee. There is no privity of contract or privity of estate between Kenai and Ben. Kenai’s rights and obligations are defined by the master lease with Anya. Ben’s rights are derived solely from his sublease agreement with Anya. When Anya, the original tenant, defaults on the master lease by failing to pay rent and abandoning the property, she has breached her contract with Kenai. This breach gives Kenai the right to terminate the master lease according to its terms and Alaska law. The legal status of the sublease is entirely dependent on the existence of the master lease. Therefore, once Kenai legally terminates the master lease, the sublease between Anya and Ben is automatically extinguished. Ben’s right to occupy the premises is terminated along with the master lease, regardless of the fact that he was not in default on his sublease payments to Anya. Consequently, Kenai can initiate eviction proceedings against Ben as he no longer has a legal right to possession. Kenai cannot, however, sue Ben for the rent Anya owed under the master lease, as there is no privity between them.

The legal outcome is determined by the creation of a novation, not merely an assignment. Initially, the written agreement between Anya and Ben was a valid executory contract under the Alaska Statute of Frauds. When Ben arranged for Chen to take over the purchase, this was initially structured as an assignment. In a simple assignment, the assignor (Ben) transfers his rights to the assignee (Chen) but typically remains secondarily liable for the performance of the contract if the assignee defaults. However, the situation evolved beyond a simple assignment when Anya, the obligee, explicitly agreed to substitute Chen for Ben and, critically, released Ben from all his contractual obligations. This three-way agreement, where a new contract with a new party (Chen) replaces the original contract and extinguishes the original party’s (Ben’s) duties, is the definition of a novation. The series of writings, including the original contract, the assignment, and Anya’s email expressing consent and release, collectively satisfy the requirement for a written agreement under the Statute of Frauds as interpreted by modern electronic transaction laws. Therefore, the original contract with Ben was discharged. Anya’s only contractual relationship is now with Chen, and her sole legal recourse for the failure to close is against Chen.

The relevant statute is the Alaska Uniform Residential Landlord and Tenant Act, specifically AS 34.03.070, which governs security deposits. The core of the issue is the timeline for accounting for and returning a security deposit after a tenancy terminates. Step 1: Determine the required timeframe for the landlord’s action. Under AS 34.03.070(b), if the tenant provides proper written notice to terminate the tenancy, the landlord must deliver the full security deposit and any required prepaid rent, along with a written itemized list of any deductions, to the tenant within 14 days after the tenancy is terminated and possession is delivered by the tenant. Step 2: Analyze the landlord’s actions against the statutory requirement. The landlord, Mateo, failed to provide the itemized list of deductions and the remaining portion of the deposit to the tenant, Lena, until 20 days after she vacated. This is 6 days past the 14-day deadline. Step 3: Determine the legal consequences of the landlord’s failure to comply. According to AS 34.03.070(d), if the landlord willfully fails to comply with the 14-day requirement, the tenant may recover an amount not to exceed twice the actual amount withheld. More critically for the landlord’s claim, the statute is interpreted by courts to mean that failure to provide the timely accounting results in the forfeiture of the landlord’s right to withhold any portion of the security deposit for property damages. The landlord’s only recourse for recovering costs for damages would be to file a separate lawsuit against the tenant, but they cannot use the security deposit for this purpose. Step 4: Conclude the outcome. Because Mateo missed the statutory deadline for providing the itemized accounting, he has lost his legal right to apply any of Lena’s security deposit towards the documented damages. He is required to return the entire security deposit to her. His failure to do so could expose him to a lawsuit where Lena could claim up to double the amount he wrongfully withheld.

First, the complete calculation is performed to determine the seller’s net proceeds. 1. Calculate the total commission expense: \[\$1,250,000 \text{ (Sale Price)} \times 0.05 \text{ (Commission Rate)} = \$62,500\] 2. Calculate the daily property tax rate: \[\$18,600 \text{ (Annual Tax)} \div 365 \text{ (Days in Year)} = \$50.958904 \text{ per day}\] 3. Calculate the number of days the seller is responsible for the taxes (January 1 through August 15, inclusive): \[\text{Jan(31)} + \text{Feb(28)} + \text{Mar(31)} + \text{Apr(30)} + \text{May(31)} + \text{Jun(30)} + \text{Jul(31)} + \text{Aug(15)} = 227 \text{ days}\] 4. Calculate the seller’s total share of the annual property tax: \[227 \text{ days} \times \$50.958904 \text{ per day} = \$11,566.85\] 5. Calculate the seller’s tax debit at closing. This is the seller’s total share minus the amount already paid. The first installment paid was half the annual tax. \[\$11,566.85 \text{ (Seller’s Total Share)} – (\$18,600 \div 2) \text{ (Installment Paid)} = \$11,566.85 – \$9,300 = \$2,266.85\] 6. Calculate the seller’s net proceeds by subtracting all debits from the sale price: \[\$1,250,000 \text{ (Sale Price)} – \$62,500 \text{ (Commission)} – \$2,266.85 \text{ (Tax Debit)} = \$1,185,233.15\] To determine a seller’s net proceeds, one must begin with the gross sale price and subtract all of the seller’s closing costs and prorated expenses. The first major expense is the real estate commission, which is calculated by multiplying the sale price by the agreed-upon commission percentage. The second key calculation involves the proration of property taxes. Since taxes are paid in arrears, the seller is responsible for the tax liability for the portion of the year they owned the property. This requires calculating a daily tax rate by dividing the annual tax bill by 365 days. Next, the exact number of days the seller owned the property within the tax year, including the day of closing, must be determined. The seller’s total tax responsibility for the year is found by multiplying the daily rate by this number of days. Because an installment has already been paid, this paid amount must be subtracted from the seller’s total responsibility to find the final debit that will be applied at closing. This final debit represents the unpaid tax for the time the seller owned the property. Finally, the seller’s net proceeds are calculated by subtracting both the total commission and the final tax debit from the sale price.

The logical determination of lien priority and the outcome of the tax foreclosure sale is as follows: 1. Identification of Liens and Encumbrances: – First Deed of Trust (Mortgage) recorded in 2016. – Delinquent Municipal Property Taxes for the years 2021 and 2022. The lien for these taxes attaches on January 1st of the respective tax year. 2. Application of Alaska Statutory Priority: – Under Alaska Statute AS 29.45.290, a real property tax lien is a “first lien, prior, and paramount to all other liens or encumbrances against the property.” This is often referred to as a “super-priority” lien. 3. Determination of Priority for Foreclosure Purposes: \[ \text{Priority 1: Municipal Property Tax Lien (AS 29.45.290)} \] \[ \text{Priority 2: First Deed of Trust (Recorded 2016)} \] 4. Consequence of Judicial Foreclosure by Senior Lienholder: – The Municipality of Anchorage, holding the senior-most lien, initiates a judicial foreclosure action as per AS 29.45.320. When a senior lienholder forecloses, the action extinguishes all liens that are junior in priority. Because the property tax lien is paramount to all other liens regardless of their recording date, the 2016 deed of trust is considered a junior encumbrance in this context. 5. Final Title Status Post-Sale: – Upon completion of the tax foreclosure sale and issuance of the tax deed by the court, the purchaser receives title to the property. This title is free and clear of the foreclosed municipal tax lien and all junior encumbrances that were properly named in the foreclosure suit, including the 2016 deed of trust. In Alaska, the system of property tax collection is robust, granting municipalities a powerful tool to ensure revenue collection. The super-priority status of the property tax lien means it leapfrogs other liens, even those recorded years earlier like mortgages. The judicial foreclosure process is designed to provide clear, marketable title to the tax sale purchaser. Proper notice must be given to all parties with a recorded interest, including the property owner and any lienholders like the bank with the deed of trust. If these parties do not act to redeem the property by paying the delinquent taxes, interest, penalties, and costs before the sale, their interest in the property is terminated by the final judgment of foreclosure and the subsequent sale. Unlike some states, Alaska does not provide a statutory right of redemption for the owner or junior lienholders after the court confirms the tax sale. This makes the outcome of the sale final and extinguishes the prior mortgage holder’s security interest in the property.

The core of this issue rests on the broker’s legal and fiduciary responsibilities when handling disputed trust funds, specifically earnest money, as mandated by the Alaska Real Estate Commission. According to Alaska Administrative Code 12 AAC 64.110, when a real estate transaction fails to close and a dispute arises between the buyer and seller over the disbursement of earnest money held in a broker’s trust account, the broker has a very specific, non-discretionary duty. The broker is prohibited from making a unilateral decision regarding which party is entitled to the funds, regardless of the contract’s terms or the broker’s personal assessment of who is in default. The broker must act as a neutral stakeholder. The regulation explicitly requires the broker to retain the funds in the trust account until one of two conditions is met: the broker receives a separate written agreement, signed by all parties to the transaction, that directs the disbursement of the funds, or the broker receives a final order from a court of competent jurisdiction that mandates how the funds are to be disbursed. Filing a court action like an interpleader is a possible strategy for the broker to resolve the stalemate, but it is not the primary, mandated obligation, which is to simply hold the funds securely until the dispute is resolved by the parties or the court.

The Government National Mortgage Association, commonly known as Ginnie Mae, is the entity that would guarantee the mortgage-backed security in this scenario. Ginnie Mae is a wholly-owned government corporation operating within the Department of Housing and Urban Development (HUD). Its mission is fundamentally different from that of Fannie Mae or Freddie Mac. Ginnie Mae does not buy, sell, or issue loans. Instead, its primary function is to guarantee the timely payment of principal and interest on mortgage-backed securities (MBS) that are backed by pools of government-insured or government-guaranteed loans. These underlying loans are primarily those insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veterans Affairs (VA), or guaranteed by the Rural Housing Service (RHS). In this case, the loan is a VA-guaranteed loan. The primary market lender, the credit union, would pool this loan with other similar government-backed loans and issue a security. Ginnie Mae then adds its guarantee to this security, which carries the full faith and credit of the United States government. This guarantee makes the security extremely attractive and safe for investors in the global capital markets, thereby facilitating the flow of capital back to the primary lender and ensuring continued liquidity for future government-backed lending. Fannie Mae and Freddie Mac, while also major players in the secondary market, are government-sponsored enterprises (GSEs) that primarily purchase and securitize conventional conforming loans, although they do purchase some government-backed loans as well. However, the unique role of guaranteeing securities backed exclusively by pools of government loans belongs to Ginnie Mae.

The calculation for the special assessment amount is based on the cost per front foot method. First, the cost per front foot is determined by dividing the total cost of the improvement by the total assessable frontage of all benefiting properties. \[ \text{Cost per Front Foot} = \frac{\text{Total Project Cost}}{\text{Total Assessable Frontage}} = \frac{\$400,000}{2,000 \text{ ft}} = \$200 \text{ per foot} \] Next, Kenji’s specific assessment is calculated by multiplying his property’s frontage by the cost per front foot. \[ \text{Kenji’s Assessment} = \text{Kenji’s Frontage} \times \text{Cost per Front Foot} = 125 \text{ ft} \times \$200/\text{ft} = \$25,000 \] Under Alaska law, municipalities are authorized to levy special assessments to pay for local improvements, such as paving roads, through the creation of a Local Improvement District (LID). This process is governed by Alaska Statutes Title 29. When the municipal assembly passes an ordinance confirming the assessment roll, the amount apportioned to each property becomes a special assessment lien. This is a specific, involuntary lien that attaches to the real property that benefits from the improvement. A critical aspect for real estate professionals to understand is the priority of this lien. According to Alaska Statute 29.46.080, a special assessment lien is superior to all other liens and encumbrances, with the exception of liens for general taxes. This means the lien takes priority over pre-existing private liens, including first mortgages, regardless of when the mortgage was recorded. Therefore, the \$25,000 assessment constitutes a lien on Kenji’s property that is senior to his existing first mortgage. In the case of a foreclosure, the special assessment lien would be paid off before the mortgage lender receives any proceeds from the sale.

The calculation demonstrates how a property with a positive Net Operating Income (NOI) can have a negative cash flow. First, calculate the NOI: Potential Gross Income (PGI) from 12 units at $1,200/month: \(12 \times \$1,200 \times 12 = \$172,800\) Vacancy and Credit Loss (assume 5%): \(\$172,800 \times 0.05 = \$8,640\) Effective Gross Income (EGI): \(\$172,800 – \$8,640 = \$164,160\) Operating Expenses (assume 45% of EGI for a Fairbanks property): \(\$164,160 \times 0.45 = \$73,872\) Net Operating Income (NOI): \(\$164,160 – \$73,872 = \$90,288\) Next, calculate the Cash Flow Before Tax (CFBT) by subtracting debt service and capital expenditures from the NOI. NOI: \(\$90,288\) Annual Debt Service (from the high-interest refinancing): \(\$95,000\) Annual Capital Expenditure Reserve (for the boiler replacement): \(\$8,000\) Cash Flow Before Tax (CFBT): \(\$90,288 – \$95,000 – \$8,000 = -\$12,712\) The result is a negative cash flow. Net Operating Income is a fundamental metric for evaluating the profitability of an income-producing property based solely on its operations. It is derived by subtracting all operating expenses, such as property taxes, insurance, management fees, and utilities, from the effective gross income. However, NOI intentionally excludes several critical financial components that directly impact an investor’s wallet. These exclusions are debt service, which includes the principal and interest payments on a mortgage, and capital expenditures, which are funds set aside for major replacements or improvements like a new roof or HVAC system. A property can generate a healthy, positive NOI, indicating it is efficient and profitable from an operational standpoint, but still be a poor investment. If the cost of financing is very high or if there are significant deferred maintenance items requiring immediate capital, the actual cash flow available to the investor can be severely diminished or even negative. An Alaska broker has a fiduciary duty to advise a client to perform a full cash flow analysis that accounts for these factors, as a positive NOI alone can be misleading and mask underlying financial instability.