“REAL ESTATE LAW” Class Chapter 1 quiz question with no answers.
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1. Joe owns a condominium unit in Flower Hill development. He has not been living in the unit and has been renting it out. The Flower Hill condo board passes a rule prohibiting the owners to rent their unit for more than two consecutive years. Joe’s unit has been previously rented for 2 years and he just signed a 1-year lease with a new tenant. Is the lease valid?
A. No, Joe has rented the unit for the maximum time before this lease was signed and the lease is void
B. No, the new board ruling nullifies any pending leases and they would require a special exemption and approval of the board
C. Yes, Joe has not consented to the board’s new ruling and amendment restricting his rights and is therefore exempt
D. All documents would be first required to be reviewed by a licensed attorney
2. Tom and Jen are first time homebuyers and are very nervous about purchasing their first home. They keep asking their agent Chris a lot of questions about the neighborhood, it’s residents and any previous crime statistics. When viewing a home, they keep asking for information on any deaths in the properties. What does Chris have to disclose?
A. Chris should research the neighborhood demographic and offer his opinion whether the neighborhood is “good” for the buyers
B. Chris is prohibited by Fair Housing laws to discuss the inhabitants of the neighborhood, but has to inform the buyers of any deaths in the properties, since it does not fall under FH laws
C. Chris is only required to disclose material facts to the buyer and deaths fall under Stigmatized properties and are therefore exempt from mandatory disclosure.
D. Chris should explain to buyers that they need to do all research on material facts and stigmatized properties since they are the buyers and should be aware under the Caveat Emptor law.
3. Betty is a sales associate for Great Big Homes Realty. She shows a house to newlyweds Annie and Ed. The couple decides to put an offer in writing that same day, since they love the house. When he gives Betty the earnest deposit check, Ed, who is a real estate attorney, asks: “What will the property tax be on the house we are buying?” What is appropriate conduct for Betty?
A. Look at the previous owner’s tax bill and base her answer on that
B. Bring Ed’s attention to the TAX DISCLOSURE notice on the real estate contract and refer Ed to the office of the county tax assessor
C. Explain that property taxes are usually 2% of the sale and purchase price
D. Say that she is not entitled to give any legal advice and tell him to call his lawyer
4. The following item is considered a finance charge and can delay the lender’s ability to send out the new Closing Disclosure and lead to delays in settlement
A. Changes in the real estate commission paid to the buyer’s agent
B. buyer’s late application for homeowner’s insurance
C. Discovery of a broken dishwasher during walk through
D. Any miscellaneous changes not affecting the APR
5. Which of the following protected categories is not included under the FL Civil Rights Act?
A. Age
B. Marital Status
C. Pregnancy
D. Gender Identification
6. When should agents deliver to the settlement company all fees and invoices for work completed, termite inspections, home warranties and other documents to be applied in the transaction?
A. Immediately or as soon as possible as late delivery of such information can delay settlement due to the new settlement disclosure requirement
B. Agent can hold on to such documents till the settlement day and bring them with them to the table
C. These documents are handled outside of the transaction and are not necessary for settlement
D. Only actual checks or money received by the agent has to be delivered to the settlement company
7. In a tenancy without a specific duration, the maximum period of time that a landlord can require a tenant to give notice before he vacates the premises is:
A. 30 days
B. 60 days
C. 90 days
D. Not mandated by law
8. The closing disclosure statement that is required to be signed by borrower under TRID is prepared by:
A. Settlement company or attorney
B. The Real Estate Broker
C. The Lender
D. Consumer Financial Protection Bureau (CFPB)
9. Is it mandatory for condo associations to maintain an insurance policy?
A. Yes, but only for new construction until all units are sold, and the individual owners obtain their policies
B. No, insurance is always optional for owners and associations alike
C. No, insurance is only needed if the units will be mortgaged with a conforming loan
D. Yes, FS718 makes it mandatory for condominium associations to maintain an insurance policy
10. Joe is a serviceman who is called for duty while residing in Port Charlotte, FL. Joe notifies his landlord. Unfortunately, the landlord makes it clear that he will not return the deposit to Joe because he only gave five days’ notice.
A. This situation is in compliance with the Florida Statutes
B. The landlord violated FS 83.67; Joe is entitled to his deposit
C. Joe is in violation of FS 83.67 and the landlord can keep the deposit in his separate non-interest-bearing escrow account
D. Both the landlord and Joe are in violation of their rental agreement and may be deferred to FREC under the provisions of FS 83
11. The borrower must be provided an accurate Closing Disclosure from the mortgage lender (—-) day(s) in advance of settlement
A. 4
B. 1
C. 5
D. 3
12. Florida landlords can require up to 60 days’ notice of lease termination from all tenants in residential properties except
A. Police officers
B. Members of armed forces
C. Politicians
D. Teachers
13. How many disclosure forms are required by the new TILA RESPA guideline?
A. One
B. Two
C. Three
D. None
14. Real estate licensees do not need to worry about Do Not Call rules
A. True – real estate brokers are exempt, since they do not sell goods
B. False – do not call lists apply to all phone solicitation including real estate calls
C. True – the lists are often absolute and no longer relevant
D. False – real estate associates should never contact prospects by phone even if such contact was requested by the consumer
15. Al bought a condominium last year and he rented the unit to Karen. The new condominium board has passed numerous restrictions, one being that units in that condominium cannot be rented. How do these restrictions affect Al?
A. Al has lost his right to rent the unit to Karen and must start an eviction procedure to vacate the premises
B. Al has lost his right to rent the unit to Karen, and the condominium association can start an eviction procedure to vacate the premises
C. The rental restrictions do not affect Al directly, but when he puts the unit up for sale the new owner will not be able to rent
D. Condominium associations have no power to pass and enforce rental restrictions
“REAL ESTATE LAW” Class Chapter 2 quiz question with no answers.
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1. Broker Ed wins a lawsuit against property owner Angela on a dispute regarding an unpaid real estate commission related to a commercial transaction consummated in Florida. Angela is now responsible for the payment of:
A. The disputed real estate sales commission only
B. The disputed real estate sales commission and Ed’s attorney fees
C. The disputed real estate sales commission and reasonable attorney fees for both parties if attorneys are involved
D. The disputed real estate sales commission, recording and court costs, and reasonable attorney fees for both parties if attorneys are involved
2. The limit for personal funds that a broker can keep in the property management escrow account is:
A. $200
B. $500
C. $1,000
D. $5,000
3. Claudia is a perfectly healthy sales associate. She wants to complete her sales associate post-licensing education without sitting in a classroom environment. Which of the following is not an option for her?
A. A post-licensing course delivered by CD-ROM
B. A post-licensing course delivered by the Internet
C. A post-licensing course delivered by mail
D. A distance learning post-licensing course, as defined in FS 475.
4. Ronny, a real estate sales associate licensed in Florida, closed a transaction four and a half years ago when he was newly licensed. During this transaction, he forgot to deliver some escrow checks in a timely fashion, and to hand out the proper brokerage relationship disclosure. The heirs of the seller decide to file a lawsuit against him because of his poor professionalism and some alleged violations of FS 475. In this situation:
A. Ronny does not have to worry because sufficient time has passed, and he can no longer be sued for these violations
B. Ronny should watch out because the five-year statute of limitations for violations of Florida Real Estate License Law is not expired yet
C. Ronny is not responsible for anything; since he was a young sales associate, his broker had all the liability
D. Ronny is OK since the transaction closed
5. Sales associate Carol decides to operate her real estate business as a PA. She buys a new car, expensive office furniture, and a brand-new color printer using the credit of the PA. After some time, her business goes bad and she cannot commit to the monthly obligations of all the bills. Which statement applies to Carol’s situation?
A. She can file for bankruptcy, but her credit will permanently bear the effects of the bankruptcy
B. She needs to go to work and repay her obligations in some way
C. She can declare the PA bankrupt, while trying to save her personal credit
D. She is in a situation where the PA status does not help
6. Lara was contacted by a Hispanic couple searching for a home. She decides that they would be more comfortable in a predominantly Hispanic neighborhood and only shows them properties in those neighborhoods. The couple file a Fair Housing complaint. What is the impact on Lara?
A. She does not need to worry about the complaint because she has E&O insurance policy
B. Lara did a really good job and exhibited care for her client by selecting the neighborhoods
C. Lara will be reprimanded by her broker and will have to take a Fair Housing course
D. Lara has violated Fair Housing Law and her law suit will not be protected by E&O insurance
7. If the parties of a transaction do not agree on the disbursement of funds when the transaction falls through, the broker must:
A. Do nothing and let the money stay in the escrow account indefinitely
B. Disburse the amount according to their personal preference of the parties
C. Initiate one of four allowed procedures for disbursement which are – Mediation, Arbitration, Request an Escrow Disbursement Order or Litigation
D. If there is no agreement between the parties, the broker can transfer the money to his/her personal account as compensation for the failed transaction In lieu of receiving the commission
8. The limit for personal funds that a broker can keep in the sales escrow account is:
A. $200
B. $500
C. $1,000
D. $5,000
9. Ana is buying a large commercial property. Her real estate broker does not give her a brokerage disclosure notice. Which statement best applies to this situation?
A. The broker is in violation of the statute
B. In a commercial transaction, there is no need for a brokerage relationship disclosure
C. In the State of Florida, there is the presumption of transactional brokerage relationship whenever there is no specified relationship
D. Since this is a commercial transaction, Ana’s broker will probably act as designated sales associate
10. Marla wants to add the PA designation after her name in her real estate sales associate license. How can she do that?
A. It is not possible under the current law to have a real estate sales associate license issued to an entity other than an individual
B. She needs to file a written request with the Florida Department of State
C. She needs to file a written request on an appropriate form to the Florida Real Estate Commission (DBPR) and pay a $35 fee
D. She needs to file a written request on an appropriate form to the Florida Real Estate Commission (DBPR) office of the ombudsman and pay a $25 fee
11. Which of the following is the only brokerage relationship disclosure statement that must be signed by the client before implementation?
A. Transaction broker notice
B. Transition to transaction broker notice
C. Single agent notice
D. No brokerage relationship disclosure statement is necessary
12. Amilcare is a transaction broker for seller Amanda. At an open house, Amilcare hears Helen, the buyer, telling her agent that she could pay up to $67,000 for the house, but that she would rather try to place an offer for $66,000. When presenting the offer to Amanda, Amilcare is:
A. Allowed by the statute to disclose that the buyer would pay up to $67,000 for Amanda’s house
B. Bound by the duty of loyalty to his principal and must disclose to Amanda that the buyer would pay up to $67,000 for the house
C. Not allowed by statute to disclose that the buyer would pay up to $67,000 for Amanda’s house
D. Not required to disclose that the buyer would pay up to $67,000 for Amanda’s house, but he could do it if he wants to increase his client’s profit
13. Edith is a potential buyer negotiating the purchase of a single-family residential home. Omar, her real estate broker, does not give her a brokerage disclosure notice. Which statement best applies to this situation?
A. The broker is in violation of the statute
B. In a residential transaction, there is no need for a brokerage relationship disclosure
C. In the state of Florida, there is the presumption of a transactional brokerage relationship whenever there is no specified relationship
D. Since this is not a commercial transaction, Edith’s broker will probably act as a designated sales associate
14. Which of the following is a misdemeanor of the first degree?
A. Publishing false and misleading information
B. Violation of rental lists and rental companies
C. Practicing real estate without a license
D. Wrong letter size for the office sign
“REAL ESTATE LAW” Class Chapter 3 quiz question with no answers.
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1. Property owner Todd decides to satisfy a lien placed on his commercial property for the nonpayment of a leasing commission to broker Kim. What is Kim supposed to do after he gets the money?
A. Take the money, thank everyone, and leave
B. File a satisfaction of lien notice within seven days
C. File a satisfaction of lien notice within 30 days
D. Initiate a foreclosure proceeding
2. What is the safest way for a buyer broker in a commercial lease transaction to make sure he can get paid or can act under the provisions of FS 475 Part III?
A. He can work as a dual agent
B. He can work as a designated sales associate
C. He can secure a separate commission agreement, specifying his rights to recover under FS 475, Part III
D. He can have an attorney check his paperwork
3. The recorded lien notice claiming the real estate commission for a commercial sale transaction is valid how many years from the date of recording?
A. 1
B. 3
C. 5
D. 4
4. Broker Marcus holds a lien he placed against the net seller’s proceeds for the nonpayment of the commission of a commercial real estate transaction. Marcus needs the money now because of a family emergency. How can he collect on his lien in compliance with the current statute?
A. He can sell his lien to a note investor and cash in his dollars
B. He can assign his lien to a note investor and cash in his dollars
C. He can compel the seller to pay by initiating a foreclosure action
D. He is stuck with the lien and he cannot cash it until the seller decides to make a move
5. What is true about the lien for nonpayment of a real estate commission in a nonresidential transaction?
A. It can be placed by a sales associate
B. It can be recorded against the property
C. It can be recorded against the net proceeds of the seller
D. It must be recorded within 90 days from the closing date
6. Broker Yvonne rented a commercial facility about five years ago. The lease she negotiated had a provision for renewal after five years. Now the lease is about to expire, and the owner wishes to renew the lease without paying the real estate commission. What options are available to Yvonne to get paid?
A. She can file and record a lien claim with the Florida Real Estate Commission
B. She can file and record a lien claim in the public record of the county where the property is located, if her listing agreement allows her to do so
C. Her only option is to sue in civil court
D. Her best option is to bring the case to small claims court (if the commercial real estate leasing commission is less than $10,000)
7. The recorded lien notice claiming the real estate commission for a commercial lease transaction is valid for how many years from the date of recording?
A. One
B. Five
C. Seven
D. Ten
8. Broker Anna had a brokerage agreement with prospective tenant Paula. Paula was to pay Anna a commission if they successfully negotiated a lease agreement for Paula’s shop. Paula gets a tremendous deal renting one of Anna’s listings, but refuses to pay commission to her broker. Which is applicable to this situation?
A. Anna can place a lien on the commercial real estate property under the provisions of FS 475 Part IV
B. Anna can place a lien on leasehold interest in the commercial real estate property under the provisions of FS 475 Part IV
C. Anna can place a lien on the net proceeds of the owner under the provisions of FS 475 Part IV
D. Anna cannot act under the provisions of FS 475 Part IV because she was representing a tenant
9. Which is NOT one of the essential elements required in the claim notice for a commercial real estate lease commission?
A. The name, address, telephone number, and license number of the sales associate who handled the transaction
B. The name of the owner of the commercial property
C. The legal description of the commercial real estate
D. The effective date of the brokerage agreement
10. Teresa is a property manager for owner Tom. She leased an office about 120 days ago, while Tom was on vacation. Now that he is back in town, he does not want to pay her leasing commission. Teresa had an exclusive right of lease agreement that included the wording of disclosure required under FS475, Part II to place a lien on the commercial property. What are the options available to Teresa to recover her commission money?
A. She can place a lien on the commercial real estate property under the provisions of FS 475 Part IV
B. She can place a lien on leasehold interest in the commercial real estate property under the provisions of FS 475 Part IV
C. She can place a lien on the net proceeds of the owner under the provisions of FS 475 Part IV
D. She cannot act under the provisions of FS 475 Part IV because the 90-day period for making a claim has expired
11. A commercial transaction closes with zero cash for the seller at closing. The buyer obtained a $20,000 purchase money mortgage from a third party institutional lender, and no commission was paid to the real estate broker. How much can the broker recover for the commission lien from the seller net proceeds?
A. The broker cannot recover anything because the commission lien claim attaches on the net proceeds of the sale and, in this case, the owner got zero cash out
B. The broker cannot recover anything because the commission lien claim attaches only on the subject property, which has been sold to a new owner
C. The broker can recover his full commission because the commission lien claim attaches only on the subject property and the property is still there
D. The broker can recover his full commission because the commission lien claim can attach on the purchase money mortgage
12. Lou Ann is a buyer broker. The seller of a commercial property refuses to pay commission. By the time the closing takes place, Louann is ready to place a lien claim on the seller’s proceeds. Which of the following statements is true?
A. Lou Ann is entitled by FS475 Part III to place a lien on the net proceeds of the seller
B. Lou Ann is entitled by FS475 Part IV to place a lien on the net proceeds of the seller
C. Lou Ann, being a buyer broker, has no title to claim commission without a commission agreement with the seller.
D. Lou Ann can place a lien on the net proceeds of the seller only after the transaction closes
13. Which of the following is NOT one of the allowable methods of delivery for the notice to impose a claim?
A. Personal delivery
B. Telegraphic transmission
C. Registered or certified mail return receipt requested
D. Electronic delivery, if proof of receipt by the other party can be shown
14. Broker Tina realizes that her client, seller Burt, is closing next week on a commercial property that is listed with her and he has no intention of paying commission. Her listing agreement with Burt has a legally sufficient disclosure that spells out Tina’s right to impose a claim. How should she best proceed?
A. She needs to file a commission lien claim in the court where the property is located, and this will be sufficient to give notice to all parties interested
B. She needs to file a commission lien claim in the court where the property is located, and she needs to deliver the notice of intent of placing a lien to both the owner and the closing agent
C. She needs to notify the owner and the closing agent, in writing, of her intention to place a lien on the net sellers proceeds and wait 60 days to give Burt the opportunity to answer
D. She needs to have the cooperating agent deliver a copy of the lien that she will place on the property to all parties before closing
15. Bill the broker is planning to forward his commission claim to the closing agent for a commercial property. The owner currently refuses to pay commission. The pending purchase agreement is for $1,000,000 and Bill’s commission is 7%. The owner has a balance of $1,125,000 in mortgages on the property. How much can Bill recover?
A. $70,000
B. 100% of his commission
C. $35,000
D. Zero
16. The FCRELCLA makes it clear that the only way to receive payment is if a broker has a written brokerage agreement with ________, specifying what the acts are that trigger the earning of a real estate commission?
A. The seller
B. The landlord
C. The selling agent
D. The Commission
17. A broker can record a lien for the nonpayment of a commercial real estate lease commission on:
A. The subject property, as long as it is a commercial facility under the provisions of FS475
B. The subject property
C. The net proceeds for the seller
D. The appraised value of the property
“REAL ESTATE LAW” Class SAMPLE of Final Exam question with no answers.
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1. In a 1031 Exchange Like Transaction, who is in charge of holding the money generated by the sale?
A. Property owner
B. Qualified third party intermediary
C. Closing agent
D. Broker
2. The FCRELCLA makes it clear that the only way to receive payment is if a broker has a written brokerage agreement with _____, specifying the acts that trigger the earning of a real estate commission.
A. The seller
B. The landlord
C. The selling agent
D. The Commission
3. Peter, the buyer’s agent, is planning to forward his commission claim to the closing agent for a commercial property. The seller has repeatedly refused to pay commission. The property has a value of $1,000,000 and Peter’s commission is 7% of it. The owner has taken out $975,000 in mortgages on the property. How much can Peter recover under the procedure explained in FS 475?
A. $70,000 (his whole commission)
B. $25,000
C. An amount determined by FREC
D. Nothing, because he is a buyer’s agent, and only the listing broker can recover under the provisions of FS 475
4. Herbert leases units he owns for a living. He put up for sale a unit that was rented to Tim. During the period of ownership of the unit, the new condominium board has passed rental restrictions, including one that prevents units from being rented before three years of ownership have passed. How do these restrictions affect Herbert?
A. Herbert is not affected since he bought the unit before the condominium association passed the rental restriction and has no duty to disclose
B. Herbert can sell the unit with Tim as a tenant because Tim’s situation is grandfathered
C. The rental restrictions do not affect Herbert directly, but when he puts up the unit for sale the new owner will not be able to rent for the first three years
D. Condominium associations have no power to pass and enforce rental restrictions
5. A seller refuses to pay the real estate commission in a commercial transaction. Contract price is $750,000 and the real estate commission is 7%, but the property is encumbered by a first mortgage for 80% and by a second lien in the amount of $50,000. In this specific case, the listing broker can record a lien for the nonpayment of the commission on:
A. The subject property, as long as it is a commercial facility under the provisions of FS475
B. The subject property
C. The net proceeds for the seller, which in this case cover the full amount of the real estate commission
D. The complete net proceeds of the seller
6. Larry lives in the brand-new condominium complex, Knight Park Condominiums. Larry is also in charge of the newly formed condominium association. Which of the following must Larry’s condominium association maintain according to FS 718?
A. A community pool of at least 100 square feet
B. An insurance policy for the condominium association
C. A life insurance policy for each condominium owner
D. A petty cash fund of at least $10,000
7. The recorded lien notice claiming the real estate commission for a commercial transaction is valid how many years from the date of recording?
A. 1
B. 3
C. 5
D. 7
8. Camille is a sales associate licensee. She does not belong to the Board of REALTORS. What is the proper wording for her business cards?
A. Camille (Last Name), Licensed REALTOR
B. Camille (Last Name), Licensed Salesperson
C. Camille (Last Name), Licensed Sales Associate
D. Camille (Last Name), Broker
9. Barbara the broker needs to file a notice to impose a claim for the nonpayment of a commercial real estate sales commission. Which is NOT one of the allowable methods of delivery for this notice?
A. Personal delivery
B. Telegraphic transmission
C. Registered or certified mail return receipt requested
D. Electronic delivery, if proof of receipt by the other party can be shown
10. Sales associate Judith decides to operate her real estate business as an LLC. She buys a new car, expensive office furniture, and a brand-new color printer using the credit of the LLC. After some time, business goes bad and she cannot pay all the bills. Which statement applies to Judith’s situation?
A. The LLC can file for bankruptcy, but her personal credit record will be permanently damaged
B. She needs to create a repayment plan to the LLC since it is a separate entity
C. She can declare the LLC bankrupt while trying to save her personal credit
D. She is in a difficult situation where the LLC status does not help
11. Linda, the listing broker, is planning to forward her commission claim to the closing agent for a commercial property. The owner refuses to pay commission. The property has a value of $1,000,000 and Linda’s commission is 7% of it. The owner had taken out $1,125,000 in mortgages on the property. Can Linda recover her commission?
A. Yes, because she can attach the commission claim to the mortgage lien on the property
B. Yes, because her notice has higher priority than any other lien
C. No, because 7% is not a usual charge for a real estate commission
D. , because there are no net seller’s proceeds
12. A few years ago, Paul bought into a condo conversion. He purchased a unit that was already rented to Tina. Recently, the new condominium board passed numerous restrictions, including one that states that units in the condominium cannot be rented. How do these restrictions affect Paul?
A. Paul has lost his right to rent the unit to Tina and must start an eviction procedure to vacate the premises
B. Paul has lost his right to rent the unit to Tina, and the condominium association can start an eviction procedure to vacate the premises
C. The rental restrictions do not affect Paul directly, but when he puts the unit up for sale, the new owner will not be able to rent it out
D. Condominium associations have no power to pass and enforce rental restrictions
13. Sales associate Nathan has a hardship condition. His license will expire in a few months. What is his best course of action?
A. Nathan can take correspondence courses approved by the commission to meet his continuing education requirement.
B. Nathan has no recourse and his license will be lost forever
C. Online education is the only option, so Nathan just needs to enroll with one of them
D. Nathan can renew the license without taking classes, betting on the odds that his office has never been audited by DBPR officials
14. The new TILA-RESPA Integrated Disclosure (TRID):
A. Is required to be given to all clients by their broker, before showing any homes
B. Has to do with stigmatized properties
C. Is only required in case of a foreclosure
D. Is required with all residential purchases where the buyer is applying for financing
15. Sales associate Sandra just received training regarding the Federal DO NOT CALL list. She goes back to her office and starts calling people from a reference directory organized by zip code, listing people who are NOT on the Federal DO NOT CALL list. When she begins calling, she should:
A. Push those calls as much as she can so she can get a lot of listings
B. Avoid those listings that are on the state’s independently enforced DO NOT CALL LIST, maintained by the Florida Department of Agriculture
C. Not worry about the old state DO NOT CALL LIST because it is now merged with the federal list
D. Call early in the morning to catch her prospects while they are sleeping and their defense level is low
16. If there is any change to the APR of the borrower’s loan, which increases it by more than 1/8 of a percent for fixed-rate loan or ¼ or a percent for adjustable loan, the borrower will receive a New Disclosure statement and is given a review period of:
A. 3 Days
B. 1 Day
C. 1 Week
D. No such review period is required
17. Vincent committed suicide in his house. When the police found the body, the case made headlines in all the local newspapers. The legal representatives of the deceased contacted Gladys, a sales associate, to sell the property a few months after Vincent’s death. Gladys was made aware of the situation. When showing the property, it would be best for Gladys to:
A. Discourage potential buyers from seeing that listing
B. Secure written permission from Vincent’s heirs to divulge the information to potential buyers
C. Show the house and give a special tour of the room where Vincent’s body was discovered
D. Show the house and explain the techniques that were used to sanitize it after the death of the previous owner
18. Joe is a serviceman who is called to duty overseas while residing in a home in Port Charlotte, FL. When he notifies his landlord, the landlord makes it clear that he will not return Joe’s deposit because he only gave a five-day notice. Which is true?
A. The situation is not in compliance with Florida Statutes
B. The landlord violated FS 83.67, and Joe is entitled to his deposit
C. Joe is in violation of FS 83.67, and the landlord can keep the deposit in a separate, non-interest-bearing escrow account
D. Both the landlord and Joe are in violation of their rental agreement and may be deferred to FREC under the provisions of FS 83
19. If there is no brokerage agreement extension what period of time is a lien effective for?
A. 1 year
B. 3 years
C. 5 years
D. A brokerage agreement must be recorded
====== Real Estate Law 2nd class ===
1. The Dunlap family is buying their first home and getting ready to go to settlement. On their final walk-through they discover that the dishwasher is broken. Will this discovery mean a delay in their settlement due to the new Integrated Closing Disclosure?
A. Possibly, depending if the amount of credit that the seller will give the Dunlaps will affect the APR more than ¼%
B. No, walk-through items are exempt from the 3-day review rule
C. Yes, because if any changes happen at the last minute before closing, it always delays settlement
D. Yes, since the seller will now contribute funds towards settlement, the lender is required to submit a new Closing Disclosure to the Dunlaps and wait 3 days for their approval before the closing can take place
2. Enrollment in FL do not call list
A. Is available for all phone numbers
B. is good for 5 years for free for residential and cell lines
C. Is only available for business phone numbers
D. Requires the consumer to pay enrollment fee
3. Regulation Z, under the Consumer Protection Act, regulates:
A. The amount of days a buyer can take to complete a home inspection
B. The requirements for agents to disclose stigmatized properties
C. Access to federal flood insurance programs
D. The ability to make loans without the consumer’s ability to repay
4. The main purpose of the Real Estate Recovery Fund is
A. Provide continuing education to licensees
B. Reimburse brokers for failed real estate transactions
C. Fund recovery efforts for real estate properties damaged by hurricanes
D. Reimburse members of public for significant losses due to illegal actions of a licensee
5. The state of FL issues the following Real Estate licenses:
A. Broker and Sales Associate
B. Broker, Broker Associate and Salesperson
C. Broker and Salesperson
D. Broker, Sales Associate and Property manager
6. Gary has a contract to purchase a townhome. Unfortunately, his financial situation changes due to a job lay off and he is not able to secure financing within the contract time. Can Gary get his earnest money deposit (EMD) back?
A. Yes, he can request and receive the deposit from the broker without having to go through the four settlement process, as long as his lender provides him with a denial letter
B. Gary has failed to perform on settlement and his EMD will be released to the seller
C. The broker has to initiate the four settlement process to determine which party receives the deposit
D. The broker can keep the EMD as commission for the failed transaction
7. Real estate broker Fred listed a highly desirable high-end property owned by his brother without any listing agreement or any consent of the brother. The price he listed the property at was highly attractive to buyers and Fred took 3 buyers to see the property without the owner’s knowledge. All 3 buyers made offers on the property with a size-able deposit. Once the deposits cleared Fred’s account, he withdrew all the cash and fled the country. What recourse do these buyers have?
A. They should call the FBI and have them initiate an international man hunt for Fred
B. They have no recourse and their money can never be recovered
C. They can recover the money from Fred’s brother even though Fred acted without his knowledge or consent. Being related to Fred makes the brother responsible for the fraud
D. They should file for reimbursement from The Real Estate Recovery Fund upon obtaining a court order
8. A person’s license can be placed under involuntary inactive status for any of these reasons except
A. The educational requirements were not fulfilled
B. The licensee has decided to change brokerage for the second time in one year
C. The employing broker died
D. The license of the employing broker was revoked or suspended
9. Transactional brokerage means:
A. The licensee owes fiduciary to both parties of the transaction
B. The licensee is representing him or herself in the transaction
C. The licensee is the facilitator of the transaction and does not owe fiduciary to any one party in the transaction
D. The licensee only assists one party of the transaction
10. Owner Kenny is concerned with the intention of his commercial real estate broker to place a lien on one of his investment properties. The broker has filed a notice of intent to file a lien, and has followed the notice with the actual recording of the lien itself, for the nonpayment of a commercial real estate lease commission. What is the proper course of action for Kenny, under the provisions of FS 475?
A. Kenny can have his attorney call the broker and tell him that the attorney will sue the broker if the broker does not remove the lien
B. Kenny can dispute the lien by notifying his broker in writing that his claims are in error and that nothing is due from him
C. Kenny has lost, and he should pay the commission
D. Kenny can file a written notice of dispute in the public record where the property is located requesting the lien be expunged
11. If a commission dispute arises:
A. The closing agent can keep the money in escrow until the dispute is over
B. The closing agent needs to file a bill of interpleader if the dispute is not settled within five days after closing
C. The closing agent can issue a certified check to the broker in the amount of his commission, if the seller is not able to prove his point
D. The closing agent does not play any role in a commercial transaction
3rd class – 9/22
1) The buyer has (—–) days after the effective date of the contract or after the delivery of condo documents, whichever is later, to cancel the contract for any reason
A. 3
B. 5
C. 15
D. 7
2) Broker Ed discovers when balancing his trust account check book with his monthly bank statement that he has $914 of his own fund left in the account. Which of the following is true?
A. Broker Ed must must immediately withdraw $414 to bring the balance down to $500.
B. Broker Ed must report this balance to the real estate commission immediately
C. Broker Ed is subject do 1 year suspension for violating the rules regarding trust accounts.
D. Broker Ed is fine as the personal funds is less than $1,000.
3) A broker can record a lien for the nonpayment of a commercial real estate sales commission on:
A. The subject property as long as it is a commercial facility under the provisions of FS475
B. The subject property
C. The net proceeds for the seller
D. The appraised value of the property
4) Sales associate Nathan has a hardship condition. His license will expire in a few months. What is his best course of action?
A. He can present a written request to the commission to allow him to fulfill the continuing education course by correspondence because of his hardship.
B. Nathan has no recourse and his license will be lost forever.
C. Continuing education courses can be taken through distance learning course providers, so Nathan just needs to enroll with one of them.
D. Nathan can renew the license without taking classes, betting on the odds that his office has never been audited by DBPR officials.
5) What did the VA raise the guarantee amount to in 2006?
A. $40,000
B. $60,000
C. $104,250
D. $240,000
6) What is the new maximum for FHA loans?
A. There is no new maximum, since FHA maximum insurable amounts never change.
B. The new maximum is adjusted at $235,000.
C. There is no such a thing as a new maximum, because FHA maximum insurable amounts change from region to region and are adjusted periodically to the cost of living in each area.
D. The new maximum is $320,000 and adjusted 3% every year.
7) How long is the Statute of Limitations?
A. Four Years
B. Five Years
C. Six Years
D. Seven years
8) If no brokerage agreement extension or a brokerage agreement at all, what period of time is a lien effective for?
A. 1 year
B. 3 years
C. 5 years
D. A brokerage agreement must be recorded
9) If a 1031 Exchange Like Transaction, who is in charge of holding the money generated by the sale?
A. Property owner
B. Qualified third party intermediary
C. Closing agent
D. Broker
10) Peter, the buyer’s broker, is planning to forward his commission claim to the closing agent for a commercial property. The seller has repeatedly refused to pay commission. The property has a value of $1,000,000 and Peter’s commission is 7% of it. The owner has taken out $975,000 in mortgages on the property. How much can Peter recover under the procedure explained in FS 475?
A. $70,000 (his whole commission.)
B. $25,000
C. An amount determined by FREC
D. Nothing, because he is a buyer’s agent, and only the listing broker can recover under the provisions of FS 475.
11) What date did the commission lien legislation become effective?
A. November 1st, 2005
B. October 1st, 2005
C. September 1st, 2005
D. August 1st, 2005
12) Sales associate Ned has a hardship condition. His license will expire in a few months. Which of the following options is his best choice?
A. He can present a written request to the commission to allow him to fulfill the continuing education course requirement by correspondence because of his hardship.
B. He can do nothing; he has no recourse and his license will be lost forever.
C. Continuing education courses can be routinely taken through continuing education providers, so Ned simply needs to enroll in one of them.
D. Ned can just renew his license without taking the class, betting on the odds that his office has never been audited by DBPR officials.
13) The FCRELCLA makes it clear that the only way to receive payment is if a broker has a written brokerage agreement with whom, specifying what the acts are that trigger the earning of a real estate commission?
A. The seller
B. The landlord
C. The selling agent
D. The commission
14) Sales associate Sandra just got her training on the State DO NOT CALL list. She goes back to her office and starts calling people from a reference directory organized by zip code, which also lists people who are NOT on the Federal DO NOT CALL list. When she begins calling she should:
A. Push those calls as much as she can so she can get a lot of listings.
B. Avoid those listings that are on the federal DO NOT CALL LIST, maintained by the Federal Trade Commission.
C. Not worry about the old state DO NOT CALL LIST because it is now merged with the federal list.
D. Call early in the morning to catch her prospects while they are sleeping and their defense level is low.
15) Sarah is ready to prepare an e-mail marketing campaign. When doing so, she needs to remember that:
A. There are very serious penalties for violators of the DO NOT SPAM list.
B. There is no such thing as a DO NOT SPAM list.
C. Unsolicited e-mails can be fined up to $11,000 for each offense.
D. Unsolicited e-mails can be fined up to $10,000 for each offense.
16) Newly licensed sales associate Henry just got a listing on a timeshare, but he is not sure how to handle it. What is the chapter of the statute where he can find important information regarding timeshares?
A. FS 120
B. FS 475
C. FS 718
D. FS 721
17) Which is a misdemeanor of the first degree?
A. Publishing false and misleading information.
B. Violation of rental lists and rental companies.
C. Practicing real estate without a license.
D. Wrong letter size for the office sign.
18) Lou Ann is a buyer’s broker. The seller of a commercial property refuses to pay her commission. By the time the closing takes place, Luann is ready to place a lien claim on the seller’s proceeds. Which is true?
A. Lou Ann is entitled by FS475 part III to place a lien on the net proceeds of the seller.
B. Lou Ann is entitled by FS475 part IV to place a lien on the net proceeds of the seller.
C. Lou Ann, being a buyer’s broker, has no title to claim commission.
D. Lou Ann can place a lien on the net proceeds of the seller only after the transaction closes.
19) Broker Barbara needs to file a notice to impose a claim for nonpayment of a commercial real estate sales commission. Which is not one of the allowable methods of delivery of this notice?
A. Personal delivery
B. Telegraphic transmission
C. Registered or certified mail return receipt requested
D. Electronic delivery, if proof of receipt by the other party can be shown.
What is the maximum guaranteed amount for a loan guaranteed by VA?
A. $40,000
B. $60,000
C. $104,250
D. $240,000
20) Which information cannot be disclosed to the buyer in a real estate transaction?
A. The tiles under the carpet are loose.
B. The house has lots of termites.
C. Someone committed suicide in the house.
D. The roof of the house has a minor leak.
21) Betty is a sales associate for Great Big Homes Realty. She shows a big house to Annie and Ed, a recently wed couple. Annie and Ed decide to put an offer in writing that same day. When he writes the earnest deposit check, Ed, a real estate attorney, asks Betty: “What will the property tax bill be for this house?’” What is appropriate conduct for Betty?
A. To look at the previous owner’s tax bill and base her answer on that
B. To bring Ed’s attention to the TAX DISCLOSURE notice on the real estate contract and refer him to the office of the county tax assessor
C. To explain that property taxes are usually 2% of the sale and purchase price
D. To say that she is not entitled to give any legal advice and tell him to call his lawyer
22) Broker David does not maintain error and omission insurance. He discovers a major mistake made by one of his sales associates, Sandra, on a commercial contract. Sandra is licensed as an LLC. Which is true in this situation regarding her liability?
A. In the state of Florida, a licensee cannot be licensed as an LLC.
B. Since she is an independent contractor, her broker is fully responsible for her mistakes.
C. Since she is licensed as an LLC, she can bankrupt the LLC and keep working under her name.
D. The fact that she is licensed as an LLC does not limit her professional liability.
23) Broker Jon is making a claim to the owner and closing agent to a piece of property. There was no closing required in the brokerage agreement. How many days after the commission is earned does broker Jon have to claim for his commission?
A. 10 days
B. 20 days
C. 30 days
D. 40 days
24) If an owner disputes the commission notice, what is the duty of the closing agent?
A. Take the issue to the county circuit court
B. Confirm with the broker that’s the statements being claimed are accurate
C. Pay the commission amount back to the owner
D. The closing agent has no duties, the broker does
25) By recording a commission notice in public record of the county where the property is located, what does the broker ensure of the lien?
A. cannot be assigned to a third party
B. cannot be enforced by a third party
C. cannot be transferred by a third party
D. all of the above
26) When looking at a property, Mary Anne asks sales associate Trudy to see the tax bill of the previous year to evaluate the return on her investment the next year. An appropriate answer from Trudy would be:
A. “I do not have it now, but I will ask the owner to fax it to me.”
B. “I’m sorry, but the statute expressly warns buyers of real estate property NOT to base their estimate of future taxes on the taxes paid by the previous owner.”
C. “I don’t know where to find that information.”
D. “The taxes you will pay are about two per cent of the sales and purchase price of the house and do not depend on the taxes paid by the previous owner.”
27) Laurie is a buyer’s broker. The seller of a commercial property refuses to pay her commission. By the time the closing take place, Laurie is ready to place a lien claim on the seller’s proceeds. Which of the following is true?
A. Laurie is entitled by FS475 part III to place a lien on the net proceeds of the seller.
B. Laurie is entitled by FS475 part IV to place a lien on the net proceeds of the seller.
C. Laurie, being a buyer’s broker, has no title to claim commission.
D. Laurie can place a lien on the net proceeds of the seller only after the transaction closes.
28) A commercial transaction closes with zero cash for the seller, a $20,000 purchase money mortgage, and no commission paid to the real estate broker. How can the broker recover?
A. The broker cannot recover, because a commission lien claim attaches on the net proceeds of the sale and in this case the owner got zero cash out.
B. The broker cannot recover, because a commission lien claim attaches only on the subject property and the property now has been sold to a new owner.
C. The broker can attach a commission lien claim on the subject property.
D. The broker can attach a commission lien claim on the purchase money mortgage.
29) Which method cannot be used to take a continuing education course without proving hardship?
A. A continuing education course delivered by CD ROM
B. A continuing education course delivered over the internet
C. A continuing education delivered by mail
D. A continuing education course delivered by distance learning as defined in FS 485
30) In the creation of a lien, the lien attaches to which of the following
A. The net proceeds
B. The real property
C. Neither the net proceeds nor the real property
D. May be attached to either, it’s a matter of preference
31) Sales associate Tim is involved in negotiating a commercial lease and does so under the supervision of broker Mary Ann. If the commission is not paid and the real estate brokerage firm has to place a commission lien notice, this commission lien notice belongs to whom?
A. Tim
B. Mary Ann
C. Tim and Mary Ann split the commission
D. Neither
32) David committed suicide in his house, and the story made headlines in all the local newspapers. Sales associate Gladys was contacted by the legal representatives of the deceased to sell the property a few months after David’s death. When showing the property, the best conduct for Gladys would be to:
A. Prevent potential buyers from seeing that listing
B. The fact that a property was the site of a death is not a material fact that must be disclosed in a real estate transaction
C. Show the house, except for the room where David died
D. Show the house and explain the techniques that were used to sanitize it after the death of the previous owner
33) Betty is a sales associate for “Great Big Homes Realty”. She shows a big house to Annie and Ed, who decide to put an offer in writing that same day. At the time of giving the earnest deposit check, Ed, a prominent real estate attorney, asks Betty: “What will the property tax bill be after we buy this house?” What is appropriate conduct for Betty?
A. She should look at the previous owner tax bill and base her answer on that.
B. She must direct Ed’s attention to the TAX DISCLOSURE notice on the real estate contract and refer Ed to the office of the county tax assessor.
C. She can explain that property taxes are usually 2% of the purchase price.
D. She should say that she is not entitled to give any legal advice and tell him to call his lawyer.
34) Marva wants to add the PA designation after her name in her real estate sales associate license. How can she do that?
A. It is not possible under the current law to have real estate sales associate license issued to an entity other than an individual.
B. She must file a written request with the Florida Department of State.
C. She must file a written request on an appropriate form with the Florida Department of Business and Professional Regulation and pay a $35 fee.
D. She must file a written request on an appropriate form with the Florida Real Estate Commission Ombudsman’s office and pay a $25 fee.
35) Broker Sandra realizes that her client, seller Barb, is closing next week on a commercial property that is listed with her, and Barb has no intention of paying the commission. Sandra’s listing agreement with Barb has a legally sufficient disclosure that spells out Sandra’s right to impose a claim. How would Sandra proceed?
A. She needs to file a commission lien claim in the court where the property is located.
B. She needs to file a commission lien claim in the court where the property is located and deliver the notice of intent of placing a lien both to the owner and to the closing agent.
C. She needs to notify the owner and the closing agent, in writing, of her intention to impose her claim.
D. She needs to have the cooperating agent deliver a copy of the lien that she will place on the property to all parties before closing.
36) Owner Kenny is concerned about his commercial real estate broker’s intention to place a lien on one of Kenny’s investment properties. The broker has already filed a notice of intent to file a lien for nonpayment of a commercial real estate lease commission. What is the proper course of action for Kenny, under the provisions of FS 475?
A. Kenny can dispute the charge by having his attorney call the broker and inform him that he (the attorney) will sue the broker if the broker does not remove the lien.
B. Kenny can dispute the lien by notifying his broker in writing that his claims are wrong and that nothing is due from him.
C. Kenny has lost, and he should pay the commission.
D. Kenny can file a written notice of dispute in the public record where the property is located, requesting to expunge the lien unless the broker provides further evidence in 60 days.
37) Linda, the listing broker, is planning to forward her commission claim to the closing agent for a commercial property. The owner refuses to pay commission. The property has a value of $1,000,000 and Linda’s commission is 7% of it. The owner had taken out $1,125,000 in mortgages on the property. Can Linda recover her commission?
A. Yes, because she can attach the commission claim to the mortgage lien on the property.
B. Yes, because her notice has higher priority than any other lien.
C. No, because 7% is not a usual charge for a real estate commission.
D. No, because there are no net seller’s proceeds.
38) Sales associate Sandra just received training regarding the Federal DO NOT CALL list. She goes back to her office and starts calling people from a reference directory organized by zip code listing people who are NOT on the federal DO NOT CALL list. When she begins calling, she should:
A. Push those calls as much as she can so she can get a lot of listings.
B. Avoid those listings that are on the state’s independently enforced DO NOT CALL LIST, maintained by the Florida Department of Agriculture.
C. Not worry about the old state DO NOT CALL LIST because it is now merged with the federal list.
D. Call early in the morning to catch her prospects while they are sleeping and their defense level
— —0ceshop0 principles—5.3.23—
1)
2)
3) How many members make up the Real Estate Advisory Commission?
a. 10
b. 12
c. Four
d. Six
4)
5)
6)
7) What is the goal of real estate law?
a. Limit activities real estate professionals can perform
b. Limit the services consumers can obtain from real estate professions
c. Promote the interests of real estate professionals
d. Protect and promote public safety, health, order, and welfare
8)
9) How many members on the Real Estate Advisory Commission are unlicensed consumers?
a. Eight
b. Four
c. Six
d. Ten
10) How is an individual selected to act as Real Estate Commissioner?
a. A public vote
b. The individual is appointed by the governor
c. The individual is selected by the attorney general
d. The Real Estate Advisory Commission holds a vote
11) How are members selected to serve on the Real Estate Advisory Commission?
a. They are appointed by the governor
b. They are appointed by the Real Estate Commissioner
c. They are elected by former Real Estate Advisory Commission members
d. They are elected in a public election
12) Which of the following actions can an individual holding only a prepaid rental listing service (PRLS) license perform?
a. Listing properties for rent
b. Negotiating lease agreements on behalf of the landlord
c. Negotiating lease agreements on behalf of the tenant
d. Providing listings of residential properties available for rent to prospective tenants for a fee
13) Jim would like to sell his own home. What is the minimum real estate license he must possess?
a. Associate broker
b. Broker
c. None
d. Salesperson
14) Which of the following properties is considered a manufactured home?
a. A structure transported in three units and built in 1975 on a permanent foundation
b. A structure transported in two units and built in 1975 on a permanent chassis
c. A structure transported in two units and built in 2005 on a permanent chassis
d. A structure transported in two units and built in 2005 on a permanent foundation
15) What must be true for a corporation to conduct real estate activities?
a. All officers must hold a broker license
b. All officers must hold a salesperson license
c. At least one officer must hold a broker license
d. At least one officer must hold a salesperson license
16) Consuela is a real estate licensee, and she has three other licensees working under her supervision. What type of license does Consuela hold?
a. Associate broker
b. Broker
c. Office manager
d. Salesperson
17) Jimbo doesn’t yet have a real estate license. Which activity is he legally allowed to perform without one?
a. Give advice to a friend who is negotiating the purchase of a house.
b. List a friend or family member’s home for sale for a fee.
c. Negotiate the sale of a house for two friends and receive a tip as thanks.
d. Receive payment for managing real estate.
18)
19)
20) In which of these scenarios does the consumer need a real estate license?
a. Jessie is searching for a new home for a friend moving into town, who will compensate her 2% of the sale price for her time and effort.
b. Mickey is selling his own home and isn’t using the services of a listing agent.
c. Peter is helping his sister, Kristen, find a new apartment and will not be compensated in any way.
d. Ronald is acting as executor of his uncle’s estate, which includes selling the property his uncle owned.
21) Which real estate brokerage ownership types may do business under a fictitious name?
a. Partnerships only
b. Sole proprietorships and partnerships only
c. Sole proprietorships only
d. Sole proprietorships, partnerships, and corporations
22) When is a real estate license required?
a. When performing maintenance work for one property owner
b. When performing real estate activities for others, for compensation of any kind
c. When performing real estate activities for others, without compensation
d. When performing real estate activities for yourself
23)
29) Lynnette works for a regional bank. Her role is to gather information from buyers looking to obtain a home loan and make a recommendation as to whether the loan should be approved. Does she need a real estate license?
a. If her compensation is tied to the transaction being completed, she needs a real estate license.
b. No, bank employees are exempt from licensure.
c. Yes, any individual, including lenders, involved in the purchase of real property must have a license.
d. Yes, employees of banks, credit unions, and lending institutions must obtain a real estate license.
30)
31) Which of these parties must obtain a real estate license before performing real estate activities?
a. Apartment resident managers or their employees
b. Attorneys-at-law performing legal services for a client
c. Persons holding a duly executed power of attorney from the real property’s owner
d. Persons representing buyers or sellers who will receive compensation for their services
32) River is an unlicensed assistant at a brokerage. Which of the following tasks is she permitted to perform for her broker?
a. Assemble closing documents.
b. Host an open house.
c. Negotiate on a client’s behalf.
d. Suggest a sale price for a client’s listing.
33)
34) What must be true for a business to perform real estate activities?
a. All employees of the business must have a real estate license
b. At least one employee must have a broker license
c. At least one employee must have a salesperson license
d. At least one employee must have a salesperson license and another employee must have a broker license
35) Which real estate brokerage ownership types require a separate license?
a. Corporations only
b. Partnerships and corporations only
c. Partnerships only
d. Sole proprietorships only
36) Adam is an unlicensed assistant working with Sarah, a licensed salesperson. The following tasks are on their plates. Which of these actions can only Sarah performed?
a. Placing a for sale sign on a property
b. Preparing marketing materials for the property
c. Providing factual information about the property
d. Showing the property to prospective buyers
37) Amanda helps her neighbor sell his home by assisting with negotiations. She receives no compensation for her assistance. Based on this one transaction, Amanda ______.
a. Doesn’t need a real estate license
b. Must have a broker license
c. Must have at least an associate broker license
d. Must have at least a salesperson license
38)
39) Angela is an unlicensed assistant working with Sam, a licensed salesperson. The following tasks are on their plates. Which of these actions can only Sam perform?
a. Draft the buyer’s offer to the seller
b. Negotiate on the client’s behalf
c. Provide factual information about a property
d. Schedule showings for a buyer
40) Tom is an unlicensed individual helping his sister, Katie, find a new house, in return for a trip to Europe. Which of the following activities can Tom legally perform?
a. He can negotiate the sale of her old house.
b. He can purchase a new property for Katie at an auction.
c. He can receive compensation from Katie for assisting in the purchase of her new house.
d. He can search real estate sites and resources to find available homes in the area.
41) June has worked with buyers and sellers for years. When homeowners default on their mortgage, June acts as trustee for the deed of trust. Under the deed of trust, June has the authority to sell the property. Does June have a real estate license?
a. If she receives compensation for performing this activity, she must have a real estate license.
b. No, trustees selling properties under a deed of trust are exempt from licensure.
c. She only needs a real estate license if she is selling her own property.
d. Yes, she is selling property for others. She must have a real estate license.
42)
43)
44) Which of the following statements best describes a real estate partnership?
a. A brokerage owned by a single person
b. A brokerage owned by at least two people
c. An entity owned by one or more parties
d. A team of two individuals who each hold a real estate license.
45) Which of the following describes a prepaid rental listing service (PRLS)?
a. A PRLS is a group of real estate licensees who only deal with residential property rentals.
b. A PRLS is a type of real estate brokerage.
c. A PRLS provides listings of residential properties available for rent to prospective tenants for a fee.
d. A PRLS represents landlords by marketing their properties to prospective tenants for a commission.
46) Which of the following statements best describes a real estate corporation?
a. A brokerage owned by a single person
b. A brokerage owned by at least two people
c. A group of individuals who each hold a real estate license
d. An entity owned by one or more parties
47) What are common ownership structures for real estate brokerages?
a. Partnerships only
b. Sole proprietorships and partnerships only
c. Sole proprietorships only
d. Sole proprietorships, partnerships, and corporations
48)
49) Sally just obtained her salesperson license. How long is the license valid?
a. Four years
b. One year
c. Three years
d. Two years
50) Jackson holds a real estate broker license with an MLO endorsement. How many hours of continuing education must he complete each year to renew this endorsement?
a. 10 hours
b. 20 hours
c. 45 hours
d. Eight hours
51) To best prevent risk associated with licensee non-compliance with real estate-related federal regulations, brokerage firms should do which of the following?
a. Encourage licensees to obtain outside training on real estate-related federal regulations.
b. Include a review of related federal legislation in the policies and procedures manual and provide appropriate training.
c. Rely on licensees to make themselves aware of all federal regulations related to real estate.
d. Require licensees to keep a tracking journal of all activities as proof that they’ve not violated federal regulations.
52) What is the minimum amount of full-time real estate industry experience that an individual must have to qualify for a broker’s license?
a. Four years
b. One year
c. Three years
d. Two years
53)
54)
55) Which of these does a sponsoring broker owe their associate brokers and salespersons?
a. Free desk and office support
b. Passing along leads
c. Paying for marketing materials
d. Supervision of activities
56) What is vicarious liability as it applies to real estate?
a. A broker commits an illegal act.
b. A broker directs a licensee to commit an illegal act
c. A broker is held responsible for the actions or omissions of the broker’s licensees.
d. One licensee witnesses another licensee’s misconduct.
57)
58) Sally is a real estate salesperson. How many hours of continuing education must she complete before the license expiration date in order to renew it for another four years?
a. 25 hours
b. 30 hours
c. 45 hours
d. 8 hours
59) How long is an MLO endorsement valid?
a. Four years
b. One year
c. Three years
d. Two years
60) Maura is a real estate salesperson who does not have an MLO endorsement. Which of these actions can she perform for her client, who is financing the purchase of a single-family home?
a. Offer to negotiate the terms of the client’s loan application.
b. Offer to provide the client with a list of lenders they could consider working with to obtain the loan.
c. Service the client’s loan.
d. Take the client’s residential mortgage loan application.
61)
62) Jackson holds a real estate broker license with an MLO endorsement. How often must he renew his MLO endorsement?
a. Every four years
b. Every three years
c. Every two years
d. Every year
63) Bradley has a real estate salesperson’s license. He’s done some traveling recently and missed the deadline to renew his license. It’s now 30 days past the expiration date. What must he do to renew his license?
a. Complete the continuing education requirements and submit a renewal and late fee.
b. File an appeal with the Real estate Commissioner.
c. Re-qualify for a real estate license by completing pre-licensing courses and passing the state licensing exam.
d. Retake the state licensing exam.
64)
65) Al is 70 years old and has held his real estate broker license in good standing for 30 consecutive years. His license is up for renewal soon. How many continuing education hours must he complete?
a. 0 hours
b. 30 hours
c. 45 hours
d. 8 hours
66) Years ago, Rachel held a real estate license. She took some time off to travel and start a family. Now she’s ready to get back in the saddle. Her license expired three years ago. What must she do to renew her license and start practicing real estate again?
a. Complete the continuing education requirements and submit a renewal and late fee.
b. File an appeal with the Real Estate Commissioner.
c. Requalify for a real estate license by completing pre-licensing courses and passing the state licensing exam.
d. Retake the state licensing exam.
67) Which federal act requires states to pass laws relating to mortgage loan originator (MLO) endorsements?
a. Consumer Financial Responsibility Act
b. Regulation Z
c. SAFE Act
d. Senate Bill 36
68) How many hours of continuing education must real estate licensees complete each year to renew their MLO endorsement?
a. 10 hours
b. 20 hours
c. Eight hours
d. Four hours
69) What is the relationship between a policies and procedures manual and the broker’s obligation to supervise agents?
a. Brokers who can prove that all agents have access to the PPM won’t be cited for failure to adequately supervise agents.
b. Brokers who enforce policies and procedures outlined in an effective PPM have proof of efforts to properly train and supervise agents.
c. The PPM may be used in place of face-to-face orientation training for new licensees.
d. The PPM outlines the broker’s responsibility to supervise and provides detailed proof of scheduled one-on-one meetings and group training sessions.
70) Karla is a sponsoring broker who owns her own brokerage. She has two associate brokers and two salespersons, who all work as independent contractors. She also has an unlicensed assistant on payroll as an employee. Which of the following is true of Karla’s liability?
a. Karla is liable for the actions of all members of her firm, both the independent contractors and the employee.
b. Karla is only liable for the actions of her associate brokers.
c. Karla is only liable for the actions of her associate brokers and salespersons.
d. Karla is only liable for the actions of her salespersons.
71) As a managing broker, you’re responsible for your associate brokers’ actions. Which of the following risk management techniques helps prevent the risk associated with vicarious liability?
a. Equipping your office with fire alarms and sprinklers
b. Prohibiting licensees from recommending third party vendors to clients
c. Providing training and policies/procedures documentation to staff
d. Purchasing a general liability insurance policy
72) Which of these real estate licensees may be exempt from the continuing education requirements for license renewal?
a. Al is 70 years old and has been licensed in good standing for 30 consecutive years.
b. Candice is 55 years old and has been licensed in good standing for 30 consecutive years.
c. Savannah is the broker of record responsible for supervising five salespeople.
d. Willard is 70 years old and has been licensed in good standing for 20 consecutive years.
73) What must real estate licensees who obtain the MLO endorsement do?
a. They must complete 20 hours of education, pass an examination, submit fingerprints to NMLS&R, and authorize a credit report pull.
b. They only need to complete 20 hours of education.
c. They only need to complete 20 hours of education and pass an examination.
d. They only need to pass an MLO exam containing national and state-specific content.
74)
75)
76) Seamus sent a letter to the residents of Maywood Park, stating, “The Mormons are moving in! Sell your houses before property values plummet.” This is a fair housing violation, and also ______.
a. A license law violation
b. A strong business practice
c. Creative advertising
d. Morally ambiguous
77)
84) If a licensee commits a violation and it’s found the broker didn’t adequately supervise the licensee, whose license in jeopardy?
a. Both the broker’s and licensee’s
b. The broker’s
c. The licensee’s
d. The license of any future licensee of the firm
85) Rita missed an important deadline for her client. This is an example of a(n) ______.
a. Conversion
b. Negligence
c. Ordinary mistake
d. Personal dealing
86)
87) If Jan is using the designation GRI (Graduate of the Real Estate Institute), but she has not paid her annual membership dues, is this a violation?
a. No, because failure to pay dues does not constitute non-membership
b. No, because GRI is not covered in real estate law
c. Yes, because failure to pay dues is considered petty theft
d. Yes, because it is dishonest
88)
89) What is the maximum amount that will be paid out of the Recovery Account for a transaction?
a. $10,000
b. $100,000
c. $25,000
d. $50,000
90) The DRE investigated Sheila and has imposed a license suspension. What does this mean for Sheila?
a. Her license is void. She’s not allowed to practice real estate anymore, and can’t reactivate her license.
b. She may perform all her normal licensed activities, but she’s on probation so she better mind her Ps and Qs.
c. She must pay a fine to have the suspension removed, and may not perform real estate activities until she does so.
d. She’s not allowed to practice real estate during the term of the suspension, but after that time she can continue performing licensed activities.
91) What is the maximum amount that will be paid out of the Recovery Account per licensee?
a. $100,000
b. $250,000
c. $50,000
d. $500,000
92) Requiring a licensee to submit detailed reports related to trust fund accounting is an example of a condition that may be placed on a licensee with a ______ license.
a. Restricted
b. Retracted
c. Revoked
d. Suspended
93)
94) Gina received an earnest money check from her buyer on Friday, after the office had closed and her broker had gone home for the day. For safekeeping, Gina should ______.
a. Cash the check and write a new check Monday for the same amount
b. Deposit the money into her savings account so her client can earn interest over the weekend
c. Hold onto the check until Monday, and give it to her broker then
d. Return the check to her client
95) Tabor’s uncle hired him as a listing agent. Because of their relationship, what may Tabor do with regard to the termination date of the agreement?
a. Include an automatic renewal clause.
b. Include a reasonable termination date.
c. Leave it out.
d. Write “family member” in the termination date field.
96) A cabin has 120 feet of lake frontage. The cabin owner’s ability to access the lake is based on ______.
a. An aquifer
b. An easement
c. Littoral rights
d. Riparian rights
97) Which economic characteristic of land contains the concept that a land’s value can be affected by the changes made to it, such as construction of buildings or fences?
a. Improvements
b. Permanence of investment
c. Scarcity
d. Uniqueness
98) Property owners who live on or next to water have certain rights. An example of one of these rights includes ______.
a. Contamination
b. Hazardous waste
c. Littoral
d. Reversionary
99) A river runs adjacent to a rancher’s property. The rancher’s ability to use the water from the river is based on ______.
a. Aquifer rights
b. Encroachment rights
c. Littoral rights
d. Riparian rights
100) Which of these is the best definition of real estate?
a. Everything that’s not real property
b. Land, plus all things permanently attached to it naturally or artificially
c. Real property, plus all of the interests, benefits, and rights included in ownership
d. The earth’s surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects
101) Annette really wants to move to San Francisco, but she’s unsure whether she’ll be able to afford to live there. Housing is very expensive because there simply is no room to build any new housing units. Which economic characteristic does this reflect?
a. Area preference
b. Improvements
c. Permanence
d. Scarcity
102) The right to access non-navigable rivers, streams, and other flowing bodies of water adjacent to a property is called ______ rights.
a. Land
b. Littoral
c. Mineral
d. Riparian
103)
104) What’s the best definition of land?
a. Everything that’s not real property
b. Land, plus all things permanently attached to it, naturally or artificially
c. Real estate, plus all of the interests, benefits, and rights included in ownership
d. The earth’s surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects
105) Littoral rights allow property owners to take which of these actions?
a. Construct a dock to moor their boat.
b. Irrigate from a stream running through the property.
c. Navigate the river running through the property.
d. Use the water from the lake bordering the property.
106) Over time, a river running through Farmer Jones’ ranch deposits sediment along the banks of the river and adds half an acre of land to the ranch. This is an example of what process?
a. Accretion
b. Avulsion
c. Erosion
d. Riparian buffering
107) Physical characteristics of land include its immobility, indestructibility, and ______.
a. Location
b. Permanence of investment
c. Scarcity
d. Uniqueness
108) In many areas of the country, Marcellus Shale has become a hot commodity. This type of rock produces gas, which can be mined, stored, and sold. Abe learned that his family farmstead sat over a rich deposit of Marcellus Shale. What type of rights does Abe have relative to this shale?
a. Air rights
b. Sub-surface rights
c. Surface rights
d. Water rights
109) Sarah owns her own home. As part of her basic property rights, she has the right to decide who may or may not access the property. Which right is this?
a. Disposition
b. Enjoyment
c. Exclusion
d. Possession
110) Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?
a. Alluvial
b. Littoral
c. Prior appropriation
d. Riparian
111) The right to access ponds, lakes, and other stationary bodies of water is ______.
a. Littoral
b. Mineral
c. Riparian
d. Water
112) Jamie owns a lakeside home. Over a period of years, the water has receded quite a bit, doubling the size of the sand beach on his property. What’s the name of this process?
a. Accretion
b. Erosion
c. Exclusion
d. Reliction
113) Licensee Arlene is helping a client purchase a property that’s suitable for use as a private school, meaning it needs to have classrooms, assembly rooms, and sports fields. She locates two properties in the area that have the required attributes. What category of property is this considered?
a. Commercial
b. Industrial
c. Residential
d. Special purpose
114) Basic property rights include the rights of possession, control, exclusion, enjoyment, and ______.
a. Destruction
b. Disposition
c. Encroachment
d. Reliction
115) Doreen owns an office building and receives income from six stable tenants. What category of real estate does Doreen own?
a. Agricultural
b. Commercial
c. Industrial
d. Residential
116) Which physical characteristic of land addresses the concept that land isn’t interchangeable, and one piece of land isn’t exactly like another?
a. Immobility
b. Indestructibility
c. Permanence of investment
d. Uniqueness
117) Jordan bought 25 acres along a navigable river. Several years later, Jordan calculates that the river has slowly carried away almost two acres of land. What process caused this?
a. Accretion
b. Avulsion
c. Erosion
d. Riparian buffering
118) When Henry first began his real estate career, he focused on residential properties. As he gained more experience, he found that he really enjoyed helping business owners find warehouses for their products, or properties where they could conduct manufacturing activities. Of the primary categories of real estate, what types of properties does Henry handle?
a. Industrial
b. Leisure
c. Residential
d. Retail
119) Property ownership gives the title holder a bundle of rights. What’s significant about the concept of a bundle of rights?
a. It describes an infinite number of rights associated with property ownership.
b. It describes the ability to separate one right from the others while leaving the rest of the bundle intact.
c. It’s an ancient Latin term meaning the property owner’s rights can’t be taken away.
d. The property owner must identify each separate right that will be purchased; they’re not automatically included in a transfer.
120) Along with property ownership, rights are granted to use the land’s physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals?
a. Air
b. Sub-surface
c. Surface
d. Water
121) Which term would you most likely see associated with a lake?
a. Fracking
b. Littoral
c. Percolating
d. Riparian
122) Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?
a. Immobility
b. Indestructibility
c. Scarcity
d. Uniqueness
123)
124) What’s the best definition of personal property?
a. Artificial attachments to land that include things such as fencing, buildings, and walkways
b. Everything that’s not real property
c. Land
d. Property that’s fenced
125) Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis’ condo is worth much more two years later. Which economic characteristic does this demonstrate?
a. Area preference
b. Improvements
c. Permanence
d. Scarcity
126) Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn’t one previously and immediately increase the value of his investment. Which economic characteristic of real property is this?
a. Area preference
b. Improvements
c. Permanence
d. Scarcity
127) The owners of Brick and Brack, a development company, have purchased several acres of vacant land for their latest development. They plan to build a community of affordable single-family homes. What category of real estate will these be in after construction?
a. Agricultural
b. Commercial
c. Industrial
d. Residential
128) Your neighbor bought rights that will prevent you from ever building above two stories. What type of rights are these?
a. Air
b. Littoral
c. Mineral
d. Riparian
129) Sally and Pete are city dwellers who have always dreamed of living in a rural setting. When Pete inherits a 600-acre cattle ranch from his uncle, they don’t waste a moment packing up and moving to the ranch. What category of real estate is their new home considered?
a. Agricultural
b. Commercial
c. Industrial
d. Residential
130) What do riparian rights give landowners the ability to do?
a. Drill an agricultural water well.
b. Prohibit others from using the water.
c. Use a pond adjacent to the property.
d. Use a river running through the property.
131) Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?
a. Area preference
b. Immobility
c. Permanence of investment
d. Scarcity
132) What’s the best definition of real property?
a. Artificial attachments to land that include things such as fencing, buildings, and walkways
b. Earth, soil, and air
c. Land, plus all things permanently attached to it naturally or artificially
d. Real estate, plus all of the interests, benefits, and rights included in ownership
133) Alluvion describes new deposits of land that are the result of what natural process?
a. Accretion
b. Erosion
c. Exclusion
d. Reliction
134) John and Tara have lived in their home for 23 years and are excited to move to Florida for retirement. As homeowners, what right allows them to sell their home?
a. Disposition
b. Enjoyment
c. Exclusion
d. Possession
135) Which of the following is true about air rights?
a. They allow the owner to use the open space above buildings.
b. They allow the owner to use the space directly below buildings.
c. They cannot be bought or sold.
d. They include mineral rights.
136) What are improvements with regard to property?
a. Another name for a building permit
b. Artificial attachments to land that include items such as fencing, buildings, and walkways
c. Natural fixtures that are part of the land and that enhance its value
d. The right to increase the value of a property
137) Which physical characteristic of land addresses the concept that while improvements may deteriorate over time, the land itself cannot be destroyed?
a. Immobility
b. Indestructibility
c. Permanence of investment
d. Uniqueness
138) Which of the following is included with real property rights?
a. Enjoyment
b. Hazardous acts
c. Right to destroy
d. Right to encroach
139) Shannon’s rural property in San Diego County has a small stream that runs across one corner where her horses are pastured, and her horses use it as a water source. What’s true about this situation?
a. Shannon has a riparian right to use the water flowing across her property as a water source for her animals, though she may not divert the water.
b. Shannon is violating the state’s water laws, which prohibit any use of water that flows across a property.
c. She must have a permit from the state water board to use the water from the stream that runs across her property.
d. The doctrine of prior appropriation makes this use of the stream water illegal, since it originates on another person’s property.
140) The right to access rivers, streams, and other flowing bodies of water adjacent to a property is called ______.
a. Land
b. Littoral
c. Mineral
d. Riparian
141) Display shelves installed by a business owner in a rented building are a good example of ______.
a. Leased premises
b. Real estate
c. Real property
d. Trade fixtures
142)
143) What term explains the complexity of property ownership rights and how rights for a single property can be “owned” by multiple parties at the same time?
a. Littoral rights
b. Physical component rights
c. Riparian rights
d. The bundle of rights
144) Licensee Dionne pointed out to her buyer client the items that would be considered real property. What is one of the key characteristics of an item that is real property (also known as a fixture)?
a. Internal or external to the house
b. Made of the same material as an interior or exterior wall
c. Over or under a certain value
d. Permanently affixed to the property
145) Of the following, which is most likely to be considered a fixture?
a. a fence around a field
b. a pasture
c. a stream
d. a tractor
146) Mrs. Blanchard cut down a tree growing on her property. Which of the following has occurred?
a. A fixture has become real property.
b. Personal property has become real property.
c. Real property has become a trade fixture.
d. Real property has become personal property.
147) What are emblements in real estate?
a. Cultivated crops
b. Detached fixtures
c. Free-standing plants
d. Open spaces
148) Having _______ on file allows lenders to confiscate personal property pledged as collateral in the event of a borrower default.
a. A chain of title
b. A title insurance policy
c. A UCC security agreement and financing statement
d. Proof of ownership
149) What’s the Uniform Commercial Code?
a. A set of business laws created to regulate commercial transactions, including contracts dealing with personal property
b. A set of business laws created to regulate financial contracts dealing with real estate
c. A set of standards created to create a uniform way in which all commercial real estate transactions must be conducted
d. A set of standards for commercial business code of ethics
150) Which of the following is an example of a fixture that is real property?
a. Above-ground pool and pool accessories
b. Bathroom mirror hanging on a hook
c. Photos and wall hangings
d. Shelves attached to the wall with brackets
151) What’s contained in a UCC security agreement?
a. A complete description of the personal property used as collateral
b. A list of personal character references
c. A list of security services provided under the contract
d. A signature of an authorized representative of the lender
152) Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he’s making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?
a. The area rug in the dining room
b. The banker’s lamps in the den
c. The chandelier in the foyer
d. The patio heater on the back patio
153) Who is required to sign a security agreement for security arrangements under the Uniform Commercial Code?
a. The borrower
b. The lender
c. The seller
d. The testator
e. The UCC requires the borrower to sign a security agreement for any security arrangements. When used in the financing of real estate, the agreement must adequately identify personal property used as collateral.
154) Which of the following would be considered personal property?
a. Built-in microwave
b. Custom curtains
c. Free-standing TV
d. In-ground pool
155) Which of the following are included in the transfer of real property unless specifically excluded in writing?
a. Chattel
b. Fixtures
c. Personal possessions
d. Personal property
156) What is the best way for a seller and buyer to demonstrate their agreement that the home’s existing refrigerator and a dishwasher are included in the property sale?
a. By including a bill of sale or agreement in the purchase contract
b. By shaking hands on it on the day of the sale
c. By verbal agreement after the sale
d. By verbal agreement before the sale
157) Which of the following would be used to describe an item that is both a fixture and real property?
a. Above-ground
b. Free-standing
c. In-ground
d. Movable
158) An item that would most likely be considered a fixture because of agreement between buyer and seller is _____.
a. a garage door opener
b. a garbage disposal
c. draperies
d. kitchen cabinets
159) Ron’s company leased a building so that it could build an escape room experience. After operating for two years, attendance (and thus its profits) started to drop significantly, so it decided to close the location. When the workers started taking down the installation, they realized that some of the structures would damage the walls if they were to try to remove them. Which of these is true about these trade fixtures?
a. If Ron leaves them in place and the lease expires, he has three months to remove them.
b. Ron is required to leave the fixtures if they’re attached.
c. Ron is required to take the fixtures and return the premises to its original condition.
d. Ron may take the fixtures as long as he repairs any damage caused by removal.
160) If an item is permanently attached to a property, a court would most likely consider it a fixture if it passes which of the following tests?
a. Adaptability of the item to the land’s use
b. Agreement of the parties
c. Method of annexation
d. Relationship of the parties
161) When using the MARIA acronym to test whether an item is a fixture, what do the two As stand for?
a. Acceptability of the fixture and agreement of the parties
b. Adaptability of item and accessibility to the property
c. Adaptability of item to land’s use and agreement of the parties
d. Allowable use and acceptable use
162) Ted’s seller client is adamant that she’ll be uprooting and taking most of the fruit trees in the backyard when she sells her home. Ted makes a note to himself that he’ll need to include the ______ of the trees in the comments for his listing.
a. Abatement
b. Annexation
c. Defenestration
d. Severance
163) In the consideration of real property and personal property, severance is ______.
a. The process of cancelling the agreement or bill of sale for a real estate transaction.
b. The process of converting personal property to real estate.
c. The process of removing a fixture before agreement or after negotiation, to designate it as personal, rather than real, property.
d. The test of how an item is attached to the property and how permanent the attachment is.
164) If the sale of a property that includes soybean fields occurs before the crops are ready for harvest, which of the following is the best option for the parties to the transaction to take?
a. The buyer should assume the crop transfers with the property.
b. The contract between the parties should clarify the disposition of the crop.
c. The seller should assume the crop does not transfer with the property.
d. The seller should harvest the beans before the sale closes.
165) Tim and Tina Wells bought a home with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year. When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. They expected these plantings to be considered part of the real property because of the ______.
a. Adaptation to the land
b. Agreement of the parties
c. Intention in placing the item
d. Method of annexation
166) The MARIA acronym helps to identify the five tests of a fixture. Which of the following tests refers to how and whether the item is attached to the property?
a. Adaptability of the item to the land’s use
b. Agreement of the parties
c. Intention in placing item on land
d. Method of annexation
167) Which of the following is NOT one of the five basics tests that courts use to determine whether an item is a fixture or personal property?
a. Agreement of parties
b. Legally permissible use
c. Method of annexation
d. Relationship of the parties
168) In which form of co-ownership is a person’s ownership inheritable?
a. Joint tenancy
b. Tenancy by the entirety
c. Tenancy in common
d. Tenancy in severalty
169) Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______.
a. Estate in severalty
b. Joint tenancy
c. Tenancy by the entirety
d. Tenancy in common
170)
171)
172) Property with ownership by more than one person is known as ______.
a. Co-ownership
b. Dual ownership
c. Estate by severalty
d. Property partnership
173) Billie (Wilhelmina) Silva was just licensed as a broker, and she plans to hang out a shingle and go into business for herself. As a sole proprietor, which of the following business names can she NOT use?
a. Billie Silva
b. Billie Silva Realty
c. Happy Homes Realty
d. Wilhelmina Silva Realty
174) Sam and Bridget are cousins who jointly own property. They are both named on the deed, they received title at the same time, they have the right of survivorship, and they each have equal interest and undivided rights of possession. What type of ownership do they have?
a. Estate in severalty
b. Joint tenancy
c. Tenancy by the entirety
d. Tenancy in common
175) Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
a. Barbie and Midge each own 50%.
b. Barbie and Skipper each own 50%.
c. Barbie, Midge, and Ken’s heirs each own one-third.
d. Barbie owns two-thirds, and Midge owns one-third.
176) Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn’t allow him to do so. What type of ownership do they have?
a. Joint tenancy
b. Tenancy by the entirety
c. Tenancy in common
d. Tenancy in
177)
178) Which ownership type is defined by four unities: time, title, interest, and possession?
a. Freehold estate
b. Joint tenancy
c. Tenancy by the entirety
d. Tenancy in common
179) Which type of ownership includes the unity of time, title, interest, possession, and marriage, and dissolves to a tenancy in common after a divorce?
a. Estate in severalty
b. Joint tenancy
c. Tenancy by the entirety
d. Tenants in common
180) Which one of the following statements about community property rights and property ownership is true?
a. All property purchased before and during the marriage or legal union automatically becomes community property.
b. All property purchased separately before the marriage or legal union must be sold and the profits divided equally between the partners.
c. Any property purchased before the marriage or legal union must have the spouse as the beneficiary.
d. Property owned separately before the marriage or legal union is separate from the community property, but property purchased during the marriage is owned equally.
181) Ryanne is a tenant in a single-family home owned by Dominick. What type of interest does Ryanne have in the property?
a. Freehold
b. Homestead
c. Leasehold
d. Lifelong
182) Which of the following describes an estate for an unknown period of time, with either party permitted to terminate the lease by giving notice to the other?
a. Estate at will
b. Estate for years
c. Leasehold estate
d. Life estate
183) Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace’s death?
a. Lucas
b. Lucas and Tom
c. Lucas, Monique, and Amy
d. Lucas, Tom, Amy, and Monique
184) What form of ownership is inheritable and includes the entire bundle of rights, not subject to any conditions or qualifications?
a. Fee entire
b. Fee on condition
c. Fee simple absolute
d. Qualified fee
185)
186) Eva, Stella, and Lynn owned a vacation home two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella’s nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?
a. Estate in severalty
b. Joint tenancy
c. Tenancy by the entirety
d. Tenancy in common
187) Which of the following is a life estate in property held by a widow?
a. Curtesy
b. Dower
c. Estate at will
d. Homestead
188) Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don’t have to pay corporate taxes. What form of business do they have?
a. Double proprietorship
b. Limited liability partnership
c. Subchapter C corporation
d. Subchapter S corporation
189) Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?
a. As a joint tenant with rights of survivorship
b. As a tenant in common with Oliver’s heirs
c. In severalty
d. In trust
190) Ken, Dale, and James were brothers who owned more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result was that the court gave each brother a designated set of acres to own. What did the court grant?
a. Bifurcation
b. Parcel
c. Partition
d. Severalty
191) An inheritable freehold estate that’s a fee simple defeasible (where the grantor can reclaim ownership) is also known as ______.
a. Fee absolute
b. Fee simple
c. Qualified fee
d. Tenancy at will
192) What’s the difference between reversionary interest and remainder interest in a property?
a. Remainder interest applies only to heirs.
b. Reversionary interest only applies to spouses.
c. With remainder interest, the property remains with the owner, even when a life tenant possesses the property.
d. With reversionary interest, the property reverts to the owner after the death of the life tenant.
193) Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called ______.
a. A lease option
b. An act of waste
c. An estate at sufferance
d. A possessional prerogative
194) Non-lawful possession after the expiration of a lease is called ______.
a. Estate at sufferance
b. Estate at will
c. Estate for years
d. Leasehold estate
195) A sole proprietor is a familiar business model. If you practice real estate as a sole proprietor, which of the following is a true statement?
a. You are on a salary.
b. You cannot be held liable for your actions.
c. You have a partner.
d. You’re an independent contractor.
196) Peter is a tenant in a single-family home owned by Cheyenne. What type of interest does Cheyenne have in the property?
a. Freehold
b. Homestead
c. Leasehold
d. Lifelong
197)
198) ______ is the form of ownership used by married couples in certain states. It includes automatic survivorship rights.
a. Tenancy by five unities
b. Tenancy by the entirety
c. Tenancy by union
d. Tenancy in common
199) To what type of estate does pur autre vie apply?
a. Fee simple
b. Freehold estate
c. Homestead
d. Leasehold
200) Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?
a. Termination by division
b. Termination of co-ownership by partition
c. Termination of estate in severalty
d. Termination of joint tenancies
201) Which form of real property ownership (for owners other than married couples) means there’s equal ownership shares with undivided possession rights?
a. Joint tenancy
b. Tenancy by the entirety
c. Tenancy in common
d. Tenancy in severalty
202) Jenner purchased his first home, to which he’ll have access forever, as far as he knows. Jenner owns ______.
a. A freehold estate
b. A leasehold estate
c. An estate for years
d. An ownership estate
203)
204) Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?
a. It’s a joint tenancy.
b. It’s held as a tenancy in common.
c. It’s owned as an estate in severalty.
d. There isn’t enough information to tell.
205) Which of the following is NOT a characteristic of a corporation?
a. Corporations are recognized legal entities.
b. Corporations are tangible and nontaxable.
c. Corporations are taxable.
d. Corporations have tax rates separate from individual tax rates.
206) Which of the following is a life estate in a property held by a widower?
a. Curtesy
b. Dower
c. Estate at will
d. Remainderman
207) Limited liability companies and limited liability partnerships are favorable forms of business because ______.
a. Owners of the LLC or LLP are personally liable for LLC/LLP obligations.
b. They aren’t taxed as partnerships.
c. They don’t require a general partner.
208) All trusts have three parties: the trustor, the beneficiary, and the ______.
a. Attorney in fact
b. Broker
c. Founder
d. Trustee
209) When Edmund died, he left several properties to his heirs. He owned a grocery store and a campground outright, and a strip mall that was held in a living trust. Which of the properties, if any, did NOT have to go through the probate process after his death?
a. The campground
b. The grocery store
c. The strip mall
d. They all had to go through probate.
210) Marcia Weinstein died, and her property wasn’t held in a trust. Thus, her estate will go through ______ to ensure her property is distributed to her beneficiaries in accordance with her will.
a. A moderator
b. An attorney
c. Estate planning
d. Probate
211) Under a land trust, the owner directs a ______ to hold title to the real estate.
a. Corporate fiduciary
b. Family member
c. Friend
d. Real estate broker
212) What primary benefit does a living trust have over a will?
a. It avoids probate.
b. It avoids taxes.
c. It’s easier to establish.
d. It’s less expensive.
213) Peter wants to set up a land trust so that his children can benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust, and Tom agreed. How is the trust created?
a. Peter conveys the real estate to Tom.
b. Peter dies.
c. Peter purchases the real estate.
d. Tom distributes income from the real estate investments.
214) Julian and Clara want to leave their real estate holdings to their children. If at all possible, they’d like those holdings to avoid the probate process after they’re deceased. Their attorney recommends a land trust. Is there a type of trust they could establish that would avoid probate?
a. No, all trusts go through probate.
b. Yes, a C trust would avoid probate.
c. Yes, a living trust would avoid probate.
d. Yes, a testamentary trust would avoid probate.
215) Which one of the following statements about testamentary trusts is true?
a. Like living trusts, testamentary trusts avoid probate.
b. Testamentary trusts do not avoid probate.
c. Testamentary trusts do not need to be reviewed by an attorney.
d. The costs of administering a testamentary trust is not borne by the beneficiaries.
216) Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he’s past the required beneficiary age of 18. What type of trust is this?
a. Indirect trust
b. Living trust
c. Probate trust
d. Testamentary trust
217) Martin placed all of his real estate investments in a trust, and the proceeds will be distributed through the trust to his son Nathan. In this situation, Nathan is the ______.
a. Beneficiary
b. Fiduciary
c. Trustee
d. Trustor
218) In a trust, the trustee is the person who ______.
a. Creates the trust
b. Is empowered to void the trust for any reason
c. Makes sure the terms of the trust are carried out
d. Receives the benefits of the trust
219) Which one of the following statements is true about land trusts?
a. A beneficiary’s interest in the land must be conveyed through a deed.
b. Land trusts generally continue for a specified term, such as 10, 20, or 30 years.
c. The identity of the trust owner is made public.
d. The person who establishes the trust (the trustor) is rarely the beneficiary.
220) Which of the following trusts is created according to the terms of the will of a deceased person?
a. Juvenile
b. Living
c. Tertiary
d. Testamentary
221) XYZ Trust would like to sell its property. Which of the following is the legal title holder?
a. The beneficiary
b. The personal representative of the estate
c. The trustee
d. The trustor
222) Which of the following statements is true regarding trusts?
a. Any asset may be held in a trust.
b. The beneficiary can’t be a minor.
c. The trustee conveys title to the trustor.
d. The trustor is the person who carries out the trustee’s wishes.
223) A living trust differs from a testamentary trust in that a living trust is established to convey property as well as to ______.
a. Dictate terms of care in the event the trust creator becomes incapacitated
b. Hasten the probate process
c. Shelter income from taxation
d. Transfer ownership before death and avoid probate
224) There are many advantages to holding property within a trust. One of the most important advantages is that some trusts ______.
a. Avoid probate
b. Need not be reviewed by an attorney
c. Require probate
d. Typically take years to sort out
225) Henry died, and his property wasn’t held in a trust. Thus, his estate will go through probate to ensure his property is distributed to his beneficiaries in accordance with his will. The probate process often takes ______ before the property is distributed.
a. 20 years or more
b. A few days
c. A few hours
d. A year or more
226) All sorts of trusts, including living trusts, have three parties: a trustee, a trustor, and a beneficiary. In the case of a living trust, the person who places property in trust while still alive for the benefit of another person is the ______.
a. Beneficiary
b. Optee
c. Trustee
d. Trustor
227) When a land trust expires, the trustee must either extend the trust term or sell the real estate and ______.
a. Give all of the proceeds to the attorneys involved
b. Give the proceeds to the beneficiary
c. Give the proceeds to the trustor
d. Retain the proceeds
228) Darren set up a land trust so that his children could benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust. Darren is the ______.
a. Beneficiary
b. Executor
c. Trustee
d. Trustor
229) What type of asset is held in a land trust?
a. Always tillable land
b. Cash
c. Real estate
d. Stocks and bonds
230) Beneficiary interest in land that’s part of a land trust is considered ______.
a. Personal property
b. Protected from creditors
c. Real property
d. Subject to partition
231) Anthony owns a new commercial strip mall with several units. He’s hired Jillian as his agent to find tenants to rent each unit. Is Jillian required to provide Anthony with an agency disclosure form?
a. It depends on how many units are for lease.
b. No, agency disclosure is only required for residential transactions.
c. No, agency disclosure is only required on sales of commercial properties.
d. Yes, Jillian is required to provide Anthony with an agency disclosure form.
232) Rob is searching for a new apartment that he can lease for the next two years while he’s working in the area. He has hired Danielle to represent him as his agent in this transaction. Is Danielle required to provide Rob with an agency disclosure form?
a. No, agency disclosure is only required on leases shorter than one year.
b. No, agency disclosure is only required on sales of residential properties with one to four units.
c. No, Danielle does not provide the agency disclosure to her client. He only provides it to the landlord involved in the transaction.
d. Yes, agency disclosure is required on leases exceeding one year.
233) Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter’s relationship to the sellers, if he doesn’t represent them?
a. Peter has no relationship with the sellers.
b. Peter is a fiduciary for the sellers.
c. The sellers are Peter’s customers.
d. The sellers are Peter’s principals.
234) Cam is a broker. His licensees, Jane and John, represent two sides in a single transaction. Jane represents the seller; John represents the buyer. What relationship does Cam have to the buyer and the seller?
a. Cam is a designated agent to both the buyer and seller.
b. Cam is a designated agent to the buyer and a dual agent to the seller.
c. Cam is a designated agent to the seller and a dual agent to the buyer.
d. Cam is a dual agent to both the buyer and seller.
235) Rhonda is an unrepresented buyer who’s purchasing Tony’s townhome. Gary represents Tony in the sale of his property. What’s Rhonda’s relationship to Gary?
a. A client and fiduciary
b. A customer
c. A customer and client
d. A fiduciary
236) As Tina’s agent, Marcus has broad responsibility to handle all the details of a specific transaction. What type of agent is Marcus?
a. Dual
b. General
c. Limited
d. Specific or special
237) Stacey, a buyer, is working with Rebecca, a licensee, in a state that doesn’t recognize or permit implied agency. Rebecca doesn’t represent Stacey, however, and is performing only ministerial tasks for her. Which of the following statements about this situation is correct?
a. Rebecca can’t work with Stacey without an agency agreement.
b. Rebecca is acting in an agency capacity for Stacey.
c. Stacey is Rebecca’s client.
d. Stacey is Rebecca’s customer
238) Which of the following lease agreements should be accompanied by an agency disclosure?
a. 15-month lease
b. Nine-month lease
c. Six-month lease
d. Three-month lease
239) Jill is selling her property and hired David as her agent. David brings another client, Kirk, to see the property, which Kirk is interested in purchasing. What kind of agent is David acting as in this scenario?Top of Form
a. A buyer’s agent
b. A dual agent
c. A seller’s agent
d. A sub-agent
240) An unrepresented ______ who’s a party to a transaction is known as a principal.
a. Agent
b. Broker
c. Client
d. CustomerBottom of Form
241) When a licensee has broad responsibility to handle all details of a specific transaction, what type of real estate agency relationship usually exists?
a. Designated
b. General
c. Special
d. Universal
242) You’re holding an open house for Brenda. Walt and Mary walk in and ask you for a flyer that gives details about the property. At this point, what’s your relationship with Walt and Mary?
a. Clients
b. Confidantes
c. Customers
d. Friends Top of Form
243) Which one of the following definitions best describes a consumer?
a. Someone who is hired to act on behalf of a client
b. Someone who is in a position of trust and loyalty
c. Someone who is involved in a transaction but represents neither party
d. Someone who uses or purchases a product or service
244) Which of the following best indicates that Harold is Kelsey’s seller client?
a. At an open house, Harold asked Kelsey about her commission rate and sales track record.
b. Harold and Kelsey talked at a local elementary school event about the real estate market and the possibility of Harold selling his house.
c. Kelsey and Harold have a signed agency agreement.
d. Kelsey cold-called Harold, and he mentioned that he had been thinking of selling his house.
245) Javier represents Marcus, who’s selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben’s relationship to Javier?
a. Client and fiduciary
b. Customer
c. Customer and client
d. Fiduciary
246)
247) What’s the term for someone who’s been given the authority to act on behalf of someone else?
a. Agent
b. Client
c. Mortgage lender
d. Trustor
248) Phil is a property manager, which means he serves as a _______ agent to his landlord/client.
a. Designated
b. General
c. Special
d. Universal
249) Jennifer is selling her property and hired Larry as her agent. Jane brings her prospective buyer client, Andrew, to see Jennifer’s property. What is Larry’s role in this scenario?
a. A buyer’s agent
b. A dual agent
c. A seller’s agent
d. A sub-agent
250) Which of the following statements regarding buyer and seller agency is true?
a. A seller’s agent represents the buyer, while the buyer’s agent represents the seller.
b. A seller’s agent represents the seller, while the buyer’s agent represents the buyer.
c. A sub-agent represents the buyer.
d. Seller agents are dual agents.
251) Terry represents seller Farrah, and Michael represents Troy, the buyer. Who is (or are) the principal(s) in this transaction?
a. Farrah
b. Farrah and Troy
c. Terry and Michael
d. Troy
252) Which of the following describes a universal agent?
a. Buyer’s agent
b. Conservator
c. Escrow officer
d. Listing agent
253) Paulo is a property manager for several large properties. Which type of agent is he in relation to the landlord/client?
a. Dual
b. General
c. Limited/special
d. Unlicensed
254) April and Wayne are the buyer and seller of a condo, respectively. April is represented by Steve. Wayne is represented by Wanda. Name the principal(s) in this transaction.
a. April and Wayne
b. Only Wanda
c. Only Wayne
d. Steve and Wanda
255)
256) You have a listing agreement with Sam. Because of this, what is Sam’s relationship to you?
a. Client
b. Confidante
c. Customer
d. Friend
257) Tamron owns a commercial strip mall with several units. She’d like to sell the property and move on to another project. She has hired Christopher as her agent. Is Christopher required to provide Tamron with an agency disclosure form?
a. No, agency disclosure is not required on commercial properties.
b. No, agency disclosure is only required on sales of residential properties with one to four units.
c. No, Christopher does not provide the agency disclosure to his client. He only provides it to prospective buyers.
d. Yes, agency disclosure is required on commercial properties
258) Which of the following is the most serious consequence of treating a customer as a client?
a. Breaching your duty to your actual client
b. Drumming up potential business
c. Wasting your time
d. Working for someone for free
259) In general, what is the term for a person who’s been placed in a position of loyalty and trust?
a. Attorney in fact
b. Client
c. Fiduciary
d. Mortgage lender
260) Which type of agent is an escrow officer?
a. General agent
b. Limited agent
c. Single agent
d. Universal agent
261) Taylor is the owner of a new apartment building. She has 15 units she needs to lease, so she has enlisted Pablo as her agent. Is Pablo required to give Taylor an agency disclosure form?
a. No, agency disclosure is not required for residential transactions involving five or more units.
b. No, agency disclosure is only required for commercial transactions.
c. No, agency disclosure is only required on sales of residential properties.
d. Yes, agency disclosure is required for lease transactions.
262) Gregory is looking for an apartment to rent for six months. He’s hired Franklin as his agent to help with this search. Is Franklin required to provide Gregory with an agency disclosure form?
a. No, agency disclosure is only required for commercial transactions.
b. No, agency disclosure is only required for lease agreements exceeding one year in length.
c. No, agency disclosure is only required on sales of residential properties.
d. Yes, agency disclosure is required for lease transactions.
263) What’s the term for someone who has agency representation with the licensee?
a. Client
b. Consumer
c. Customer
d. Fiduciary
264)
265) Melanie is selling her single-family home. She has hired Damian to represent her as her agent in this transaction. Is Damian required to provide Melanie with an agency disclosure form?
a. No, agency disclosure is not required on sales of residential properties with one to four units.
b. No, agency disclosure is only required on leases exceeding one year.
c. No, Damian does not provide the agency disclosure to his client. He only provides it to others involved in the transaction.
d. Yes, agency disclosure is required on sales of residential properties with one to four units.
266) When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent?
a. Designated
b. General
c. Special
d. Universal
267) In most cases, what type of agent is a real estate licensee when working with a client on a real estate sale?
a. Double
b. Dual
c. General
d. Limited or special
268) Your college friend Dave found out that you have a real estate license, and has asked you to help him put together an offer on his neighbor’s house. You agree. What is your relationship with Dave?
a. Dave is your client.
b. Dave is your customer.
c. Dave is your principal.
d. You are Dave’s customer.
269) After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing?
a. Accounting
b. Confidentiality
c. Disclosure
d. Loyalty
270) Micah’s client often tells him to do things that Micah doesn’t necessarily agree with and that create a lot more work for him. Micah has multiple clients and can’t spend all of his time doing the bidding of just one demanding client. Micah decides to pick and choose which of his client’s instructions he is going to follow. What might be the consequence if Micah doesn’t fulfill his duty of obedience to his client?
a. Micah may be forced to send the client a written apology.
b. Micah may lose the client’s business.
c. Micah may receive a slap on the wrist from his broker, and be told to shape up or ship out.
d. Micah’s commission may be at risk.
271) In which of these situations did the licensee breach the fiduciary duty of loyalty?
a. Margo tells her seller client Troy that his property is worth less than it really is so he will get a quick sale.
b. Michael submits all offers he receives on Jarrod’s property.
c. Steven postponed his vacation so he could attend his seller client’s closing.
d. Tanaka refuses to encourage his seller client to lower his asking price.
272) Informing parties of material facts related to a transaction describes the duty of ______.
a. Accounting
b. Disclosure
c. Loyalty
d. Reasonable skill and care
273) What happens when two fiduciary duties conflict? For instance, your clients ask you not to show their property on evenings and weekends, when most showings occur. To obey (a fiduciary duty) means to fail in reasonable skill and care (another fiduciary duty). What should you do?
a. Discuss the issue with your clients and let them decide.
b. Obey. It always trumps reasonable skill and care.
c. Refuse to work with these unreasonable clients.
d. Wait until your clients are out of town, then show the property.
274) Which of these situations addresses the fiduciary duty of confidentiality?
a. Jeanette, a seller’s agent, tells the buyer’s agent that her client must sell his home because of an illness.
b. Mark discloses the commission split he receives from his broker to a colleague at another firm.
c. Regina tells her seller client that he’s required to disclose the roof damage.
d. Todd’s lender shares Todd’s financial information with the loan underwriter.
275) Monica meets a colleague from another firm, Kate, for lunch, and discovers that a former seller client, Reuben, is now Kate’s buyer customer. Monica tells Kate, “You know Reuben inherited a bunch of money right before he sold his house, right?” Which of these statements is true?
a. This is a breach of confidentiality because confidentiality survives forever.
b. This is a breach of confidentiality because the information impacts Reuben’s negotiating ability with the seller.
c. This isn’t a breach of confidentiality because Reuben is no longer Monica’s client.
d. This isn’t a breach of confidentiality because the information shared doesn’t negatively impact the client.
276) If an agent fails to perform the duty of obedience, what might the legal consequence be?
a. The agent may be charged with misrepresentation.
b. The agent may be given a verbal warning by his broker.
c. The agent may receive a nasty call from the client.
d. The agent may receive a reduced commission.
277) Norman, the seller’s agent, notices a significant crack in the foundation that the inspector failed to note in the inspection report. Norman decides to keep this information to himself. He really needs to close this deal. Which fiduciary duty has Norman breached?
a. The duty of accounting
b. The duty of disclosure
c. The duty of obedience
d. The duty of reasonable skill and care
278) Specifically, what does the fiduciary duty of disclosure relate to?
a. Adverse material facts and publicly recorded facts only
b. Conflicts of interest and confidential information only
c. Conflicts of interest, material facts, and adverse material facts
d. Material facts and adverse material facts only
279) The duty of confidentiality survives agency unless the information is known from other sources or ______.
a. it will help another client.
b. the former client has moved out-of-state.
c. the former client is found guilty of fraud.
d. the transaction has closed.
280) Carrying out a client’s instructions describes the duty of ______.
a. Accounting
b. Loyalty
c. Obedience
d. Reasonable skill and care
281) Alex’s client doesn’t want prospective buyers to track dirt and mud throughout her clean home. She asks Alex to place a box of booties by the front door with a sign asking visitors to wear the booties while viewing the home. Alex does as his client instructs—no questions asked. What fiduciary duty is this an example of?
a. The duty of accounting
b. The duty of loyalty
c. The duty of obedience
d. The duty of reasonable skill and care
282) When does an agent’s fiduciary duty of loyalty to the client begin?
a. Five days after both parties have signed the agency agreement
b. The moment both parties agree to an agency relationship
c. The moment the client enters into a sales transaction with another party
d. The moment the seller accepts the buyer’s purchase offer
283) Gary’s new seller client is concerned about privacy and doesn’t want her listing posted on the MLS. Gary explains to her the potential impact this will have on marketing her property, but the client remains adamant. Gary doesn’t list the property on the MLS. What fiduciary duty is at play?
a. The duty of confidentiality
b. The duty of disclosure
c. The duty of loyalty
d. The duty of obedience
284) If you fail to notify your client of a conflict of interest, in addition to the duty of loyalty, what other duty have you breached?
a. Confidentiality
b. Disclosure
c. Obedience
d. Reasonable skill and care
285)
286) Your clients closed on their property yesterday, but you still have some paperwork that you need to deliver to them as soon as possible. Under which fiduciary duty are you acting?
a. The duty of accounting
b. The duty of confidentiality
c. The duty of disclosure
d. The duty of obedience
287) What’s one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties?
a. Accounting
b. Disclosure
c. Loyalty
d. Obedience
288) Your buyer client, Ben Dalton, tells you two weeks before closing that he’s lost his job. He doesn’t have any other income at the moment, and may not be able to follow through on his purchase of the house you’re helping him buy. However, he doesn’t want to miss out on his dream home and is optimistic that he’ll find something soon, so he asks you to keep it confidential. What should you do?
a. Disclose this fact to all parties to the transaction if Ben refuses to do so.
b. Keep it confidential, because you owe him that fiduciary duty.
c. Keep it confidential, but only on the condition that Ben promises not to tell anyone he told you, so you can play dumb.
d. Send an anonymous note to the seller’s agent telling him the truth.
289) Select the situation that correctly represents a true conflict of fiduciary duties.
a. Kai learns that her buyer clients’ inspector will be reporting a furnace issue to the buyers. She doesn’t want to break the news to them. Her duty of confidentiality to the seller and her duty of loyalty to her buyers are in conflict.
b. Nikki’s seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki’s duty of disclosure, which requires her to present all offers, and her duty of obedience.
c. Renee’s clients don’t want showings on weekends. Renee knows this may reduce market exposure and she feels it’s not in her client’s best interests. This is a conflict of her duty of loyalty and her duty of obedience.
d. Terrance’s buyer clients don’t want him to share with the seller that they’re having trouble coming up with the down payment. Terrance’s duty of loyalty to his clients is in conflict with his duty of disclosure.
290) Which of the following details may you share with the buyer if you’re the seller’s agent?
a. None of these facts may be shared with the buyer if you’re the seller’s agent.
b. The roof leaks when it rains.
c. The seller is in a hurry to move because his wife is seven months pregnant.
d. The seller is willing to take less than the asking price.
291) Simone can’t believe that her client won’t let her put a lockbox on the property. How does he expect other agents to be able to show the home? Oh well, it’s not as if he’s asking her to do something illegal. The client’s wish is her command. What fiduciary duty is this an example of?
a. The duty of accounting
b. The duty of loyalty
c. The duty of obedience
d. The duty of reasonable skill and care
292)
293) A seller tells his agent that he has to sell his house quickly because of a divorce proceeding, and that he’s willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true?
a. The agent has breached his duty of confidentiality to his client.
b. The agent hasn’t violated any fiduciary responsibilities to his client.
c. The buyer is prohibited from making an offer because of the agent’s breach of confidentiality.
d. Unless the agent has the seller’s permission to share this information, the agent should have disclosed only that the seller is willing to reduce his price, not the amount.
294) Henry is Monica’s listing agent. As Monica’s agent, Henry has a duty to account for and properly handle her funds and ______.
a. Financial investments
b. Paperwork
c. Personal savings
d. Property taxes
295) While hosting an open house, Liza speaks with prospective buyers. They’re interested in the house, but think the listing price is a little high. They ask her what other incentives they could include in their offer to get the seller to come down on their price. If Liza helps them, what duty may she be breaching?
a. Accounting
b. Loyalty
c. Obedience
d. Reasonable skill and care
296) You might tell a new client, “This means that I, as the agent, have to keep certain private information you tell me, or that I find out otherwise in our relationship, to myself,” when describing your duty of ______ to the client.
a. Confidentiality
b. Loyalty
c. Obedience
d. Reasonable skill and care.
297) What happens when your client asks you to do something that’s against the law?
a. According to the duty of obedience, you must obey, but document the request.
b. You must break your duty of obedience.
c. You must obey, but ask your client to sign a disclaimer for your actions.
d. You must report your client to the authorities.
298) Which of these would be a breach of Margo’s fiduciary duty of confidentiality?
a. Margo told a potential buyer that the city council was considering rezoning the area around the property to commercial/light industrial.
b. Margo told her seller client Troy the percentage commission split she gets from her broker.
c. Under court order, Margo revealed conversations about the financial status of her previous client.
d. When asked by the buyer’s agent if the seller was firm on his price, Margo said, “Everything’s negotiable,” and winked at the other agent.
299) Shari’s clients want her to post that there are “no showings on weekends” on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______.
a. Accounting
b. Disclosure
c. Loyalty
d. Obedience
300) What does the letter R in the acronym for fiduciary duties (OLD CAR) stand for?
a. Rationality
b. Reasonable skill and care
c. Respect
d. Responsibility
301) Which of these situations is addressed by the fiduciary duty of disclosure?
a. The buyer fails to disclose to the seller his need to close on the property quickly.
b. The buyer’s home inspector refuses to share the inspection report with the seller.
c. The seller refuses to complete a property disclosure form.
d. The seller’s agent fails to disclose a conflict of interest.
302) Which one of the following is an example of the duty of loyalty?
a. Carrying out a client’s instructions without question
b. Keeping a client’s confidential information confidential
c. Never questioning a client’s opinion
d. Putting the client’s interests first
303) Jim represents Joel in the sale of Joel’s country acreage and house. Jim’s business partner, Rolly, informed Jim that he wants to put an offer in to purchase the property, with the intention to subdivide it. Which statement best represents the disclosure requirements regarding this transaction?
a. Because Jim isn’t buying the property for himself, he has no disclosure requirements.
b. Jim may disclose that he’s partners with Rolly, only if Rolly agrees.
c. Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property.
d. Rolly must disclose that he and Jim are business partners.
304) A client has asked her agent for a 24-hour notice on showings. The agent knows this will have a negative impact on the number of showings. Which duty is in conflict with reasonable skill and care?
a. Accounting
b. Confidentiality
c. Disclosure
d. Obedience
305) Newt’s buyer client isn’t happy with him. The buyer has accused Newt of breaching his duty of ______ by mishandling the earnest money.
a. Accounting
b. Confidentiality
c. Disclosure
d. Obedience
306) Which of these is an example of an agent NOT executing the duty of reasonable skill and care?
a. Kevin, Corinne’s buyer agent, helped her write her offer and reviewed it to make sure it was what she wanted before presenting it to the seller’s agent.
b. Marta agreed to list a commercial property even though her expertise is in residential real estate.
c. Morgan is careful to protect and manage all his client’s earnest money deposits.
d. Rex promptly submits all offers to his seller client.
307) Which fiduciary duty requires agents to handle their clients’ funds and paperwork properly?
a. The duty of accounting
b. The duty of confidentiality
c. The duty of disclosure
d. The duty of obedience
308)
309) Which of these tasks that Jenna performs does NOT represent the fiduciary duty of accounting?
a. She avoids commingling trust funds with her firm’s operating funds.
b. She discloses the terms of the listing agent’s compensation to her client.
c. She meticulously manages all her clients’ transactional paperwork.
d. She properly records the earnest money her buyer client gave her.
310) Facts that negatively affect a property’s value are known as:
a. confidential.
b. Immaterial facts.
c. Material facts.
d. property fraud.
311) Which of these circumstances does NOT require agent disclosure?
a. As part of his corporation, Sean, a licensee, owns several investment properties. He’s selling one.
b. Gary represents the buyer. He’s a shareholder in the title insurance company the buyer has selected.
c. Marty is representing Dwayne in both the sale of his current home and the purchase of his new home.
d. Megan has listed her brother’s townhome for sale.
312) Which of the following statements about the fiduciary duty of confidentiality is true?
a. It doesn’t extend to material facts relating to the property.
b. It encompasses any and all information the client tells the agent, not just confidential information.
c. It ends with the termination of the agency agreement.
d. It never conflicts with the duty of disclosure.
313) Which of the following is an example of the duty of disclosure?
a. Carrying out a client’s instructions without question
b. Informing parties to the transaction of material facts related to the transaction
c. Keeping a client’s confidential information confidential
d. Keeping the client in the loop on all that is happening with the transaction
314) Jessie, the buyer’s agent, decides to informally inspect the property while she waits for the professional inspection. She notices a small puddle of water in the basement behind a stack of boxes. Later, Jessie calls the seller’s agent and tells him what she found. The agent tells her not to worry; the seller is aware of the leak and plans to have it fixed within the week. Which one of these statements about this situation is true?
a. Jessie can check the basement later to be sure the leak is fixed.
b. Jessie can rely on the inspector to discover and disclose the leak.
c. Jessie should disclose this to her buyer.
d. Since the seller intends to fix the leak, Jessie doesn’t need to disclose it to her buyer.
315) When agents put their clients’ interests ahead of their own, this describes the duty of ______.
a. Accounting
b. Loyalty
c. Obedience
d. Reasonable skill and care
316) Which of the following statements about the fiduciary duty of disclosure is true?
a. It only applies to the seller’s agent.
b. It requires licensees to disclose everything to all parties.
c. It’s owed to other parties, not just to the licensee’s clients.
d. It’s owed to the licensee’s clients only.
317) Which fiduciary duty may continue even after the transaction closes?
a. The duty of accounting
b. The duty of disclosure
c. The duty of obedience
d. The duty of reasonable skill and care
318) Layla, a licensee, has had a few casual meetings with a potential client, Marcus. Marcus has told Layla the type of home and locations he’s interested in. Layla has mentioned a few homes that she thinks Marcus might be interested in. Although Layla hasn’t said that she will continue to look for homes for Marcus, Marcus believes she’ll do just that. Which of these statements about this situation is correct?
a. Because Layla doesn’t know if Marcus is working with another agent, she’s just inadvertently created a dual agency situation.
b. Because Layla has performed some agency tasks for Marcus, she has an express agency agreement with him.
c. Layla and Marcus have no agency agreement, either express or implied, until Layla begins showing Marcus homes.
d. Layla’s actions may have created an implied agency agreement with Marcus.
319) Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max’s representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he’s seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max’s agency coupled with interest?
a. It’s still in place because it doesn’t terminate on the death or incompetence of the principal.
b. Max has no recourse; the agency relationship is terminated and he receives no compensation.
c. Max now owns the subdivision as a result of the principal’s death or incapacity.
d. Rufus must now pay Max the commission that he didn’t get from the original listing, and the agency relationship is terminated.
320) Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann’s options for accepting an agency relationship after the fact?
a. Continue to assist Carly and have her sign an estoppel certificate.
b. Leigh Ann’s only option is to get a signed listing agreement.
c. Prepare an agency agreement or continue to assist Carly with the purchase.
d. Prepare an estoppel certificate and a listing agreement.
321) Elisa agreed to list Simone’s house for sale. After the listing contract was signed, Simone lost her job, and her father, George, offered to help Simone by paying Elisa’s listing commission. The buyer’s agent, Carl, also reduced his commission. Who is Elisa’s client?
a. Carl
b. George
c. No one
d. Simone
322) When the listing agreement’s purpose has been fulfilled, what happens to the agency agreement?
a. Agency continues for future transactions.
b. Agency continues until the agreement’s expiration date.
c. The agency agreement terminates by completion.
d. The agent can renounce the listing agreement to terminate it.
323) Alice listed a three-bedroom home for her client, but before she finds a buyer, the home burns to the ground. What happens to the agency agreement that Alice has with her client?
a. The agency agreement continues as created unless Alice and her client can mutually agree to terminate it.
b. The agency agreement is terminated if the property is destroyed.
c. The agency agreement must be extended until the home is rebuilt, or for six months, whichever is longer.
d. The agreement must continue, but it can be modified due to the changed value of the property.
324) Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan’s agreement?
a. It’s terminated once the specified term in the agency agreement expires.
b. Jenson and Susan can mutually agree to terminate the agreement.
c. The agreement terminates by force of law.
d. The client can revoke the agreement but may be considered in breach of contract.
325) Which one of the following actions would result in the legal termination of an agency agreement?
a. The client wants the seller to make improvements to the property.
b. The client wants to attach an addendum to the sales contract.
c. There’s an unexpected death in the agent’s family.
d. The term specified in the agency agreement expired.
326) In which of the following listing agreement terminations is there LEAST likely to be a penalty for terminating the agreement?
a. The agent abandons the listing.
b. The client and agent mutually agree to terminate the listing.
c. The client revokes the listing agreement to sell the property to a family member.
d. The seller withdraws the listing, deciding instead to stay in the property.
327) Imagine that you’re an active real estate licensee as well as an architect, and you’d like to partner with a builder who’s just beginning a development. Which of these creates agency coupled with interest?
a. You agree to design the houses for this builder in return for getting the listings when the properties are finished.
b. You agree to list the properties for a reduced commission once they’re built.
c. You have the builder and developer sign listing agreements now that will be effective when the properties are complete.
d. You tell the builder that he has to hire you to design the houses if the builder wants you to list them when they’re finished.
328) In which of these situations would a listing be most likely to terminate due to listing agreement expiration?
a. A market with high inventory and low demand
b. A market with low inventory and high demand
c. A moderately-priced home in a neighborhood slated for renewal
d. A moderately priced home sold as-is in a market full of investors
329) Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of the following statements about this situation is true?
a. Bankruptcy has no impact on agency agreements.
b. Marcus can choose whether or not to continue the listing agreement with Ron.
c. The agency agreement is terminated because the agent filed for bankruptcy.
d. The agency agreement only terminates if the broker or the principal declares bankruptcy.
330) What happens if a real estate licensee acting as a finder performs duties beyond just introducing the buyer and seller?
a. An agency relationship is created. The licensee can face disciplinary action if an agency is formed without proper agency disclosures.
b. Nothing. The person has a real estate license and can perform other duties as needed.
c. The licensee can get in trouble for acting as a dual agent.
d. The licensee is guilty of misrepresentation.
331) You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?
a. Buyer agency
b. Dual-licensed dual agency
c. Seller agency
d. Single-licensed dual agency
332) Broker Adeline’s firm has a listing for a condo downtown. Maurice is a cooperating agent. What does this mean?
a. He doesn’t mind working with other brokers.
b. He’s from another brokerage and brings a potential buyer for the listing.
c. He’s the listing agent for the condo and also represents a buyer interested in the condo.
d. He works at Adeline’s firm and is helping to market the condo listing.
333) Which fiduciary duties does a finder owe?
a. A finder doesn’t owe any fiduciary duties.
b. A finder only owes the duties of confidentiality and loyalty.
c. A finder only owes the duty of confidentiality.
d. A finder owes the duties of obedience, loyalty, disclosure, confidentiality, accountability, and reasonable skill and care.
334) Hanna represents the buyer, and Hank, an agent from a different firm, represents the seller in the same transaction. What type of agency relationship does Hanna have with her client?
a. Buyer agency
b. Dual-license dual agency
c. Seller agency
d. Single-license dual agency
335) Estelle is representing seller Margaret. Which of the following tasks is one that Estelle is required to perform as Margaret’s agent?
a. Determine the property’s listing price based on comparables.
b. Give the buyer’s earnest money to Margaret to deposit into her personal checking account.
c. Hire someone to market the property.
d. Inform Margaret about required property condition disclosures.
336) Which of the following is an example of a sub-agency situation?
a. Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group, and he has a buyer customer who wants to see the property.
b. Kermit is represented by Burt, an agent with Street Realty. Today they are seeing Oscar’s house, which has been listed by Oscar’s agent, Ernie, from Energy Realty.
c. Rita is a licensee with Hawthorne Realty. She has a client, Dinah, who is selling her condo. Rita thinks Dinah’s house will be perfect for Ruby, a customer.
d. Tim and Tom are both licensees with Acme Realty. Tim is the listing agent on a home where Tom represents the buyer.
337) Madeline works for a single-agency firm. If she wants to represent both the buyer and seller in a transaction, what must she do?
a. She can’t do this at her firm.
b. She may act as a designated agent for one client and a representative agent for the other.
c. She should get informed consent from both sides to represent them.
d. She should have her broker act as a dual agent, and she can be a single agent for each party.
338) Ned represents Sofia in the sale of her townhome. Luciana represents Sofia’s buyer, Arturo. What is Luciana’s responsibility to Sofia?
a. Assist Sofia in the performance of tasks that Sofia needs to accomplish in order to get to a successful closing.
b. Contact the tax assessor’s office for an estimate of the real property taxes.
c. Disclose that the buyer is a registered sex offender.
d. Disclose that the buyer will not have the funds for the down payment unless he sells his current home.
339) In a seller agency relationship, to which party does the licensee owe undivided loyalty?
a. Both the seller and the buyer
b. The broker
c. The buyer
d. The seller
340) As a licensee, you’ll have several tasks you must perform for your buyer client. One of these tasks is to ______.
a. Coach the buyer on how to negotiate the terms of the sales contract to be completely in the buyer’s favor
b. Explain to the buyer why it’s unnecessary to have a professional inspection done on a new home
c. Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
d. Show properties the buyer might qualify for if he would put down more earnest money
341) Bradley is acting as a finder for Emma. He’s introduced her to Rachel, the other party in the transaction. Whom does Bradley represent?
a. Both Emma and Rachel
b. Emma
c. Neither Emma nor Rachel
d. Rachel
342) If you represent the buyer and seller in the same transaction, what type of agency relationship do you have with your clients?
a. Buyer agency
b. Dual-licensed dual agency
c. Seller agency
d. Single-licensed dual agency
343) Assuming that dual agency is legal where these scenarios occur and that the licensees’ brokerages permit it, which of these situations demonstrates illegal dual agency?
a. Jarrod represents the seller, Juan. A buyer, Alaina, approaches Jarrod about representing her in the purchase of Juan’s house. Jarrod obtains Juan and Alaina’s consent to dual agency.
b. Kady’s firm uses representation agreements that, when signed, provide consent to dual licensee dual agency. Kady’s buyer makes an offer on one of Kady’s colleague’s listings.
c. Levi’s customer, Renee, wants to make an offer on Levi’s seller client’s home. Levi explains that he represents the seller but then presents Renee’s offer to his client.
d. Tom is holding an open house for his client. Ruby, a buyer, says she wants to make an offer. She details her situation; Tom waits until she finishes and then suggests that she offer a non-refundable earnest money deposit to strengthen her offer.
344) What happens if a person without a real estate license is acting as a finder and performs duties beyond just introducing the buyer and seller, such as negotiation or advising?
a. An agency relationship is created. The individual can face disciplinary action if an agency relationship is formed without proper agency disclosures.
b. Nothing. The person is not a licensee and doesn’t face any repercussions from the real estate commission.
c. The individual can get into trouble for acting as a dual agent.
d. The individual could face penalties for acting as a real estate licensee without having a real estate license.
345) Bradley is acting as a finder for Emma. He’s introducing her to Rachel, the other party in the transaction. Which fiduciary duties does Bradley owe Rachel?
a. A finder doesn’t owe any fiduciary duties.
b. He only owes the duties of confidentiality and loyalty.
c. He only owes the duty of confidentiality.
d. He owes the duties of obedience, loyalty, disclosure, confidentiality, accountability, and reasonable skill and care.
346) Licensee Randy has a written listing agreement with Brent, a seller. The buyer is Tim. Who is Randy’s client?
a. Both the seller (Brent) and the buyer (Tim)
b. Randy’s broker
c. The buyer (Tim)
d. The seller (Brent)
347) Natalie is selling her home and has hired Dylan as her agent. Natalie has given Dylan permission to enlist the services of another licensee, Al, to act as a sub-agent for the transaction. Who is liable for Al’s actions?
a. Dylan and Al only
b. Dylan, Natalie, and Al
c. Dylan only
d. Natalie only
348) Who does a finder represent?
a. Both the buyer and seller
b. Neither the buyer nor seller
c. The buyer
d. The seller
349) Orla represents the seller, and Pardeep, an agent from a different firm, represents the buyer in the same transaction. What type of agency relationship does Orla have with her client?
a. Buyer agency
b. Dual-licensee dual agency
c. Seller agency
d. Single-licensee dual agency
350) After a few meetings, the Stinsons sign a listing agreement with broker Vera so she can sell their house. The house has already generated interest from a potential buyer named Sergei, who has spoken with Vera about the house’s price and square footage. Which of the following is true about this situation?
a. Because Vera now has a sub-agency relationship with the Stinsons, she shouldn’t talk to Sergei until the house is officially on the market.
b. The Stinsons and Vera have brokerage relationship agreement.
c. Vera has an agency agreement with Sergei.
d. Vera should disclose the dual agency that has been created by her direct assistance to the buyer
351) Bradley is acting as a finder for Emma. Which action can he perform?
a. Introduce Emma to the seller (or buyer)
b. Negotiate an offer for Emma
c. None of these actions
d. Present the offer on Emma’s behalf
352) In a buyer agency relationship, what relationship does the seller have to the licensee?
a. The seller is the licensee’s client.
b. The seller is the licensee’s customer.
c. The seller is the licensee’s fiduciary.
d. The seller is the licensee’s nemesis.
353) Which of the following questions can an agent in a dual agency transaction answer without breaching her duties to either client?
a. Are you aware of any structural issues with the property?
b. How much should my counter-offer to the buyer be?
c. What repairs or concessions should I ask for from the home inspection?
d. What should I agree to fix from this list the buyer sent?
354) A middleman is another term for a _______.
a. Finder
b. Keeper
c. Universal agent
d. Wholesaler
355) Mavis is a buyer’s agent working with Blaine, an unrepresented seller. Mavis’s buyer, Cintra, makes an offer on Blaine’s property. Mavis assists Blaine with the paperwork. What’s Mavis’s relationship to the parties?
a. She’s a buyer’s agent to Cintra and an undisclosed dual agent with the seller.
b. She’s a dual agent to the buyer and seller.
c. She’s an agent to Cintra, and the seller is her customer.
d. The seller and buyer are her customers.
356) When a licensee represents a seller, which one of the following statements is true about the licensee’s ability to list other properties that are for sale?
a. The licensee isn’t permitted to list other properties for sale.
b. The licensee is permitted to list other properties for sale as long as they’re not competing properties.
c. The licensee is permitted to list other properties for sale, even if they’re competing properties.
d. The licensee must list the seller’s property only for the first 90 days, after which the licensee may list other properties.
357) A licensee has several tasks to perform for seller clients. What’s one of those tasks?
a. Advise sellers on the property conditions they shouldn’t disclose to the buyer.
b. Communicate all offers and counter-offers to the sellers.
c. Disclose to the sellers that if the property doesn’t sell within 60 days, the asking price must be lowered.
d. Ensure an implied agency agreement is in place.
358) Erik is acting in a single agency capacity in a transaction. What does this mean?
a. Erik isn’t part of a realty team within his brokerage firm.
b. He’s representing (and owes undivided loyalty to) either the buyer or the seller.
c. He’s working as a non-agent for either the buyer or seller.
d. His firm doesn’t allow dual agency.
359) Bradley is a real estate licensee acting as a finder for Emma. What happens if he performs duties beyond just introducing the buyer and seller, such as negotiating a deal?
a. An agency relationship is created. Bradley can face disciplinary action if an agency is formed without proper agency disclosures.
b. Bradley is guilty of misrepresentation.
c. He can get in trouble for acting as a dual agent.
d. Nothing. He has a real estate license so he can perform other duties as needed.
360) Which one of the following tasks must licensees perform for seller clients?
a. Dictate the listing price of the property.
b. Drive the sellers around to show them other properties that are for sale in their neighborhood.
c. Ensure that the buyer’s earnest money is deposited.
d. Show the sellers how they can market their property.
361) A licensee must perform which of the following tasks for a buyer client?
a. Ensure the buyer understands the importance of due diligence, including a professional inspection of the property.
b. Review the seller’s property disclosures and show the buyer the ones that you believe are important.
c. Show the buyer properties that you are listing for other sellers.
d. Tell the buyer how much earnest money she should put down to ensure the deal goes through.
362) What is a sub-agent?
a. An agent appointed by another agent to assist in serving a seller client
b. An agent who handles the listing for a seller
c. An inexperienced agent
d. Anyone who works for a broker
363) Buyer Kristin has a buyer agency agreement with Carlotta, a licensee. Kristin’s brother, Dalton, is going to showings with Kristin and helping her decide which house is the best fit. Who is/are Carlotta’s client(s)?
a. Kristin
b. Kristin and Dalton
c. Kristin and the seller
d. The seller
364) A finder is a _______.
a. General agent
b. Limited agent
c. Middleman
d. Universal agent
365) Melinda is selling her home and has hired Megan as her agent. Megan enlists the services of another licensee, Alison, to act as a sub-agent for the transaction without permission from Melinda. Who is liable for Alison’s actions?
a. Megan and Alison only
b. Megan, Melinda, and Alison
c. Megan only
d. Melinda only
366) Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?
a. Alda tells Marge she wants to make an offer on Steven’s property and asks Marge what she should offer, since Marge knows Steven’s rock-bottom price.
b. Alda tells Marge that she’s hired an inspector to perform a property inspection.
c. During the home inspection, Marge hears the buyer tell the inspector several times, “That’s no big deal. I can fix that.” The buyer lists those as repairs she wants the seller to make.
d. Steven tells Marge he can reduce his price, and Alda tells Marge she can increase her offer.
367) In a buyer agency relationship, whom does the licensee represent?
a. Both the seller and the buyer
b. The buyer
c. The listing firm and the buyer
d. The seller
368) Bradley is acting as a finder for Emma. What’s Bradley’s role?
a. To help buyers and sellers locate agents
b. To introduce the buyer and seller, but not provide representation
c. To investigate title issues
d. To try to locate the prior owners of a specific property
369) A person who doesn’t owe either party any fiduciary duties and only introduces the buyer and seller is called a ____.
a. Finder
b. General agent
c. Limited agent
d. Special agent
370) Ryan is an unlicensed individual acting as a finder for Rachel. What happens if he performs duties beyond just introducing the buyer and seller, such as negotiating a deal?
a. An agency relationship is created. Ryan can face disciplinary action if an agency is formed without proper agency disclosures.
b. Nothing. Ryan is not a licensee, so he doesn’t face any repercussions from the real estate commission.
c. Ryan can get in trouble for acting as a dual agent.
d. Ryan could face penalties for acting as a real estate licensee without having a real estate license.
371) What responsibility does the seller’s agent have to the seller?
a. Advocate for and ensure the sale is profitable for the seller.
b. Advocate for the seller and help present the property in the best light, even if it means covering up material defects.
c. Ensure the sale is profitable for the seller.
d. Seek a sale at the best price at terms that are acceptable to the seller.
372) Which of the following is a buyer’s agent’s task or duty?
a. Advocating for the seller
b. Negotiating for the seller
c. Representing the buyer’s interests
d. Reviewing transactional documents with the seller
373) Which one of the following provides the best example of single agency?
a. A broker acts as a dual agent to one party only.
b. An agent from one firm acts as the agent for the buyer.
c. Two agents from different firms each act as a sub-agent for the other.
d. Two agents from one firm act, separately, as the agent for the buyer the agent for the seller.
374) Monica’s business is booming. She’s representing an owner who’s selling a $500,000 home on one side of town, and a buyer who’s purchasing a $300,000 property on the other side of town. As it happens, the seller and buyer both know each other from church and have been talking to others about Monica’s talents, which has brought in several new leads for her to pursue. What type of agency relationship does Monica have with the seller and buyer?
a. She is each party’s single agent.
b. She’s a dual agent, since the seller and buyer know each other.
c. She’s the buyer’s agent and the seller’s sub-agent.
d. She’s the seller’s agent and the buyer’s sub-agent.
375) Which of these situations is an example of designated (appointed) agency?
a. Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction.
b. Marvel’s broker at Homeworks Realty appoints her as the buyer’s agent in a transaction. Tim’s broker at Great Homes Real Estate appoints him as the seller’s broker in the same transaction.
c. Meredith’s broker appoints her to represent both the buyer and the seller in a single transaction.
d. Michele is the firm’s managing broker. She’s the designated dual agent in all dual agency transactions.
376) Which action can a finder perform?
a. Introduce the buyer and seller
b. Negotiate an offer for a client
c. None of these actions
d. Present the offer on a client’s behalf
377) Camille has a listing for a townhome, and appoints Ivy as her sub-agent. Ivy brings a buyer customer to the transaction, and the buyer purchases Camille’s listing. What’s true about the agency relationships in this situation?
a. Camille owes her loyalty to Ivy.
b. Ivy is Camille’s sub-agent and owes loyalty to the seller.
c. Ivy owes her loyalty to the buyer.
d. The buyer is the sub-agent to the seller.
378) Which of these tasks must a licensee perform for buyer clients?
a. Advise the buyer on how to get the seller to come down on the asking price.
b. Ensure that the buyer receives copies of all signed paperwork.
c. Explain to the buyer how to deposit the earnest money into the seller’s personal checking account.
d. Explain to the buyer that there’s really no need to review transaction documents because they’re all standard.
379) You’re representing Abe and Ben in a dual agency situation. Abe tells you something that would give Ben a distinct advantage if he knew. Do you tell Ben?
a. No, because agents can’t share information with their clients.
b. No, because it’s hearsay.
c. No, because you can’t share one client’s confidential information with another client.
d. Yes, because Ben is your client and has a right to know.
380) Which legal description method uses compass headings and directions?
a. Block and grid
b. Lot and block
c. Metes and bounds
d. Rectangular government survey
381) “Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road Southwesterly from the dwelling house of the late Henry Nelson …” is an example of what type of legal description?
a. Benchmark
b. Lot and block
c. Metes and bounds
d. Rectangular
382) Which entity decides the matter when two different legal descriptions conflict?
a. Appraisers
b. Land surveyors
c. The courts
d. The property owners
383) Travis is a new real estate licensee and is writing up his first offer to purchase for his buyer clients. Which of these statements is true?
a. Real estate licensees don’t have access to legal descriptions.
b. Travis should include the legal description in the offer, because it provides a complete description of the property.
c. Travis should not include the legal description on the offer to purchase, but he should include the address.
d. Travis shouldn’t write up the offer to purchase; the client should.
384) Which of these may have been used as a point of beginning in the metes and bounds system?
a. A fence post
b. All of these
c. An iron stake
d. A pine tree
385) A registered land surveyor is preparing a plat map that will show elevations and boundaries for a multi-level condominium complex. What is used as a reference point for measuring elevation?
a. Datum
b. Monument
c. Point of beginning
d. Sea level
386) Morty, a land surveyor, was called out to survey a property. After doing some research, he located the legal description for the property in question. Now, if he could just find the point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east of the oak tree next to Bear Creek. What type of legal description is Morty working with?
a. Benchmark
b. Datum
c. Metes and bounds
d. Rectangular government survey
387) What’s a datum?
a. An iron pin or other permanent marker used in metes and bounds descriptions
b. A point indicating a location is at sea level
c. A point, surface, or line used as a reference for measuring elevations
d. The center of a township
388) Sunshine Surveyors, Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description?
a. Map
b. Metes and bounds description
c. Monument
d. Plat book
389) Cheri wants to find the legal description for her property. Where could she look?
a. At a deed
b. In a history book
c. In a phone book
d. On a piece of mail
390) Which of the following is NOT one of the three most commonly used systems to describe land in the U.S.?
a. Lot and block
b. Metes and bounds
c. Monument system
d. Rectangular survey system
391) When looking at a rectangular survey system map, where would Section 36 be located?
a. The exact center of the township
b. The northeastern-most section of the township
c. The southeastern-most section of the township
d. The southwestern-most section of the township
392) What is a principal meridian?
a. An east-west line used as a reference point in the rectangular survey system
b. A north-south line used as a reference point in the rectangular survey system
c. The center-most section identified in the rectangular survey system
d. The center-most township identified in the rectangular survey system
393) Who can verify the boundaries of a legal description for a given property?
a. Anyone with a smart phone
b. Designated broker
c. Land surveyor
d. Title company
394) Pamela inherited a piece of property that has been in her family for generations. She wants to find the property’s exact boundaries. What should contain this information?
a. A fence company’s records
b. A legal description of the property
c. A satellite image of the property
d. Old family photos of the property
395) Buyers Tony and Sylvia know the postal address of the property they’re purchasing but are wondering about the legal description of the property. Where is the most likely place to find the legal description?
a. Deed
b. HOA covenant
c. Home warranty
d. Listing agreement
396) The Simpsons are buying a five-acre lot that was part of a much larger tract of acreage. When the owners of the large acreage decided to subdivide it, they needed to have a legal description created for the five-acre lot. What was used as the starting point for creating that legal description?
a. A benchmark
b. A plat map
c. A survey
d. Metes
397) What does the metes and bounds system use to develop a property’s legal description?
a. Compass headings and directions
b. Plat references
c. Principal meridians and base lines
d. Townships and sections
398) Related to the legal description of land, what is a monument?
a. 43,560 square feet
b. A permanent land marker sometimes used in legal descriptions
c. A point from which elevations are measured
d. The subdivision of air above the land
399) How is the grid that’s used in the rectangular survey system laid out?
a. The numbers are read left to right.
b. The numbers are read right to left.
c. The numbers start in the center and spiral out clockwise.
d. The numbers start in the northeastern corner and follow a zigzag pattern.
400) Absent a legal description, what are other ways to identify a property?
a. A legal description is the only way to identify a property
b. Family photos
c. Satellite imagery
d. Street addresses and tax map personal identification numbers
401) Which of the following is a key consideration and starting reference for a metes and bounds description?
a. Base line
b. Benchmark
c. Point of beginning
d. Principal meridian
402) Why is it important that the legal description appears in real estate documents?
a. It defines the duties an agent owes a client.
b. It details the terms for a lease.
c. It outlines all of the terms of a real estate purchase.
d. It precisely locates the property and its boundaries.
403) Which of the following is the least specific method for describing a property?
a. Lot and block description
b. Metes and bounds description
c. Rectangular survey system description
d. Street address
404) How large is a section used in the rectangular survey system?
a. 640 acres
b. 640 miles
c. 640 square feet
d. One acre
405) What does the lot and block system use to develop a property’s legal description?
a. Compass headings and directions
b. Plat references
c. Principal meridians and base lines
d. Townships and sections
406) Kellan and Stacy are in the midst of a property dispute. Each party has a legal description and survey that show conflicting boundaries between their properties. What may be the best way to resolve this dispute?
a. One property owner can sell their property to the other.
b. They must agree between themselves where the true boundary lies.
c. They must take the dispute to court.
d. They should each hire a land surveyor to determine the boundary.
407) Shannon is reading through paperwork related to her upcoming home purchase when she comes across the following: “Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West.” What did Shannon just find?
a. Legal description
b. Mortgage clause
c. Quitclaim deed
d. Tax description
408) If the land is described as “Lot 6 of Block 3 of the East Subdivision plat as recorded in Map Book 18, Page 11 at the Recorder of Deeds,” what type of legal description is being used?
a. Lot and block
b. Metes and bounds
c. Monument system
d. Rectangular government survey system
409) What is a bound?
a. A line that runs east to west
b. A line that runs north to south
c. A physical feature that defines the boundaries of the land
d. The direction and distance of a line forming the boundary of a property
410) What is a plat map?
a. A detailed depiction of air lots above the land
b. A detailed map of a subdivision that includes boundaries, measurements, and distances between points
c. A map showing all of the benchmarks located in the U.S.
d. A map tax assessors use when determining the value of a property
411) What is a section?
a. A 36-square-mile square formed in the use of the rectangular survey system
b. A one-square-mile square formed in the use of the rectangular survey system
c. A permanent reference point used in the measurement of elevations
d. The point of beginning used in a metes and bounds survey
412) Which of the following statements related to condominiums and surveys is true?
a. All states require that land used for condominiums be surveyed by a registered land surveyor and that a plat map be prepared to show the elevations of the floor and ceiling boundaries, as well as the vertical boundaries of each unit.
b. Condominiums are not required to be surveyed.
c. Multi-level condominium units cannot be surveyed.
d. Only the ground floor of a condominium unit is surveyed.
413) The process of determining the location, size, and boundaries of a parcel of property is called ______.
a. Platting
b. Subdividing
c. Surveying
d. Title searching
414) Jamie wants to find the legal description for a property. What’s her best bet?
a. County recorder’s office, registry of deeds, or a title company
b. Motor vehicle department
c. Neighborhood notice
d. Real estate flyer
415) Which type of legal description is this: “Plat of Block 28, Woodmen Heights Tract, recorded in Map Book 27, page 68, at the Eldor County Records Office”?
a. Benchmark
b. Lot and block
c. Metes and bounds
d. Rectangular government survey
416) Brandon is interested in purchasing a piece of property, but before doing so, he’d like to verify the accuracy of the legal description. Which of these options will accomplish this?
a. Having a home inspection performed
b. Having an appraisal performed
c. Having a survey conducted
d. Looking up the property on Google
417) What is the oldest type of legal description used in the U.S.?
a. Assessor’s parcel number
b. Lot, block, tract
c. Metes and bounds
d. Rectangular government survey
418) In the rectangular survey system, what is a base line?
a. An east-west line used as a reference point
b. A north-south line used as a reference point
c. The center-most section identified
d. The center-most township identified
419) How are sections and townships related to one another, relative to the rectangular government survey system?
a. Sections are divided into townships.
b. Townships and sections are opposites.
c. Townships and sections are synonyms.
d. Townships are divided into sections.
420) When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: “Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet.” In this description, what does “north for 314 feet” represent?
a. A benchmark
b. A bound
c. A mete
d. A monument
421) Which type of legal description do courts prefer?
a. Benchmark
b. Lot and block
c. Metes and bounds
d. Rectangular government survey
422) If the land is described as “Beginning at the great oak 60 yards from the center of the Rock River that runs north to south through the county,” what type of legal description is being used?
a. Lot and block
b. Metes and bounds
c. Monument system
d. Rectangular survey system
423) Benjamin is interested in a piece of property but is curious about its exact legal description. What’s one of the best ways to find this information?
a. Ask neighbors where the property boundaries are.
b. Look for the point of beginning.
c. Look up the latitude and longitude coordinates of the property on Google Maps.
d. Reference a previous property deed.
424) Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?
a. Lot and block
b. Metes and bounds
c. Monument and benchmark
d. Rectangular government survey
425) Which legal description method is regulated by the U.S. Department of the Interior’s Bureau of Land Management?
a. Governmental
b. Lot and block
c. Metes and bounds
d. Rectangular government survey
426) Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan’s property. Stan filed a civil legal action against Emile. Which of these would the court use to determine the actual lot line?
a. Aerial photographs
b. An affidavit from a surveyor
c. Legal descriptions of both properties
d. Testimony from long-time neighbors
427) Which type of survey system is also known as the public land survey system (PLSS)?
a. Address and zip code
b. Lot and block
c. Metes and bounds
d. Rectangular survey
428) When measuring elevations, what is used instead of a point of beginning?
a. Datum
b. Equator
c. Monument
d. Sea level
429) A drawing prepared by a surveyor showing the layout and location of a tract of land, including boundaries, designations of lots and blocks, and names of streets, is called a ______.
a. Metes and bounds description
b. Plat
c. Rectangular survey
d. Topographical map
430) A professional, on-site measurement of the lot lines and dimensions of a property is known as ______.
a. An abstract
b. An appraisal
c. An inspection
d. A survey
431) Which of the following is the best definition of a township?
a. A 36-square-mile square formed when using the rectangular survey system
b. A one-square-mile square formed when using the rectangular survey system
c. A permanent reference point used in the measurement of elevations
d. The point of beginning used in a metes and bounds survey
432) A surveyor created a lot and block survey for a new residential development. The first thing she did when she surveyed the new neighborhood was to reference a metes and bounds land description. From there, she divided the land into numbered lots and blocks. This output is known as a ______.
a. Benchmark
b. Monument
c. Plat map
d. Rectangular survey
433) Datums and benchmarks are used for ______.
a. Calculating area
b. Determining land acquisition costs
c. Measuring distance
d. Measuring elevations
434) What is a sketch that shows the location, size, and shape of any improvements on a property being surveyed?
a. Building plan
b. Legal description
c. Plat reference map
d. Spot survey
435) What is the starting point for any land surveyor who has been asked to perform a survey?
a. A review of existing historical records
b. Satellite photos
c. The point of beginning
d. Visiting the site
436) What does a land surveyor produce?
a. A determination of value of a property
b. A report detailing defects of a property
c. A survey that includes a legal description and a survey sketch
d. Property boundaries
437) Which of these is usually a brass marker that is used to mark a datum?
a. Base line
b. Benchmark
c. Monument
d. Principal meridian
438) Jenna’s closing agent has asked her to get a spot survey of the property she’s purchasing. What will this accomplish for Jenna and the closing agent?
a. It decides the location of the point of beginning.
b. It notes the location of major appliances and features inside a home.
c. It notes the location, size, and shape of any improvements on a property.
d. It’s provides a sketch based upon driving by the property.
439) Which of the following are possible effects of an incorrect legal description?
a. Clearer title for the property owners
b. Fewer legal issues for real estate licensees
c. No effect
d. Unintentional encroachment, title and legal issues
440) A ______ is a point, surface, or line used as a reference for measuring elevation.
a. Base line
b. Datum
c. Monument
d. Principal meridian
441) For what are datums and benchmarks used?
a. Calculating area
b. Determining land acquisition costs
c. Measuring distance
d. Measuring elevations
442) What’s the permanent marker used primarily for marking datums when measuring elevation?
a. Benchmark
b. Monument
c. Point of beginning
d. Sea level
443) What describes the different symbols that are used in a survey sketch?
a. Legal description
b. Spot survey
c. Survey legend
d. Surveyor’s stamp
444) What’s the point from which elevation is measured?
a. Base line
b. Datum
c. Monument
d. Principal meridian
445) What signifies that a survey is certified and represents a guarantee of accuracy?
a. Spot survey
b. Survey legend
c. Surveyor’s stamp
d. Title insurance policy
446) A lot measuring 108,900 square feet is for sale. How many acres is this?
a. Five
b. One
c. Three
d. Two-and-a-half
447) If a farm that’s for sale measures one and three-quarter square miles, how many acres is it?
a. 1,050
b. 1,120
c. 1,280
d. 875
448) A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what’s the list price for this parcel? Round to 10ths of an acre for your calculation.
a. $1,527,273
b. $752,066
c. $756,000
d. $763,560
449) The cost of a parcel of land is 50 cents per square foot. Candace wants to purchase one acre. How much will this cost?
a. $21,780
b. $43,560
c. $500
d. $5,000
450) How many acres are in a square mile?
a. 1,760
b. 43,560
c. 5,280
d. 640
451) James purchased five acres of land for $75,000. What was the cost per acre?
a. $15,000
b. $25,000
c. $375,000
d. $5,000
452) How do you determine the cost of purchasing land?
a. Divide the cost per unit by the land area
b. Divide the land area by the cost per unit
c. Multiply the land area by $100 per acre
d. Multiply the land area by the cost per unit
453) How many square feet are in an acre?
a. 10,000 square feet
b. 43,560 square feet
c. 53,640 square feet
d. 640 square feet
454) How long is a mile?
a. 1,000 feet
b. 1,000 yards
c. 43,560 feet
d. 5,280 feet
455) Gabi owns one parcel measuring one square mile and another parcel measuring one mile by a half mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land?
a. $1,953.13
b. $2,604.17
c. $3,125.00
d. $3,906.25
456) How many feet are in a mile?
a. 2,400
b. 320
c. 5,280
d. 6,044
457) How many acres are in a quarter section in a rectangular survey?
a. 160
b. 450
c. 640
d. One
458) A property is 330 feet long by 100 feet wide. How many square feet is the property?
a. 10,300
b. 30,000
c. 3,300
d. 33,000
459) An 800-square-foot rectangular building sells for $75,000. What’s the cost per square foot?
a. $187.50
b. $46.88
c. $60.50
d. $93.75
460) A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400 feet deep. What was the price per front foot of the property?
a. $1,335.67
b. $2,000
c. $363.64
d. $598.95
461) Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What’s the total square footage?
a. 2,200 square feet
b. 3,000 square feet
c. 750 square feet
d. 850 square feet
462) Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank’s property?
a. $3,500
b. $4,375
c. $4,955
d. $5,250
463) Alana and Michael want to build a 5,000-square-foot ranch home on two acres of land they just bought. Once the house is built, how many acres of land will remain unbuilt?
a. 0.88 acres
b. 0.89 acres
c. 1.86 acres
d. 1.89 acres
464) Your client, a builder, is considering buying three adjacent lots. They each have the same depth: 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?
a. 446 feet
b. 462 feet
c. 464 feet
d. 466 feet
465) How much would a lot that is 400 feet wide by 500 feet long cost at $900 per acre?
a. $2,200
b. $3,060
c. $4,132
d. $4,500
466) A four-bedroom, four-bath, 4,875-square-foot house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house?
a. $45.64
b. $82.15
c. $86.72
d. $93.00
467) A lot measuring three-fourths of an acre is for sale. How many square feet is this?
a. 10,890
b. 14,520
c. 32,670
d. 43,560
468) Clint is interested in making an offer on a house with hardwood floors that will need to be replaced. The hallway is 18 feet by 6 feet. The kitchen is 20 feet by 30 feet. The living room is 25 feet by 45 feet. There are two bedrooms, which measure 12 feet by 16 feet each, plus a master bedroom that is 14 feet by 20 feet. If the cost of the flooring is $5.48 per square foot, and the cost of installation is $1.49 per square foot, how much can Clint plan to spend to replace the floors?
a. $13,683.56
b. $16,065.85
c. $16,309.80
d. $17,404.09
469) An area of 640 acres is equal to ______.
a. One hectare
b. One kilometer
c. One square mile
d. One township
470) When a city is determining zones, what should be followed?
a. Construction standards
b. Federal zoning codes
c. State zoning codes
d. The comprehensive plan
471)
472) When the planning board gets together, Carl focuses on commercial aspects, Renee focuses on residential areas, and Arthur focuses on agricultural spaces—all without any insight from one another. What type of planning is this?
a. Form-based planning
b. Integrated planning
c. Pocket planning
d. Traditional planning
473) Spark City has built a new city courthouse. The construction caused a landslide, which buried most of Joe’s farmland; now it can no longer be used for farmland. Joe is bringing an action against the city for his property loss. What is this an example of?
a. Condemnation
b. Eminent domain
c. Foreclosure
d. Inverse condemnation
474) The Johnsons have owned a small restaurant for more than 20 years. It’s open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons’ restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.
a. Condemnation
b. Eminent domain
c. Escheat
d. Inverse condemnation
475) Police power is the government’s authority at what level(s)?
a. At any level
b. Federal only
c. Local only
d. State only
476) Which statement best describes traditional planning?
a. Developers identify how land will be used.
b. Residents determine how land will be used.
c. Specialists with different areas of expertise work separately and focus on designing “their” areas.
d. Specialists with different areas of expertise work together, focusing on overall use.
477) _________ is the power of the government to take private land for public use.
a. Eminent domain
b. Encumbrance
c. Escheat
d. Foreclosure
478) At what level of government are budgeting, site plan review, and building codes controlled?
a. Federal
b. Federal and state
c. Local
d. State
479) The Kelo vs. City of New London U.S. Supreme Court ruling was controversial because the U.S. Constitution prohibits the government from taking private property except for “public use”. What governmental power was central to this case?
a. Eminent domain
b. Escheat
c. Police power
d. Taxation
480) The power of ______ was commonly used by community redevelopment agencies (CRAs) to acquire blighted properties.
a. Condemnation
b. Eminent domain
c. Escheat
d. Inverse condemnation
481) What’s inverse condemnation?
a. It occurs when a property owner dies without a will, heirs, or creditors.
b. It occurs when government actions deprive a property owner of the value of the property without offering just compensation.
c. It occurs when municipalities pass enabling acts.
d. It occurs when the government places a lien on a property due to failure to pay taxes.
482) When government regulation causes a land owner’s property to decrease in value, it’s called ______.
a. Condemnation
b. Eminent domain
c. Escheat
d. Inverse condemnation
483) Under what type of police power is a property owner compensated for the loss of property?
a. Eminent domain
b. Escheat
c. Riparian
d. Taxation
484) Which agency administers the Interstate Land Sales Full Disclosure Act?
a. Consumer Financial Protection Bureau
b. Department of Energy Conservation
c. Developers Land Sales Act
d. Housing and Urban Development
485) A ______ is created after a jurisdiction’s general plan is adopted. It provides more detailed information and aids in the implementation of the general plan.
a. Development plan
b. General plan
c. Specific plan
d. Zoning map
486) Adams County implemented a 10 p.m. curfew for youths under age 18 because of the high number of fights that have been occurring late at night in public places. Which of the following gives Adams County the right to restrict the movements of its minor citizens?
a. Doctrine of laches
b. Municipal master plan
c. Police power
d. Power of escheat
487) What type of police power allows cities to identify specific uses for an area?
a. Condemnation
b. Eminent domain
c. Escheat
d. Zoning
488) In the movies, a shady salesperson might say “I have some great farmland to sell you in the Midwest; just take a look at this brochure and let me know if you’d like to buy!” The federal government passed a law to prevent such fraudulent sales of property sight unseen. What is that law?
a. Interstate Citizens Protection Act
b. Interstate Land Sales Full Disclosure Act
c. Police Power Act
d. Subdivision Act of 1997
489) The government’s authority at all levels to ensure the health, safety, and welfare of its citizens, which includes the control of public land use, is the definition of ______.
a. Condemnation
b. Eminent domain
c. Police power
d. Sovereignty
490) Which of the following is a true statement about police power and public land use controls?
a. Government agencies may exercise police power only when it does not restrict the freedom of its citizens.
b. Local governments and their planning boards control budgeting, site-plan review, and building codes.
c. Planning, zoning, and subdivision development are primarily controlled at the state level.
d. Police power is citizens’ rights to police themselves.
491) When it came time to plan the city, Arlene (the agriculture specialist), Robert (the residential guru), and Carmen (the commercial genius) all locked themselves in a room and planned the area together. What type of planning is this?
a. Form-based planning
b. Integrated planning
c. Pocket planning
d. Traditional planning
492) Local authorities lack police power over which of the following?
a. Budgeting
b. Federal government construction projects
c. Subdivision development
d. Zoning
493) What police power did community redevelopment agencies (CRAs) use?
a. Condemnation
b. Eminent domain
c. Escheat
d. Inverse condemnation
494) After a general plan is developed, what is the next step in the adoption process?
a. Developers bid on areas they would like to develop.
b. Residents vote on the plan.
c. The plan is reviewed at a public hearing by the local legislative body.
d. The plan is reviewed at a public hearing by the planning commission.
495) The Kelo vs. City of New London U.S. Supreme Court ruling was controversial because the U.S. Constitution prohibits the government from taking private property except for “public use”. What governmental power was central to this case?
a. Eminent domain
b. Escheat
c. Police power
d. Taxation
496) Can police power ever be used in a way that restricts citizens’ freedom?
a. No, that’s beyond the scope of police power.
b. Yes, but only when the citizen has committed a crime.
c. Yes, if it’s for the public good.
d. Yes, that’s the purpose of police power.
497) The process in which the government actually takes someone’s property through the power of eminent domain is called __________.
a. Condemnation
b. Encroachment
c. Encumbrance
d. Escheat
498) A ______ is created after a jurisdiction’s general plan is adopted. It provides more detailed information and aids in the implementation of the general plan.
a. Development plan
b. General plan
c. Specific plan
d. Zoning map
499) Jeffersontown has a zoning ordinance that requires all properties in a designated historic district to have brick or wood plank facades. No aluminum, cement board, or vinyl siding is allowed. What type of zoning is this?
a. Aesthetic zoning
b. Downzoning
c. Incentive zoning
d. Spot zoning
500) What’s one of the ways that bulk zoning achieves its objectives?
a. Through architectural style requirements
b. Through minimum height requirements
c. Through minimum parking space requirements
d. Through setbacks
501) What purpose does bulk zoning serve?
a. It homogenizes the look of the area.
b. It keeps similar races together.
c. It provides increased density.
d. It restricts building density.
502) Which of the following situations may result in inverse condemnation?
a. Property taxes rise because of an increase in property value.
b. Property values decrease because adjacent property was rezoned.
c. Property values decrease because the property was rezoned.
d. The government takes private property for public use and compensates the owner.
503) Residents of Tinytown have been complaining to town officials that the village-like character of their town is being affected by the medium-rise condos that developers are building on the edge of town. In response, local government officials rezoned the areas on the edges of town as parklands. What type of zoning is this?
a. Aesthetic zoning
b. Downzoning
c. Incentive zoning
d. Spot zoning
504) The Druid Hills neighborhood sits firmly within a single-family residential zoning area. Most of the lots are one-third of an acre or larger. A 20-acre parcel on the edge of the neighborhood sold recently. The buyer wants to build condominium flats since multi-family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this?
a. Aesthetic zoning
b. Downzoning
c. Incentive zoning
d. Spot zoning
505) Your clients, the Harpers, live in Area B that’s adjacent to Area C; Area C was recently downzoned. If the Harpers believe the rezoning has harmed their property values, what can they do?
a. File a claim of inverse condemnation.
b. Move to Area C and file a claim.
c. Nothing, because they don’t live in the rezoned area.
d. They must sell to prove a loss of value.
506) Zoning that preserves the architectural style and cohesive appearance of an area is termed ______.
a. Aesthetic zoning
b. Architectural zoning
c. Bulk zoning
d. Density zoning
507) The Town of Petersville has just decided to restrict density in one area of town that previously allowed a higher density. This is known as ______.
a. Aesthetic zoning
b. Density zoning
c. Downzoning
d. Reduction zoning
508) FAR, or floor-to-area ratio, includes ______.
a. All of the habitable structures on a lot
b. All structures, including habitable structures and parking structures, but not parking lots
c. None of the habitable structures on a lot
d. The area within parking lots or parking structures
509) Which of the following statements is true about zoning classifications?
a. A property that’s zoned residential may be either single-family or multi-family.
b. A residential property may only have one use.
c. Condos are always commercial property.
d. Multi-family housing is zoned commercial.
510) What is a buffer zone?
a. A reduction in density
b. Rezoning of various spots in a city, town, or village that have similar architectural styles
c. Strips of land that are used to separate property dedicated to one use from property of another use
d. Zoning targeted to a specific demographic make-up
511) What’s the definition of a group home?
a. A facility where unrelated adults live
b. A home that’s grouped closely to other dwellings for increased density
c. An institution, such as a prison or mental health facility
d. Any multi-family dwelling
512) One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______.
a. Bulk zoning
b. Commercial zoning
c. Density zoning
d. Residential zoning
513) You’re on a planning board that’s discussing how to keep the city more livable by reducing building density. The subject of bulk zoning comes up. What is your response?
a. “That applies to commercial areas only.”
b. “That’s a great way to meet our objectives.”
c. “That’s crazy. We’re trying to reduce density, not increase it.”
d. “That will work for residential areas, but what about commercial?”
514) If downzoning occurs in one area, reducing property values in adjacent areas, what can the homeowners in those adjacent areas do?
a. File a claim for inverse condemnation.
b. Require a zoning change to their own property.
c. Sell at a loss and file a claim.
d. Sue their neighbors.
515) A town has just assigned a lower-density use zone to an area that previously allowed higher density. What’s one reason the town may have done this?
a. To improve property values
b. To increase density in surrounding areas
c. To increase taxes
d. To limit overgrowth
516) The Arbor Heights community passed a zoning ordinance that requires group homes designated for disabled citizens to be situated outside of city limits. This is a violation of the ______.
a. City Charter Act
b. Fair Housing Act
c. Municipality Zoning Act
d. Zoning Disability Act
517) Which zoning classification would be used solely for the development of a home?
a. Industrial
b. Mixed use
c. Planned use
d. Residential
518) A town passes a zoning ordinance preserving the architectural style of an area and requiring plantings in the parking strips. This is an example of ______.
a. Aesthetic zoning
b. Architectural zoning
c. Bulk zoning
d. Variance zoning
519) Which type of zoning classification is used for areas that are undeveloped or are used to raise animals or plants?
a. Agricultural
b. Commercial
c. Industrial
d. Residential
520) Cluster zoning would include single-family homes, townhomes, apartments, and condominiums on a single parcel, provided that the developer leaves a portion ________.
a. Of each building for a community room
b. Of the parcel for parking
c. Of the parking lot for RV parking
d. Open for a playground, a park, and a walking path
521) Tres owns a warehouse in an area that is zoned light industrial. With an increased demand for housing in the area, Tres wants to create loft-style condos and have his property designated as residential, even though the surrounding buildings will remain light industrial. What type of zoning is this?
a. Aesthetic zoning
b. Downzoning
c. Incentive zoning
d. Spot zoning
522) A new development is going up just outside city limits where the population is expected to grow significantly in the next decade. The development will consist of commercial properties in one quadrant near a main road. The other areas are designated residential and will include single-family residences and multi-family townhomes. A small number of the single-family homes will border a golf course that is at the center of the development. What type of zoning is this an example of?
a. Conforming
b. Exclusive-use
c. Non-conforming
d. Planned unit development
523) Which of the following is a type of zoning action?
a. Aesthetic
b. Bulk
c. Moratorium
d. Rural
524) Which of the following actions likely requires a variance?
a. A change in architectural style
b. A garage repair
c. An addition which alters the setback
d. A remodel involving a different internal layout
525) Which of the following must occur before zoning changes are made?
a. Local development experts must be consulted.
b. Public hearings must be held.
c. The real estate commission must approve the changes.
d. Voters in that jurisdiction must vote to approve the change.
526) Which of the following is true about zoning?
a. Proposed zoning ordinances are examined for fairness before being enacted.
b. While zoning may impact a community, it does not impact individual property owners.
c. Zoning changes are enacted by local governments without public input.
d. Zoning does not impact property value.
527) Which of the following is a common action of historic preservation commissions?
a. Adopting ordinances to protect the historical character of the area
b. Buying any properties that are listed for sale in the area
c. Demolishing properties in the area
d. Prohibit construction or renovations of any kind
528) Which of the following statements about zoning ordinances is true?
a. Before zoning ordinances are changed, they must be examined for fairness and reasonableness.
b. Zoning ordinance changes apply to specific properties in different ways.
c. Zoning ordinance changes impact communities, but not individual property owners.
d. Zoning ordinance changes impact individual property owners, but not communities.
529) April was able to establish a day care in a residential neighborhood, where the zoning wouldn’t normally be permitted. This required permission from the planning commission and ______.
a. A special use permit
b. A tax referendum
c. A variance
d. A zoning ordinance
530) Back in the 1930s, the house at 102 Barbour Street was the only one in sight. Since then, however, the town has grown considerably and the once-residential Barbour Street is an industrial zone, with the residence at 102 Barbour Street in the middle of it all. What type of zoning does the residence demonstrate?
a. Conforming zoning
b. Non-conforming zoning
c. Planned unit development
d. Spot zoning
531) Your client, William, wants to run a tax office out of his home. He lives in an area that is not zoned for that purpose. What must William obtain to operate his tax office legally?
a. A home business waiver
b. A petition from his neighbors
c. A special use permit
d. A variance
532) The purpose of ______ commissions is to preserve buildings, landmarks, and the character of certain areas.
a. Historic preservation
b. Human rights
c. State real estate
d. Wetlands
533) What’s the difference between a special use permit and a variance?
a. A special use permit allows a deviation from the requirements of the zoning ordinance; a special use permit is the temporary use of another’s property.
b. A variance allows a deviation from the requirements of the zoning ordinance; a special use permit allows a use not ordinarily allowed in the zone.
c. A variance is temporary; a special use permit is permanent.
d. A variance relates to building height only; a special use permit can relate to building height, use, or setback.
534) The developer of a new subdivision is placing residential properties closer together, allowing him to include large open spaces throughout the development to build bike and walking trails, as well as a community pool and recreation center. What type of zoning is this?
a. Cluster
b. Conforming
c. Non-conforming
d. Spot
535) Which of the following is true about a variance?
a. It involves eminent domain.
b. It’s a use that was in place when the zoning ordinance was enacted.
c. It’s temporary.
d. To obtain it, the owner must show hardship.
536) What describes both the type of the development and the regulatory process that allows the developer to meet the community’s goals for land use and density without being restricted by existing zoning requirements?
a. Cumulative zoning
b. Planned unit development
c. Spot zoning
d. Subdivision
537) Which of the following is the sunshine law based on?
a. The First Amendment
b. The Freedom of Information Act
c. The Sarbanes-Oxley Act
d. The SPEECH Act
538) Builders weren’t allowed to develop new properties in Cityville for six months. This is likely because the city had enacted a ______.
a. Condemnation
b. Moratorium
c. New tax base
d. Zoning ordinance
539) When would a sheriff’s deed be used?
a. Property owned free and clear by the owner(s)
b. Property that is being passed down in probate
c. The court-ordered sale of a property
d. To clear interest in property from the title
540) Which term describes an oath by a subscribing witness, such as a notary public, that the grantor’s signing of the deed is a voluntary act and enables a deed to be recorded?
a. Acknowledgment
b. Grantee
c. Granting clause
d. Habendum clause
541) Siblings Shasta and Ruby inherited their mother’s home when she died. Ruby had been taking care of their mom, so she was already living in the home and continued to do so. Shasta lived in another state and remained there. After some years, Ruby decided to sell the house. Shasta agreed to the sale, and even offered to give up any of his ownership so Ruby could enjoy all the profits of the sale. What’s the best deed to use in this situation?
a. Executor’s deed
b. Quitclaim deed
c. Trustee’s deed
d. Warranty deed
542) Which of the following is an instrument of conveyance?
a. Deed
b. Mortgage
c. Promissory note
d. Title insurance policy
543) Joe Bob is the grantor of a deed, and is in the final stages of transferring a deed to the new owner, Frank. What must Joe Bob do in order to satisfy delivery and acceptance of the deed to Frank?
a. Deliver the deed to Frank, his agent or attorney, or the title company issuing the title
b. Get Frank’s signature on the official acceptance letter notarized and recorded at the county clerk’s office.
c. Send the deed via certified mail so that the shipment is officially tracked
d. Submit delivery and acceptance paperwork to the Board of Submission and Acceptance
544) Select the statement that accurately reflects the type of deed used for the transfer.
a. A bargain and sale deed conveys property in a foreclosure proceeding.
b. A deed of trust conveys real estate to a trustee for the beneficiary named in the deed.
c. A referee’s deed conveys property from one spouse to another in a divorce proceeding.
d. A warranty deed conveys REO property from the lender.
545) Which kind of deed releases any rights of the grantor to the property to the grantee and clears any clouds on a title, but does not offer any warranties to the grantee?
a. Executor’s deed
b. Grant deed
c. Quitclaim deed
d. Sheriff’s deed
546)
547) Which one of the following covenant terms promises that the grantor will provide any additional assurances that the grantee reasonably requires and perform any acts necessary to correct any defect in the title being conveyed?
a. Against encumbrance
b. Further assurances
c. Quiet enjoyment
d. Warranty
548) Select the statement that correctly exemplifies the covenant term.
a. The covenant against encumbrances is the grantor’s guarantee that he or she owns the property being conveyed.
b. The covenant for further assurances assures the grantee that there are no undisclosed encumbrances on the property.
c. The covenant of quiet enjoyment promises that the grantee won’t be disturbed by a title defect the grantor passes on.
d. The covenant of warranty promises that the grantor has the capacity to convey title.
549) A ______ is a method of conveying real property from one party to another.
a. Deed
b. Power of attorney
c. Promissory note
d. Recordation
550) Jerry’s client Carla has successfully closed on the purchase of a home. The deed shows she’s taken sole ownership of the property. Which of these actions is necessary before the escrow agent can have the deed recorded?
a. Carla must name a beneficiary.
b. Carla must state her acceptance of the deed.
c. The grantor’s signature must be acknowledged.
d. The title company must issue a standard policy that validates the deed.
551) Which type of deed comes with two covenants of warranty implied in its use?
a. Grant deed
b. Quitclaim deed
c. Sheriff’s deed
d. Warranty deed
552) Which covenant term means that the grantor both has legal capacity to convey the title and also has the title to convey?
a. Further assurances
b. Quiet enjoyment
c. Right to convey
d. Warranty forever
553) Which type of deed conveys real property from a decedent’s estate to a buyer?
a. Deed in trust
b. Executor’s deed
c. Quitclaim deed
d. Referee’s deed
554) John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted’s property several years earlier. Which general warranty deed covenant does this represent?
a. The covenant against encumbrances
b. The covenant of further assurances
c. The covenant of quiet enjoyment
d. The covenant of seisin
555) Kevin and Regina sold their property to Vickey using a general warranty deed. Which one of these statements is true?
a. Either Regina or Kevin can convey the property.
b. Kevin and Regina are the grantees.
c. Vickey is the grantee.
d. Vickey is the grantor.
556) A property owner who wishes to convey property to a new owner will generally use a ______.
a. Deed
b. Lease
c. Mortgage
d. Title abstract
557) Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating?
a. Against encumbrances
b. Quiet enjoyment
c. Seisin
d. Warranty
558) Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who’s 16. Which of these must occur to make this transfer legal?
a. Christian must agree to the transfer and sign the deed.
b. Christian must provide monetary compensation to Meg.
c. Meg must sign the deed and have her signature acknowledged.
d. Meg must wait until Christian has reached the age of majority.
559) Which term refers to the person conveying title, often called the “party of the first part,” in a deed?
a. Grantee
b. Grantor
c. Notary public
d. Witness
560) Todd conveyed title to his out-of-state property to Brad using a general warranty deed. A few months later, Brad discovered that the legal description of the property on the deed was incorrect, and his property was only half the size he thought he’d purchased. He sued Todd based on Todd’s promises of ______ in the deed.
a. Consideration and compensation
b. Habendum and fair dealing
c. Quiet enjoyment and further assurances
d. Seisin and right to convey
561) What phrase is or words are required on a deed and are considered an “act of conveyance?”
a. “Between ____ and ____.”
b. “Forever and always”
c. “Grant and convey”
d. “Witnesseth and acknowledged”
562) Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?
a. The covenant against encumbrances
b. The covenant of seisin
c. The covenant of the right to convey
d. The covenant of warranty
563) Which of the following terms describes the actions required to transfer a title by deed?
a. Acknowledgment
b. Delivery and acceptance
c. Granting clause
d. Habendum
564) In order to convey real property, which one of the following documents would you use?
a. Deed
b. Mortgage
c. Promissory note
d. Title insurance
565) Which term refers to the person receiving title, often called the “party of the second part,” in a deed?
a. Grantee
b. Grantor
c. Notary public
d. Witness
566) Cheng is selling his property to Jericho. What’s the best method Jericho can use to ensure his interest in the property?
a. Ensure that Cheng signs the deed.
b. Ensure that he signs the deed.
c. Purchase title insurance.
d. Record the deed in his name.
567) Which type of deed is sometimes called a general warranty deed and contains all six covenants?
a. Bargain and sale deed
b. Quitclaim deed
c. Referee’s deed
d. Warranty deed
568) Which of the following could be a valid deed?
a. A napkin with both parties’ signatures and an oral agreement to sell the land
b. An oral agreement between two trusted individuals
c. An oral agreement between two trusted individuals and witnesses
d. A written document containing all of the required elements and adhering to all document formatting requirements
569) Which address(es) must be included on the deed?
a. The grantee’s
b. The grantor’s and the county clerk’s
c. The notary public’s and the county clerk’s
d. The notary public’s and the grantee’s
570)
571) Which option must be included on a deed for it to be valid?
a. County judge’s and sheriff’s signatures and approval
b. List of all living neighboring property owners
c. Name of next of kin for inheritance purposes
d. Names of grantor/grantee
572) Kandy was so excited to be buying her first home, a condo in a San Diego beach neighborhood. Thanks to an inheritance, she was able to pay for the property in cash! She gazed adoringly at her deed, admiring each of its elements that proclaimed her the sole owner of 1256 Voltaire Street, Unit 15. Which of these is NOT on Kandy’s deed?
a. A granting clause
b. Kandy’s signature
c. Names of the grantor and the grantee
d. The property description
573) What term is defined as the addition of value to property through labor or the addition of new materials?
a. Accession
b. Accretion
c. Alluvion
d. Avulsion
574) Jerome has four grown children. When he dies, he leaves his home to all four children, making them tenants in common with equal shares. One child wants to live in the house, another wants to use it as investment property, and two others want to sell it and take the cash. When they can’t agree on a solution, they end up in court and the property is ______.
a. Deeded by appointment
b. Foreclosed
c. Partitioned
d. Transferred via intestate succession
575) Which term is defined as someone claiming property of another simply by using it for an extended period of time?
a. Accession
b. Adverse possession
c. Dedication by deed
d. Public grant
576) What takes precedence over a deceased person’s wishes to grant his property at death, even if those wishes are specified in the decedent’s will?
a. Intestate succession
b. Location, location, location
c. Operation of law
d. Public interest
577) When co-owners of a property decide to partition the property, what does it mean?
a. One co-owner is foreclosing on another.
b. They’re dividing the property into parcels and maintaining co-ownership of each parcel proportionally.
c. They’re dividing the property proportionally so that each co-owner becomes sole owner of a portion.
d. They’re selling additional interests in the property, in essence adding co-owners.
578) Trinity has been named executor of her uncle’s will. What does this mean?
a. She receives all her uncle’s possessions and property.
b. She’s responsible for carrying out the will’s provisions.
c. She’s responsible for taking care of her uncle until his death.
d. She’s responsible for the probate of her uncle’s will.
579) Which term is defined as land that washes away and decreases the property size?
a. Accession
b. Accretion
c. Alluvion
d. Avulsion
580) Who would inherit the property in a family with legally adopted children if both parents died without a will?
a. The illegitimate children
b. The IRS
c. The legally adopted children
d. The state
581) Which term is used to describe when an owner gives or donates land or an easement for public use?
a. Accession
b. Adverse possession
c. Dedication by deed
d. Public grant
582) Which term is defined as an increase in land by the permanent and gradual withdrawal of water?
a. Alluvion
b. Avulsion
c. Dedication
d. Reliction
583) Frank had been talking about getting a will for a while now, but he never got around to it before he passed away unexpectedly. His wife and two kids were very distraught and the family got together with his only living relative, a cousin, and friends at the funeral for the first time in years. Frank’s wife is now concerned about who will get the farm where she and her children live. According to the laws of intestacy, can you figure out who will get the land?
a. The children
b. The closest living relative, Frank’s cousin.
c. The state
d. The wife
584) Susan Duffield died testate at age 49. What can be said about Susan’s estate?
a. Because of Susan’s age, any will is invalid.
b. Because of the will, it will avoid probate.
c. Because she died without a will, the estate becomes property of the state.
d. It will be put through probate.
585) Marsten is the personal representative for his grandmother’s estate. After her death, he learns that he can’t distribute the estate’s property until after the will goes through probate. What does this mean?
a. Marsten must apply through the courts to manage his grandmother’s estate.
b. The court must determine the will’s validity and supervise distribution of the estate.
c. The courts must contact all potential heirs to learn of their wishes regarding distribution of the estate.
d. The courts must review Marsten’s ability and knowledge related to distribution of the estate.
586) Which term is defined as the act of transferring away ownership of a property?
a. Alienation
b. Avulsion
c. Real transference
d. Reliction
587) Which term describes the newly formed land mass built up by the deposits of sediments on a property that belongs to the owner?
a. Alluvion
b. Avulsion
c. Erosion
d. Reliction
588) What might Trina’s mother have bequeathed to Trina?
a. Her interest in an oil drilling operation
b. Her jewelry and fine china
c. Her primary residence
d. Her vacation property
589) According to the laws of descent, who will inherit the property when there are no surviving heirs?
a. Friends of the family
b. Private auction
c. The neighboring property owner
d. The state
590) Which term is defined as the build-up of land near water from the accumulation of sand, silt, or gravel deposits?
a. Accession
b. Accretion
c. Accumulon
d. Avulsion
591) What is it called when property is taken by the state after the owner dies without heirs?
a. Accession
b. Escheat
c. Estoppel
d. Forfeiture
592) If a property owner dies intestate and no heirs or creditors can be found, what becomes of the property?
a. A lottery is held for ownership.
b. The property is combined with an adjoining property.
c. The property reverts to a former owner as recorded on the deed.
d. The state claims the property through escheat.
593) June specified in her will how title to her home would transfer. At her death, alternate conveyance occurred. What likely happened?
a. Fraud
b. Intestate hereditary
c. Operation of law
d. Testate succession
594) What do you have to prove in order to claim a piece of property through adverse possession?
a. Have a public grant land patent document
b. Must be dedicated to you by the true owner
c. Possession must be open, notorious, continuous, and uninterrupted without permission of the true owner
d. Prove the land was acquired through the accumulation of sediments
595) Which term is defined as the state government granting power, license, or real property to a private individual or individuals using a land patent?
a. Accession
b. Adverse possession
c. Dedication by deed
d. Public grant
596) Roberta worked with an attorney to prepare her will. What kind of will is this?
a. Descent
b. Functional
c. Holographic
d. Statutory
597) The terms of a person’s will are subject to ______.
a. Intestate succession
b. Legal duress
c. Nothing
d. Operation of law
598) Jardin passed away suddenly, and when his family started looking through his documents, they found a handwritten will. Which of these statements about the will is true?
a. A handwritten will, also called a holographic will, may be valid if it meets other terms for validity.
b. A handwritten will, also called a statutory will, is valid if it’s been witnessed.
c. A handwritten will is called a simple will.
d. A handwritten will is not valid.
599) What is it called when a property owner acquires additional land through manmade or natural causes?
a. Accession
b. Alienation
c. Dedication
d. Reliction
600) Your aunt bequeathed you her property in her will, but you never received it. Instead, the property went to pay her tax bill. Is this legal?
a. No, never
b. Not if there were other heirs
c. Yes, due to operation of law
d. Yes, if the will wasn’t witnessed
601) Shana received a devise from her mother. What might this be?
a. A written message
b. Her mother’s car
c. Her mother’s farm
d. Her mother’s jewelry
602) Elmer died and left a will. Before his estate can be distributed according to his wishes, it must go through ______.
a. A lawyer
b. Devise
c. Escheat
d. Probate
603) Meredith died, leaving behind a will. Although her instructions to devise her property to her daughter were explicit, her husband inherited. Why might this be?
a. Escheat
b. Intestate
c. Testate
d. The operation of law
604) Wilma died without a will. How will her heirs be determined?
a. A committee appointed by the court
b. Intestate bequest
c. Intestate succession
d. The process of escheat
605) ______ determines who the heir or heirs will be if a person dies without a will.
a. Court appointment
b. Escheat
c. Intestate bequest
d. Intestate succession
606) When tenants in common can’t agree on how to manage the property and want to terminate their co-ownership without selling the property, how can this be accomplished?
a. Foreclosure
b. Law of succession
c. Partition
d. Process of escheat
607) In a contract, consideration is the giving of ______.
a. Notice to attorneys that they may review the terms of the agreement
b. Something of value in exchange for something of value
c. Something of value in exchange for something without value
d. Thoughtfulness and courtesy to all parties
608) Which of the following best explains how the statute of frauds protects consumers?
a. It doesn’t allow people to own land unless they can afford it.
b. It provides requirements that certain contracts have to meet to be legally enforceable.
c. It puts a limit on how much interest financial institutions can charge.
d. It states that all real property sales must involve lawyers.
609) Ken signed a contract to purchase Debra’s condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken’s birthday. What was the status of the contract when Ken and Debra entered into it?
a. Executed
b. Illegal
c. Void
d. Voidable
610) A legally competent party means that an individual has the capacity, legally and ______, to enter into a contract.
a. Financially
b. Mentally
c. Morally
d. Purposefully
611) Louellen is about to take out a mortgage loan from her credit union. The contract includes the following information: Louellen is offering her house as consideration, and the credit union is offering $350,000; and Louellen will pay the loan back over a certain number of months at a certain rate. Both Louellen’s signature and the credit union representative signed it. What, if anything, is this contract missing in order for it to be legally binding, according to the statute of frauds?
a. Louellen’s credit history needs to be included.
b. Nothing is missing.
c. The condition and size of the house needs to be included.
d. The credit union’s physical address needs to be included.
612) In contract law, a “legally competent” party has the ______ to enter into a contract.
a. Financial resources
b. Legal and mental capacity
c. Legal background
d. Motivation and means
613) Bill and Mindy, who are neighbors, get into a disagreement about late-night noise. The two come to an agreement: Bill promises to stop having loud parties and Mindy promises to keep her dogs inside after 10 p.m. Their promises represent the ______ in their agreement.
a. Consideration
b. Flaw
c. Legal competency
d. Undue influence
614) A real estate contract written for an illegal purpose is ______.
a. Permissible and valid
b. Void
c. Voidable only by the buyer
d. Voidable only by the seller
615) Which of the following elements is always required for a real estate contract to be valid?
a. Attorney review
b. Consideration
c. Earnest money
d. Profit
616) Which of the following is true about the statute of frauds?
a. All types of written contracts, with the exception of email or other online communication, may be considered “in writing” and binding.
b. Any form of written contract, including email communication, may be considered “in writing” and binding.
c. Only contracts that are handwritten are considered to be “in writing” and binding.
d. Only pre-printed contracts, the blanks of which have been filled in in ink, are considered to be “in writing” and binding.
617) What’s the best definition of legal purpose?
a. Attorney consideration
b. Mentally capable of entering into a contract
c. Written for a lawful objective
d. Written for an illegal purpose
618) Robert and Sarah enter into a contract for Sarah to purchase Robert’s home. Robert decides he doesn’t want to sell, and is elated when he finds out that Sarah’s only 17 years old. Can Sarah force Robert to sell?
a. No, because Sarah can’t legally enter into a contract.
b. No, she can purchase the house if Robert doesn’t object, but can’t do so if he objects.
c. Yes, as long as she gets a legally competent party to co-sign the contract with her.
d. Yes, Sarah can require that Robert fulfill the contract terms.
619) The statute of frauds states that if a contract transferring ownership of real property is not in writing, it’s ______.
a. Enforceable
b. Executory
c. Unenforceable
d. Voidable
620) What does the parol evidence rule say about contracts?
a. All contracts, commitments, and agreements for the sale of real property must be in writing.
b. A sales contract must contain the essential elements of a contract for it to be enforceable.
c. In order for a real estate agreement to be enforceable, it must be in writing and signed by both parties.
d. The terms agreed to in a written contract are the only terms relating to that contract.
621) According to the statute of frauds, which of the following agreements needs to be in writing to be legally enforceable?
a. Condo owner Freya agreed to let her friend’s daughter stay in her spare room for four months.
b. Geoffrey agreed to work on his uncle’s farm for a few days to pay off the $300 he owes him.
c. Lara sold her book collection to her friend for $450.
d. Pam agreed to rent her house to Miguel for three years.
622) Per the statute of frauds, which of the following agreements does NOT have to be written down in order to be legally binding?
a. Sierra sells her car to her cousin for $2,500.
b. Sloane agrees to pay the $400 in credit card debt that her sister owes.
c. The Lees rent out their basement to some college students for three months.
d. Tyrone and Alaya are getting married.
623)
624) Tom and Jim are neighbors. Jim wants to buy Tom’s rental property. In the contract they sign, Jim is identified only as “the neighbor.” Which statute or contract element does this violate?
a. Fair housing
b. Legal purpose
c. Offer and acceptance
d. The statute of frauds
625) Drew and Hank were camping at Hank’s riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he’d buy it from Hank for $80,000, which Hank agreed was a fair price. It’s two months later, and Hank is upset that Drew now says he won’t buy it. Why isn’t this contract enforceable?
a. Drew didn’t have the financial resources to make the offer.
b. Real estate contracts must be in writing.
c. There was no offer and acceptance.
d. This wasn’t a legal purpose.
626) Jolene signs a contract to buy Harvey’s home. Before closing, it’s discovered that Jolene is only 16 years old. Because she’s a minor, she’s not considered legally competent to enter into a contract. Which of the parties can void the contract?
a. Harvey
b. Jolene
c. Nobody
d. Only a judge
627)
628) The residents of Blair Avenue are a close-knit bunch. They’re all young couples with small children, and they don’t want this dynamic to change when two of the couples have to move. Those couples sign an agreement promising not to sell to anyone without kids or to anyone over the age of 50. The contract can’t be enforced because it’s missing ______.
a. Consideration
b. Legally competent parties
c. Legal purpose
d. Offer and acceptance
629) A valid contract must include which of the following elements?
a. Counter-offer
b. Electronic signature
c. Fairness clause
d. Legally competent parties
630) If a party to a contract lacks legal capacity but enters into a contract anyway, which party may void the contract?
a. Both parties
b. The broker
c. The party lacking legal capacity
d. The party possessing legal capacity
631) In a real estate transaction, which of the following is established when the parties enter into an agreement voluntarily with a full understanding of the contract terms?
a. Consent
b. Consideration
c. Legal competency
d. Legal purpose
632) Both the buyer and the seller have to sign the purchase and sale agreement in order to demonstrate that ______.
a. An attorney has reviewed the contract
b. Their agents have agreed to the terms and conditions
c. The very first offer was accepted
d. They understand the terms
633) An ______ minor is considered to be a legally competent party who is able to enter a contract.
a. Alien
b. Emaciated
c. Emancipated
d. Incompetent
634) When offer and acceptance has occurred, both parties enter into ______.
a. A contingency
b. A mutual agreement
c. Consideration
d. Understanding
635) A contract for an illegal purpose is ______.
a. Fraud
b. Valid
c. Void
d. Voidable
636) To meet the requirements of the statute of frauds, an agreement must clearly identify the contract’s subject matter, present the contract’s essential terms and conditions, and ______ to be enforceable.
a. Achieve a result that’s fair to all parties
b. Be agreed to verbally
c. Be reviewed by an attorney
d. Identify the contracting parties
637) Bobby has just found out that he was named as the executor of his grandfather’s will. In accordance with the terms of the contract, he may sell his grandfather’s property while serving as a ______.
a. Lawyer
b. Partner
c. Personal representative
d. Seller representative
638) Claudia and Yves enter into contract for her to buy his condo. The written contract must _____, identify the subject matter of the contract, and present the essential terms and conditions of the contract.
a. Achieve a result that is fair to all parties
b. Be handwritten
c. Be signed by two or more attorneys
d. Name the contracting parties
639) Carl and Sadie, who are neighbors, got into a disagreement about early-morning noise on the weekends. The two came to an agreement: Carl promised to not mow the lawn before 10 a.m., and Sadie promised to put bark collars on her dogs in the early morning hours. Their promises represent the ______ in their agreement.
a. Consideration
b. Flaw
c. Legal competency
d. Undue influence
640) In the eyes of the law, why do people under age 18 lack contractual ability?
a. They have insufficient resources.
b. They lack intelligence.
c. They’re immature.
d. They’re minors.
641) Another term used to describe an executor or executrix who was named to carry out the provisions of a will is a personal ______.
a. Assistant
b. Executor
c. Lawyer
d. Representative
642) What does the parol evidence rule state?
a. All contracts, commitments, and agreements for the sale of real property must be in writing.
b. An Agreement of Sale must contain the essential elements of a contract for it to be enforceable.
c. For a real estate agreement to be enforceable, it must be in writing and signed by both parties.
d. In most cases, a written agreement is the final and comprehensive expression of the parties’ agreement. It generally prohibits introducing oral or written evidence that contradicts that agreement.
643) Sylvia, who’s 15 years old, and her neighbor Marge, who’s 24, sign an agreement that Sylvia will babysit Marge’s toddler for the summer for $10 an hour. What type of contract is this?
a. Enforceable
b. Unilateral
c. Valid
d. Voidable
644) Jessica enters into a contract to acquire real property in return for some form of consideration. On the contract, Jessica is regarded as the ______.
a. Agent
b. Broker
c. Buyer
d. Seller
645) Doris and Kathleen, who are neighbors, enter into an agreement to not permit their real estate agents to sell their homes to families with children. This agreement lacks ______, so it’s void.
a. A lawful objective
b. A mutual agreement
c. A purpose
d. Two parties
646) Which of these is an example of good consideration?
a. A payment of less than $10,000
b. A payment of more than $10,000
c. Earnest money paid with a cashier’s check or wire transfer
d. Gifting a house to a family member
647) Which of the following states that, in certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract?
a. The parol evidence rule
b. The statute of frauds
c. The statute of limitations
d. The statute of oral evidence
648) Alex, a high school freshman, started a neighborhood lawn care business. Simone decides to hire Alex to mow her lawn every two weeks. Alex presents Simone with a written contract outlining the services to be provided and the fee Simone will pay. Which of the following is true in this situation?
a. Because minors can’t enter into a contract, this contract is void.
b. Because this contract binds Alex and Simone to an obligation that’s legal for a minor to perform (mowing lawns), the contract is valid and enforceable for both parties.
c. If both parties are content to uphold their agreement, the fact that it’s not legally binding doesn’t matter.
d. Minors can’t enter into contracts, so Alex’s parents are legally obligated to uphold the contractual obligations if Alex fails to fulfill them.
649)
650) An ______ minor is considered to be a legally competent party who is able to enter a contract.
a. Alien
b. Emaciated
c. Emancipated
d. Incompetent
651)
652) Jessica enters into a contract to acquire real property in return for some form of consideration. On the contract, Jessica is regarded as the ______.
a. Agent
b. Broker
c. Buyer
d. Seller
653) All of the following are true regarding implied agreements EXCEPT which one?
a. An implied agreement is based on actions or behaviors.
b. An implied agreement is based on a formal agreement.
c. With an implied agreement, it’s possible that the other party didn’t intend to be bound.
d. With an implied agreement, there’s an increased chance of confusion.
654) Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.
a. Enforceable
b. Oral
c. Unenforceable
d. Voidable
655) You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don’t actually exist (for now), what type of contract is this?
a. Enforceable
b. Unilateral
c. Void
d. Voidable
656) Your automatic check writer wrote a check for $51.50, but your printer ran out of toner, so you had to fill in the handwritten line. In a hurry, you accidentally wrote, “Fifty-one dollars and no/100 cents.” Which amount takes priority?
a. Neither; the check is void
b. The handwritten number
c. The numerals
d. The recipient must split the difference between the two amounts
657) Which of the following is a contract that exists based on an understanding or assumption, rather than on specifically defined terms?
a. Express contract
b. Implied contract
c. Invalid contract
d. Unilateral contract
658) Which of these sentences accurately lists rules for interpreting a contract?
a. Pre-printed text takes precedence over typed and handwritten text.
b. Typed text takes precedence over handwritten text.
c. Typed text takes precedence over pre-printed text, and numbers (e.g. 2) take precedence over spelled-out numbers (e.g. three).
d. Typed text takes precedence over pre-printed text, and spelled-out numbers (e.g. four) take precedence over numerals (e.g. 5).
659) Which of the following is a primary focus of the statute of frauds as it relates to real estate transactions?
a. Anyone caught committing real estate fraud will be prosecuted.
b. Fraudulent behavior won’t be tolerated in the real estate profession.
c. Real estate purchase and sale contracts must be in writing to be enforceable.
d. There’s a limitation on how long someone can sue for fraud.
660) You receive an offer in the mail that says you’re eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?
a. Implied contract
b. Invalid contract
c. Unenforceable contract
d. Unilateral contract
661) Which of the following is true regarding express agreements?
a. Express agreements are implied.
b. Express agreements are invalid.
c. Express agreements may be written or verbal.
d. Express agreements must be lengthy.
662) Alex and Michael Helbig signed a contract to purchase their first home from sellers Joe and Bonnie Watson. Once closing occurred and all closing requirements wrapped up, the Helbigs were given the keys to their house. What type of contract do they have at this point ?
a. Executed
b. Executory
c. Implied
d. Voidable
663) You’re talking to a co-worker at lunch, and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation?
a. This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged.
b. This is an implied contract because it is not written down and nobody signed anything.
c. This is an invalid contract because it is not written down and nobody signed anything.
d. This is a unilateral contract because only one party is providing anything of value.
664) Why do you think that handwritten changes take priority over typed changes?
a. All typewriters are different.
b. It’s less likely to be done inadvertently.
c. They are made last.
d. Typed changes are the same as pre-printed changes.
665) In which of the following types of contracts does one or more of the contract’s terms still need to be completed?
a. Bilateral contract
b. Executed contract
c. Executory contract
d. Unilateral contract
666) Three of these statements about interpreting contracts are true, and one is not. Which statement is FALSE?
a. A handwritten insertion can be canceled out by typing over it.
b. Handwritten insertions take precedence over typed and pre-printed insertions.
c. If a contract shows a fee as $250 in one location and “three hundred fifty” in another, the amount of 350 will be assumed to be correct.
d. If typed text is crossed out and replaced with a handwritten note, the handwritten note is what should be executed.
667) What is wrong with this statement: “Handwritten information on a contract is not legally binding. All insertions must be typed.”?
a. Contracts are not legally binding.
b. Insertions are not allowed on contracts. They must be pre-printed.
c. Insertions do not have to be typed to be legally binding.
d. There is no reason to write by hand on a contract.
668) Rex needs to handle some money he acquired during an “unsavory” business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business deal. What kind of contract do Rex and Ben have?
a. Executed
b. Executory
c. Void
d. Voidable
669) Which type of contract is the opposite of an express contract?
a. Bilateral
b. Executory
c. Implied
d. Voidable
670) In a purchase offer, is earnest money required in order to have a binding contract?
a. No, because earnest money isn’t part of a sales contract.
b. No, because the buyer’s consideration is the promise to buy.
c. Yes, because it opens escrow.
d. Yes, because it’s the buyer’s consideration.
671) Which of these situations represents a unilateral contract?
a. Cain sells Trenton his bike.
b. Maurice promises Shelton $100 if Shelton will sell his painting. Shelton agrees, but Maurice doesn’t pay Shelton.
c. Nathan and Sue exchange vows at their wedding.
d. Sherry promises to give Brent a ride home from work, and then doesn’t show up.
672) Which of the following best describes a bilateral contract?
a. A contract for which one or more terms has yet to be completed
b. A contract in which only one of the parties offers consideration
c. A contract that involves an exchange of consideration between two parties
d. A contract that is enforceable by law
673) Which of the following describes a contract that exists based not on words, but on the parties’ actions or behaviors?
a. Executed
b. Executory
c. Express
d. Implied
674) In an addendum to the purchase and sale contract, the seller agrees to paint the house before conveying the house to the buyer. The weather changes, and the seller is unable to finish painting the house before closing. Of what is this an example?
a. A void contract
b. Contract execution
c. Legal purpose
d. Partial performance
675) Kyle promised his grandmother he’d pay her $200 a month to live in the room above her garage. He lived there a few months without paying a dime and then disappeared one night after trashing the place. How long does Grandma have to decide if she can really bring herself to sue Kyle?
a. Six months
b. Two decades
c. Two months
d. Two years
676) Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal, and Kenneth kept the earnest deposit. This is an example of ______.
a. Accepting liquidated damages
b. Accepting partial performance
c. Suing for damages
d. Suing for specific performance
677) When a contract has been breached, the wronged party may attempt to sue for punitive damages, which are ______.
a. An agreed-upon amount that the buyer will pay the seller if the buyer breaches the contract
b. Compensation for actual loss based on the contract’s value
c. Non-monetary damages
d. Payments in excess of any compensatory damages
678) Which of the following scenarios is an example of novation?
a. Cynthia has a contract with Jack to buy his house. She terminates the contract after the inspection and writes a similar contract on a new property with Jeff.
b. Doug is buying Norm’s farm, but has a serious accident and no longer wants to own a farm, so his daughter Linda decides to buy the property. Norm agrees to the substitution of Linda for Doug in the purchase contract, effectively creating a new contract.
c. Marcie contracts to buy Suzanna’s beauty salon. Marcie gets cold feet, though, and terminates the contract.
d. Using a clause in the original purchase contract, Roxanne assigns her contractual right to purchase a property to her friend, Caroline.
679) Which of these sentences accurately describes the phrase “statute of limitations”?
a. There are deadlines for certain types of legal action.
b. There are limits to how many times someone may sue another person.
c. There are limits to the monetary damages that may be awarded in a civil suit.
d. There’s a limit to the number of statutes that may be enacted each year.
680) Which one of the following statements is true regarding a partially performed sales contract that otherwise contains all of the essential elements?
a. The contract can’t close.
b. The contract is unenforceable in court.
c. The contract is void.
d. The contract is voidable.
681) Anna and Cindy entered a contract to buy Jake’s home. However, at the last minute, Cindy had a change of heart and wanted out of the deal. Anna asked another friend, Sally, if she wanted to take Cindy’s place as a co-buyer of Jake’s home. Everyone agreed to the substitution of Sally for Cindy on the contract. Of what is this an example?
a. Assignment
b. Fraud
c. Mutual mistake
d. Novation
682) DeeAnna thought she purchased an investment property, but the seller refused to deliver the title to her. DeeAnna met all of her obligations per the written contract she and the seller signed. She decided to take the seller to court in an effort to force him to hand over the title. This is an example of ______.
a. Accepting partial performance
b. Rescinding the contract unilaterally
c. Suing for damages
d. Suing for specific performance
683) Which of these situations could be most appropriately addressed through reformation of the contract?
a. Bobby the Buyer got a promotion with the same company, and a 10% raise in salary.
b. Bobby the Buyer wasn’t approved for a mortgage loan and asks Sally if he can have his earnest money back.
c. Sally the Seller and Bobby the Buyer request a new contract after Sally notices the property address is mistyped.
d. Sally the Seller decides she cannot part with her house after all. Fortunately for her, but not so fortunately for him, Bobby
684) What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?
a. Haste makes waste
b. Patience is a virtue
c. Seek the advice of an attorney
d. Time is of the essence
685) Sue Ellen has a contract to buy Roger’s house, which she has always admired, when Roger decides he’s ready to move to a senior living community. After Roger finds a suitable senior apartment and moves, Sue Ellen writes a check for the agreed-upon amount, and Roger transfers the deed to her. What is happening in this scenario?
a. Assignment
b. Breach
c. Novation
d. Performance
686) Which of these phrases is used to describe the act of correcting a contract that contains a mistake?
a. Disclosing of a contract error
b. Reformation of a contract
c. Release of a contract
d. Renewal of a contract
687) Mary agreed to buy her mother’s house when her mother planned to move to a senior living community. They signed a purchase agreement, but when Mary had to move because of work, she signed her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can’t come up with the agreed-upon funds. What’s happening in this scenario?
a. Assignment
b. Breach
c. Novation
d. Performance
688) What is it called when one party to a contract transfers the contractual rights and obligations to another but remains liable for the contract terms?
a. Assignment
b. Execution
c. Novation
d. Termination
689) Eileen entered into a contract to buy Peter’s home. The contract specified that Peter must leave the refrigerator with the home, and he must replace the roof before closing. During the pre-closing walk-through, Eileen confirmed the house had a nice new roof, but also found that Peter took the refrigerator with him. Eileen decided she didn’t want the refrigerator that much anyway so she didn’t make a fuss. This is an example of ______ of the contract.
a. Partial performance
b. Performance
c. Reinforcement
d. Voiding
690) Sam entered into a contract to sell his home to Gina. After the inspection, Gina insisted that Sam replace the damaged roof. Sam refused, and the parties agreed to cancel the deal. This is an example of ______.
a. Accepting liquidated damages
b. Accepting partial performance
c. Mutually rescinding the contract
d. Unilaterally rescinding the contract
691) Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren’t going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.
a. Accepting partial performance
b. Mutually rescinding the contract
c. Rescinding the contract unilaterally
d. Suing for damages
692) Grace found herself in a breach of contract situation where the other party met some of the terms but not others. Grace thought it would cost a lot of time and money to sue, so she decided to accept the work that had been done and call it good. This is an example of ______.
a. Accepting partial performance
b. Mutually rescinding the contract
c. Rescinding the contract unilaterally
d. Suing for damages
693) Which of the following scenarios describes an example of unilateral rescission?
a. A sales transaction falls through when Nora, the buyer, doesn’t qualify for financing.
b. Bobby, the buyer, makes an offer on a house that doesn’t meet the appraisal contingency. He cancels the sale.
c. Buyer Alice decides to join the Peace Corps. She and the seller mutually agree to cancel the sale, and the seller keeps Alice’s earnest money.
d. Sally, the seller, sells her property to two different buyers. Both buyers sue Sally for specific performance.
694) Shannon and Rene are sisters who entered into a contract to buy an income property. The sisters got into a dispute, and Shannon wants out of the deal. However, their uncle Jerry wants to replace Shannon on the contract. Shannon agrees to the substitution so they go ahead and do it. If Jerry fails to live up to his obligations under the contract though, Shannon will be held responsible. Of what is this an example?
a. Assignment
b. Fraud
c. Mutual mistake
d. Novation
695) What language may be included in a contract after the assignor’s name to make it clear that the contract is assignable?
a. “And/or assigns”
b. “Buyer beware”
c. “Spouse or partner”
d. “Time is of the essence”
696) Seller Gina feels awful that Martha, who was going to buy her property, lost her job. Gina decides to ______ Martha from the purchase contract.
a. Assign
b. Reform
c. Release
d. Rescind
697) Zack enters into a contract to buy Olivia’s home. Per the terms of the contract, Zack must put down a $10,000 earnest money deposit and have the property inspected within five days. In reality, he puts down a $12,000 deposit and has the property inspected within two days. Of what is this an example?
a. Buyer misrepresentation
b. Partial performance of the contract
c. Performance of the contract
d. Voiding of the contract
698) What’s the key difference between assignment and novation of a contract?
a. Assignment releases the original party from all obligations, while novation does not.
b. Individual contracts must specifically allow novation, but not assignment.
c. Novation is disallowed in many states, while assignment is not.
d. Novation releases the original party from all obligations, while assignment does not.
699) When a buyer breaches the real estate sale contract, the seller may file a lawsuit for compensatory damages. Which of the following best describes compensatory damages?
a. A specified monetary amount agreed upon by the buyer to pay the seller, if the buyer breaches the contract.
b. A specified monetary amount the seller agrees to pay the buyer, if the seller breaches the contract.
c. Compensation for actual loss based on the contract’s value.
d. Payment in excess of the contract’s value.
700) Mary contracted to buy her mother’s house when her mother moves to a senior living community, but now Mary has to move because of work and no longer wants to buy the house. With their mother’s agreement, Mary’s sister, Tina, steps in, releasing Mary from her obligation. They write up a new contract, with the only change being that Tina is now the party to the contract rather than Mary. What’s happened here?
a. Assignment
b. Breach of contract
c. Novation
d. Performance
701) Betty hired a contractor to replace her gutters. Within days, the gutters leaked and flooded her basement. She complained to the contractor, who replaced the gutters again. The next time it rained, the gutters leaked and flooded Betty’s basement a second time. Frustrated, Betty decided to file a lawsuit against the contractor in an attempt to recover the money she lost. This is an example of ______.
a. Accepting partial performance
b. Rescinding the contract unilaterally
c. Suing for damages and breach of contract
d. Suing for specific performance
702) In contract law, when does partial performance occur?
a. When a party acknowledges receipt of the contract
b. When a party does some, but not all, of what the party has agreed to do
c. When a party meets all terms of the contract
d. When a party rejects all terms of the contract
703) Parker entered into a contract with seller Derrick to buy Derrick’s home. Before finalizing the sale, Parker had a change of heart and decided to renounce all worldly possessions. He no longer wanted to buy Derrick’s home. With Derrick’s approval, Parker is released and Parker’s brother, Tom, takes Parker’s place as the buyer in the purchase contract. Of what is this an example?
a. Assignment
b. Fraud
c. Misrepresentation
d. Novation
704) Martha made an offer to buy Drake’s home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.
a. Accepting partial performance
b. Rescinding the contract unilaterally
c. Suing for damages
d. Suing for specific performance
705) Rescission can be ______ agreement to cancel a contract.
a. A mutual
b. An ill-advised
c. An unlawful
d. A tenuous
706) The owner of ABC Construction entered into a contract to build two homes for brothers Jack and John. The contract specified that the homes must be completed by April 1. ABC finished the homes on March 30. Of what is this an example?
a. Non-performance
b. Partial performance
c. Performance
d. Voiding
707)
708) What’s the key difference between assignment and novation of a contract?
a. Assignment releases the original party from all obligations, while novation does not.
b. Individual contracts must specifically allow novation, but not assignment.
c. Novation is disallowed in many states, while assignment is not.
d. Novation releases the original party from all obligations, while assignment does not.
709) In an addendum to the purchase and sale contract, the seller agrees to paint the house before conveying the house to the buyer. The weather changes, and the seller is unable to finish painting the house before closing. Of what is this an example?
a. A void contract
b. Contract execution
c. Legal purpose
d. Partial performance
710) What is the name of the process of substituting one party to an existing contract with a new party, releasing the original party from all contractual obligations and rights?
a. Assignment
b. Execution
c. Novation
d. Re-contracting
711) Select the correct definition for “reformation of a contract.”
a. Redrafting a contract
b. Releasing one party from a contract
c. Renewing a contract
d. Suing another party to a contract
712) Bob signed a contract to purchase Ingrid’s apartment building. Bob decided he didn’t want to be a landlord, and Ingrid decided she didn’t want to sell and move to Maui. They mutually agreed to cancel the contract, and Ingrid returned Bob’s earnest money. This is referred to as ______.
a. Assignment
b. Breach of contract
c. Novation
d. Rescission
713) This is a loss of money or anything of value, due to failure to perform.
a. Covenant
b. Forfeiture
c. Listing agreement
d. Options
714) This acts as the receipt for earnest money given by the buyer to secure an offer.
a. Covenant
b. Deposit receipt
c. Listing agreement
d. Options
715) This is a legal written agreement between a buyer and seller that states the purchase price and other terms of understanding by which real property will be transferred.
a. Contract for sale
b. Covenant
c. Listing agreement
d. Options
716) Which of these is a contract between a client and agent to sell real property?
a. Contract for sale
b. Covenant
c. Deposit receipt
d. Listing agreement
717) Which of the following means a legal section in a contract or law?
a. Listing agreement
b. Option
c. Provision
d. Tender
718) What is the deciding factor when determining whether the buyer or the seller takes the loss on a property that is taken by eminent domain?
a. The amount of the earnest deposit
b. The value of the property
c. Whether or not title and possession have transferred
d. Who has eminence
719) Which of these means, “A privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy at an agreed-upon price during a certain period of time or on a specific date”?
a. Commission
b. Listing agreement
c. Option
d. Tender
720) Which of these means, “An agent’s compensation for performing the duties of agency; usually a percentage of a property’s selling price”?
a. Commission
b. Listing agreement
c. Options
d. Tender
721) This is the legal agreement between a buyer and a broker hired to represent the buyer’s interest.
a. Buyer representation agreement
b. Covenant
c. Listing agreement
d. Options
722)
723) Sally the Seller and Bobby the Buyer are about to sign the closing documents when a fire truck rushes by. The house is burning down! The documents are not signed. Which of these outcomes adheres to the rights provided by the Uniform Vendor and Purchaser Risk Act?
a. Bobby does not have to pay the closing costs and will get his earnest money back.
b. Bobby does not have to pay the closing costs, but Sally gets to keep the earnest money.
c. Bobby must go through with the purchase and will seek reimbursement through insurance.
d. Sally and Bobby must split the loss 50/50.
724) Which of these means “to formally offer”?
a. Commission
b. Conveyance
c. Listing agreement
d. Tender
725) Which of these scenarios describes a voluntary lien?
a. Ruby hasn’t paid her property tax, so the state put a tax lien on her home.
b. Sam hasn’t paid the general contractor for the new deck he built on Sam’s house, so the contractor put a mechanic’s lien on Sam’s property.
c. Sharon purchased a condo and now the lender has a mortgage lien on the property.
d. The court ordered Bob to pay his debt to Leo and placed a judgment lien on Bob’s property when he couldn’t pay.
726) What type of lien is defined as an involuntary lien placed on all of the property received by a deceased person’s heirs?
a. Estate/inheritance lien
b. Income tax lien
c. Judgment lien
d. Mortgage lien
727)
728) Which of the following defines the term ‘lis pendens’?
a. A legal notice that a lawsuit is pending that affects the title of a property
b. A legal term that means “it depends” and requires a certain minimum sales price of the property.
c. A notice that notifies potential buyers of a pending lease
d. A public listing and notice of foreclosure of a property.
729) April owes money to quite a few people after a round of court-ordered judgment liens were placed on her property. Can you determine who would get paid first?
a. Alycea filed at the end of June and was awarded $50,000.
b. Bob filed in May and was awarded $85,000.
c. Frank filed in February and was awarded $10,000.
d. Sarah filed in March and was awarded $15,000.
730) Why is it important to publicly record a deed?
a. The title insurance policy schedule of exceptions will include anything that’s publicly recorded.
b. Title insurance policies don’t cover publicly recorded events.
c. Title insurance policies must be publicly recorded to be legal.
d. Title representatives and attorneys who perform title searches look for documents that are publicly recorded.
731) Which of these statements is NOT true about a specific lien?
a. It may allow the creditor to sell the property through a court sale (foreclosure) and be repaid from the proceeds of the sale.
b. It prevents the debtor from transferring the property until the debt has been repaid.
c. It’s a lien against a single property rather than a person.
d. It’s always involuntary.
732) How is priority determined in cases where more than one judgment lien is filed against a property?
a. The government has priority, followed by whoever is owed the most next.
b. Whoever filed their claim first receives priority.
c. Whoever is owed the most money has priority.
d. Whoever paid to receive priority service at the county clerk’s office.
733) Conrad just closed on the house he’s buying to fix up. Why should he follow up to be sure the deed has been recorded?
a. He can’t legally make any improvements to the property until the deed is recorded.
b. He doesn’t legally own the house until that occurs.
c. Recording provides actual notice that he owns the property.
d. Recording provides constructive notice that he owns the property.
734) What makes an income tax lien different from a property tax lien?
a. An income tax lien has priority over a property tax lien and will be paid first upon foreclosure.
b. An income tax lien is a general lien and a property tax lien is a specific lien.
c. An income tax lien is placed by the federal government and a property tax lien is placed by the state.
d. An income tax lien is voluntary and a property tax lien is involuntary.
735) What type of notice results from publicly recording a title transfer?
a. Actual notice
b. Attorney notice
c. Constructive notice
d. Proper notice
736) Which of the following defines an income tax lien?
a. Involuntary lien placed against a property owner’s property due to a court decree resulting from a lawsuit.
b. Involuntary lien placed against a property owner’s property for due and unpaid taxes
c. Involuntary lien placed on all property inherited by a deceased person’s heirs.
d. Voluntary lien against a single property that uses the property as collateral for repayment of a loan.
737)
738) Joshua won his lawsuit against Savannah. The judge awarded him $30,000. Savannah was unable to pay, so the court placed a ______ on her home.
a. Foreclosure action
b. Judgment lien
c. Lis pendens
d. Mortgage lien
739) Which option is true if a deed is not recorded after closing?
a. The buyer must pay a fine to the seller.
b. The entire closing is void.
c. The property’s legal ownership can be challenged.
d. The title never changes hands from the seller to the buyer.
740) Which of these scenarios describes a voluntary specific lien?
a. The court placed a lien on the property Marge inherited upon Homer’s death.
b. The IRS placed a lien on Lisa’s property when she failed to pay her income taxes.
c. When Jack and Jill refused to pay the roofing contractor, he placed a lien on their property.
d. When Rob and Sue bought their house using a mortgage, the lender put a lien on the property.
741) Under which of the following circumstances would a mechanic’s lien be attached to a property?
a. The court has determined that the owner must pay for damages from a civil court case.
b. The owner fails to pay his homeowners association dues.
c. The owner fails to pay his property taxes.
d. The owner fails to pay the builder who added an extra bedroom to the house.
742) Which option describes a real property tax lien?
a. General and involuntary
b. General and voluntary
c. Specific and involuntary
d. Specific and voluntary
743) Daisy and her kids loved their new pool, but Daisy wasn’t so happy when she received notice that the general contractor who poured the concrete had placed a lien on her home. Daisy went through her records and discovered that she had never paid the general contractor. What’s true about this situation?
a. Daisy can now place a lien on the general contractor’s property.
b. The lien is illegal.
c. This is a legal judgment lien.
d. This is a legal mechanic’s lien.
744) What type of involuntary lien is placed on a person’s estate after their death if there are unpaid debts to creditors?
a. Deceased person’s debt lien
b. Estate/ inheritance tax lien
c. Mechanic’s lien
d. Real property tax lien
745) What type of individual’s property is affected by a general lien?
a. All real property and personal property
b. One specific property
c. Only personal property, not real property
d. Only real property and not personal property
746) Dorcas and Ralph were married for 15 years. Ralph, an accountant, always took care of the bills and other financial matters for the couple. Then Dorcas discovered that Ralph had failed to pay the property tax on their property for the last three years. Which of these is likely to happen?
a. Dorcas and Ralph will be required to sell their home to the state for the amount of property tax owed.
b. The state will place a condemnation order on their property so they can’t transfer their property until the debt is satisfied.
c. The state will place a mortgage lien on their home for the amount of property tax owed.
d. The state will place a tax lien on their property so it can’t be transferred without satisfying the debt.
747) What’s the definition of a judgment lien?
a. An involuntary lien due to a court decree resulting from a lawsuit
b. An involuntary lien placed on all of the property received by a deceased person’s heirs
c. An involuntary lien placed on a person’s estate after his or her death if there are unpaid debts to creditors
d. A voluntary lien against a single property that uses the property as collateral for repayment of a loan
748) When property changes hands, the deed is recorded and a fee is charged. What is the benefit to the grantee of having the deed recorded?
a. It impacts who owns the property.
b. It protects against foreclosure.
c. It puts the public on notice regarding ownership.
d. It’s required by law.
749) What’s the term for a notice given directly to and received by a person?
a. Actual notice
b. Constructive notice
c. Proper notice
d. UPS notice
750) Which one of the following is true about ownership or title to a property?
a. Constructive notice to the public of real property ownership occurs when the deed is recorded.
b. The last party to record has priority.
c. The seller is responsible for paying for owner’s and lender’s title insurance.
d. Title isn’t finalized until the deed has been recorded.
751) Christina purchased a house from Thomas. When did she officially gain ownership of the property?
a. After the appraisal was completed
b. Prior to closing after approving the Loan Estimate
c. When actual notice of the deed was given to the mortgage company
d. With the transfer of deed from the seller to the buyer
752) What’s the definition of a judgment lien?
a. An involuntary lien due to a court decree resulting from a lawsuit
b. An involuntary lien placed on all of the property received by a deceased person’s heirs
c. An involuntary lien placed on a person’s estate after his or her death if there are unpaid debts to creditors
d. A voluntary lien against a single property that uses the property as collateral for repayment of a loan
753) April owes money to quite a few people after a round of court-ordered judgment liens were placed on her property. Can you determine who would get paid first?
a. Alycea filed at the end of June and was awarded $50,000.
b. Bob filed in May and was awarded $85,000.
c. Frank filed in February and was awarded $10,000.
d. Sarah filed in March and was awarded $15,000.
754) Joshua won his lawsuit against Savannah. The judge awarded him $30,000. Savannah was unable to pay, so the court placed a ______ on her home.
a. Foreclosure action
b. Judgment lien
c. Lis pendens
d. Mortgage lien
755) How is priority determined in cases where more than one judgment lien is filed against a property?
a. The government has priority, followed by whoever is owed the most next.
b. Whoever filed their claim first receives priority.
c. Whoever is owed the most money has priority.
d. Whoever paid to receive priority service at the county clerk’s office.
756) How long after a notice of cessation or completion is filed can a contractor file a mechanics lien?
a. Within 60 days
b. Within 90 days
c. Within six months
d. Within two years
757)
758)
759) Which of the following options describes a subordination agreement?
a. An agreement between a contractor and any subcontractors
b. An agreement between a landowner and a contractor
c. An agreement between the court and landowner to decrease property taxes
d. An agreement between two lien holders to modify the order of lien priority
760) Frank has waited 30 days after notifying a client that the project he finished remains unpaid. The client has not filed a notice of completion or cessation with the county clerk. How long does Frank have left to file a mechanic’s lien?
a. 10 days
b. 30 days
c. 60 days
d. 90 days
761) How long does a homeowner have to pay off outstanding liens against his property?
a. 30 days
b. One week before the foreclosure sale is held
c. Until the foreclosure sale is held
d. Up to 10 years
762) Karen’s house was recently foreclosed on to pay off a lien on her home. What happens to any extra money after the lien and expenses of the sale are paid?
a. It goes to Karen.
b. It’s given to a local government-approved charity.
c. The bank receives the rest as compensation.
d. The state government receives the extra funds.
763) Which action can be taken if you don’t pay a lien against your property?
a. Accretion
b. Condemnation
c. Eminent domain
d. Foreclosure
764) What does the right of redemption allow?
a. It allows a property owner to freely give away her property to another and release it of any and all liens against it.
b. It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held.
c. It allows a property owner to sue a neighboring property owner over boundary disputes.
d. It allows the government to satisfy liens against a property through a foreclosure sale.
765) What can a property owner do to stop contractors performing unauthorized work from filing mechanic’s liens later?
a. File a lien release
b. File a notice of completion
c. Post and file a notice of nonresponsibility
d. Require the contractor obtain a payment bond
766) Which option best defines an equitable lien?
a. An income tax lien
b. A real property tax lien
c. Created by a court of common law; doesn’t give the right to possession of the property
d. Created by law and gives right of possession
767) One of Jackie’s creditors sued her in civil court. As a result of the judgment against her, her house, car, and art collection were all subject to sale in order to pay the creditor. What type of lien is this?
a. General
b. Special assessment
c. Vendor’s
d. Voluntary
768) What’s it called when lien holders allow another lien holder’s claim to have priority over their own?
a. Equitable lien
b. Lis pendens
c. Subordination agreement
d. Voluntary lien
769) What would happen if you bought a house and later found out that there were unpaid liens against the property?
a. Nothing. The former owner owes the money on the liens.
b. The lien claimants would lose their liens against your property.
c. The unpaid liens could trigger a foreclosure on your property.
d. You would have to assume a loan to pay off the liens.
770) Homeowners Daryl and Stella, who are both in their 70s, paid off their mortgage during good times, but recent medical bills have overcome them and their creditors have a judgment lien against their property. They decide to sell their home and downsize to pay off their bills. Which of these is NOT true about the homestead exemption for Daryl and Stella?
a. It protects $175,000 of their equity.
b. The holder of the judgment lien will be paid before they receive their exemption.
c. They’ll need to purchase another home within six months of the sale.
d. They must first file a declaration of homestead.
771) How can a foreclosure be stopped or prevented?
a. Auction
b. Fleeing the state
c. Paying all outstanding liens against the property
d. Refinancing
772) In a foreclosure situation, which lien has highest priority of the options listed below?
a. A judgment lien
b. A mechanic’s lien
c. An income tax lien
d. A real property tax lien
773) Which process temporarily stalls foreclosure?
a. Filing for Chapter 7 bankruptcy
b. Fleeing the state
c. Making a request for a break
d. Paying off all debts
774) How are creditors or lien holders paid during a foreclosure process?
a. Lien holders are given a referee’s deed to the property.
b. Tax refunds are disbursed after supplying a foreclosure affidavit to the court.
c. The property is portioned among the lien holders to have or to sell.
d. The property is sold at auction and lien holders are paid from the proceeds of the sale.
775) You have just started a construction project on your property and have hired a contractor to do some of the work. The contractor then brings on several subcontractors to do some of the tasks. What can you do to protect yourself from subcontractor liens should the contractor not pay them?
a. File a lien release.
b. File a notice of completion.
c. Nothing. There is no defense against unpaid subcontractors.
d. Require the contractor obtain a payment bond.
776) Which term means property that is used as the owner’s primary residence?
a. Estoppel
b. Homestead
c. Lis pendens
d. Reliction
777)
778) What happens after a foreclosure if there isn’t enough money from the sale to pay off all of the lien holders against a property?
a. All claims are void if there isn’t enough money after the foreclosure sale of the property.
b. The former owner may owe a debt to lien holders who aren’t fully paid.
c. The former owner’s wages will be garnished for the remainder of what’s owed.
d. The lien holders must refile on the former owner’s next property.
779)
780) What is the six-month rule for homestead exemptions?
a. No liens may be filed against homesteads unless at least six months’ notice has been given to the homeowner.
b. The property owner has six months to sell the property after a lien is filed.
c. The property owner must live in the home for at least six months before they may qualify for a homestead exemption.
d. The property owner must reinvest the homestead exemption amount within six months in another homestead to protect it from creditors.
781) Which option best defines a statutory lien?
a. A judgment lien
b. A mortgage
c. Created by a court of common law; doesn’t give the right to possession of the property
d. Created by law and gives right of possession
782)
783) How can a foreclosure process be temporarily stalled?
a. By filing for Chapter 7 bankruptcy
b. By fleeing the state
c. By paying off all debts
d. By request
784)
785) Which document is used to establish proof of ownership?
a. Abstract of title
b. Chain of title
c. Deed
d. Title insurance
786) Jeff has filed a quiet title suit against Roger. What’s the purpose of this suit?
a. To clear up a cloud on title
b. To clear up a property line dispute
c. To exercise his right to quiet enjoyment of the property
d. To prohibit the seller from releasing the buyer’s name
787) What is the purpose of the title search?
a. To collect evidence that the title is a marketable title, meaning it’s clear and free of encumbrances
b. To ensure the current owner has the title to give to the buyer
c. To ensure the title is on the record at the local clerk recorder’s office
d. To insure the owner against any financial loss due to a defect in the title
788) Anita is a new buyer. Luckily, ______ will help her before the sale and can reimburse her after the sale if a title issue arises.
a. Her buyer’s agent
b. Her title insurance
c. Seller credits
d. Seller disclosures
789) Which of these statements is NOT true about an extended title insurance policy?
a. It covers some items that aren’t part of the public record, such as unrecorded liens.
b. It’s typically purchased for the lender.
c. It’s typically used when the property is paid for in cash.
d. The buyer will most likely pay for this policy.
790)
791) What’s a quiet title action?
a. A lien placed against a potential land owner for property purchased by another
b. An action to locate and notify all who may have some claim on the title, and determine the validity of all claims
c. A type of title insurance that reimburses the policyholder if the neighborhood is noisier than normal
d. A way to anonymously purchase property without filing the title or transfer on record
792) What type of title insurance covers defects of an incorrect survey and boundary encroachments?
a. Extended title insurance
b. Homeowners insurance
c. Standard title insurance
d. Title survey and boundary insurance
793) In a typical transaction, which of these title defects is unlikely to cause a problem for the buyer?
a. A faulty survey
b. An unrecorded lien
c. A past error in recording title transfer
d. The seller’s existing mortgage
794) Which document is used to give a buyer an overview of the title history and information about what is or isn’t covered in an insurance policy?
a. Abstract of title
b. Guarantee of title
c. Preliminary report
d. Title insurance
795)
796) Which document establishes path and proof of ownership?
a. Abstract of title
b. Chain of title
c. Deed
d. Title insurance
797) Lisa purchased an older home with a large backyard that’s perfect for her pack of collies to romp in. Six months after she bought the property, a total stranger knocked on her door and told her he’s the true property owner. After investigating, it turns out the person who sold Lisa the property had forged the deed without the true owner’s knowledge. What’s true about Lisa’s situation?
a. Her homeowner’s policy may protect her from loss.
b. Her lender must initiate a quiet title action to resolve the issue.
c. Her title insurance policy may protect her from loss.
d. The county clerk where the documents were recorded is liable.
798) Your client, Ray, is worried about title issues that may arise after closing. Remind Ray of his secret protection: ______.
a. Buyer Trust Fund
b. Litigation
c. Seller guarantees
d. Title insurance
799) As a licensee, you’re helping a couple buy a new home when you come across issues that could mean there’s a cloud on the title. What should you do?
a. Encourage the couple to move forward with the purchase and not worry about the clouded title.
b. File an affidavit with the court about the knowledge of the clouded title and tell the couple to move forward with the sale.
c. Keep moving forward with the sale but recommend the couple purchase title insurance to insure against any potential title problems.
d. Recommend the couple find another property to purchase, or ask the seller to settle the title through a quiet title action to clear any cloud before moving forward with the sale.
800) Marsha’s title insurance policy was issued on closing day, which was June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which one of these will NOT be addressed in the schedule of exceptions?
a. Marsha’s second mortgage on the property, which she plans to get next January
b. Marsha’s unrecorded lease on the property
c. Smith and Martin Building and Rehab’s mechanic’s lien, which was filed on June 18
d. The local cable company’s unrecorded easement through the property for underground wiring. Marsha disclosed this to the title company
801) What special concern do foreclosed properties often present?
a. Buying the property at a discount may have tax implications.
b. The homeowners may or may not have property insurance.
c. The property sale may be subject to additional fees that will be passed to the new buyer.
d. There could be hidden title issues.
802) What can buyers do to protect themselves from title issues when purchasing property?
a. Ensure the seller’s name is on the deed.
b. File a lis pendens claim at the court before buying the property.
c. File a security agreement at the county clerk’s office.
d. Purchase title insurance.
803) Which one of the following protects the owner against financial loss if the real estate title has defects?
a. Abstract of title
b. Chain of title
c. Deed
d. Title insurance
804) Paula is bidding on a property that’s being sold at a foreclosure auction. She’s excited about the great deal she’s getting on the property after she finds out she submitted the winning bid. What could cause Paula’s great deal to turn into a nightmare?
a. The lender has the option to refuse her bid and revoke the deed transferring ownership to Paula.
b. The previous owner may redeem the property by paying Paula at least 50% of the property’s market value.
c. The title insurance company may charge her additional fees after closing to continue the title policy.
d. The title to the property may have hidden issues that could cost her a lot of money to clear.
805) What’s a marketable title?
a. A title that a relative has gifted
b. A title that has been granted by public grant
c. A title that is about to go on the market
d. A title that is clear and free of encumbrances
806) Which document is used to provide a summary of the title history?
a. Abstract of title
b. Chain of title
c. Deed
d. Title insurance
807) Real estate licensees who want to uphold the Fair Housing Act should make a habit out of which of the following actions?
a. Disclose their protected status to all clients.
b. Present sellers with offers from people of the same class so they don’t ask the licensee to discriminate.
c. Show buyers properties in neighborhoods where they are unlikely to experience discrimination.
d. Tell potential clients in their initial meeting that they are committed to upholding fair housing laws.
808) Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?
a. Department of Civil Rights
b. Department of Equal Opportunity
c. Department of Housing and Community Development
d. Department of Housing and Urban Development
809) Individuals who experience housing discrimination are provided the opportunity to file a complaint based on the provisions of which act?
a. Americans with Disabilities Act of 1990
b. Civil Rights of 1866
c. Fair Housing Act of 1968
d. Fair Housing Amendments Act of 1988
810) Which protected class refers to a group of people who share common characteristics, typically physical characteristics, such as skin color?
a. Familial status
b. National origin
c. Race
d. Religion
811) Which of these statements best represents what happens after a federal fair housing complaint is made?
a. A fair housing specialist will review the complaint.
b. An official housing discrimination complaint will be filed, and a fair housing specialist will be assigned to the case.
c. FHEO will contact the alleged perpetrator to gather information.
d. HUD will review the complaint to determine if it’s valid.
812) In case history regarding fair housing, which case involved an ordinance that prohibited blacks from living on a block where the majority of the residents were white?
a. Brown vs. Board of Education
b. Buchanan vs. Warley
c. Jones vs. Mayer
d. Plessy vs. Ferguson
813) The Office of Fair Housing and Equal Opportunity is a part of which federal department?
a. CIA
b. HHS
c. HUD
d. NHA
814) Which type of property is exempt from the Fair Housing Act?
a. Condominium with no more than eight units
b. Condominium with no more than four units
c. Owner-occupied with no more than eight units
d. Owner-occupied with no more than four units
815) Which act created the Office of Fair Housing and Equal Opportunity under the Department of Housing and Urban Development?
a. Americans with Disabilities Act of 1990
b. Equal Credit Opportunity Act of 1974
c. Federal Fair Housing Act of 1968
d. Housing and Community Development Act of 1974
816) If a private individual owner doesn’t own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?
a. Housing designated for senior use
b. “Mrs. Murphy” exemption
c. Owner-occupied buildings with no more than six units
d. Single-family housing sold or rented without the use of a broker
817) What protected class is involved when there is discrimination due to a person being lighter-skinned or darker-skinned?
a. Color
b. Familial status
c. National origin
d. Race
818) Your client submits an application to rent a condo unit. He has excellent credit and has had the same job for a long time. He uses a cane to help with his mobility. When his application is rejected, he feels it’s due to his disability. He is protected under what federal law?
a. Civil Rights Act of 1866
b. Fair Housing Amendments Act of 1988
c. Federal Fair Housing Act of 1968
d. Housing and Community Development Act of 1974
819) Which U.S. Supreme Court decision consolidated five cases involving the constitutionality of state-sponsored segregation in public schools?
a. Brown vs. Board of Education
b. Buchanan vs. Warley
c. Jones vs. Mayer
d. Plessy vs. Ferguson
820) The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?
a. Color
b. Disability
c. Religion
d. Sex
821) Contrary to federal fair housing laws, the state where Katrina lives includes age as a protected class. Which of these statements about this conflict is true?
a. Katrina can follow either the federal or the state law as long as she is consistent.
b. Katrina is permitted to follow whichever law is least restrictive.
c. Katrina must follow federal law for any federally related transaction.
d. Katrina must follow the more restrictive of federal or state law.
822) Prior to a certain act’s existence, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing. What’s this act called?
a. Civil Rights Act of 1866
b. Fair Housing Amendments Act of 1988
c. Federal Fair Housing Act of 1968
d. Housing and Community Development Act of 1974
823) A mortgage lender has landed in hot water for fair housing discrimination. Which of these actions might have gotten the lender in trouble?
a. Denying a loan based on income-to-credit ratio
b. Denying a loan that was pre-approved after the mother stops working to care for her baby
c. Imposing different interest rates based on credit scores
d. Refusing to provide literature about loans to consumers with poor English language skills
824) If a landlord refuses to rent an apartment to two single women who live together, this is discrimination on the basis of what federally protected class?
a. Familial status
b. Lifestyle
c. Same sex relationship
d. Sex
825) Which agency enforces fair housing law?
a. FFA
b. FHEO
c. NFHA
d. NHA
826) Which of these actions is legal?
a. A landlord offers an apartment to a woman only if she goes out with him.
b. A landlord refuses to show or rent an apartment to someone who is not Christian or Jewish.
c. A landlord requires a larger deposit for each child who will be living in the home.
d. A man advertises for a roommate to share his two-bedroom apartment and specifies that he prefers female roommates.
827) A landlord with a strict “no pets” policy won’t rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation?
a. This is discrimination based on disability.
b. This is discrimination based on familial status.
c. This isn’t discriminatory because service animals are restricted to the vision-impaired.
d. This isn’t discriminatory if the “no pets” policy is universally applied.
828) In what way did the Supreme Court case of Brown vs. Board of Education affect the way fair housing laws are implemented today?
a. The court found that racially segregated school buses were unconstitutional.
b. The court legalized racial segregation through the “separate but equal” doctrine.
c. The court’s decision made segregated school boards illegal.
d. The decision overturned the doctrine of “separate but equal.”
829) A family of four, with children ages six and nine, is denied the opportunity to view an available unit in housing intended for older persons. Which of the following statements is true?
a. The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons.
b. The federal Fair Housing Act allows an exemption for communities that don’t have playgrounds or play areas for children.
c. This is a violation of the federal Fair Housing Act because it discriminates on the basis of age.
d. This is a violation of the federal Fair Housing Act because it discriminates on the basis of familial status.
830) Which agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations?
a. Office of Civil Rights
b. Office of Equal Credit Opportunity
c. Office of Fair Housing and Equal Opportunity
d. Office of Housing and Community Development
831) Why did the Civil Rights Act of 1866 fail to have an immediate impact on practice?
a. It was unconstitutional.
b. Nobody understood the Civil Rights Act.
c. The protected classes had to be approved.
d. There was no agency put in place to enforce the laws.
832) Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing?
a. Civil Rights Act of 1866
b. Equal Credit Opportunity Act of 1974
c. Fair Housing Amendments Act of 1988
d. Housing and Community Development Act of 1974
833) In what year was the Americans with Disabilities Act made law?
a. 1950
b. 1978
c. 1988
d. 1990
834) Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller’s broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?
a. Age status
b. Familial status
c. Marital status
d. Partnership status
835) The Millers moved to a small town and were interested in buying a house. At the first meeting with real estate sales professional Nora, she asked them where they went to church. They replied that they were atheists and didn’t attend church. Nora then told them that she didn’t know of any listings that met their needs, even though that wasn’t true. Nora is discriminating based on _______.
a. Familial status
b. National origin
c. Religion
d. Sex
836) Which decision stated that separate facilities for blacks and whites were constitutional as long as they were “equal”?
a. Brown vs. Board of Education
b. Buchanan vs. Warley
c. Jones vs. Mayer
d. Plessy vs. Ferguson
837) Title VIII of which law prohibits discrimination in the sale, rental, and financing of housing?
a. Civil Rights Act of 1866
b. Civil Rights Act of 1968
c. Equal Credit Opportunity Act of 1974
d. Housing and Community Development Act of 1974
838) A landlord refuses to show or rent an apartment to someone who is not Christian or Jewish. What type of discrimination is this?
a. Disability discrimination
b. Familial status discrimination
c. Racial discrimination
d. Religious discrimination
839) Which fair housing case tested discrimination in a private sale?
a. Brown vs. Board of Education
b. Buchanan vs. Warley
c. Jones vs. Mayer
d. Plessy vs. Ferguson
840) A homeowner has converted two rooms in his home to a rental unit. What does the “Mrs. Murphy” exemption permit him to do?
a. Advertise for a tenant of a specific race.
b. Move out of the property and rent both portions of it, relying on the “Mrs. Murphy” exemption to permit renting only to single females.
c. Refuse to rent to a female tenant.
d. Use the services of a real estate professional to advertise for a male tenant.
841) Which of these is something that is NOT requested in the initial fair housing complaint form?
a. A description of the alleged discrimination
b. A notarized copy of the complaint description
c. The applicable protected class of the complainant
d. The physical location of the discrimination event
842) Which protected class is protected against discriminatory practices, such as against placing limitations on the number or age of children in the residence?
a. Familial status
b. Marital status
c. National origin
d. Partnership status
843) A fair housing specialist is reviewing fair housing complaints. Which of these contains an action that is prohibited?
a. An appraiser inflates the value of a property because the person buying the property stole his girlfriend in high school.
b. A pregnant woman was not given the opportunity to rent a room in a three-bedroom house because the owner doesn’t want to live with a baby.
c. A real estate professional doesn’t respond to any requests to view a property.
d. A transgender woman is evicted from a rental property because she makes the neighbors uncomfortable.
844) When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?
a. State and local law override federal law.
b. State lawmakers decide which law prevails.
c. The conflicting law is invalidated, effectively removing the law’s requirements.
d. The state law may not remove rights granted to citizens under the federal law.
845) Which of these situations does the Americans with Disabilities Act address?
a. Marcus, a property manager, routinely dismisses rental applications from families with children under the age of 18.
b. Meridian Apartments provides a gym and pool area for residents, but it’s not accessible to residents who use wheelchairs.
c. Metro Agents hired an interpreter to assist Spanish-speaking clients with the real estate process.
d. The Golden Gate senior housing center has no exercise or activity center for its residents.
846) Which act was the first to prohibit any exceptions for discrimination based on race or color?
a. Civil Rights Act of 1866
b. Fair Housing Amendments Act of 1988
c. Federal Fair Housing Act of 1968
d. Housing for Older Persons Act of 1995
847) Which of these statements accurately describes finance- and housing-related legislation?
a. As a stipulation of the Housing and Community Development Act, lenders must offer reasons when rejecting loan applications and must respond to all applications within 30 days.
b. The Americans with Disabilities Act added familial status and disability (both physical and mental) to the existing protected classes.
c. The Equal Credit Opportunity Act of 1974 required lenders to provide consumers with equal access to credit and prohibited credit discrimination based on just the three protected classes of race, color, or national origin.
d. The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
848) Which of these scenarios is legal?
a. A homeowner makes a room available for rent in her residence, but only interviews female applicants.
b. A property manager refuses to show a property to a blind person with a guide dog because the property does not allow pets.
c. A selling agent does not respond to a request to view a listed property because the person’s accent in the voicemail is very thick.
d. The sellers refuse to consider an offer from someone who looks like a man wearing women’s clothing, because they don’t think the neighbors would be happy if they sold their house to someone who might be transgender or gay.
849) Rhonda and Jade both consider themselves to be African-American, although Rhonda has much darker skin and hair than Jade. When Rhonda went to the Valley Falls apartment manager’s office to request a rental application, she was told there were no vacancies. Jade went in a day later and received an application. This may be discrimination based on _______.
a. Color
b. National origin
c. Race
d. Sex
850) As a stipulation of a specific act, lenders must offer reasons when rejecting loan applications and must respond to all applications within 30 days. What’s the name of this act?
a. Americans with Disabilities Act of 1990
b. Equal Credit Opportunity Act of 1974
c. Fair Housing Amendments Act of 1988
d. Federal Fair Housing Act of 1968
851) Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination?
a. Fair Housing Amendments Act of 1988
b. Federal Fair Housing Act of 1968
c. Housing and Community Development Act of 1974
d. Housing for Older Persons Act of 1995
852) Which of these situations would be exempt from most provisions of the federal Fair Housing Act?
a. A homeowner engages a real estate professional to rent out his basement apartment.
b. An investor owns and rents out five duplexes.
c. A non-profit owns 20 properties that it only rents to Caucasian families.
d. The local Elks club owns a property that’s rented only to Elks club members.
853) What is the length of the statute of limitations to file a fair housing complaint with HUD?
a. 10 years
b. Five years
c. One year
d. Seven years
854) How does the Office of Fair Housing and Equal Opportunity support real estate consumers?
a. The FHEO conducts regular audits of licensee advertising activities for fair housing violations.
b. The FHEO makes loans available to first time home buyers.
c. The FHEO provides financing education for future homeowners.
d. The FHEO provides support for protected classes through the fair housing complaint process.
855) Your client tells you to do something. It would violate fair housing laws, but it will earn you an amazing commission. What should you do?
a. Explain that you cannot do it, because it’s a fair housing violation, and you could both get into trouble for doing what she’s asked.
b. Immediately fire her as your client and report her as a violator of federal fair housing laws.
c. Try to talk her out of it, but then go along with what she asks. If you don’t, someone else will, and then they’ll get to cash that giant check.
d. You should do what she asks. As your client’s agent, you owe her the duties of loyalty and obedience above all.
856) To whom/which entity should a licensee who’s been threatened with violence after refusing to violate fair housing law report the threat?
a. HUD
b. Law enforcement officials
c. The governor
d. The National Fair Housing Alliance
857) Which of these might bring a charge of illegal steering against a licensee?
a. Benny screens the properties he shows his clients based on the clients’ preferences.
b. Johnny is working with a client who has a disability. At the client’s request, Johnny refrains from showing the client listings that aren’t ADA accessible.
c. Norton encourages his clients to contact local agencies to learn more about a neighborhood’s schools, crime rates, and religious institutions.
d. When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.
858) Which of these is an example of blockbusting?
a. A lender withholds mortgage loans in areas considered demographically risky.
b. A licensee doesn’t tell her buyer client about a first-floor condo because she felt it wasn’t safe for the client.
c. A licensee focuses on showing properties in areas that are demographically similar to her buyer clients’ ethnicity.
d. A real estate licensee approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she’ll never be able to sell.
859) What’s the term for a lender refusing to lend in a specific area, often based on the area’s minority make-up?
a. Blockbusting
b. Gerrymandering
c. Redlining
d. Steering
860) What’s the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?
a. Blockbusting
b. Gerrymandering
c. Redlining
d. Steering
861) Which one of these situations represents the illegal practice of redlining?
a. Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values.
b. Based on the neighborhood’s demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods.
c. Eunice refused to allow her listing broker to show her house to families with children.
d. Jaime was working with Korean clients, so he focused on showing them homes in Korean communities because he thought they would be more comfortable there.
862) How should you respond if your buyer says the following? “We’re looking for a three-bedroom, two-bathroom home. We have young children, so we want to make sure we’re in a good neighborhood—somewhere safe, where we’ll find a lot of good families and neighbor kids that we’d want our children to play with.”
a. “I can screen neighborhoods based on good school districts for you. That usually means you’ll end up in the kind of neighborhood you want.”
b. “If you provide me with specific kinds of people you want to avoid, I can screen the properties more closely.”
c. “If you provide me with specific neighborhood names, I can certainly look for homes in those areas. You can learn about the different neighborhoods in the area at neighborhoodscout.com.”
d. “Let’s keep this off the record. We just need to make sure it all looks legitimate from the outside.”
863) Which act attempted to eliminate discrimination caused by blockbusting, steering, and redlining?
a. Civil Rights Act of 1866
b. Fair Housing Act of 1968
c. Housing Discrimination Act of 1974
d. HUD Act of 1961
864) What discriminatory lending practice by lenders resulted in the destruction of whole neighborhoods, with perfectly good housing left abandoned?
a. Blockbusting
b. Gerrymandering
c. Redlining
d. Steering
865) Which of these is a recommended strategy for a real estate professional who wants to avoid being asked to violate fair housing laws?
a. Let consumers know upfront that you adhere to fair housing laws.
b. Only work with clients who are the same race as you.
c. Quiz clients on their views about protected classes.
d. Require your clients to complete training on fair housing laws.
866) Early in its history, the Federal Housing Administration officially supported keeping “incompatible” racial groups out of the newly developed white suburbs. What is this practice known as?
a. Blockbusting
b. Consolidating
c. Redlining
d. Steering
867) In 1934, when the Federal Housing Administration was created, it adopted the practice of crossing off cities and neighborhoods it considered risky and refused to insure loans for purchases in those areas. What is this action called?
a. Blockbusting
b. Gerrymandering
c. Redlining
d. Steering
868) How would you respond if your seller makes the following request? “We’ve lived here 10 years and love our neighbors. They’re really concerned about the changes happening to the blocks around us, so we want to be careful about who we sell this house to. You know what we mean. You’ll help us find the ‘right’ kind of buyer, won’t you?”
a. “I can’t technically do that, but I could choose to advertise only in publications that target a white readership.”
b. “I’m sorry that you feel that way. I am obligated to obey the requests of my clients, but I’m going to need you to write up your request and sign it, so there’s no way I can get in trouble for fair housing violations.”
c. “It would be illegal to limit the search based on race or religion or anything like that, but I promise I’ll find you the most qualified buyer I can, and we’ll sell this house for the highest price possible.”
d. “Let’s keep this off the record. As long as we can come up with other reasons to disqualify the buyers you don’t want, we’ll be okay. We just need to make sure it looks legitimate from the outside.”
869) Which of these sentences most accurately describes the purpose of the Unruh Civil Rights Act?
a. The act grants protections to members of protected classes from discrimination by business establishments.
b. The act protects everyone from discrimination by business establishments.
c. The act protects everyone from discrimination in public housing accommodations.
d. The act removes protections from some of the federally protected classes.
870)
871) What is the purpose of the fair lending notice?
a. To disclose the demographic characteristics of approved mortgagors by the bank over the past five years.
b. To explain that financial institutions have the right to refuse to provide loans on homes in neighborhoods with historically high rates of foreclosure.
c. To notify mortgagors of their rights to equitable interest rates.
d. To notify mortgagors that it is illegal for financial institutions to discriminate on the basis of a protected class or on the basis of the characteristics of the neighborhood.
872)
873) The Unruh Civil Rights Act prohibits discrimination against protected classes by ______ establishments.
a. All business
b. All for-profit
c. Only non-profit
d. Only real estate
874)
875)
876) To make a complaint with the Department of Fair Employment and Housing, the complainant must first complete what form?
a. Formal DFEH complaint form
b. Pre-complaint inquiry
c. Protected class disclosure form
d. Request for temporary restraining order
877)
878) Which act prohibits housing financial discrimination on the basis of protected class make-up or location of a property?
a. The DFEH Act
b. The Holden Act
c. The HUD Act
d. The Unruh Act
879)
880)
881)
882) When a Department of Fair Employment and Housing complaint reaches litigation, the parties have the option to have the case heard before _____________________.
a. A court-appointed mediator
b. Civil court
c. The Department of Fair Employment and Housing or in civil court
d. The Housing and Urban Development Commission
883) Which of these statements about the Unruh Civil Rights Act is true?
a. The act provides for a variety of remedies, including court-ordered damages up to five times the victim’s actual damages.
b. The act provides for a variety of remedies, including court-ordered damages up to three times the victim’s actual damages.
c. The act provides for a variety of remedies, including court-ordered damages up to two times the victim’s actual damages.
d. The act specifies that victims of discrimination may not be reimbursed for attorney fees.
884)
885) Which step of the DFEH complaint process takes place in civil court?
a. Investigation
b. Litigation
c. Pursuit of resolution
d. Remedies
886) Which of these statements is true?
a. The Unruh Civil Rights Act does not include the seven federally protected classes.
b. The Unruh Civil Rights Act extends protections to several classes in addition to the seven federally protected classes.
c. The Unruh Civil Rights Act protects one class—source of income—in addition to the seven federally protected classes.
d. The Unruh Civil Rights Act protects the seven federally protected classes and no other classes.
887) During which step of the DFEH complaint process does the DFEH explore options to resolve a complaint after a violation of the law has been found?
a. Investigation
b. Litigation
c. Pursuit of resolution
d. Remedies
888) The Unruh Civil Rights Act requires: “Full and equal accommodations, advantages, facilities, privileges or services in ______ business establishments.”
a. All
b. For-profit
c. Non-profit
d. Privately owned
889) Which of these statements accurately describes the formal DFEH complaint process?
a. A formal complaint is only filed if a full investigation reveals a violation of the law.
b. DFEH cases are litigated by private lawyers.
c. The formal process begins with filing of a complaint and ends with remedies. In the middle, you have investigation, pursuit of resolution, and litigation.
d. The process begins with mediation in an effort to avoid a costly investigation.
890) Which of these actions would be considered illegal under the Holden Act?
a. Refusing to provide a mortgage loan to a customer who wishes to buy a home in a neighborhood with a high rate of foreclosures
b. Refusing to provide a mortgage loan to a recently divorced woman who just filed bankruptcy
c. Requiring a legal address for the property before approving a mortgage loan
d. Running a credit report on a mortgage applicant who has darker skin
891) How does the Department of Fair Employment and Housing complaint process begin?
a. A pre-complaint questionnaire is completed by the complainant’s lawyer.
b. Complainants fill out a pre-complaint inquiry form and then are contacted by the DFEH to arrange a telephone interview to gather more information.
c. Complainants fill out formal complaint forms on the DFEH website.
d. Someone who has a complaint calls the DFEH to schedule an interview. If the interviewer deems the complaint to be valid, they give the complainant a questionnaire to fill out.
892)
893) Which term refers to the tenant’s right to live in a rental property without harassment or trespass by the landlord?
a. The right of quiet enjoyment
b. The right to live
c. The right to peace
d. The right to possession
894) Lorenzo just received a prestigious fellowship to study abroad for a year! However, he still has six months left on his one-year apartment lease. His landlord has given him permission to draw up a new agreement with his sister Maggie, whereby Maggie will live in the apartment, pay rent to Lorenzo, and then Lorenzo will pay the landlord. This is an example of ______.
a. Assignment
b. Assimilation
c. Subleasing
d. Transfer
895) Malcolm loves his apartment, even though he’s rarely there. His job in international development has him on the road for months at a time. He doesn’t have to worry about missing out on his lease renewal, though, because he has ______.
a. A freehold estate
b. An estate at will
c. An estate for years
d. A periodic estate
896) What type of leasehold is characterized by possession of a property without the express permission of the property owner, such as a situation in which a tenant continues to occupy an apartment after the lease has terminated?
a. Estate at sufferance
b. Estate at will
c. Freehold estate
d. Periodic estate
897) Selma and Richard have the temporary right to live at 123 Elm Street. They can come and go and use the property as they see fit, but they can’t do so indefinitely. They must vacate the property at the end of next year. What sort of interest do they have in 123 Elm Street?
a. Fee simple estate
b. Leasehold estate
c. Life estate
d. Reversionary estate
898) Randolph has a leasehold estate that automatically renews at the end of each lease period. What type of leasehold estate does Randolph hold?
a. Estate at will
b. Estate for months
c. Periodic estate
d. Renewable estate
899) An example of this type of leasehold estate is a month-to-month lease.
a. Estate at sufferance
b. Estate at will
c. Estate for months
d. Periodic estate
900) Eric’s residential tenant hasn’t paid rent for more than three months, so Eric went to court to start eviction proceedings. He’s now been granted the right to remove the tenant. This is a(n) ______ eviction.
a. Actual
b. Aggressive
c. Constructive
d. Sufferance
901) Dawn owns a bungalow three miles from the city center. She rents it to Bob and Jan Siegel. Dawn is a ______.
a. Beneficiary
b. Lessee
c. Lessor
d. Trustee
902) Cedric is opening a model railroad shop, but he knows that he’ll only run the store until his partner finishes law school. He signed a three-year lease, after which the lease will terminate. What kind of leasehold is this?
a. Estate at sufferance
b. Estate at will
c. Estate for years
d. Periodic estate
903)
904) Which of these terms is used to describe when a new occupant lives in a rental unit and pays rent to the previous tenant, who is still under contract with the landlord?
a. Assignment
b. Covenant
c. Estate at will
d. Sublease
905)
906)
907) What’s required for both assignments and subleasing in most cases?
a. An escrow account
b. A real estate license
c. A security deposit
d. Landlord approval
908) Landlords may protect themselves from having to pay for damages to the property caused by the tenant by collecting a security ______ from the tenant.
a. Charge
b. Deposit
c. Guarantee
d. Payment
909) Lorenzo just received a prestigious fellowship to study abroad for a year! However, he’d just signed a one-year lease on his apartment. With the landlord’s permission, he substituted his sister’s name on the lease, and Lorenzo’s sister will pay rent directly to the landlord. Lorenzo may still be liable for the rent if she misses any payments. This is an example of ______.
a. Assignment
b. Assimilation
c. Subleasing
d. Transfer
910)
911) Which type of leasehold lasts for a defined period of time and automatically terminates when that period ends?
a. Estate at sufferance
b. Estate at will
c. Estate for years
d. Periodic estate
912) Jake, who was leasing a house, retained possession even after his right to possess had terminated. Jake has a(n) ______.
a. Estate at sufferance
b. Estate at will
c. Estate for months
d. Holdover tenancy
913)
914) As part of his lease agreement with his landlord, Alex mows the grass around his apartment building each week in return for a small reduction in rent. What is this an example of?
a. Condition
b. Covenant
c. Enjoyment
d. Promissory
915) Sonya’s lease expired, but she hasn’t yet moved out and she’s not paying rent. Walt has started eviction proceedings. Sonya is considered a(n) ______.
a. Expired tenant
b. Holdover tenant
c. Illegal tenant
d. Malingerer
916) Tyra owns a nail salon that’s located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales. What kind of lease does Tyra have?
a. Graduated
b. Gross
c. Net
d. Percentage
917) How does the “break-even point” relate to percentage leases?
a. Sales proceeds must exceed last year’s total before the percentage applies.
b. The landlord charges a percentage of the cost for improvements to all tenants.
c. The landlord doesn’t charge a percentage of sales until the tenant’s sales exceed a break-even point.
d. The landlord must receive enough in rent plus the share of sales to break even on the debt service.
918) Martin is a tenant. His lease has a fixed rent but also requires that he pay for insurance and other expenses for the property. What type of lease does he have?
a. Gross
b. Ground
c. Net
d. Variable
919) Which clause allows a landlord to increase the lease payment during the lease term?
a. Acceleration
b. Escalation
c. Mid-lease
d. Upward
920) Gary leases a commercial building and pays all expenses related to the building, including taxes and insurance. Gary has a ______.
a. Gross lease
b. Net lease
c. Percentage lease
d. Sublease
921) How is the break-even point calculated for a percentage lease?
a. Divide the annual expenses by the monthly base rent.
b. Divide the monthly base rent by the percentage the landlord established.
c. Multiply the established percentage by the base rent.
d. Subtract the base rent from the monthly expenses.
922) Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately?
a. Graduated
b. Gross
c. Net
d. Percentage
923) What’s an expense stop as used in leases?
a. A lease that increases its rate when operating expenses exceed a certain threshold
b. A limit to a landlord’s maintenance costs
c. A way of computing capitalization rates for lease agreements
d. A way to limit taxes on income-producing properties
924) Commercial lease escalation clauses typically do not take effect until after what period of time?
a. Five years
b. One week
c. Six months
d. The “base year,” or first year
925) Charlie, who owns and leases out a commercial building, pays taxes, maintenance, and insurance on the building. What type of lease agreement does Charlie have with his tenants?
a. Gross
b. Net
c. Percentage
d. Triple net
926) How does the term “break-even point” relate to percentage leases?
a. Sales proceeds must exceed last year’s total before the percentage applies.
b. The landlord doesn’t charge a percentage of sales until the tenant’s sales exceed a break-even point.
c. The landlord must receive enough in rent plus the share of sales to break even on the debt service.
d. The tenant has to break even on expenses before the percentage charge is applied.
927) A commercial landlord finds herself in trouble because the rent she is collecting is not keeping up with inflation due to the type of leases she signed with her tenants. She has the longest tenancies of commercial landlords she knows, which is probably because she signed with them ______ leases.
a. Cheap
b. Flat rate
c. Indexed
d. Low rate
928) Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?
a. Graduated lease
b. Gross lease
c. Net lease
d. Percentage lease
929) Which of these types of tenants most often uses a percentage lease?
a. Manufacturing
b. Residential
c. Retail
d. Triple net
930) Headhunters Anonymous rents office space in a large office building owned by CEO Properties. CEO Properties pays all expenses for the property, including taxes, insurance, and routine maintenance. What type of commercial lease does Headhunters Anonymous have?
a. Gross lease
b. Net lease
c. Office space lease
d. Percentage lease
931) Raymond just started his clothing business in a high-traffic shopping center. This type of lease agreement will require Raymond to pay the landlord rent based upon the percentage of the periodic gross sales. This type of agreement is called a ______ lease agreement.
a. Gross
b. Ground
c. Net
d. Percentage
932) With a triple net lease, the tenant pays ______ separately from the base rent.
a. Insurance, utilities, and maintenance
b. Maintenance, insurance, and debt service
c. Taxes, debt service, and lease payment
d. Taxes, insurance, and maintenance
933) What type of a lease escalation clause is tied to a market index (typically the CPI)?
a. A flat rate lease escalation clause
b. An expense lease escalation clause
c. An index lease escalation clause
d. A profit margin lease escalation clause
934) Fiona signed a lease with her landlord for a commercial building. A percentage of Fiona’s sales will be paid to the landlord, in addition to her lease payment. Why would Fiona agree to this arrangement?
a. Fiona is hoping to purchase the building at a later date.
b. Fiona wants to demonstrate how viable her business is.
c. Fiona wants to reduce her base rent.
d. The landlord is her business partner.
935) You have a client who is leasing commercial space. The lease terms call for him to pay a portion of the landlord’s taxes, insurance, and maintenance. What type of lease does your client have?
a. Itemized lease
b. Percentage lease
c. Sublease
d. Triple net lease
936) Maxwell is a tenant. His lease has a fixed rent in which the landlord pays all taxes, insurance, and maintenance expenses. What type of lease does he have?
a. Gross
b. Ground
c. Net
d. Variable
937) One of the requirements of an enforceable lease is that both parties are bound to the terms of the lease. This is called ______.
a. Mutuality of assent
b. Mutuality of enforceability
c. Mutuality of liability
d. Mutuality of obligation
938) Which term describes the transfer of possession of rental property?
a. Clairvoyance
b. Contract
c. Conveyance
d. Covenant
939) Which of these terms refers to the mutual agreement between the landlord and the tenant?
a. Lawful object
b. Legal capacity
c. Mutual assent
d. Mutuality of obligation
940) This legal aspect of a lease establishes “privity of contract.”
a. Contract
b. Conveyance
c. Covenant
d. Statute of Frauds
941) Which of these statements about leases is true?
a. A lease must be signed by a notary and recorded in public records to be enforceable.
b. A lease must meet the essential requirements of any contract to be enforceable.
c. A lease that is not signed is not enforceable.
d. A tenant may waive the right to peaceful enjoyment if the lease includes an unlimited right-of-entry covenant.
942) Which terms describes a lease that has been agreed to by both parties?
a. Accepted
b. Delivered
c. Effective
d. Executed
943) Which of these two terms describe the dual legal nature of a lease?
a. Clairvoyance and contract
b. Concession and contract
c. Conveyance and concession
d. Conveyance and contract
944)
945) When a landlord grants possession of a property to a tenant, this is called an act of what?
a. Clairvoyance
b. Contract
c. Conveyance
d. Ownership
946) One of the requirements of an enforceable lease is that both parties are bound to the terms of the lease. This is called ______.
a. Mutuality of assent
b. Mutuality of enforceability
c. Mutuality of liability
d. Mutuality of obligation
947) Which of these contract-specific requirements for a lease prohibits minors from entering into a lease agreement?
a. Lawful object
b. Legal capacity
c. Mutual assent
d. Mutuality of obligation
948) This legal aspect of a lease establishes “privity of estate.”
a. Clairvoyance
b. Contract
c. Conveyance
d. Ownership
949) When presenting a CMA, if you take the time to explain the CMA process, help the prospective sellers understand what’s behind the numbers, and ultimately leave the decision of the list price up to them, what characteristic have you demonstrated?
a. Documentation
b. Effective communication
c. Law-abiding
d. Precision
950) You are working on a CMA for your new listing. The seller has indicated that he really wants to list his home for $400,000 or more. Which of the following would indicate that price may be too high?
a. The closest comparable is a two-story while your client’s house is a ranch house.
b. There are no comparables within the last six months.
c. There were three expired listings priced between $400,000 and $425,000.
d. Two properties recently sold for just under $400,000.
951) Which of the following statements is true about appraisals?
a. “Appraisal” and “CMA” are interchangeable terms for a property valuation.
b. Appraisals may only be performed by certified appraisers (with certain exceptions in some states).
c. Either certified appraisers or managing brokers may perform appraisals.
d. Real estate licensees may perform appraisals on foreclosed properties, but a certified appraiser must perform all other appraisals.
952) Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that’s about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What’s Clark most likely asking you to provide?
a. Appraisal
b. BPO
c. CMA
d. Professional opinion
953) Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?
a. Expired
b. Foreclosed
c. Pending
d. Withdrawn
954) When pricing a property, which of the following is a reason a licensee would consider expired listings?
a. To determine approximately how long it will take the home to sell
b. To determine the price at which a property is most likely to sell
c. To determine the price at which a property won’t sell
d. To determine the property’s competition
955) Marcy’s offer on a home was accepted! Which party will be contacting her about arranging an appraisal?
a. The closing attorney
b. The lender
c. The seller’s agent
d. The title insurance representative
956) What does a CMA determine?
a. Availability of funding
b. Cost of replacement
c. Cost per square foot
d. Market price range
957) When a real estate professional goes beyond a broad brushstroke approach to a CMA and takes the time to research not only recent sales, but competition and expired listings, what trait are they exhibiting?
a. Diligence
b. Documentation
c. Effective communication
d. Empathy
958) Ellen has only been licensed for two weeks, but she’s already toured the home of potential clients, the Birds. What should she do to next to secure the listing?
a. Call her mom and get a pep talk.
b. Prepare a CMA.
c. Print out two copies of her professional resume.
d. Review her pre-licensing coursework for information about taking property photos.
959) When completing a CMA, what might be indicated if a comparable property had a quick sale?
a. It’s a buyer’s market.
b. The market for similar homes is good.
c. The other agent was incompetent.
d. The property was priced too high.
960) Real estate licensees turn to specific information sources when preparing CMAs for clients. Which of the following information sources is best for estimating the market value of a property?
a. Comparable sales
b. Construction costs
c. Previous sales price
d. Time to close
961) In which form of price determination does the real estate professional often just drive by the property and take photos, then complete paperwork for the lender?
a. Appraisal
b. Broker’s price opinion
c. Comparative market analysis
d. Competitive market analysis
962) Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?
a. Appraisal
b. Broker’s price opinion
c. Comparative market analysis
d. Credit analysis
963) Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?
a. Busy street
b. Color
c. Demographics
d. Interest rates
964) Which of the following provides an opinion of list price range by looking at recently sold properties, comparing current competing properties and properties that didn’t sell, and estimating buyer appeal regarding the style, location, and size?
a. Appraisal
b. Broker price opinion
c. Collective market analysis
d. Comparative market analysis
965) What’s the primary purpose of a CMA?
a. To determine an appropriate listing price range
b. To ensure that the sales price reflects the cost of replacement
c. To provide the property value to the lender
d. To set a price that an appraiser will approve
966) You need to perform a sales comparison for your clients. Comparable A’s adjusted sales price is $277,000. Comparable B’s adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients’ home?
a. Find the average of the adjusted sales prices of Comparable A and Comparable B.
b. Give more weight to the list price on Comparable A, because it’s lower.
c. Give more weight to the list price on Comparable B, because the subject property will likely sell more quickly at this higher price.
d. Give more weight to the list price on the comparable that’s most similar to the property.
967) Steve is preparing a comparative market analysis for the Joneses and has selected three comparable properties. How many adjustments should Steve make to the Joneses’ property?
a. One
b. Three
c. Two
d. Zero
968) Steve won’t adjust the subject property. Only the comparable’s sales price is adjusted. If it is inferior, adjust upward. If it’s superior, adjust downward.
969) Question 4
970) Which of the following is typically used for purposes other than a prospective listing or sale?
a. Appraisal
b. AVM
c. BPO
d. CMA
971) Jan is a real estate licensee gathering information to help her seller determine a good listing price. How could expired listings help her in this process?
a. They denote the property’s competition.
b. They determine approximately how long it will take the property to sell.
c. They help determine the price at which the property is most likely to sell.
d. They illustrate the price at which the property won’t sell.
972) When licensees follow through on what prospects have asked, arrive for meetings on time, and come prepared, what trait are they exhibiting?
a. Competence
b. Documentation
c. Effective communication
d. Empathy
973) Comparative market analysis is most effective when a licensee limits the data collection time frame for sold properties. A CMA should look at properties that sold within ______.
a. In the last two years
b. No later than three to six months ago
c. Within 18 to 24 months
d. Within the last six to 12 months
974) Which type of analysis starts with a visit to the property, a search on the MLS, and a comparison of comparable sales, and hopefully ends in a listing for a real estate licensee?
a. Appraisal
b. Broker price opinion
c. Comparative market analysis
d. Credit analysis
975) Supply and demand determine competition within a market. Which of the following is a true statement?
a. When there are fewer houses on the market, buyers will pay less.
b. When there are fewer houses on the market, demand wanes, as well.
c. When there are fewer houses on the market, neighborhood blight occurs.
d. When there are fewer houses on the market, sellers can demand more for their properties.
976) When you’re putting together a listing presentation, which of these is a key point to address?
a. Buyers won’t pay more for a home than the market dictates.
b. Everything you talk about with the seller will change in six months.
c. The house needs work before you can sell it for the right price.
d. Your credentials are the best in the market.
977) After you’ve made a professional listing presentation and the seller has declined to use you as a listing agent, what’s the best practice?
a. You should accept the outcome either way.
b. You should ask the sellers for a second chance.
c. You should call the competing salespersons to discuss the matter.
d. You should pursue the sellers with questions about their decision, even if they tell you they don’t want to talk about it.
978) Getting the best price is always a factor for a seller, but the ______ at which it would actually sell must be another consideration.
a. Guesstimate
b. Highest possible price
c. Market price
d. Reduced price
979) If, after seeing your carefully prepared comparative market analysis, a seller doesn’t agree with the price range you prepared in your listing presentation, your best practice would be to ______.
a. Decline the listing if the seller’s price and your price analysis are too far apart.
b. List the property at the seller’s price and hope to reduce the price later.
c. Offer to purchase the property at your suggested list price if it doesn’t sell at the seller’s price.
d. Split the difference.
980) What happens when an appraiser determines a property’s value to be less than the pre-approved loan amount?
a. Most buyers will have an appraisal contingency, so they can back out and receive a refund of their earnest money.
b. Most sellers will have an appraisal contingency, so the seller can keep the buyer’s earnest money.
c. The buyer must make up the difference between the appraisal and the purchase price.
d. The seller must make up the difference between the appraisal and the purchase price.
981) Why is it so important to properly price a property when it first enters the market?
a. If a property is overpriced from the beginning, the chances of the property selling are not impacted significantly.
b. Overpricing a property will drive up the price of other properties as well, causing a false inflation.
c. The first several months are crucial because they’re the best chance for the property to sell.
d. The first several weeks are crucial because they’re the best chance for the property to sell.
982) What are some ways you can make sure you’re pricing a property at fair market value?
a. Ask the sellers what the sales price should be.
b. List to sell as fast as possible.
c. Prepare a well-researched CMA.
d. Price it at the price the house originally sold for to be fair.
983) An agent lists a home that receives an offer for full list price within one day in a buyers’ market. There is a chance the agent ______ the home.
a. Appraised
b. Inflated
c. Overpriced
d. Underpriced
984) What’s a CMA?
a. Company marketing announcement
b. Comparative market analysis
c. Comparison marketing algorithm
d. Comprehensive market appraisal
985) What’s the best advice when challenging an appraisal?
a. Be specific and concise about why the value opinion is different in your mind.
b. Blame it on the appraiser.
c. Don’t bother asking the appraiser to explain why certain adjustments were made or not made.
d. Suggest a minimum value for the appraiser to meet.
986) Many market conditions impact housing prices. Which of the following is a true statement?
a. High unemployment rates mean there are more available buyers in the market.
b. Inflation increases buying power.
c. Low unemployment rates mean there are fewer available buyers in the market.
d. Reduced consumer confidence makes new buyers wary of purchasing and homeowners hesitant to trade up.
987) A property has been listed on the market for four months with no offers. Finally, a buyer makes an offer that is 18% less than the list price. How was this property likely priced when it first hit the market?
a. At appraisal value
b. Fair market value
c. Overpriced
d. Underpriced
988) Demographics impact the housing market. Which of the following is a true statement?
a. An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes.
b. An increase in the number of retirees in a given population would positively impact the demand for large, single-family homes.
c. An influx of higher wage earners to a given area would create a price decrease for lower-valued homes.
d. An influx of higher wage earners to a given area would decrease the demand for higher-priced housing.
989) Why might a licensee want to make two visits to the property as part of a listing presentation?
a. To find out how many licensees the seller will be interviewing, which will help determine how much effort to put into preparing a comparative market analysis
b. To see if the sellers say the same thing both times
c. To see the property at different times of day
d. To use information from a tour to prepare the CMA
990) When market conditions indicate top-of-the-market pricing, is it always in your client’s best interest to price it there?
a. No, because higher sales prices result in higher taxes.
b. No, it still has to appraise.
c. Yes, because it’s probably what will win the listing for you.
d. Yes, because it will sell fast.
991) Which of the following is a potential consequence of overpricing a property?
a. A competing broker can report you for unfairly pricing a property.
b. It increases the odds that buyers will be interested because it must be worth the higher price point.
c. The property will receive offers from serious buyers only, since it is listed at a higher price point.
d. The property won’t appraise high enough and you could lose the contract if you do get an offer.
992) When pricing a home for the market, what should a licensee try to get sellers to do?
a. Put themselves in the buyers’ shoes
b. See how much it might be able to fetch on the market
c. Set the price at one level, with the expectation of lowering it in 30 days
d. Visit the neighbors and come up with a price
993) An agent has a seller who wants to list the property at $550,000. The market has taken a downturn, and the fair market value is estimated at $495,000. What is the best approach for this listing?
a. Explain the benefits in the long run of entering the market at a fair price.
b. List the home at $550,000 to keep the seller happy.
c. Tell the seller it’s worth a shot to try it and see if you can get more.
d. Tell the seller that you won’t work with her unless she lists the home at $495,000.
994) Which of the following statements is true about the listing presentation?
a. It’s best to leave out financial data (such as a CMA or comparable property information) and listing agreements, so the seller doesn’t think you’re jumping the gun and already counting your commission.
b. The less you say, the better. You don’t want to overwhelm your potential clients with numbers and decisions at this first presentation.
c. The most important part of a listing presentation is to make the buyers like you as a person. Try not to talk numbers or about their house, but instead focus on charming them.
d. You should go into the presentation fully prepared with a comparative market analysis, listing agreement, MLS listings of comparable properties, and your plan for marketing the sellers’ property.
995) If an appraisal is lower than the agreed-upon sales price, what steps can the seller take?
a. A second appraisal can be ordered, although there should be good reason to question the first appraisal.
b. A second appraisal can be ordered, but it’s always the buyer’s expense.
c. A second appraisal can be ordered, but the seller must pay for it.
d. A second appraisal can be ordered, which typically turns out to be higher.
996) Claire, a seller, accepted an offer on her home. However, it just appraised for less than the sales price. Which of the following is true?
a. Claire must refund the buyers for the cost of the appraisal.
b. Claire must take her house off the market.
c. The appraiser must perform a second appraisal.
d. The lender will only approve a loan based on the property’s appraised value.
997) A home enters the market priced above fair market value. Within the same time frame, three additional homes enter the market listed between 5% and 10% less than the first home, at a fair market price. What is likely to happen with the first home?
a. Buyers will recognize the higher price point and immediately submit much lower offers.
b. If a property is overpriced from the beginning, buyers will move on and likely make a purchasing decision before the price is corrected on the overpriced home.
c. The backload of buyers on the market will wait to see if the price is adjusted on the first home.
d. The chances are high there are one or two buyers in the backload of buyers who are willing to make an offer at the entry price.
998) Interest rates determine buying power. Which of the following is a true statement?
a. When interest rates are high, buyers are often priced out of the market.
b. When interest rates are high, buyers will be able to afford higher-priced homes.
c. When interest rates climb, more buyers are encouraged to buy.
d. When interest rates shift higher, buyers can still buy in the same price range.
999) When a property is overpriced, what happens?
a. A backlog of buyers will return to it again and again.
b. It can usually list again at a higher price.
c. It increases buyer interest and demand.
d. It may become stale on the market, resulting in low-ball offers.
1000) An agent is working with seller clients who are very emotionally attached to their home. They want to list the property at $330,000, but the CMA indicates a price range of $255,000 to $275,000. What is the best course of action?
a. Explain the importance of fair market value and offer to walk them through the process.
b. List the home for $300,000 because it’s a good compromise.
c. List the home to sell, so start with the lower end of the CMA.
d. Start with listing for $330,000 and see if you get any interest.
1001) What’s the best strategy for pricing a home?
a. Always go with what the seller thinks it’s worth—the customer is always right.
b. Prepare a detailed comparative market analysis and base the price on recent comparable sales.
c. Price it higher than market value so buyers think it has more to offer and will schedule a showing.
d. Price it lower than market value so that there are lots of offers and a bidding war.
1002) At a listing appointment, licensee Chet asks Sam, the seller, if his property is his own home or an investment property. Why would Chet ask this?
a. Chet can only represent sellers if they’re selling their own home; selling investment properties requires a different license.
b. If the home is his own, he’s likely to be purchasing a new one, so Chet has a chance to land two transactions.
c. Investment homes are easier to sell because they’re sold “as-is.”
d. Investment home sellers tend to be more emotionally attached because the homes bring them more income.
1003) A fire destroyed Meredith’s house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn’t fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?
a. Its current market value
b. The amount for which it was appraised
c. The amount it would cost to completely replace her home
d. The original sales price when it was first constructed
1004) Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?
a. Appraisal
b. Cost
c. Price
d. Value
1005) Who typically performs an appraisal?
a. Certified appraiser
b. Inspector
c. Real estate licensee
d. Tax assessor
1006) Which economic principle is related to supply and demand?
a. Competition
b. Conformity
c. Contribution
d. Substitution
1007) A rundown home, overgrown with weeds and in desperate need of repairs, is driving down property values on the block. What economic principle is at work here?
a. Anticipation
b. Contribution
c. Progression
d. Regression
1008) The economic principle that tells us that when supply goes up, price goes down is also called ______.
a. Conformity
b. Price dropping
c. Regression
d. Supply and demand
1009) There are a lot more sellers than buyers in the current market. How does this demand influence value?
a. Demand doesn’t influence value.
b. Value is pushed downward.
c. Value is pushed upward.
d. Value remains the same.
1010) The Hendersons were hoping to list their home for $400,000; however, four other comparable homes in the neighborhood just went up for sale, and they now must list their property at $380,000 to sell quickly. Which economic principle is at work here?
a. Competition
b. Conformity
c. Progression
d. Substitution
1011) Boris is an appraiser working for the Smith family. They’ve hired him to perform an appraisal on their six-bedroom house. What two types of data will Boris gather?
a. Digital and hand-written
b. General and specific
c. Old and recent
d. Pertinent and unrelated
1012) What acronym can be used to remember factors that influence real property value?
a. CRUD
b. DUST
c. GIVEN
d. OLD CAR
1013) What type of value may consumers be interested in if they are looking for the potential rate of return?
a. Assessed value
b. Insured value
c. Investment value
d. Value in use
1014) Appraiser Jamie is looking past how a property is being used to determine a higher value. What is Jamie determining?
a. Cost to replace
b. Highest and best use
c. Loan value
d. Value in use
1015) What’s another term for a valuation that’s an unbiased opinion of value?
a. Assessment
b. Comparative market analysis
c. Evaluation
d. Formal appraisal
1016) When appraisers look past how a property is being used to determine a more optimal function, what are they determining?
a. Cost to replace
b. Highest and best use
c. Market value
d. Value in use
1017) Which of the following is the cost of replacing a building in the case of total loss?
a. Insured value
b. Investment value
c. Mortgage value
d. Value in use
1018) Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today?
a. Cost
b. Insurance
c. Price
d. Value
1019) A CMA or a BPO is an example of ______.
a. A formal appraisal
b. An assessment
c. An informal estimate of market value
d. An inspection
1020) What is an appraisal?
a. A determination of property defects and conditions
b. An opinion of listing price as determined by a real estate professional
c. An opinion or estimate of a property’s value as of a specific date
d. A study on the feasibility of developing land
1021) When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?
a. Competition
b. Conformity
c. Progression
d. Regression
1022) Which factor influences property value and addresses questions such as, “What’s the market like?” and “Are there more buyers than sellers, or vice versa?”
a. Demand
b. Scarcity
c. Transferability
d. Utility
1023) Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land’s value, he jumped at the opportunity. What’s this an example of?
a. Contribution
b. Eminent domain
c. Plottage
d. Zoning
1024) Building codes, zoning laws, and environmental legislation are examples of which force that influences property value?
a. Economic
b. Physical/environmental
c. Political/governmental
d. Social
1025) Which economic principle pertains to how a change in a property affects its value as a whole?
a. Anticipation
b. Conformity
c. Contribution
d. Substitution
1026) Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?
a. Cost to replace
b. Highest and best use
c. Mortgage value
d. Value in use
1027) Which of the following terms means the price a property is worth to its owner as currently enjoyed?
a. Appraisal
b. Insured value
c. Investment value
d. Value in use
1028) Kevin is having an appraisal performed on a piece of property he’s interested in buying. He’s especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in?
a. Assessed value
b. Insured value
c. Investment value
d. Value in use
1029) A property’s value is dropping because the neighboring property’s yard is filled with trash. What’s this an example of?
a. Depreciation
b. Progression
c. Regression
d. Substitution
1030) Appraiser Jerry is looking past how a property is being used to determine a more optimal function. What is he determining?
a. Cost to replace
b. Highest and best use
c. Market value
d. Value in use
1031) What’s the first step an appraiser will perform when conducting an appraisal?
a. Estimate the value of the land.
b. Gather and analyze data.
c. Identify the data that’s needed.
d. State the problem.
1032) The Richards family farm is located on a 10-acre parcel of land, which is very rare in their area. However, the house is rundown and in need of many repairs. Most buyers in the area are looking for a move-in-ready home, which means they would need to either look elsewhere or wait several months for the home to be renovated. Which factor is most negatively impacting the value of the Richards’ property?
a. Demand
b. Scarcity
c. Transferability
d. Utility
1033) Which of the following is a piece of general data an appraiser may gather?
a. Improvements made to a property
b. Kitchen upgrades
c. Population size
d. Property lot size
1034) Your neighbors build a high-quality addition to their home, increasing its value compared to your own home’s value. Because of this, you notice a bump in your property value. Which economic principle is at work here?
a. Conditional value
b. Price bump
c. Progression
d. Regression
1035) Which of the following can be defined as what a property is worth?
a. Appraisal
b. Cost
c. Price
d. Value
1036) What’s one purpose of a BPO?
a. To assist buyers in determining an offer amount or sellers in determining a listing price
b. To assist insurers in determining the amount of liability insurance to place on a property
c. To assist lenders in determining the marketability and potential sales price for distressed properties
d. To ensure that the value of a property is sufficient as collateral for a mortgage loan
1037) What’s the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?
a. Insured value
b. Market value
c. Valuation
d. Value in use
1038) Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole?
a. Contribution
b. Impact on value
c. Plottage
d. Progression
1039) What is the term for an increase in property value caused by the joining of two neighboring parcels of land?
a. Anticipation
b. Contribution
c. Plottage
d. Progression
1040) Appraiser Victor is determining the insured value of a property. What is he evaluating?
a. Items of great importance to a lender to replace or rebuild
b. The cost to replace or rebuild a property
c. The price at which the property can be loaned on or sold at a foreclosure sale
d. The return on investment the property may provide
1041) Trudy loved her new neighbors. The investor couple bought every available house on Trudy’s block and was working hard to renovate them and increase their value. Trudy decided that she’d sit back, relax, and let her property’s value go up, too, thanks to ______.
a. Competition
b. Progression
c. Regression
d. Substitution
1042) What type of value is of interest to taxing authorities?
a. Assessed value
b. Insured value
c. Investment value
d. Value in use
1043) Rico is an appraiser who is performing a valuation on a property. What’s another term for what Rico is doing?
a. Analytical exercise
b. CMA
c. Formal appraisal
d. Price opinion
1044) Which economic principle states that the value of property today is impacted by the current value of the total expected future benefits?
a. Anticipation
b. Conformity
c. Highest and best use
d. Progression
1045) Which of these is true about the assessed value of real estate?
a. It is typical for the assessed value to increase by 5% or more per year.
b. It’s the value used to calculate the property taxes, and it’s based on a percentage of the market value.
c. Property taxes are based on real market value and not assessed value.
d. The assessed value of a property will almost always be higher than real market value.
1046) While market value is an opinion of a property’s worth on the fair market, which of the following best describes market price?
a. How much a buyer has paid and a seller has accepted for the property.
b. How much a lender would be willing to finance for the property.
c. How much an appraiser estimates a property is worth on a given day.
d. How much it would take to rebuild the property from scratch, including the cost of the land.
1047) Identifying the purpose of the appraisal leads the appraiser to do what next?
a. Determine highest and best use.
b. Estimate value of land.
c. Identify data needed.
d. Use three approaches to estimate value.
1048) Quality of amenities, climate, and topography are examples of which force that influences property value?
a. Economic
b. Physical/environmental
c. Political/governmental
d. Social
1049) Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here?
a. Anticipation
b. Contribution
c. Plottage
d. Progression
1050) Soren is an appraiser. As such, what guidelines must he follow?
a. NAR Code of Ethics
b. National Association of Appraisers (NAA) bylaws
c. Real estate license law
d. Uniform Standards of Professional Appraisal Practice (USPAP)
1051) Which economic principle says that value is created and maintained when the characteristics of a property fit in with its surroundings?
a. Anticipation
b. Conformity
c. Contribution
d. Substitution
1052) John’s home is up for sale. He originally bought it five years ago for $300,000. Its current value is $350,000. His real estate agent notified him that a buyer just made an offer on his home for $365,000, which is the price for which other similar homes in the neighborhood are selling, and John accepts. What does the price of $365,000 represent?
a. The appraised value
b. The assessed value
c. The investment value
d. The market value
1053) If there is some kind of defect on a property’s title, what effect does this level of transferability have on the property’s value?
a. The value falls.
b. The value remains unchanged.
c. The value rises.
d. Transferability has no effect on value.
1054) What well-known economic principle says that a property’s value is determined by what it would cost to purchase a similar property?
a. Conforming value
b. Regression
c. Similar cost principle
d. Substitution
1055) The fewer properties on the market, the greater the scarcity. What’s the effect on prices?
a. Prices are pushed downward.
b. Prices are pushed upward.
c. Prices remain the same.
d. There’s no correlation between scarcity and price.
1056) Interest rates, availability of credit, and employment trends are examples of which force that influences property value?
a. Economic
b. Physical/environmental
c. Political/governmental
d. Social
1057) What two types of data does an appraiser gather?
a. Computer and hand-written
b. General and specific
c. Old and new
d. Related and non-related
1058) The smallest property on the block is priced lower than any others, but the higher-priced properties that surround it help to drive the property’s market value up. What economic principle is at work here?
a. Anticipation
b. Contribution
c. Progression
d. Regression
1059) Which of the following is a piece of specific data an appraiser may gather?
a. Cost of living
b. Employment figures
c. Population size
d. Property lot size
1060) Which of the following is the price a lender believes the property will bring at a foreclosure sale?
a. Insured value
b. Investment value
c. Mortgage value
d. Value in use
1061) Marsha made an offer of $325,000 on a home listed for $350,000. The seller accepted her offer. What service will her lender order to determine the home’s actual value?
a. Appraisal by an appraiser
b. Assessment by the seller’s agent
c. Estimate by her broker
d. Quote by a property insurer
1062) Which economic principle says that a property’s value is determined by what it would cost to purchase a similar property?
a. Anticipation
b. Competition
c. Contribution
d. Substitution
1063) What does Susanna do as an appraiser?
a. She determines what a buyer may pay for a property.
b. She provides an estimate of value that the consumer may influence.
c. She provides an unbiased estimate of value.
d. She’s usually hired by the buyer or seller.
1064) What economic principle is related to a property’s most profitable use that is both legal and economically feasible?
a. Anticipation
b. Contribution
c. Highest and best use
d. Progression
1065) Joaquin is an appraiser. What purpose do Joaquin and other appraisers serve?
a. Cause a sale to go through
b. Determine a property’s value
c. Help buyers buy a property
d. Make a real estate agent’s life better
1066) Population growth, marriage rates, and attitudes toward education are examples of which force that influences property value?
a. Economic
b. Physical/environmental
c. Political/governmental
d. Social
1067) There are a lot more sellers than buyers in the current market. How does this demand influence value?
a. Demand doesn’t influence value.
b. Value is pushed downward.
c. Value is pushed upward.
d. Value remains the same.
1068) ______ is the principle that the more similar properties there are on the market, the lower the price will be driven.
a. Competition
b. Conformity
c. Contribution
d. Plottage
1069) Mary Ann is looking for the potential rate of return. What sort of value is she interested in?
a. Assessed value
b. Investment value
c. Market value
d. Value in use
1070) What standards do appraisers follow?
a. Appraisal bylaws
b. License law
c. NAR Rules of Ethics
d. Uniform Standards of Professional Appraisal Practice
1071) Which factor that influences value considers the property’s function?
a. Demand
b. Scarcity
c. Transferability
d. Utility
1072) Which of the following is the price a lender believes the property will bring at a foreclosure sale?
a. Insured value
b. Investment value
c. Mortgage value
d. Value in use
1073) Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend’s neighborhood. It’s listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here?
a. Anticipation
b. Conformity
c. Progression
d. Substitution
1074) Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?
a. Determine the highest and best use.
b. Estimate the value of the land.
c. Identify the data that is needed.
d. Use three approaches to estimate the value.
1075) What does the income approach to value rely on when valuing properties that are five or more units?
a. Gross income multiplier
b. Gross rent multiplier
c. Monthly gross rent
d. Sales comparison
1076) To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?
a. Conditions of sale
b. Financing terms and cash equivalency
c. Market conditions
d. Physical characteristics
1077) To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority?
a. Conditions of sale
b. Location
c. Market conditions
d. Physical characteristics
1078) An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?
a. Effective gross income
b. Gross income multiplier
c. Gross rent multiplier
d. Potential gross income
1079) A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value?
a. $100,000
b. $20,000
c. $200,000
d. $25,000
1080) Homes in a new home development have been built with a floor plan that doesn’t appeal to today’s buyers. In a cost approach valuation of the houses, what sort of depreciation will the appraiser apply?
a. External depreciation
b. Functional obsolescence
c. None. Depreciation doesn’t apply to new buildings.
d. Physical depreciation
1081) The value principle of ______ is the basis of the income approach to appraisal.
a. Anticipation
b. Capitalization
c. Competition
d. Substitution
1082) An investor is analyzing a property by looking at its ability to produce future income. The property is a 10-unit apartment building. Which of the following would be used to determine this value?
a. Effective gross income
b. Gross income multiplier
c. Gross rent multiplier
d. Potential gross income
1083) Which of the following is a true statement about how adjustments are made in the sales comparison approach?
a. Adjustments are made to the subject property, not the comparables.
b. Appraisers adjust downward when a comparable is missing a feature found in the subject property.
c. Appraisers adjust upward when a comparable is missing a feature found in the subject property.
d. Only three adjustments per comparable property are allowed; otherwise it’s not considered sufficiently similar.
1084) On which principle of value is the sales comparison approach based?
a. Anticipation
b. Competition
c. Conformity
d. Substitution
1085) If a property’s income value is $200,000 and it’s earning a net operating income of $40,000, what is the cap rate?
a. 20%
b. 25%
c. 40%
d. 5%
1086) In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?
a. Alternatives
b. Comparables
c. Conformables
d. Substitutions
1087) In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what?
a. Bracketing
b. Bridging
c. Substituting
d. Surrounding
1088) A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall?
a. 12.59%
b. 7.9%
c. 8.67%
d. 9.2%
1089) Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt’s newly built homes is the ______.
a. Appraisal process
b. Cost approach
c. Income approach
d. Sales comparison approach
1090) Which approach to value measures the cost to produce a property, including land acquisition and construction costs?
a. Cost approach
b. Income approach
c. Indirect approach
d. Sales comparison approach
1091) A poor floor plan is an example of which type of depreciation?
a. External depreciation
b. Functional obsolescence
c. Incurable depreciation
d. Physical depreciation
1092) With the cost approach to value, what is the replacement cost?
a. Cost of the materials used in construction
b. Cost to build a functionally equivalent improvement
c. Cost to build an exact replica of the subject, with the same materials and deficiencies
d. Cost to buy the property
1093) Which of the following terms may be defined as a form of depreciation or loss in value caused by defects in design?
a. Economic obsolescence
b. External depreciation
c. Functional obsolescence
d. Physical depreciation
1094) Nearby industrial odor is an example of which type of depreciation?
a. Curable depreciation
b. External depreciation
c. Functional obsolescence
d. Physical depreciation
1095) What’s the capitalization formula used in the income approach?
a. Value = cap rate – income
b. Value = income × cap rate
c. Value = income cap rate
d. Value = net operating income ÷ cap rate
1096) The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.
a. Correlation
b. Substitution
c. Supply and demand
d. Under-bidding
1097) Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?
a. $306,384
b. $345,103
c. $383,822
d. $635,513
1098) With the cost approach to value, what is the reproduction cost?
a. Cost of the materials used in construction
b. Cost to build a functionally equivalent improvement
c. Cost to build an exact replica of the subject, with the same materials and deficiencies
d. Cost to buy the property
1099) A small duplex sold for $550,000. Each unit can gross $2,500 in monthly rent for the owner, and there are no additional income sources from the property. What’s the GRM?
a. 100
b. 110
c. 200
d. 220
1100) Which approach to value is typically used for investment property of two- to four-family units?
a. Cost approach
b. Income approach
c. Revenue approach
d. Sales comparison approach
1101) Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?
a. Financing terms and cash equivalency
b. Income generated
c. Market conditions at time of sale
d. Physical characteristics of the property
1102) The loss in value caused by deterioration in physical condition is called ______.
a. Economic obsolescence
b. External depreciation
c. Functional obsolescence
d. Physical depreciation
1103) A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)?
a. 0.125
b. 125
c. 1.25
d. 12.5
1104) When you’re using the sales comparison approach to value a property, which of the following is considered a category of adjustment?
a. Area demographics
b. Financing terms and cash equivalency
c. Seller motivation
d. Types of obsolescence
1105) A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?
a. Economic and material depreciation
b. External depreciation
c. Functional obsolescence
d. Physical depreciation
1106) Which of the following best defines capitalization rate?
a. The expected rate of return on investment
b. The rate at which assets depreciate over time
c. The rate of capital recapture
d. The value of a business as an investment
1107) Using the income approach, determine the value of a property that has a net operating income of $15,000 and a cap rate of 15%.
a. $100,000
b. $15,000
c. 40%
d. 5%
1108) The GRM for Sunny Hills is 147. If a three-bedroom, one-bath house in Sunny Hills rents for $820 monthly and sold for $125,000, what is the suggested value of a house that leases for $1,000 monthly based on the GRM?
a. $120,540
b. $147,000
c. $152,439
d. $198,540
1109) To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements is applied last?
a. Conditions of sale
b. Location
c. Market conditions
d. Physical characteristics
1110) Related to depreciation, what are the two types of physical deterioration?
a. Curable and incurable
b. Economic and material
c. Internal and external
d. Qualitative and quantitative
1111) Which of these properties are exempt from the FIRREA federal appraisal guidelines?
a. Properties valued at $400,000 or less
b. Properties valued at $450,000 or less
c. Properties valued at $500,000 or less
d. Refinanced properties
1112) Which category of appraiser can appraise one- to four-unit residential property valued under $1 million and that are not complex in nature, and non-residential properties valued below $250,000?
a. Certified general appraiser
b. Certified residential appraiser
c. Residential license
d. Trainee license
1113) Which of the following properties is exempt from the FIRREA federal appraisal guidelines?
a. A refinance of a property valued at $375,000
b. A refinance of a property valued at $475,000
c. The purchase of a property valued at $455,000
d. The purchase of a property valued at $475,000
1114) Which category of appraiser can appraise any residential property without any limitations related to value or complexity, but only non-residential properties valued below $250,000?
a. Certified general appraiser
b. Certified residential appraiser
c. Residential license
d. Trainee license
1115) Which category of appraiser can appraise any real property without any limitations related to value or complexity?
a. Certified general appraiser
b. Certified residential appraiser
c. Residential license
d. Trainee license
1116) Which type of appraisal report makes use of pre-printed documents?
a. Form report
b. Letter report
c. Narrative report
d. Printed report
1117) Which category of appraiser must be supervised by a certified appraiser and can assist on any appraisals their supervisor can perform?
a. Certified general appraiser
b. Certified residential appraiser
c. Residential license
d. Trainee license
1118) What type of appraisal report contains minimal detail, and may be prepared for a specific client for an explicit, limited purpose?
a. Appraisal report
b. Oral report
c. Restricted appraisal report
d. Summary report
1119) What entity sets the standards for the appraisal report?
a. Appraisal Ethics Association
b. FIRREA
c. State real estate license law
d. USPAP
1120) Which of the following actions toward an appraiser would be considered proper?
a. Asking an appraiser to correct errors in the appraisal report
b. Making payment of an appraisal report conditional on the value or estimate to be reached
c. Threatening to no longer do business with an appraiser
d. Withholding payment for a completed appraisal report
1121) Which of the following statements about appraisal activities is true?
a. Appraisers’ activities are highly regulated, especially when a federally related transaction is involved.
b. Appraisers’ activities are not regulated.
c. Appraisers’ activities are only regulated when a federally related transaction is involved.
d. None of these statements is true.
1122) Which type of appraisal report is lengthy and often used for complex properties?
a. Form report
b. Letter report
c. Narrative report
d. Restrictive report
1123) Which of the following actions toward an appraiser would be considered improper?
a. Asking an appraiser to consider additional, appropriate property information
b. Asking an appraiser to correct errors in the appraisal report
c. Asking an appraiser to remove information about adverse property conditions from an appraisal report
d. Giving an appraiser additional details, substantiation, or explanation for the appraiser’s value conclusion
1124) What does the Financial Institutions Reform, Recovery, and Enforcement Act require?
a. Federally related appraisals must be conducted by an appraiser who’s either licensed or certified by the state.
b. Federally related transactions need not be appraised.
c. Non-federally related transactions must be appraised by government employees.
d. Real estate licensees who perform appraisals must have a federal security clearance.
1125) Which of the following is true of agency disclosures?
a. Agency disclosure is not required if a licensee represents both the tenant and the landlord.
b. Agency disclosure is required for both landlords and tenants.
c. Agency disclosure is required for buyers and sellers, but not tenants or landlords.
d. A rental agent only has “agency” with landlords, so only landlords must be provided with the disclosure.
1126) Noah is a real estate professional who is helping a landlord list her rental property. What is the minimum real estate license that Noah must possess?
a. Broker license
b. Listing license
c. Rental license
d. Salesperson license
1127) Which of the following would be a typical task of a rental agent?
a. Advertising a vacancy
b. Collecting rent
c. Preparing year-end tax reports for the building owner
d. Taking care of maintenance and repair
1128)
1129)
1130) Which of the following is a true statement about a rental agent?
a. Rental agents always represent tenants.
b. Rental agents always represent the landlord.
c. Rental agents represent neither the tenant nor the landlord, but instead represent the building itself.
d. The listing agent and leasing agent may be the same person.
1131) Which of these statements about agency disclosure and leases is true?
a. Agency disclosure is not required for leases.
b. Agency disclosure is only required for verbal leases.
c. Agency disclosure is required for written leases with a duration of a year or more.
1132) A lease that has a term of a year or more requires rental agents to complete what type of disclosure form?
a. Agency disclosure form
b. Lease term disclosure form
c. Property condition disclosure form
d. Rental condition disclosure form
1133)
1134) Which of these statements about listing and leasing agents is true?
a. A listing agent and leasing agent cannot represent the same client.
b. Landlords cannot enter into a lease agreement without entering into agency with a listing agent.
c. Listing agents cannot represent tenants.
d. The listing agent and the leasing agent can be the same person.
1135)
1136)
1137) Lorelei doesn’t like the man who is living in her rental home and wants to kick him out. When she goes to his house to give him immediate notice, she takes a copy of the rental agreement, which stated that the rental agreement was at-will, meaning she could resume possession at any moment. What is the best explanation for why the tenant doesn’t need to move out?
a. Lorelei didn’t give 90 days’ notice.
b. Lorelei hasn’t specified why she doesn’t like the tenant.
c. Lorelei needs to have the tenant removed by a sheriff.
d. The lease provision is void, because the right to notice is a non-waivable right.
1138) Which of the following sentences about non-waivable tenant rights is true?
a. Any lease provision that is meant to waive one of the non-waivable rights is void and unenforceable.
b. Lease provisions may only include the non-waivable tenant rights.
c. The non-waivable rights may be waived in writing, but not orally.
d. The non-waivable tenant rights must be provided to a tenant in writing to be enforceable.
1139)
1140) Jake is saving up to move out of his parents’ house. If he finds an unfurnished rental for $1,000 per month, what is the most he will need to have saved up for the security deposit?
a. $1,000
b. $2,000
c. $3,000
d. $4,000
1141) You’re a landlord who wants to increase your month-to-month tenant’s rent from $800 to $900. You may do this if ______.
a. The property is owned by a real estate investment trust.
b. The rental is a multi-unit building constructed prior to 1995.
c. The rental is a single-family residence.
d. The tenant has lived in the unit for more than 12 months.
1142) Rental properties that are less than ______ are exempt from the Tenant Protection Act of 2019.
a. 15 years old
b. 20 years old
c. 25 years old
d. 30 years old
1143) Josie has signed a lease agreement for a furnished apartment for $2,000 and the required security deposit is equal to the highest amount the landlord could ask for. How much is her security deposit?
a. $10,000
b. $2,000
c. $4,000
d. $6,000
1144) You inherit five mobile homes from your favorite Aunt Tina. It’s good to be a land baron. Before you jump into signing rental agreements, what law might you want to consult?
a. Mobilehome Landlord-Tenant Relations
b. Mobilehome Rent Law
c. Mobilehome Residency Law
d. RV Park Occupancy Law
1145) If a landlord wants to increase the rent on a unit that’s regulated by the Tenant Protection Act of 2019, what’s the maximum allowed as an annual increase?
a. 10% plus the cost of living
b. 2%
c. 4%
d. 5% plus the cost of living
1146) A landlord owns a 15-unit rental property in an area without local rental control. Under what circumstances may this landlord increase the monthly rent of a unit by 20%?
a. If it’s covered by the Costa-Hawkins Act.
b. If the landlord lives in one of the units.
c. If the previous tenant moved out and the increased rate is for a new tenant.
d. If the tenant has missed at least two previous rental payments.
1147) Your cousin, Joe, owns a mobile home that he wants to sell, but the park owner told him to take down his “for sale” sign. He knows you’re studying real estate, so he asks you for advice. Where do you recommend Joe start his research?
a. Mobilehome Landlord-Tenant Relations
b. Mobilehome Rent Law
c. Mobilehome Residency Law
d. RV Park Occupancy Law
1148) Hank moved out of a rental house on the second of the month. How long until his landlord must refund the security deposit and/or provide an itemized list of deductions?
a. By the 23rd of the same month
b. By the 26th of the same month
c. By the second of the next month
d. Within 45 days
1149)
1150)
1151) Janey hasn’t been able to use her toilet for a week because the sewer pipe is blocked by tree roots, and her landlord is not responding to her calls. Upon reviewing her lease, she notices she signed an agreement not to sue the landlord for any cause. What can she do?
a. She cannot sue and must contact a mediator.
b. She cannot sue and must pay for the repairs herself.
c. She can still sue because the lease provision is void.
d. She can sue, but will probably be counter-sued for breaching the agreement to not sue.
1152) A landlord owns a 15-unit rental property in an area without local rental control. Under what circumstances may this landlord increase the monthly rent of a unit by 20%?
a. If it’s covered by the Costa-Hawkins Act.
b. If the landlord lives in one of the units.
c. If the previous tenant moved out and the increased rate is for a new tenant.
d. If the tenant has missed at least two previous rental payments.
1153) Which of these landlords has filed an unlawful detainer suit?
a. April fined her tenant $60 for damage to the lawn when he parked his motorcycle there.
b. Cary sued to collect three months’ back rent from his tenant.
c. Chet tried to kick his tenant out, but he wouldn’t leave, so he’s started eviction proceedings.
d. Norma’s tenant always pays his rent late and Norma has decided not to renew his lease.
1154) Which of the following circumstances would likely constitute an emergency, giving a landlord the right to enter a tenant’s premises without notice?
a. Curiosity
b. Inventory of valuables for building insurance
c. Prevention of property destruction
d. Spot check for cleanliness
1155) Deirdre is receiving a lot of advice about how to respond to the breach of contract by one of her tenants. Which of these statements is bad advice because it is blatantly false?
a. Even if you terminate the lease and kick her out, you can sue for the rest of the rent, because she agreed to pay it by signing the lease.
b. If you’re thinking of going the route of eviction, you’ll need to terminate the lease first.
c. Keeping the lease in effect means you can sue for rent owed for the remainder of the lease term.
d. Terminating the lease means the tenant won’t be obligated to pay any more rent.
1156) Harry discovers that his commercial lease requires him to pay for the installation of his business sign. This is a common requirement, called what?
a. Franchise fixtures
b. Tenant encroachments
c. Tenant expenses
d. Tenant improvements
1157) A tenant is not legally obligated to let her landlord enter the premises to visit her goldfish, because she has what legal right?
a. Freedom from harassment
b. Landlord prohibition from entry
c. Right to enjoyment
d. Right to entry
1158) Which of these statements about landlord liability for injuries is true?
a. A residential landlord must regularly inspect the property for defects throughout the tenancy period.
b. Both commercial and residential landlords may be liable for injuries if they promised to repair the defect but never followed through.
c. Commercial landlords are never liable for injuries resulting from the condition of the premises.
d. Residential landlords are only liable for injuries resulting from the condition of the premises if they agreed to make repairs in writing.
1159) Audrey has assigned her lease to her college buddy, Skip. After two months, Skip vacates the premises and is never heard from again. Who could the landlord reasonably sue for non-payment of rent?
a. No one
b. Only Audrey
c. Only Skip
d. Skip and Audrey
1160) Which of these landlords is using their right to maintain a lease in effect after a tenant breach of contract?
a. Ben installs a lock-out bolt on his tenant’s door, prohibiting him from entry.
b. Brenda sues her tenant, Shep, for missed rental payments.
c. Calli serves an eviction notice against her tenant, Steve.
d. Kermit begins legal proceedings against Miss Piggy, who won’t vacate.
1161) Which of these fits the description of the “rent deduction” remedy?
a. Kip found out that his neighbor was paying $10 less rent than he was, so he began deducting that amount from his rent.
b. The landlord didn’t fix the plumbing after the tenant provided notice, so the tenant hired a plumber and deducted the cost from the rent.
c. The landlord refused to replace the stained carpets after the tenant’s cats made a mess on them, so the tenant bought new carpet and deducted it from the rent.
d. The wagon wheel light fixture wasn’t to the tenant’s taste, so the tenant replaced it and billed the landlord.
1162) What is an unlawful detainer lawsuit?
a. A lawsuit filed by a landlord against a holdover tenant.
b. A lawsuit filed by a landlord to regain possession of an improvement to property.
c. A lawsuit filed by a rental agent when the commission is not paid.
d. A lawsuit filed by a tenant when the security deposit is withheld unlawfully.
1163) Who’s responsible for a person’s injury that was sustained on the premises depends on ______.
a. The landlord
b. The tenant
c. Whether the premises are commercial or residential
d. Who’s at fault
1164) Which of these statements about tenant remedies is true?
a. Abandonment is the only remedy a landlord may take without legal representation.
b. A tenant may repair and deduct without providing notice if the repair is under a specific dollar amount.
c. The three types of remedies available include repair and deduct (aka rent deduction), abandonment, and rent withholding.
d. When landlords fail to meet their obligations, tenants have 21 days to choose a remedy to apply.
1165) Which of these scenarios includes a landlord using the right to terminate a lease after breach of contract?
a. Benjamin refused to babysit his landlord’s children and was served with an eviction notice.
b. India missed three rental payments and her landlord sued to collect.
c. No pets are allowed at Hartford Arms. Bob has been warned twice, and now his landlord tells him to move out.
d. Steve is continually taking other tenants’ parking spaces. The landlord fines him one month’s rent.
1166) Which of these is a valid way for a landlord to deliver reasonable notice of a need to enter the property?
a. Knocking on the door prior to entering
b. Leave notice with a neighbor’s kid
c. Mail notice to the tenant the day the landlord needs to enter
d. Personally deliver notice to the tenant 24 hours before entry
1167) A landlord wants to show a tenant’s unit to a prospective tenant. What constitutes reasonable notice?
a. 24 hours
b. No notice is required if the showing occurs during regular business hours
c. One month, for month-to-month tenancy
d. Two weeks
1168) Which of these fits the description of the abandonment remedy?
a. Biff’s boss sent him to Taiwan for six months, so Biff decided to move out.
b. Rats drove Willard out of his apartment.
c. Sheila loved Hawaii so much she never returned to her rental unit.
d. The neighbor’s newborn’s nighttime awakenings were driving Cora to her mother’s every night.
1169) Audrey is raging mad at her landlord, Ruby, who hasn’t sent anyone to fix the toilet. To show that she is serious, Audrey could remind Ruby that she is legally obligated to maintain the ______ of the premises.
a. Habitability
b. Habitat
c. Security
d. Water protection
1170) Which of these actions fits the description of a “repair and deduct” remedy?
a. After his landlord refused to fix the broken window, Rick had it replaced and deducted the cost from his rent.
b. Ryan did not like having carpeting in the bathroom, so he replaced it with vinyl and deducted the cost in his next month’s rent.
c. Seamus is a carpenter and crafted some built-in bookshelves for his unit. Because they will increase the value, he deducts the cost from his rent.
d. The wallpaper was peeling in Susan’s dining room and she hired a contractor to repair it, deducting the cost from her rent.
1171) Which of the following is a valid reason for a tenant to refuse to allow a landlord to enter the property?
a. “I take it back. I don’t want the repairs done today anymore. I’m sleepy.”
b. “The water dripping through the ceiling of the unit below isn’t mine.”
c. “You didn’t provide notice that you wanted to show the property to a buyer today.”
d. “You shall not pass!”
1172) A residential tenant decides the 70s-era shag carpeting has to go, rips it up, and replaces it with nail down wood floors. When she moves out, she can’t take the floor with her, because it is what?
a. A fixture
b. An improvement
c. The wrong color for her new house
d. Too heavy
1173) Marley has just purchased an occupied rental property. Which of these rights does she have?
a. The right to change the terms of the lease, including an increase in rent
b. The right to collect rent according to the terms of the existing lease
c. The right to evict the tenant and take possession for herself
d. The right to terminate the lease, effective immediately
1174) A landlord who wishes to show an occupied rental property to a prospective buyer must provide the tenant with reasonable ______.
a. Compensation
b. Identification
c. Justification
d. Notice
1175) Johnny is overwhelmed by the amount of work that goes into being a landlord and has too many requests for repairs from his tenants. He needs to choose one of these to hold off on for now. Which repair can he legally postpone completing?
a. Evie’s key broke in her deadbolt and she can’t lock the front door.
b. Jay clogged up his toilet again, and still hasn’t bought himself a plunger.
c. The lights and outlets aren’t working in Ethan’s living room.
d. The water to Julie’s shower won’t turn on.
1176) Which of these is a legal reason for a landlord to enter a rental unit without notice?
a. Abandonment of the property
b. To conduct a home inspection for a buyer
c. To inspect a waterbed
d. To make repairs scheduled in advance
1177) One of these parties is likely to be held liable for an injury resulting from the condition of the premises. Who is it?
a. A passerby is hit by a falling icicle left behind by a freak ice storm.
b. A residential landlord promises to repair the exposed wiring in the laundry room, but forgets—until someone is electrocuted.
c. A tenant watches the neighbor start to disappear into a sinkhole in the front yard that she had no idea existed.
d. The owner of a strip mall learns that a shopper tripped over the cord of a vacuum while a tenant was cleaning up some cereal dropped by their child.
1178) Audrey has assigned her lease to her college buddy, Skip. After two months, Skip vacates the premises and is never heard from again. Who could the landlord reasonably sue for non-payment of rent?
a. No one
b. Only Audrey
c. Only Skip
d. Skip and Audrey
1179) A tenant is not legally obligated to let her landlord enter the premises to visit her goldfish, because she has what legal right?
a. Freedom from harassment
b. Landlord prohibition from entry
c. Right to enjoyment
d. Right to entry
1180) Which of these statements about transfer of interest in rental property by a landlord is true?
a. It is illegal for a landlord to transfer interest in rental property while a lease is in effect.
b. The existing lease is unenforceable unless it is renewed by the new landlord.
c. There are two ways a landlord may transfer interest: subleasing or assignment.
d. The tenant retains the same rights and responsibilities that were provided by the original lease.
1181) A jewelry store is relocating from a mall to a free-standing building and is pulling all of its display cases out of the storefront. These cases belong to the jewelry store because they are ______.
a. Franchise fixtures
b. Improvements
c. Jewelry fixtures
d. Trade fixtures
1182) A landlord who wishes to show an occupied rental property to a prospective buyer must provide the tenant with reasonable ______.
a. Compensation
b. Identification
c. Justification
d. Notice
1183) Johnny is overwhelmed by the amount of work that goes into being a landlord and has too many requests for repairs from his tenants. He needs to choose one of these to hold off on for now. Which repair can he legally postpone completing?
a. Evie’s key broke in her deadbolt and she can’t lock the front door.
b. Jay clogged up his toilet again, and still hasn’t bought himself a plunger.
c. The lights and outlets aren’t working in Ethan’s living room.
d. The water to Julie’s shower won’t turn on.
1184) Barb has six months left on her lease when the house is sold in foreclosure. The buyer is planning to move in, which may happen how soon?
a. In 120 days
b. In 60 days
c. In 90 days
d. In six months, when the original lease term expires
1185)
1186) What must be filed for the eviction process to begin?
a. An unlawful detainer lawsuit
b. A writ of possession
c. Evidence of missed rental payments
d. The lease
1187) Jake is unhappy that his lease was extended automatically. What lease provision should Jake review closely to ensure it is enforceable?
a. Automatic lease creation clause
b. Automatic lease extension clause
c. Automatic lease renewal clause
d. Non-cancellation clause
1188) Which of these accurately describes a lease extension?
a. A landlord may impose a lease extension on a tenant.
b. A lease extension is a continuation of the current lease.
c. A lease extension is a new lease.
d. A lease extension occurs as the result of fraud.
1189) Which of these statements about tenants in the military is true?
a. A tenant in the military who cannot pay rent due to military service may be eligible for a 90-day stay of eviction.
b. Landlords may not increase rent on units occupied by tenants in the military.
c. Tenants in the military may miss up to 90 days of rent payments while deployed.
d. Tenants in the military may not rent property with a monthly payment that exceeds $1,200.
1190) Brandy, a member of the National Guard, has been called up to duty. If she’s unable to pay her rent due to her orders, she may be entitled to a delay of eviction service. To qualify, her monthly rent must be __________ as adjusted by the housing price inflation adjustment.
a. $1,500 or less
b. $1,500 or more
c. $2,400 or less
d. $2,400 or more
1191) Which of these answers best describes the difference between lease expiration and lease termination?
a. Termination of a lease may only occur after the expiration date set in the lease.
b. Termination of a lease occurs before the lease would have expired.
c. Termination of a lease requires consent of both parties, whereas expiration is written into the lease terms.
d. There is no difference. A lease that is expired is also terminated.
1192)
1193) Julie has received notice that the house she is renting was sold in foreclosure. She has a month-to-month lease, so how long does she have until her lease may be terminated?
a. 21 days
b. 30 days
c. 60 days
d. 90 days
1194) What legal document must be delivered to the sheriff before a tenant may be forcibly removed from a rental?
a. Writ of eviction
b. Writ of possession
c. Writ of removal
d. Writ of unlawful detainer
1195) What is it called when a tenant repays past-due rent to retain possession?
a. Due process
b. Relief from forfeiture
c. Unlawful detainer
d. Writ of possession
1196) Which of these ways of ending a lease falls into the category of lease termination?
a. A one-year lease reaches the end of its term
b. A periodic lease is automatically renewed per the terms of the lease extension clause
c. The tenant ends the lease after the property is condemned
d. Two parties mutually agree to rescind the contract
1197) Which of these accurately describes a lease renewal?
a. A lease renewal is a continuation of the current lease.
b. A lease renewal is a new lease.
c. A lease renewal is unenforceable.
d. A lease renewal requires an automatic lease renewal clause.
1198) Which of these statements about terminating a lease is true?
a. Rescission is one way to terminate a lease.
b. Termination of a lease differs from rescission of a lease.
c. Termination of a lease requires the consent of both parties.
d. The first step to terminating a lease is to file an unlawful detainer lawsuit.
1199) If a negotiable instrument is transferrable, it must be ___________.
a. Include a “not to exceed” clause
b. On a government-issued form
c. Payable at an indefinite time
d. Signed
1200) Rusty received an acceleration letter from his mortgage lender. What is the most likely reason for receiving this letter?
a. Rusty failed to pay his property taxes.
b. Rusty has paid off his mortgage.
c. Rusty is two or three months in default.
d. Rusty’s mortgage is being sold on the secondary market.
1201) A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?
a. Borrower
b. Lender
c. Loan
d. Property
1202) What generally determines the priority of a lien?
a. The amount of the lien
b. The date it is recorded
c. The date the lien is to be paid off
d. The lien holder
1203) What’s a discount point?
a. An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires
b. The amount a borrower charges a lender for using its money, charged either monthly or annually
c. The amount a lender charges to initiate a loan
d. The interest rate at which a bank is allowed to borrow money from the Fed; this rate changes with the stock market
1204) In a title theory state, which of the following is a true statement?
a. A promissory note creates a lien against the property used as security for the loan.
b. It’s generally much easier for a lender to foreclose on a property.
c. The lien makes non-judicial foreclosure typical.
d. The mortgage creates a lien against the property used as security for the loan.
1205) What type of foreclosure is commonly used when a deed of trust is the security instrument?
a. Eviction
b. Judicial
c. Non-judicial
d. Strict
1206) Which one of the following is a true statement regarding prepayment penalties?
a. All loans involve prepayment penalties.
b. Lenders don’t have to tell borrowers about prepayment penalties until the borrower’s payoff amount is received.
c. Lenders must disclose up front if they reserve the right to charge a prepayment penalty, and under what conditions a penalty will apply.
d. Prepayment penalties are illegal.
1207) Ken and Julia took out a five-year subprime loan that included a prepayment penalty clause. They’re on track to pay it off after only three years. Which one of the following is a true statement?
a. Lenders may not charge a prepayment penalty.
b. The lender can only charge a prepayment penalty if it was disclosed to the borrower.
c. The prepayment penalty can be as much as 30 days’ interest.
d. The prepayment penalty can be as much as 5% of the original loan balance.
1208) What purpose does the promissory note serve?
a. It gives the lender the right to begin foreclosure proceedings if the buyer defaults.
b. It gives the trustee the right to begin foreclosure proceedings if the buyer defaults.
c. It’s a promise made to the buyer that the lender will not foreclose as long as the note is kept current.
d. It’s a promise the buyer makes to the lender that the note will be repaid in full.
1209) Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now?
a. The lender releases the deed of trust that secured her mortgage loan.
b. The lender releases the mortgage that secured her mortgage loan.
c. The lender tells the trustee to release the title to Olivia.
d. The trustee releases the mortgage that secured her mortgage loan.
1210) Which of the following statements about the promissory note is true?
a. A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note’s terms.
b. A promissory note isn’t a legal document.
c. A promissory note isn’t transferable, so it must be held by the original lender until paid in full.
d. A promissory note serves as collateral for a mortgage loan.
1211) Alyssa’s mortgage loan is secured by the note and the mortgage. Which of the following is true if she lives in a lien theory state?
a. Her lender can foreclose on her without advance notice.
b. She holds title to the property, and the mortgage becomes a lien on the property.
c. The lender can never legally foreclosure on her home.
d. The lender doesn’t need to involve the court to foreclose.
1212) Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?
a. Acceleration
b. Alienation
c. Defeasance
d. Due-on-sale
1213) Which of the following is one reason a lender might charge a prepayment penalty?
a. Because the lender is a subprime lender
b. To cover the costs of processing an early payoff
c. To deter buyers from ever paying off their mortgage
d. To recover the money lost in anticipated interest
1214) While Martha’s paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?
a. A deed of trust
b. A mortgage
c. An assignment
d. A promissory note
1215) Daniel purchased a townhome and obtained financing from Bank A on February 1, 2014. On April 1, 2015, he took out a home equity loan on the property with Bank B. On August 1, 2015, Daniel refinanced his mortgage through Bank C, which resulted in Bank A’s loan being paid off. Bank B signed a subordination agreement related to Bank C’s loan. Which lender will be paid first in the event of a foreclosure?
a. Bank A
b. Bank B
c. Bank B and C will be paid at the same time.
d. Bank C
1216) When a deed of trust is used as a security instrument, who holds the deed and the note?
a. The lender holds the deed and the note
b. The lender holds the deed, and the trustee holds the note.
c. The trustee holds the deed, and the lender holds the note.
d. The trustee holds the mortgage and the note.
1217) Generally, there are covenants between the borrower and the lender within a mortgage document. Which of the following is a mortgage covenant?
a. Agree to refinance only with the current lender.
b. Give the lender first right of refusal.
c. Move all checking and savings account to the lender’s institution.
d. Pay any charges and assessments against the property.
1218) Which of the following describes the amount a lender charges a borrower for using money?
a. Discount point
b. Interest
c. Principal
d. Usury
1219) Buyer Ed is reviewing the Loan Estimate he received from the lender he’s working with. He notices the loan terms include a prepayment penalty. Because he’s a savvy consumer, which of the following does Ed do?
a. Ask the lender if there are other options available that would not involve a prepayment penalty.
b. Check with his real estate agent to make sure that the penalty shown is typical.
c. Laugh and throw the Loan Estimate in the trash.
d. Resolve to not try to pay the loan off early.
1220) Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?
a. A trustee will hold title until the loan is paid.
b. Their transaction is secured with a mortgage as well.
c. The lender will hold the mortgage, while a trustee will hold the deed of trust until their loan is paid off.
d. The lender will hold the title until the loan is paid off.
1221) Which of the following defines when a lender charges a borrower more than the highest allowable interest rate?
a. Default
b. Discount points
c. Note
d. Usury
1222) In title theory states, which of the following is true?
a. The borrower and lender hold the title jointly.
b. The borrower doesn’t hold the legal title to the property until the loan is paid in full.
c. The borrower receives the title at closing.
d. The lender is not allowed to hold the title.
1223) Which of the following is a mortgagor’s responsibility?
a. Assign the mortgage.
b. Charge late payment penalties.
c. Foreclose on the property if in default.
d. Keep the property in good repair.
1224) Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe?
a. Acceleration
b. Alienation
c. Defeasance
d. Prepayment
1225) Shirley’s lender discharged the mortgage lien on Shirley’s property after processing her final payment. Which clause requires the lender to take this action?
a. Acceleration
b. Alienation
c. Defeasance
d. Due-on-sale
1226) In a mortgage, the property is used as collateral for the loan. What’s the term for the process of pledging something as collateral?
a. Hypercollateral
b. Hyperinflation
c. Hyperventilation
d. Hypothecation
1227) Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?
a. Deed of trust
b. Mortgage lien
c. Promissory note
d. Usury
1228) Rob and Jill obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What is the loan with Quail Loans considered?
a. First mortgage
b. Graduated mortgage
c. Home equity line of credit
d. Junior mortgage
1229) What type of foreclosure is commonly used when a mortgage is the security instrument?
a. Eviction
b. Judicial
c. Non-judicial
d. Strict
1230) Which of the following documents is an example of a promissory note?
a. Borrower Keesha just signed a document that states that she pledges to pay back her mortgage loan of $310,000.
b. First Financial drafted a document for a borrower that includes, among other things, an acceleration clause.
c. The document that Darren is about to sign includes an acceleration clause.
d. The document that Sandra will sign also includes spaces for her lender’s and her trustee’s signatures.
1231) Gerard has been offered a 4% interest rate on a $300,000 mortgage. His monthly mortgage payment would run about $950 per month. He plans to pay $2,000 up front to drop his interest rate to 3.75% and his payment to $920 per month. What is this upfront charge called?
a. Discount point
b. Interest
c. Notes
d. Usury
1232) Which of the following options describes a subordination agreement?
a. An agreement between a contractor and any subcontractors
b. An agreement between a landowner and a contractor
c. An agreement between the court and landowner to decrease property taxes
d. An agreement between two lien holders to modify the order of lien priority
1233) What’s an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires?
a. Discount point
b. Interest
c. Note
d. Usury
1234) When a mortgage is used as a security instrument, who holds the mortgage and the promissory note?
a. The borrower holds the mortgage, and the lender holds the note.
b. The borrower holds the mortgage and the note.
c. The lender holds the mortgage, and the borrower holds the note.
d. The lender holds the mortgage and the note.
1235) Which of the following is the name of a penalty lenders charge when borrowers repay their loans earlier than expected?
a. Discount point
b. Late fee
c. Prepayment penalty
d. Usury
1236) Jim decided to refinance his three-year-old mortgage that has a balance of $300,000. He has to pay a fee of 5% of the loan amount to the original lender for paying off the mortgage early. What is this fee called?
a. A prepayment penalty
b. Closing costs
c. Origination fee
d. Points
1237) How many parties does a mortgage involve?
a. Five: borrower, lender, trustee, trustor, and beneficiary
b. Four: borrower, lender, trustee, and trustor
c. Three: borrower, lender, and trustee
d. Two: borrower and lender
1238) A trustee is holding title to Cassandra’s house until the loan is paid in full. Which type of security instrument was used?
a. Deed of trust
b. Mortgage
c. Mortgage and deed of trust
d. Promissory note
1239) Where are mortgages recorded?
a. Mortgages are not recorded; only deeds are.
b. They’re recorded at the lending bank’s main office.
c. They’re recorded at the real estate brokerage’s main office.
d. They’re recorded at the recorder’s office in the county where the property is located.
1240) Phyllis and Maury obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What’s the loan with Taylor Bank & Trust considered?
a. First mortgage
b. Home equity line of credit
c. Junior mortgage
d. Subordinate mortgage
1241) Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?
a. Acceleration
b. Alienation
c. Defeasance
d. Due-on-sale
1242) After getting into a fender bender, Parker had to buy a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a notice from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?
a. Acceleration
b. Alienation
c. Defeasance
d. Due-on-sale
1243) Which one of the following examples describe a prepayment penalty?
a. A fee the government charges the lender if the borrower pays off a loan before its intended time
b. A fee the lender charges for servicing a loan
c. A loan origination fee charged to the borrower
d. A monetary penalty imposed on a borrower for paying off a loan before its intended time
1244) How can a lender with a lien that’s in second position get into the first position?
a. With a deed of trust
b. With an IOU
c. With a promissory note
d. With a subordination agreement
1245) Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it’s going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in?
a. A deed of trust theory state
b. A lien theory state
c. An intermediary theory state
d. A title theory state
1246) Sheila’s financing calls for the use of a promissory note. What’s a promissory note?
a. A lien on a property
b. An agreement for a consumer to buy a new condominium
c. The borrower’s promise to repay a certain sum of money to another party (the lender or holder of the note) under specified terms
d. The lender’s promise to repay a certain sum of money to another party
1247) Who or what entity has legal title to a financed property in a lien theory state?
a. The beneficiary
b. The borrower
c. The lender
d. The state
1248) Janice is selling her property, and Tim wants to assume her loan. If a due-on-sale clause exists in Janice’s mortgage, ______.
a. Janice will have to pay any loan assumption fee
b. The entire loan balance may be due at once, and Tim won’t be able to assume it
c. The interest rate will rise with the assumption
d. Tim will have to accept existing terms of the loan
1249) What’s the purpose of a typical subordination agreement?
a. It allows a junior mortgage to move into first lien position.
b. It allows the lien(s) ahead of the junior mortgage to be refinanced without changing their priority in lien positions.
c. It raises interest rates incrementally over time.
d. It removes a lien from a property when it’s been repaid.
1250) Jason purchased his dream home six months ago. After Jason received an inheritance from his uncle, he decided to pay off his mortgage. What should he consider before doing this?
a. A second mortgage
b. The state of his local housing market
c. Whether he will incur a prepayment penalty
d. Whether his uncle would like this
1251) What often comprises the sum total of a buyer’s mortgage payment?
a. Principal and interest
b. Principal and taxes
c. Principal, interest, and taxes
d. Principal, interest, taxes, and insurance
1252) Which of the following is a true statement about loan assumptions?
a. Most loans are assumable.
b. The lender may not change the loan terms for the buyer.
c. The seller can’t also ask the buyer to pay the seller for any equity built up.
d. They may trigger a due-on-sale clause, making the seller have to pay the entire loan balance.
1253) When a mortgage holder is released from liability for a mortgage, it’s also called ______________.
a. Clear title
b. Release clause reformation
c. Satisfaction of mortgage
d. Subordination
1254) Which of the following describes a buydown?
a. ABC Lending charges origination points and offers a 4.5% rate.
b. Buyers pay the seller a prepaid lump sum prior to closing to reduce the sales price.
c. Your clients opt to pay their lender two discount points in a lump sum so they can lock in a reduced interest rate.
d. Your sellers pay some of the buyer’s closing costs so the buyer can put more money to their down payment.
1255) Lisa took out a conventional 30-year mortgage at a 6% interest rate when she bought her home 15 years ago. Her payments today are the same as they were when she made her first payment. What’s this an example of?
a. Constant payment method
b. Graduated payment
c. Home equity line of credit
d. Straight loan
1256) What’s a reserve fund?
a. An account brokers use to pay commissions to licensees
b. A specified number of months’ worth of property tax and insurance funds that have been set aside
c. The amount of money a bank reserves for mortgage lending
d. The amount of money lenders keep on hand
1257) What may happen if a property lies in a designated floodplain?
a. Flood insurance may be required.
b. Lenders will not approve a loan.
c. The property may float away.
d. The property will never sell.
1258) Nina and Rob prepaid some of their interest to their lender when financing their new home. What’s this called?
a. A buydown
b. A down payment
c. An adjustable rate mortgage
d. An interest-free loan
1259) Who or what determines the amount that can be set aside in reserve funds?
a. Borrowers
b. Builders
c. Federal regulations
d. Lenders
1260) What’s it called when a borrower’s installment payment remains relatively the same over the life of the loan?
a. Constant payment method
b. Graduated payment
c. Negative amortization
d. Straight loan
1261) ABC Lending requires mortgage borrowers to prepay 12 months of property taxes and insurance at closing. Where must these funds be held?
a. Brokerage account
b. Escrow account
c. Safe
d. Savings account
1262) Which program helps homeowners in flood hazard areas obtain insurance?
a. Federal Emergency Management Act
b. Flood Alleviation Program
c. National Flood Insurance Program
d. Safe Drinking Water Act
1263) Evelyn’s mortgage payments fluctuate. The amount applied toward principal each payment remains the same, but the interest amount varies. What type of amortization is this?
a. Constant payment
b. Negative amortization
c. Standard amortization
d. Straight-line amortization
1264) A reserve fund may also be called a(n) ______ account.
a. Additional
b. Escrow
c. Insurance
d. Taxable
1265) Which of the following is generally true of flood insurance?
a. It is a standard part of any homeowners policy.
b. It is optional for all properties.
c. It is required by lenders for all properties.
d. It is usually purchased separately or bundled with a homeowners policy, but it’s not standard.
1266) Maddy is looking over some documents while preparing for the closing of her first home purchase. She sees that her lender requires six months prepayment of this in her escrow account.
a. Insurance and taxes
b. Insurance only
c. Late fees
d. Taxes only
1267) What might a borrower’s escrow account or reserve fund pay for?
a. Insurance and taxes
b. Insurance only
c. Late fees
d. Taxes only
1268) Your buyer clients have plenty for a down payment and closing costs, and they’d like a lower interest rate than the going rate. How can they use some of their saved funds to get a better interest rate?
a. They can buy down the interest rate.
b. They can eliminate the interest rate.
c. They can postpone paying interest for a certain amount of time.
d. They can’t use funds to get a better interest rate.
1269) Janice is selling her property, and Tim wants to assume her loan. If a due-on-sale clause exists in Janice’s mortgage, ______.
a. Janice will have to pay any loan assumption fee
b. The entire loan balance may be due at once, and Tim won’t be able to assume it
c. The interest rate will rise with the assumption
d. Tim will have to accept existing terms of the loan
1270) With which type of amortization does the amount applied toward the principal remain the same each month, with the interest amount varying according to the outstanding loan balance?
a. Constant payment
b. Graduated payment
c. Negative amortization
d. Straight-line
1271) If a buyer assumes the seller’s mortgage, which of the following is a true statement?
a. The buyer is solely responsible for the mortgage.
b. The mortgagee and mortgagor are both responsible for the note.
c. The mortgagee assumes personal liability for the note.
d. Unless the lender releases the seller, the seller remains responsible for the mortgage and note.
1272) Which occupancy type is eligible for a VA loan?
a. All occupancy types
b. Investment property
c. Owner-occupied
d. Second home
1273) Joann purchased her house with a mortgage loan from her friendly neighborhood bank. Which of these most likely happened to Joann’s loan soon after she received it from her bank?
a. Her bank foreclosed on the loan.
b. Her bank sold it on the secondary market as an investment product.
c. She received another loan on the secondary market when her bank demanded full payment.
d. She sold the loan on the primary market for a lower interest rate.
1274) What type of loan is neither guaranteed nor insured by government agencies?
a. Conventional
b. Federal Housing Administration (FHA)
c. U.S. Department of Agriculture (USDA)
d. U.S. Department of Veterans Affairs (VA)
1275) Which entity’s purpose is to keep U.S. finances in check by maintaining balanced and favorable economic conditions?
a. Federal Reserve System
b. Primary mortgage market
c. Secondary mortgage market
d. Stock market
1276) Amy purchased a new home and obtained financing through a bank, called Natula Bank. Natula originated the loan, but before Amy’s first mortgage payment was due, it sold her loan to CitiMortgage. As a loan originator, what market is Natula Bank operating in?
a. Federal Reserve System
b. Primary mortgage market
c. Secondary mortgage market
d. Stock market
1277) Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%?
a. Acceleration clause
b. Mortgage insurance premium
c. Prepayment penalty
d. Private mortgage insurance
1278) What are the main benefits to veterans of the VA-guaranteed loan program?
a. A VA guarantee of the property condition
b. Lower interest rates than are available on the open market
c. No down payment, no mortgage insurance, and no prepayment penalty
d. Reduced homeowner’s insurance requirements
1279) Which of the following statements is true of the secondary mortgage market?
a. Borrowers have a say in which entity may purchase their mortgages in this market.
b. Lenders don’t purchase loans from other lenders in this market.
c. The borrower’s rights are unaffected.
d. The loan originator continues to service the loan after it’s sold.
1280) Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don’t have enough money saved to put down 20%. What type of loan seems most appropriate?
a. Conventional
b. FHA
c. FHA, VA, or conventional
d. VA
1281) Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What’s Mick’s position?
a. Mortgage banker
b. Mortgage broker
c. Mortgage servicer
d. Real estate investor
1282) Which of the following is a true statement about FHA financing?
a. An FHA loan is best for borrowers who have large down payments.
b. An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments.
c. FHA loans are available to all borrowers, regardless of credit history.
d. FHA loans have more stringent requirements than conventional loans do.
1283)
1284) Lydia put the minimum 3.5% down on her $210,000 home. She’ll have to pay an MIP. What type of loan does Lydia have?
a. Conventional
b. FHA
c. Standard
d. VA
1285) What institution was formed in 1968 and took over the sale of the government loan market?
a. Fannie Mae (FNMA)
b. Farmer Mac
c. Freddie Mac (FHLMC)
d. Ginnie Mae (GNMA)
1286) Which of the following is a property requirement for CalVet loans?
a. The property can be transferred, encumbered, or leased as the owner sees fit.
b. The property cannot be a mobile or manufactured home.
c. The property must be a unit in a planned unit development (PUD).
d. The property must be owner-occupied.
1287) Stacey’s lengthy military service makes her uniquely eligible for a(n) ________.
a. FHA loan
b. Piggyback loan
c. Subprime loan
d. VA loan
1288) Which governmental department guarantees VA loans?
a. CFPB
b. FHA
c. HUD
d. VA
1289) Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel’s mortgage?
a. Insurance company
b. Investment group
c. Mortgage broker
d. Savings and loan
1290) Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution?
a. Fannie Mae (FNMA)
b. Farmer Mac
c. Freddie Mac (FHLMC)
d. Ginnie Mae (GNMA)
1291) What could be a consequence if there were no secondary mortgage market?
a. Interest rates would fall.
b. Lenders might not have funds available to make new loans to the public.
c. There wouldn’t be any institutions available to service loans.
d. Unemployment would rise.
1292) Shelly’s flower business is blooming and it’s time for her business to grow. She plans to take out a business loan to open two more shops on the north side of town. Which lending institution would she most likely go to for the loan?
a. A commercial bank
b. A credit union
c. An investment group
d. A savings and loan
1293) In which market do lenders purchase packaged loans?
a. Housing market
b. Primary mortgage market
c. Secondary mortgage market
d. Stock market
1294) How do the primary and secondary mortgage markets work together?
a. The primary market packages loans to sell to the secondary market.
b. The primary market regulates the secondary market.
c. The secondary market packages loans to sell to the primary market.
d. The secondary market regulates the primary market.
1295) Which of the following statements is true about government loans?
a. They originate in the secondary market.
b. They’re insured or guaranteed by a government agency.
c. They’re serviced by the U.S. Department of the Treasury.
d. They’re underwritten by the Federal Reserve.
1296) Sandra retired from a career in the Navy and is ready to buy her first home, a small bungalow in a quiet neighborhood, for $169,900. Her military service gives her the benefit of Veterans Affairs (VA) loan. What’s her required down payment?
a. $0
b. $1,699
c. $2,548.50
d. $500
1297) According to the PMI Act of 1998, at what percentage of equity position does personal mortgage insurance automatically cancel for homeowners?
a. 20%
b. 21%
c. 22%
d. 25%
1298) Your clients, the Schwans, are financing their home purchase. They want to obtain a conventional loan directly from a bank and to put down at least 20% of the home price. They will most likely get their loan from ______.
a. A primary lender
b. A secondary lender
c. A subprime lender
d. A supra-prime lender
1299) Sgt. Johnson is an active member of the Marines. He’s been serving for 10 years. He wants to buy a home with no money down. What loan option seems like the best fit?
a. Conventional
b. FHA
c. FHA, VA, or conventional
d. VA
1300) The secondary mortgage market buys loans from the primary market. How does this aid the lending market?
a. Avoid foreclosure of borrower properties
b. Ensure funds are available to borrowers
c. Prevent bank runs by consumers
d. Streamline lenders’ bankruptcy processes
1301) Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel’s profession?
a. Mortgage banker
b. Mortgage broker
c. Mortgage servicer
d. Real estate investor
1302) The Baxters are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them?
a. Conventional
b. FHA
c. FHA, VA, or conventional
d. VA
1303) Robin has great credit and was able to secure a loan for her ocean-side dream home. Her 30-year, fixed-rate loan is for an amount that’s above conventional loan limits. What type of loan does Robin have?
a. A conforming Freddie Mac loan
b. A government loan
c. An FHA loan
d. A non-conforming loan
1304) In which market do lenders that originate real estate loans operate?
a. Government market
b. Primary mortgage market
c. Real estate investment trust market
d. Secondary mortgage market
1305)
1306) To which of the following borrowers might a lender be most likely to recommend an FHA loan?
a. An investor who intends to use equity in another investment property as his down payment
b. A retired couple interested in downsizing from a large four-bedroom house they own free and clear to a condominium
c. A single stockbroker with a $40,000 down payment and significant assets in a stock portfolio
d. A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores
1307) Which of the following statements is true about conventional loans?
a. Originators usually package and sell the loans on the secondary market.
b. They’re guaranteed by the U.S. Department of Veterans Affairs.
c. They’re insured by the Federal Housing Administration.
d. They’re provided by the U.S. Department of Agriculture.
1308) Who generally qualifies for CalVet loans?
a. First-time home buyers
b. Low-income households
c. Military personnel and veterans
d. Senior citizens
1309) Recently retired Admiral Bongo and his wife, Lucy, contact you. They want you to help them purchase their dream house now that he’s retired, but one that has the necessary accommodations for the admiral’s disability. They also confide in you that they don’t have a lot of money saved up for a down payment. Which type of financing may work best for them?
a. A conventional loan combined with a seller carry back.
b. A conventional loan using the admiral’s retirement money as a down payment.
c. An FHA 203(k) loan to fix their new home up.
d. A VA loan, which requires no down payment.
1310) Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?
a. Conventional
b. FHA
c. FHA, VA, or conventional
d. VA
1311) Which type of lender specializes in taking in savings deposits and then lending money out to consumers through mortgages and other loans?
a. Credit union
b. Mortgage banker
c. Mortgage broker
d. Savings and loan
1312) Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some additional financing. To which type of lending institution might he prefer to go?
a. A commercial bank
b. A credit union
c. An investment group
d. A savings and loan
1313) How does the Fed maintain a balanced economy?
a. By limiting the number of loans a bank may originate
b. By purchasing loans on the secondary market
c. By regulating the flow of available funds and interest rates
d. By shutting down the stock market
1314) Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don’t have the best credit score. They’ve decided to buy the home using an FHA loan. Which of these is a true statement?
a. A minimum down payment of 3.5% is required.
b. Mortgage insurance is not required.
c. The loan-to-value ratio must be less than 80%.
d. They must have PMI.
1315) What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors?
a. Fannie Mae (FNMA)
b. Farmer Mac
c. Freddie Mac (FHLMC)
d. Ginnie Mae (GNMA)
1316) Who guarantees VA loans?
a. Federal Housing Authority
b. Housing and Urban Development
c. The primary mortgage market
d. U.S. Department of Veterans Affairs
1317) David is an active duty member of the U.S. Air Force. Assuming he and the property meet the qualifications, which type of mortgage may be the best option for him?
a. A conventional loan
b. A Ginnie Mae-originated loan
c. An FHA loan
d. A VA-guaranteed loan
1318) You’re a farmer. Which loan program might be tailor-made for you?
a. Farmer Mac
b. FHA
c. Freddie Mac
d. Ginnie Mae
1319) Which type of lender is a member-based cooperative that provides credit for auto loans and home loans, takes deposits, and offers savings vehicles and money markets?
a. Credit union
b. Mortgage banker
c. Mortgage broker
d. Savings and loan association
1320)
1321) Lauren obtained a loan that’s insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?
a. Conventional
b. FHA
c. Home equity line of credit
d. VA
1322) Which of the following is a true statement about U.S. Department of Veterans Affairs loans?
a. All properties are eligible.
b. All veterans are eligible.
c. The VA will guarantee a loan based on the sales price or the certificate of reasonable value (CRV).
d. VA loans can be used for investment properties.
1323) What’s it called when a number of percentage points is added to the index to determine the rate for an adjustable rate mortgage?
a. Initial cap
b. Lifetime cap
c. Margin
d. Usury
1324) Which of these is a type of gap financing that’s used temporarily until the consumer can obtain permanent financing?
a. Balloon payment
b. Blanket mortgage
c. Bridge loan
d. Wrap-around mortgage
1325) With this type of loan, personal property is included with the real property in the sale. It’s commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums.
a. Blanket mortgage
b. Package mortgage
c. Shared equity mortgage
d. Wrap-around mortgage
1326) An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 9% rate represent?
a. Initial cap
b. Lifetime cap
c. Maximum rate able to be charged
d. Periodic cap
1327) Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?
a. A land contract
b. An assumable mortgage
c. A straight-term loan
d. A wraparound mortgage
1328) Which type of mortgage has an interest rate that remains constant over the life of the loan?
a. Adjustable-rate
b. Fixed-rate
c. Growing equity
d. Pledged account
1329) What type of loan is given based on the amount of equity a borrower has in the home?
a. Bridge loan
b. Home equity loan
c. Shared equity mortgage
d. Swing loan
1330) This is a type of renegotiable mortgage in which the interest rate on the loan can be renegotiated at specified intervals (usually every five years).
a. Adjustable rate mortgage
b. Rollover mortgage
c. Shared appreciation
d. Swing loan
1331) This is a loan when, at specified intervals, borrowers have the option to renew their loan (with a likely change in interest rate) or immediately pay the remaining loan balance and interest due.
a. Adjustable rate mortgage
b. Renegotiable-rate mortgage
c. Rollover mortgage
d. Swing loan
1332) An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 1% rate represent?
a. Initial cap
b. Lifetime cap
c. Periodic cap
d. Usury
1333) An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 2% rate represent?
a. Initial cap
b. Lifetime cap
c. Periodic cap
d. Usury
1334) What’s the process of paying off a loan by making periodic payments?
a. Accession
b. Accretion
c. Acquisition
d. Amortization
1335) In the eyes of a lender, when financing a residence, what advantage does an investor have over owner-occupied borrowers?
a. Investors always pay cash.
b. Investors are less of a risk.
c. Investors can use rental income to qualify.
d. Investors maintain their property better.
1336) When must lenders provide borrowers with a disclosure statement regarding finance charges, annual percentage rate, etc.?
a. At loan application or within three days after loan application
b. Prior to loan application
c. Prior to or within 10 days after the loan application
d. Prior to or within three days after the loan application
1337) Which percentage reflects the top debt-to-income ratio limit for qualified mortgages?
a. 28%
b. 35%
c. 38%
d. 43%
1338) A homeowner is behind on his mortgage. He’s decided to try to sell the property and is working with his lender to do so. He owes $315,000 on his loan balance and closing costs. He has an offer for $300,000, which the lender approves. What is this an example of?
a. Deed in lieu of foreclosure
b. Eviction
c. Redemption
d. Short sale
1339) To whom does the subprime market cater?
a. High-wealth individuals
b. Investors
c. Less creditworthy borrowers
d. Property managers
1340) Mortgages may still, but only rarely, contain which of the following clauses?
a. Alienation clause
b. Amortization clause
c. Prepayment penalty clause
d. Underwriting clause
1341) Which of the following is a characteristic of predatory lending?
a. Disclosing fees
b. Disclosing the true nature of the loan obligation
c. Linking interest rates charged to consumer creditworthiness
d. Making loans the consumer can’t afford
1342) What is a short sale?
a. The borrower pays back the loan, thus avoiding foreclosure.
b. The borrower sells the property, but for less than the amount owed on the property
c. The borrower turns the deed over to the lender, rather than face foreclosure proceedings.
d. The lender receives the deed as a result of foreclosure proceedings.
1343) Which practice involves talking the consumer into refinancing over and over so a lender can charge fees?
a. Loan flipping
b. Poison lending
c. Premeditated lending
d. Turnover lending
1344) This is a legal process borrowers may go through to either discharge or restructure all of their debt.
a. Bankruptcy
b. Deed in lieu of foreclosure
c. Deficiency judgment
d. Short sale
1345) Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements?
a. Qualified mortgage with ability to repay
b. Qualified mortgage with a safe harbor status
c. Qualified mortgage with cash payment option
d. Qualified mortgage with the rebuttable presumption
1346) Which of the following prohibits lenders from discriminating based on protected class status?
a. Community Reinvestment Act
b. Equal Credit Opportunity Act
c. RESPA
d. Truth in Lending Act
1347) Which act was created to safeguard the consumer in the use of credit by requiring full disclosure of the terms and conditions of that credit?
a. Community Reinvestment Act
b. Consumer Credit Protection Act
c. Equal Credit Opportunity Act
d. Real Estate Settlement Procedures Act
1348) Which of the following is the process the lender uses to evaluate whether to make the loan?
a. Application
b. Appraisal
c. Commitment
d. Underwriting
1349) How long does the borrower have to rescind or cancel a new mortgage obtained for an already owned property?
a. The borrower has 24 hours after loan application to rescind or cancel.
b. The borrower has 48 hours after loan application to rescind or cancel.
c. The borrower has three days after loan application to rescind or cancel.
d. The borrower must do this at the time of application.
1350) Which of the following loan transactions would be exempt from TILA disclosure requirements?
a. Duplex, with office building used as collateral
b. Grocery store, with personal funds used as collateral
c. Hobby farm
d. Vacation home
1351) A lender is preparing to begin foreclosure proceedings. Rather than go through this proceeding, the borrower decided to turn over the deed to the property. What is this called?
a. Deed in lieu of foreclosure
b. Default
c. Deficiency judgment
d. Redemption
1352) Loans for ______ purposes don’t require TILA disclosure.
a. Business
b. Consumer
c. Housing
d. Personal
1353) Jacqueline found a ready, willing, and able buyer for her client’s condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?
a. A middle point between the two numbers
b. A weighted average based on the sales price, appraisal amount, and recent sales
c. The larger number, as a buyer has already been found
d. The smaller number
1354) Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.
a. Highly qualified loans
b. Prime loans
c. Secondary loans
d. Subprime loans
1355) Which of the following is an example of a prime lender, as compared to a subprime lender?
a. Offers higher interest rates
b. Offers lower fees
c. Refuses to work with minorities
d. Targets low credit scores
1356) What is a deed in lieu of foreclosure?
a. The borrower pays back their loan, thus avoiding foreclosure.
b. The borrower sells their property, but for less than the amount owed on their property.
c. The borrower turns the deed over to the lender rather than face foreclosure proceedings.
d. The lender receives the deed as a result of foreclosure proceedings.
1357) Which method of foreclosure involves the court and a sheriff’s sale?
a. Deed in lieu of foreclosure
b. Judicial
c. Non-judicial
d. Strict
1358) Which of the following is a tactic used by a predatory lender?
a. Charging minorities lower interest rates
b. Encouraging debt
c. Refusing to loan to minorities
d. Selling mortgages on the secondary market
1359) How does the lender determine whether the property is worth the sales price?
a. Appraisal
b. Demographics of the area
c. Prior history with borrower
d. Style of home
1360) Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer’s appraisal came in at $300,000. On what number will the buyer’s lender base the loan-to-value ratio?
a. $249,000
b. $299,000
c. $300,000
d. There’s no way to tell given the data provided.
1361) You’ve just learned that your buyer, Kirk, can’t obtain a qualified mortgage for his dream home because his debt-to-income ratio would be above the threshold. What is Kirk’s best option?
a. Get a sub-prime loan.
b. No options here; Kirk will need to wait until his debt-to-income ratio meets qualified lending standards.
c. Offer a shared equity situation with the lender.
d. Pay off his other debt and/or increase monthly income.
1362) What is it called when the borrower and lender work together to restructure the terms of a home loan?
a. Deed in lieu of foreclosure
b. Deficiency judgment
c. Loan modification
d. Reinstatement
1363) Which method of foreclosure does not involve the court, but includes a trustee’s sale?
a. Deed in lieu of foreclosure
b. Judicial
c. Non-judicial
d. Strict
1364) Lenders examine a variety of documents to determine whether the buyer is a good risk for a loan, such as _______.
a. Genealogy report
b. Marriage certificate
c. Resume
d. Tax returns
1365) What is it called when borrowers pay back all of the amounts owed and become current (no longer in default) on their loan?
a. Deed in lieu of foreclosure
b. Deficiency judgment
c. Loan modification
d. Reinstatement
1366) Which of the following is an alternative to foreclosure?
a. Deed in lieu of foreclosure
b. Default
c. Deficiency judgment
d. Eviction
1367) When considering loan risk, which two items will lenders consider in equal measure?
a. Borrower and property
b. Credit and employment
c. Debt and income
d. Loan and value
1368) What is it called when borrowers pay back all of the amounts owed and become current (no longer in default) on their loan?
a. Deed in lieu of foreclosure
b. Deficiency judgment
c. Loan modification
d. Reinstatement
1369) Which consumer protection act enacted in 1974 prohibits kickbacks and referral fees and requires written lender disclosure of estimated and final settlement costs?
a. ECOLA
b. Real Estate Settlement Procedures Act
c. The Community Reinvestment Act
d. The Equal Credit Opportunity Act
1370) The Truth in Lending Act requires lenders to make certain ______ to consumers.
a. Concessions
b. Disclosures
c. Loans
d. Rates available
1371) Which of the following is most susceptible to a predatory lender?
a. A borrower with poor credit
b. A family
c. A minority
d. An investor
1372) Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.
a. Highly qualified loans
b. Prime loans
c. Secondary loans
d. Subprime loans
1373) Which of the following is a type of subprime loan usually offered to consumers with insufficient or marginal credit history?
a. Qualified mortgage with a safe harbor
b. Qualified mortgage with the rebuttable presumption
c. Qualified with ability to repay
d. Qualified with cash
1374) A qualified mortgage may not include interest-only payments and balloon payments, or lender fees and points that total more than 3% of the loan because these are considered ______ in relation to the qualified mortgage.
a. FHA and VA loan provisions
b. Qualified and allowable
c. Toxic loan features
d. Updated financing provisions
1375) Improving credit scores can also _____________________.
a. Increase credit risk for the lender
b. Increase how much house the borrower can afford
c. Increase risk for the borrower
d. Lower the borrower’s FICO® score
1376) Roth IRA rules state that a first-time homebuyer can withdraw funds with no penalties from a Roth IRA under which of the following conditions?
a. Account has been open for five years or longer
b. Borrower must not have other money saved
c. Distribution does not exceed $15,000
d. Funds are used for renovations only
1377) What effect does a pre-approval letter have on an offer?
a. It assures the seller that the buyer’s financial information has been verified.
b. It has no effect.
c. It kills it.
d. It provides some assurance to the seller, but not as much as a pre-qualification letter would.
1378) Which organization establishes relationships with financial institutions to offer home ownership programs that include down payment assistance through grants and favorable terms?
a. HUD
b. NHF
c. OSHA
d. RESPA
1379) The three companies that track credit for lenders are TransUnion, Equifax, and Experian. Which of the following is a true statement?
a. Each company a uses a slightly different scoring system
b. Each company posts the borrower’s FICO® Score
c. Scoring is consistent across the three companies
d. The higher the score, the higher the credit risk
1380) A borrower’s credit history and willingness and desire to repay a loan are elements of which C of credit?
a. Capacity
b. Capital
c. Character
d. Collateral
1381) From a lender’s perspective, what does a credit score on the low end indicate?
a. Better rates
b. Credit usage
c. Higher risk
d. Lower risk
1382) When your clients improve their credit score, they _____________.
a. Are likely to get better rates
b. Are likely to get better service
c. Must wait three years before applying for a loan
d. Must wait three years before it will show up in their FICO® score
1383) What are the three Cs of credit?
a. Cash, credit, change
b. Character, capital, capacity
c. Character, cash, credit
d. Collateral, character, credit
1384) Your clients are first-time home buyers. They can access up to _________ of their Roth IRA accounts, penalty free, for their down payment.
a. $0
b. $10,000
c. $20,000
d. $5,000
1385) Lenders look at a HELOC balance of less than $50,000 as if ________________.
a. It were a credit card
b. It were an asset
c. It were a paid mortgage
d. It were cash
1386) Increasing income improves your debt-to-income ratio. Which of the following factors is also considered by lenders?
a. Bonus income
b. Demographics
c. Place of work
d. Proof of permanent employment
1387) Who may borrow money from a Roth IRA to obtain down payment funds?
a. Any Roth IRA holder
b. First-time home buyers who’ve held a Roth IRA account for at least 10 years
c. First-time home buyers who’ve held a Roth IRA account for at least five years
d. Only 10-year Roth IRA holders
1388) What is the best way to reduce debt while maintaining cash reserves?
a. Increase spending, using cash
b. Increase tax deductions
c. Placing more on low-interest credit cards
d. Purchase assets
1389) Some first-time homebuyers tap into the bank of mom and dad. In what circumstance would the parents’ contribution be acceptable for loan qualification?
a. A balloon payment must not apply for the first three years.
b. Interest rates for the loan must not exceed 3%.
c. The borrower receives cash at closing.
d. The money is given as a gift with no expectation of repayment.
1390) A borrower is using a gift to fund part of his home purchase. What criteria for the gift holds the most weight in the lender’s eyes?
a. How long ago the gift was given
b. How the gift giver is related
c. The amount of the gift
d. The terms for repayment
1391) What is one way to improve your debt-to-income ratio without reducing your debt?
a. Increase credit card balance
b. Increase debt
c. Increase expenses
d. Increase income
1392) Buyers who intend to finance should understand that the higher their credit score, _______________.
a. The better interest rates they will qualify for
b. The higher their cash reserves
c. The higher their taxes
d. The more house they can afford
1393) As a real estate licensee, you should ______.
a. Be willing to loan money to your clients for their down payment
b. Calculate a buyer’s loan pre-qualification
c. Know the benefits of reverse mortgages
d. Understand what helps your buyer qualify for a mortgage
1394) You’re working with buyers who are close to being financially ready to buy. To prepare themselves for loan approval, they should __________.
a. Delay paying bills with high-dollar amounts to show better available cash
b. Pay down credit card balances
c. Pay off and close all but one or two credit cards
d. Take out a home equity line of credit to pay off credit card debt
1395) Which of the following is the credit score range?
a. 200 and 500
b. 300 and 850
c. 80 and 100
d. One and 10
1396) Paying down your credit cards is a great idea to reduce debt, but it can backfire. In the eyes of the lender, which action is the least damaging to loan qualification?
a. Keeping a high balance card and having several cards with nothing charged on them
b. Keeping one card with a high balance
c. Paying off several cards and cancelling them
d. Several open cards with available credit on them
1397) Most lenders like to see at least _______ months of cash reserves in addition to the buyers’ down payment.
a. 12
b. Eight
c. Four
d. Two
1398) Which of these provides a number that signifies your credit risk to lenders?
a. Credit analysis
b. Credit appraisal
c. Credit score
d. Credit tabulation
1399) Why do lenders care so much about their borrowers’ debt reduction?
a. It eliminates the need for credit.
b. It lowers affordability.
c. It makes it easier for borrowers to pay their mortgages.
d. It raises the debt-to-income ratio.
1400) This letter is created after a borrower submits information about their income and debts, which is verified by the lender, who then estimates how much a borrower qualifies for.
a. Approval letter
b. Disclosure letter
c. Pre-approval letter
d. Pre-qualification letter
1401) The Fair and Accurate Credit Transactions Act of 2003 requires the credit bureaus to _____________________.
a. Caution consumers that information in the credit report only influences FICO® scores
b. Not charge for credit reports
c. Provide consumers with a free copy of their credit report annually
d. Use FICO® scores
1402) A borrower’s ability to repay a loan is which C of credit?
a. Capacity
b. Capital
c. Character
d. Collateral
1403) What is the best-case scenario with a debt-to-income ratio?
a. 100% debt-to-income
b. 20% debt-to-income
c. 60% debt-to-income
d. 80% debt-to-income
1404) Improving a credit score can help a buyer ______________.
a. Avoid financing
b. Decrease debt
c. Increase savings
d. Qualify for better interest rates
1405) Buyers who want to look good to lenders prior to financing should employ which of the following strategies?
a. Close all credit card accounts
b. Keep high credit card balances to improve available cash
c. Pay off as much debt as possible, even if it means they will have no cash reserves
d. Reduce credit, but retain cash reserves
1406) First-time home buyers who’ve had a Roth IRA account for at least five years may withdraw an amount that equal to the contributions they’ve made to use as a down payment. After that, how much more can they withdraw to help with a home purchase without penalty?
a. Up to $10,000
b. Up to $20,000
c. Up to $25,000
d. Up to 50% of their fund balance, or $5,000, whichever is less
1407) Consumers may use Roth IRA funds to obtain the down payment for their home purchase. Which of the following scenarios is allowed?
a. Clayton, who has had his IRA for 10 years, withdraws $15,000 as part of his down payment on a vacation home.
b. Desiree, who has held her Roth IRA for three years, withdraws $7,000 to help fund a down payment on her third home.
c. Mary borrows $5,000 from her brother Jack’s Roth IRA for her home purchase.
d. Nevil, who has held his Roth IRA for five years, withdraws $8,000 to go toward a down payment on his first home.
1408) Which of these is an encroachment?
a. A path providing neighborhood access to a pond cuts through part of Bill’s property.
b. Jeff installed a sidewalk next to his driveway, six inches outside his property.
c. The city seized a formerly private parcel of land for public use.
d. The state took ownership of Dawn’s property when no heirs could be located following her death.
1409) What type of easement is created when the government exercises its right of eminent domain?
a. Easement by condemnation
b. Easement by grant
c. Easement by implication
d. Easement by prescription
1410) When is an easement by necessity created?
a. When a landowner sells a mineral right to another, access to the land is created by this type of easement.
b. When a property doesn’t have direct access to a road, this type of easement is created across any intervening properties.
c. When a property owner allows others to use the property for a specific purpose, this type of easement is created.
d. When the government requires a portion of a property for a public good, the property is taken with this type of easement.
1411) Seth owns a property on a small island with six other property owners. Recently, Seth built a fishing pier along the water’s edge; however, the pier is actually on his neighbor’s property, which Seth has no rights to. What might this be an example of?
a. Easement
b. Encroachment
c. Estate
d. Eviction
1412) What does CC&R stand for?
a. Carparks, curbs, and roadways
b. Conditions, consideration, and reports
c. Condominiums, cooperatives, and residential housing
d. Covenants, conditions, and restrictions
1413) Sam decided to build a swimming pool in his yard. He built it one foot inside his neighbor’s property. What is this an example of?
a. Easement
b. Eminent domain
c. Encroachment
d. Necessity
1414) Which of the following statements about an easement appurtenant is TRUE?
a. It does not involve an adjoining property.
b. It’s an encumbrance on the dominant property.
c. It’s a permanent right that runs with the land.
d. It’s a temporary agreement between two parties.
1415) You’ve just purchased a rural property, and the attorney at the closing tells you, “You have a dominant estate.” What does that mean to you?
a. The property comes with an easement in gross granted to the utility company.
b. You’ll be using an easement across your neighbor Jim’s property.
c. Your property has an easement granted to your neighbor Jim, allowing him to cross your property to access his land.
d. Your property has direct access to a road and doesn’t require an easement.
1416) This is a shared side of a structure; each owner owns his section of the wall in severalty, with the ownership subject to an easement by the other.
a. A party wall
b. Easement by implication
c. Easement by necessity
d. Easement by prescription
1417) A part of your property is used by the local utility company to maintain its power lines. What’s this an example of?
a. Easement
b. Eminent domain
c. Encroachment
d. Illegal use
1418) Which of the following is an easement?
a. A path providing neighborhood access to a pond cuts through part of Bill’s property.
b. Jeff installed a sidewalk next to his driveway, six inches outside his property.
c. The city seized a formerly private parcel of land for public use.
d. The state took ownership of Dawn’s property when no heirs could be located following her death.
1419) The doctrine of “use it or lose it” is known as the doctrine of ______.
a. Eminent domain
b. Escheat
c. Laches
d. Taking
1420) Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.
a. Covenant
b. Easement
c. Grant
d. License
1421) Regarding restrictive covenants/deed restrictions, to what does the doctrine of laches refer?
a. Creation
b. Enforcement
c. History
d. Types
1422) If John suspects that his neighbor’s deck encroaches on his back yard, what should John do to determine whether an encroachment exists?
a. He should check legal description of the property.
b. He should consult a survey for the exact property lines.
c. He should find out if the neighbor’s deed has been recorded or not.
d. He should investigate whether there is a tax lien on their neighbor’s property.
1423) Brent and Kathy recently bought a property in a gated community. While doing some landscaping they noticed that their neighbor’s shed seems to be over the lot line and on their property. What should they consult to determine if the shed is an encroachment?
a. Deed
b. HOA covenant
c. Mortgage
d. Survey
1424) Which of the following is true about easements appurtenant?
a. Only the dominant estate may terminate an easement.
b. Parcels with easements may not be joined.
c. The necessity of an easement by necessity could be terminated even if the reason for the necessity still exists.
d. They can be terminated if dominant and servient lands are merged into one parcel.
1425) Which of the following is a type of encumbrance?
a. Counter-offers
b. Deed restrictions
c. Improvements
d. Options
1426) Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would be, they found he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. Kurt owns the _______ estate or tenement.
a. Dominant
b. Gross
c. Prescriptive
d. Servient
1427) Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.
a. Easement appurtenant
b. Easement by necessity
c. Easement by prescription
d. Easement in gross
1428) Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be?
a. Easement appurtenant
b. Easement by necessity
c. Easement by prescription
d. Easement in gross
1429) Rancher Ross was thrilled to learn he could sell his property’s mineral rights to a company that’s looking for oil. He didn’t realize he’d also created an ______, allowing them to bring drilling equipment onto his land.
a. Easement by implication
b. Easement by necessity
c. Easement by prescription
d. Easement by right
1430) Sam grants Steve a license to hunt deer on his property. Which of the following statements about the license is true?
a. Sam can revoke the license at any time.
b. The license is a permanent privilege.
c. The license is assignable.
d. The license is inheritable.
1431) Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?
a. Easement by prescription
b. Easement in gross
c. Express easement
d. Visible easement
1432) Elizabeth’s property is encumbered by an easement in gross with which of these entities?
a. The neighbor who constructed his new backyard fence six inches across Elizabeth’s property line
b. The owner of the empty lot down the street that Elizabeth uses as a vegetable garden with the owner’s permission
c. The resident of the adjoining property to whom Elizabeth has given permission to store some items in her gardening shed
d. The utility company that needs to access the power line that crosses a corner of Elizabeth’s land
1433) Sondrine’s beach cottage has a right of way that allows nearby residents to get to the beach. What is the primary difference between a right of way and an easement?
a. A right of way always has a defined expiration date.
b. A right of way is always for an indefinite time period.
c. A right of way offers the right to use the property for some function, as compared to just as a pass-through.
d. A right of way provides a pass-through, but not a right to use the property.
1434) Because of the topography of Elsie’s and Lawrence’s respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence’s property line. What word or phrase best describes Elsie’s fence?
a. Easement in gross
b. Encroachment
c. Servient estate
d. Visible easement
1435) Which of the following describes a deed restriction?
a. It can be placed on a single property, an entire subdivision, or a neighborhood.
b. It ensures compliance with zoning and public safety and preserves property value.
c. It must be placed by the property owner within one year of purchasing the property.
d. It’s limited to three years in duration.
1436) Why is it important for a buyer to know if any easements or encroachments exist on a property?
a. Both easements and encroachments affect the property’s lot size, enjoyment, and use, which can affect a property’s value.
b. Both easements and encroachments are illegal. The buyer could end up in court.
c. It helps determine special assessment levies.
d. The buyer will have to remove these before the property can be re-sold.
1437) Terry purchases a property. The deed includes a description of an easement given to the neighboring property. This is an easement created by ______.
a. Condemnation
b. Express grant
c. Implication of law
d. Prescription
1438) Jason, your client, is developing a subdivision of 140 houses. He may place deed restrictions on as many as ______ properties.
a. 140 (100%)
b. 35 (up to 25%)
c. 70 (up to 50%)
d. Zero
1439) Who or what entity is the beneficiary of a completion bond?
a. The bank
b. The developer
c. The homeowner
d. The municipality
1440) Which map must be filed within two years of approval of the initial map?
a. Final map
b. Lot map
c. Parcel map
d. Tentative map
1441) Which document is issued by the state real estate commissioner to help protect purchasers of subdivision plots?
a. Feasibility study
b. Public report
c. Subdivision map
d. Subdivision regulations
1442) Which document is filed with the local municipality to coordinate development with the community’s general plan?
a. Feasibility study
b. Public report
c. Subdivision map
d. Subdivision regulations
1443) Which of the following types of subdivisions are exempt from filing a public report?
a. A commercial subdivision
b. A planned development subdivision
c. A stock cooperative
d. Campground
1444) Which type of subdivision is defined as parcels of land that purchasers own individually, with no commonly owned areas?
a. Common interest subdivision
b. Standard subdivision
c. Subdivided lands project
d. Undivided interest subdivision
1445) Once the market study has been conducted, a developer can apply to ________________ for approvals.
a. Local agencies only
b. State and local agencies
c. The board of governors
d. The municipal court
1446) In which type of common interest subdivision do the owners have exclusive rights to a unit, as well as a shared interest in the common areas?
a. Condominium project
b. Planned development
c. Stock cooperative project
d. Timeshare
1447) What is the purpose of the Subdivided Lands Law?
a. To coordinate subdivision development with local municipalities
b. To dissuade developers from subdividing lands
c. To enforce public land dedication minimums on developers
d. To protect consumers from subdivision fraud and misrepresentation
1448) Which type of subdivision is defined as a property owned jointly by all purchasers, who are tenants in common with all other owners?
a. Common interest subdivision
b. Standard subdivision
c. Subdivided lands project
d. Undivided interest subdivision
1449) A plat book can be defined as ______.
a. A collection of subdivision regulations and ordinances
b. A public record of subdivision plats held at the county clerk’s office
c. The recorded legal description of a lands lot dimensions
d. Zoning map
1450) A piece of land that’s been split into lots where homes will be built is called a ______.
a. Development project
b. Market
c. Neighborhood
d. Subdivision
1451) The first step in the subdivision development process is the market study. This step includes ______.
a. A feasibility study
b. Fair housing interviews
c. Raising venture capital
d. Underwriting financing
1452) What is the purpose of the Subdivision Map Act?
a. To coordinate subdivision development with local municipalities
b. To dissuade developers from subdividing lands
c. To enforce public land dedication minimums on developers
d. To protect consumers from subdivision fraud and misrepresentation
1453) What is the longest time (with extensions) a developer can have to file a final map after receiving tentative map approval?
a. Eight years
b. Five years
c. One year
d. Two years
1454) Which of the following must be disclosed in a subdivision’s public report, according to the Subdivided Lands Law?
a. The filing date of the first tentative map
b. The financial history of the developer
c. The interest to be acquired by the purchaser
d. The number of parcels to be sold with or without pools
1455) Why may a developer have to pay impact fees?
a. To address a violation of zoning ordinances
b. To address the burden on existing infrastructure caused by the development
c. To apply for a use variance from the Zoning Board of Appeals
d. To pay for an Environmental Impact Statement
1456) In which type of common interest subdivision are the owner’s shareholders in a corporation that owns the property?
a. Condominium project
b. Planned development
c. Stock cooperative project
d. Time-share
1457) When developers consider what to do with leftover pieces of land that remain after the subdivision is built, they are considering what to do with ____________.
a. Municipal boundaries
b. Outlots
c. Parcel overage
d. Residual development
1458) Which of the following must be disclosed in a subdivision’s public report, according to the Subdivided Lands Law?
a. A six-month plan to ensure the removal of any blanket encumbrances
b. Available financing payment options
c. Conditions and restrictions of use included with the purchase of the property
d. The license number of any agent marketing the property
1459) What’s an outlot?
a. A parcel of land left over after the subdivision is built
b. The cornerstone space of a retail center occupied by an anchor tenant
c. The main roadway leading into and out of a subdivision
d. The parcel of land where a home in a subdivision is built
1460) In order for a Adroc Development Corp. to receive approval to build a new subdivision, it is required to create a community park bordering the development. The developer agreed to do so, but what may the city require to ensure the park actually gets completed?
a. A completion bond
b. A feasibility study
c. An IOU
d. A promissory note
1461) What is an impact fee?
a. A fee charged to conduct an environmental assessment
b. A fee paid to clean up the site after development is complete
c. A fee paid to offset the development’s negative effects on the natural environment
d. A fee paid to offset the increased burden on area infrastructure that the new subdivision may create
1462) Which of the following describes a subdivision plat?
a. A collection of subdivision regulations and zoning ordinances
b. A map that defines zoning districts
c. A record in the county clerk’s office that can serve as the legal description on a deed
d. A record of the previous owners of a tract of land
1463) What kind of contracts can a developer enter into if they have obtained an interim report?
a. Any type of contract
b. Binding contracts
c. Free-finance contracts
d. Non-binding reservations
1464) Which type of subdivision is defined as separately owned parcels where purchasers also share interest in common areas?
a. Common interest subdivision
b. Standard subdivision
c. Subdivided lands project
d. Undivided interest subdivision
1465) Which of the following must be included on the subdivision map?
a. Distance from the county clerk’s office
b. Existing and proposed easements and utility locations
c. Financial plan information
d. Solar angles at the subdivision’s latitude
1466) _______ fees are paid to state and local agencies for items such as permits and utility hook-ups.
a. Developer
b. Impact
c. Municipal
d. Residential
1467) Which type of common interest subdivision limits an owner’s exclusive use of the property to a certain period of time?
a. Condominium project
b. Planned development
c. Stock cooperative project
d. Time-share
1468) Chadwick is a developer considering purchasing a large piece of unimproved land for a subdivision development. What should he do before committing to the project?
a. Apply for financing.
b. Conduct a feasibility study.
c. Phone a friend.
d. Start marketing the property to see if there are buyers.
1469) How long after receiving tentative map approval does a developer have before a final map must be filed, according to the Subdivision Map Act?
a. Eight years
b. One year
c. Three years
d. Two years
1470) Which public report can be issued while awaiting final approval and allows developers to take reservations for up to a year while waiting for the final report?
a. Amended report
b. Conditional report
c. Interim report
d. Preliminary report
1471) Which type of common interest subdivision retains individually owned parcels of land, but the owners also share an interest in common areas?
a. Condominium project
b. Planned development
c. Stock cooperative project
d. Time-share
1472) Larry is a developer. His current project involves him taking a large parcel of land, dividing it into hundreds of lots and building single family homes on those lots then selling the properties to home buyers. What is Larry developing?
a. A condominium
b. A cooperative
c. An apartment complex
d. A subdivision
1473) What’s a subdivision?
a. A developed property zoned for multiple uses, such as residential and commercial
b. An unimproved piece of land zoned for residential use
c. A piece of land that has been split into lots where homes will be or have been built
d. A retail development in which one building houses several commercial tenants
1474) Which of the following involves street specifications, lot size, single- or multi-family dwellings, utilities provided and easements, how far houses must be set back from property lines, and drainage requirements?
a. Abstract of title
b. Alquist-Priolo Act
c. CEQA
d. Subdivision regulations
1475) A community apartment project is an example of what type of subdivision?
a. Common interest subdivision
b. Standard subdivision
c. Subdivided lands project
d. Undivided interest subdivision
1476) Determining who the buyers of subdivision homes are, the market niche to target, and whether to have different price points for various phases of development are all considerations in the ___________.
a. Environmental assessment
b. Feasibility study
c. Marketing strategy
d. Subdivision lot release plan
1477) Which type of contract allows developers to enter into binding contracts with purchasers?
a. Binding report
b. Conditional report
c. Interim report
d. Preliminary report
1478) Which of the following must be included on the subdivision map?
a. Account number of the completion bond associated with the project
b. Interest to be acquired by purchasers
c. Marketing plan
d. Widths and names of all streets
1479) Which map only contains the boundary and division lines for lots of land?
a. Final map
b. Lot map
c. Parcel map
d. Tentative map
1480) Who approves subdivision maps?
a. A local judge
b. The county clerk
c. The local planning board
d. The real estate commissioner
1481) What must happen before a subdivision’s tentative map can be approved?
a. A dedication of at least 15% of the land must be given to the local government
b. An in-person site review by all planning board members must occur
c. A notice must be filed with the local planning board, with an opportunity for a hearing
d. The real estate commissioner must sign off on it
1482) How long does a subdivision developer have to respond to a D&R order if they wish to contest it?
a. 10 days
b. 15 days
c. 30 days
d. 90 days
1483) What does the Alquist-Priolo Earthquake Fault Zoning Act have to do with regard to subdivision development?
a. Issues grants to fix faults
b. Limits development next to coastal areas
c. Regulates development in earthquake fault zones and requires disclosure of fault zones to purchasers
d. Requires all houses in fault zones be clearly labeled on the front door or entryway
1484) When financing is structured, when are disbursements typically made?
a. As each home is sold
b. As materials are needed
c. As stages of construction are completed
d. On a particular day of each month
1485) What does a D&R stand for when issued by the state real estate commissioner?
a. Delivery and Research
b. Demolition and Recovery
c. Desist and Refrain
d. Do Not Resuscitate
1486) What does a lot release provision require?
a. That all of the loan be repaid when 50% of the lots are sold
b. That a portion of the loan be repaid when each lot is sold
c. That the developer release deed restrictions on the lots when sold
d. That the lot be released from the subdivision plat when sold
1487) What recourse does a subdivision developer have to a D&R order?
a. Nothing. D&Rs are immediate and irreversible once issued
b. Refund purchasers’ deposit money
c. Sue the commissioner for improper use of authority
d. They can write a request to have a hearing and contest the order
1488)
1489) Which option is an acceptable way for a subdivider to handle a purchaser’s deposit money?
a. Place the deposit money in an escrow account until the blanket encumbrance is lifted
b. Place the money in the company’s bank account
c. Reinvest it back into the property development
d. Use the money to purchase newer equipment
1490) Owner participation is often a key factor in the approval of a construction loan. What does owner participation refer to?
a. Capital provided by the owner’s investors
b. The developer’s own funds used as a down payment
c. The developer’s participation in construction
d. The participation of individual homeowners
1491)
1492) Subdivision financing usually comes from _____________________.
a. A combination of sources
b. A waterfall loan
c. Developer capital
d. One single source
1493)
1494) Construction loans usually come with a higher interest rate because they involve _____ for the lender.
a. Less participation
b. More approvals
c. More paperwork
d. More risk
1495) What does a developer have to do if they are selling lots to a subdivision that is in another state?
a. Disclose the state and location the property is in
b. Petition for clemency
c. Register the project with the BRE
d. Request a permit from the governor to sell out-of-state property
1496)
1497) What is the definition of a blanket encumbrance?
a. An encumbrance on subdivisions with an intended use for industrial textile factories
b. A security bond that protects against encumbrances to subdivided property
c. Both personal and real property are used as security for a loan
d. When more than one lot, unit, or interest in a subdivision is used to secure payment of a trust deed note or other lien of encumbrance
1498) What type of encumbrance exists when one or more property in a subdivision is used to secure a loan?
a. Blanket encumbrance
b. Easement by appurtenant
c. Judgment lien
d. Mechanic’s lien
1499) A buyer is purchasing a home for $400,000 and is financing $300,000. What is the loan-to-value ratio?
a. 72%
b. 75%
c. 82%
d. 96%
1500) A square room has an area of 144 square feet. How long is each side?
a. 10 feet
b. 12 feet
c. 24 feet
d. 72 feet
1501) A buyer is purchasing a property for $500,000. His lender’s loan-to-value ratio is 90%. How much is the buyer financing?
a. $400,000
b. $450,000
c. $50,000
d. $500,000
1502) Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)
a. 79%
b. 81%
c. 83%
d. 85%
1503) Your client Ellis is purchasing a property for $520,000. He made a down payment of $200,000 and plans to finance $320,000. What is the LTV ratio as rounded to the nearest percentage?
a. 50%
b. 55%
c. 62%
d. 65%
1504) A property is 60 feet long and 75 feet wide. What is its area?
a. 135 square feet
b. 175 square feet
c. 3600 square feet
d. 4,500 square feet
1505) Property is being sold for $15,000 an acre. A buyer spent $75,000. How many acres did he buy?
a. Eight
b. Five
c. Six
d. Ten
1506) Property is being sold for $15,000 an acre. How much will five acres cost?
a. $15,000
b. $30,000
c. $45,000
d. $75,000
1507) How do you calculate the area for a rectangular room?
a. Add the length of all four sides.
b. Multiply the length of all four sides.
c. Multiply the length of two opposite sides.
d. Multiply the length times the width.
1508) A triangle has a base of 10 feet and a height of eight feet. What is its area?
a. 180 square feet
b. 18 square feet
c. 40 square feet
d. 80 square feet
1509) Your buyer client, Max, just signed a purchase agreement for a $520,000 home. He has a 60% LTV ratio, and his lender’s charging a 1.5% loan origination fee. What loan origination fee can Max expect to pay at closing?
a. $2,200
b. $3,120
c. $4,200
d. $4,680
1510) A property is 30 square yards. How many square feet is this?
a. 270 square feet
b. 27 square feet
c. 300 square feet
d. Nine square feet
1511) Your buyer clients, the Fowlers, obtained an 80% loan on their $600,000 home. At closing, they paid $8,250 for points. How many points did the Fowlers pay to lower their interest rate?
a. 0.017
b. 1.17
c. 1.72
d. 7.2
1512) How much would a lot that is 300 feet wide by 400 feet long cost at $900 per acre?
a. $2,479
b. $2,700
c. $3,600
d. $6,300
1513) A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What’s the amount of the loan origination fee if the lender charges one-and-a-half points?
a. $5,000
b. $6,750
c. $750
d. $7,500
1514) How do you calculate the area for a triangle?
a. Add all three sides together
b. Multiply base times height
c. Multiply half the base times the height
d. Multiply the length of all three sides together
1515) A buyer is purchasing a property for $400,000. His lender’s loan-to-value ratio is 80%. How much is the buyer financing?
a. $320,000
b. $360,000
c. $400,000
d. $80,000
1516) How do you calculate the area for a square room?
a. Add the length of all four sides together
b. Add the length of two sides together
c. Multiply the length of all four sides together
d. Multiply the length of two sides together
1517) How large is one square yard?
a. 10 square feet
b. Nine square feet
c. Six square feet
d. Three square feet
1518) You’re working with a buyer who’s purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?
a. $712
b. $720
c. $728
d. $800
1519) A basement is 40 feet long and 20 feet wide. What is its area?
a. 600 square feet
b. 60 square feet
c. 800 square feet
d. 80 square feet
1520) A discount point equals 1% of the _______.
a. Appraised value
b. List price
c. Loan amount
d. Sales price
1521) Your clients Earnestine and Sammie Griffin are financing $180,970 for a $500,000 home. The Griffin’s lender will approve an interest rate of 4.5% if they pay two discount points at closing. How much is this?
a. $10,000
b. $3,619.40
c. $6,380.60
d. $8,143.65
1522) How many feet are in one yard?
a. 10
b. Nine
c. Six
d. Three
1523) Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase?
a. $208,000
b. $220,000
c. $300,000
d. $312,000
1524) A property is 21,780 square feet. How many acres is this?
a. Half an acre
b. One acre
c. Three acres
d. Two acres
1525) One mile contains ______ feet.
a. 2,400
b. 3,620
c. 4,800
d. 5,280
1526) A triangle has a base of three feet and a height of eight feet. What is its area?
a. 11 square feet
b. 12 square feet
c. 24 square feet
d. Six square feet
1527) Another closing appointment is approaching. These clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?
a. $2,400
b. $2,450
c. $2,475
d. $3,200
1528) James is purchasing some property. How will he determine the cost of purchasing that land?
a. Divide the cost per unit by the land area
b. Divide the land area by the cost per unit
c. Multiply the land area by $100 per acre
d. Multiply the land area by the cost per unit
1529) A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?
a. $3,200
b. $3,600
c. $4,000
d. $800
1530) Gunther’s gross monthly income is $3,800, and he has no monthly debt payments. The lender’s qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What’s the maximum housing payment Gunther can afford?
a. $1,064
b. $1,297
c. $1,368
d. $1,492
1531) A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal for that payment?
a. $1,110.64
b. $1,246.10
c. $1,578.57
d. $1,780.75
1532) A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What’s the total amount he’ll pay over the life of the loan?
a. $1,108,292.40
b. $500,000
c. $608,292.40
d. $750,000
1533) A buyer with a 15-year, $250,000 loan at a fixed 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?
a. $117,687.80
b. $250,000.00
c. $367,687.80
d. $735,375.60
1534) A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month’s mortgage payment is interest?
a. $2,333.33
b. $28,000
c. $3,100
d. $933.33
1535) A buyer with a 30-year, $750,000 loan at a 5.75% interest rate has a monthly principal and interest payment totaling $4,376.80. If $3,593.75 is interest, how much is applied to principal?
a. $251.66
b. $3,593.75
c. $4,376.80
d. $783.05
1536) A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What’s the total amount the borrower will pay back over the life of the loan?
a. $250,000.00
b. $30,640.65
c. $367,687.80
d. $735,375.60
1537) George has $625 in monthly debt obligations, and his anticipated mortgage payment is $1,828. His gross income is $9,869, and his net income is $7,895. What’s his housing ratio?
a. 15.23%
b. 18.52%
c. 23.15%
d. 30.71%
1538) You’re working with buyers who are pre-approved for a loan of as much as $200,000. Assuming they lock in a 5.25% interest rate at closing, how much of their first payment will go toward interest?
a. $824
b. $825
c. $874
d. $875
1539) Traditionally, lenders’ qualifying mortgage rules use a range of percentages to qualify for both the housing debt-to-income ratio and the total debt-to-income ratio. What are those ratio ranges?
a. 25% to 28% for housing; 33% to 36% for total debt
b. 25% to 28% for total debt; 33% to 36% for housing
c. 25% to 33% for housing; 28% to 36% for total debt
d. 25% to 33% for total debt; 28% to 36% for housing
1540) The Gatlins’ lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000?
a. 0.524%
b. 5.24%
c. 6.29%
d. 6.39%
1541) Tess has $385 in monthly non-housing debt obligations, and her anticipated mortgage payment is $1,103. Her gross income is $7,598, and her net income is $5,815. What’s her total DTI (debt-to-income ratio)?
a. 14.51%
b. 18.96%
c. 19.58%
d. 25.58%
1542) A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?
a. 15
b. 180
c. 240
d. 360
1543) Phoebe’s gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender’s qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What’s the maximum housing payment she can afford?
a. $1,075
b. $1,152
c. $1,176
d. $1,512
1544) A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What’s the total amount of interest he’ll pay over the course of the loan?
a. $1,108,292.40
b. $500,000
c. $608,292.40
d. $750,000
1545) Gary has an 80% LTVR on his new $318,000 townhome with an annual interest rate of 4.125%. What’s his interest payment the first month?
a. $1,093.13
b. $1,126.25
c. $874.50
d. $901
1546) A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what’s the housing ratio?
a. 20%
b. 23%
c. 28%
d. 31%
1547) A buyer has a 30-year, $750,000 loan with a 5.75% interest rate. How much of the first monthly payment is interest?
a. $10,869.57
b. $3,500.93
c. $3,593.75
d. $3,750.27
1548) Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?
a. $1,038.59
b. $1,042.29
c. $1,044.79
d. $1,750
1549) A buyer has a 15-year, $250,000 loan with a 5.5% interest rate. How much of the first monthly payment is interest?
a. $1,145.83
b. $13,750.28
c. $1,388.89
d. $916.67
1550) Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What’s their monthly interest amount?
a. $550.25
b. $562.50
c. $570
d. $575.75
1551) At closing, ______ is an amount that’s divided proportionately between the buyer and the seller.
a. A discount point
b. An origination fee
c. Mortgage interest
d. Proration
1552)
1553) Your client Michael feels like he’s getting a great deal on the purchase of his home, since he’s paying only $385,000 and the assessed value is $492,500. He asked you to estimate his monthly property taxes. You know the rate for his jurisdiction is .52%.
a. $159.72
b. $166.83
c. $213.42
d. $234.00
1554) Your seller client has an offer for $300,000. If the agreed-upon commission is 5%, what is net to seller before any other costs are taken into account?
a. $280,000
b. $285,000
c. $290,000
d. $295,000
1555) A buyer is purchasing a $1.5 million property in a city that imposes a transfer tax of $12 per $1,000, in addition to the county transfer tax of 55 cents per $500. What is the total transfer tax this property is subject to?
a. $1,800
b. $18,000
c. $19,650
d. $825
1556) A listing brokerage received a $25,000 check from a property sale, which represented the brokerage’s 2.5% split. The total commission was 5%. How much did the property sell for?
a. $100,000
b. $10 million
c. $1 million
d. $2 million
1557) A licensee sells a property for $325,000. The total commission rate is 6%, which is split evenly with the cooperating agent. What amount goes to the listing broker?
a. $0
b. $19,500
c. $4,875
d. $9,750
1558) Jamal is selling his townhome for $242,000, and closing is set for July 20. He has a loan balance of $193,000 at a 3.7% interest rate, and he’s current on his payments. Jamal has prepaid the property taxes ($1,165) and insurance ($745). Using a calendar year proration method for calculations, how will these amounts appear on Jamal’s closing statement?
a. $523.16 seller credit
b. $523.16 seller debit
c. $798.89 seller credit
d. $872.45 seller credit
1559) Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice’s mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar?
a. $289,850
b. $370,500
c. $374,930
d. $398,020
1560) The daily property tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn’t made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar.
a. $151
b. $242
c. $298
d. $449
1561) A licensee sells a property for $525,000. The total commission rate is 6%, which is split evenly with the cooperating agent. What amount goes to the listing broker after this split?
a. $15,750
b. $3,000
c. $31,500
d. $7,875
1562) Seller Adelaide and buyer Colin close on a transaction for two rental condos on March 15. They live in a state where the seller is considered the owner of the property on the day of closing. The combined rental income per month is $4,000. How much rental income can Colin expect to earn in March?
a. $2,011.56
b. $2,064.48
c. $2,193.51
d. $2,300.25
1563) The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it’s not a Leap year), how much of the pre-paid property tax was the Davises’ responsibility?
a. $1,050
b. $1,055
c. $1,064.70
d. $1,069.77
1564) The Simpsons are buying the Martins’ house for $415,000, and closing is set for March 15. The Martins have a loan balance of $230,000 at a rate of 4.7% and have prepaid property taxes ($2,506) and insurance ($1,400), and they also have mortgage interest to consider. Using a 365-day proration method, calculate the prorated amount the Simpsons will owe the Martins at closing. Assume February has 28 days this year. The sellers own the day of closing.
a. $1,997.62
b. $3,113.46
c. $604.95
d. $792.54
1565) What must you do to convert a fraction to a decimal?
a. Divide the top number by the bottom number.
b. Move the decimal point two places to the left and remove the percent symbol.
c. Move the decimal point two places to the right and remove the percent symbol.
d. Move the decimal point two spots to the right and add a percent symbol.
1566) What must you do to convert a percentage to a decimal number?
a. Divide the smaller number by the larger number.
b. Divide the top number by the bottom number.
c. Move the decimal point right two spots and add a percent symbol.
d. Move the decimal point two places to the left and remove the percent symbol.
1567) Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $200,500. Their tax rate is 1.5%. How much will their monthly taxes be?
a. $111.04
b. $191.37
c. $250.62
d. $86.49
1568)
1569)
1570) How are real estate-related prorations usually calculated?
a. On a 12-month basis
b. On a 360- or 365-day basis
c. On a 52-week basis
d. On a quarterly basis
1571) Seller Garrett has a closing date of October 11. He’s already paid his annual taxes of $1,825. Assuming the buyer owns the day of closing and assuming a calendar year proration, which of the following statements is true regarding the property tax proration?
a. Garrett will be credited $1,825 at closing.
b. Garrett will be credited $410 at closing.
c. Garrett will be debited $1,415 at closing.
d. Garrett will be debited $410 at closing.
1572)
1573)
1574) Buyer Maria and seller Doug are closing on June 1. Maria’s mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria’s prepaid interest cost be at closing?
a. $842.74
b. $871.80
c. $896.97
d. $927.90
1575) A seller wants to net $10,000 after the broker’s commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?
a. $250,000
b. $265,957
c. $276,596
d. $650,000
1576) Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she’s current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue’s closing statement?
a. Credit of $1,059.10
b. Credit of $1,350 and debit of $484.04
c. Credit of $721.50
d. Debit of $1,214.85
1577) A seller wants to break even after the broker’s commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?
a. $150,000
b. $300,000
c. $315,789
d. $450,000
1578) Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes?
a. $17,595
b. $1,759.50
c. $17.60
d. $35.19
1579) James is the buyer’s agent. A property sold for $450,000. The total commission rate is 5%, with the listing agent receiving 3% and the buyer’s agent (the cooperating broker) receiving 2%. James has a 75/25 split with his broker (meaning he’ll receive 75% of the commission paid to his broker for the sale). What commission does James receive?
a. $16,875
b. $22,500
c. $6,750
d. $9,000
1580) A real estate transaction has a closing date of May 20. The seller, who’s responsible for closing costs up to but not including the day of closing, has already paid annual property taxes of $1,949. How will the closing statement reflect the proration for the seller? Use a calendar year proration, and round to the nearest dollar.
a. Credited $1,207
b. Credited $742
c. Debited $1,207
d. Debited $742
1581)
1582) Kelly is purchasing a property that has an assessed value of $160,000. If the tax rate is 2.5%, what will Kelly likely pay annually in property taxes?
a. $160
b. $400
c. $4,000
d. $40,000
1583) Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?
a. $105,163.16
b. $105,263.16
c. $105,363.16
d. $105,463.16
1584) Your buyer purchases a property for $120,000. It has an assessed value of $130,000. The annual rate for property taxes is $2.10 per $100 of the property’s tax value paid on a semi-annual basis. On the next tax bill, what amount is due?
a. $1,260
b. $1,365
c. $2,100
d. $619
1585) A seller wants to net $10,000 after the broker’s commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?
a. $250,000
b. $265,957
c. $276,596
d. $650,000
1586) Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice’s mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar?
a. $289,850
b. $370,500
c. $374,930
d. $398,020
1587)
1588) What must you do to convert a decimal to a percentage?
a. Divide the larger number by the smaller number.
b. Divide the top number by the bottom number.
c. Move the decimal point two places to the left and remove the percent symbol.
d. Move the decimal point two spots to the right and add a percent symbol.
1589) Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she’s current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue’s closing statement?
a. Credit of $1,059.10
b. Credit of $1,350 and debit of $484.04
c. Credit of $721.50
d. Debit of $1,214.85
1590) A property valued at $1 million is returning a net annual income of $85,000. What’s its cap rate?
a. 7.0%
b. 7.5%
c. 8.0%
d. 8.5%
1591) In investments, each type of depreciation is defined by a particular event. Which of the following best describes a depreciation type and an event it’s tied to?
a. Economic depreciation and cost recovery
b. Economic depreciation and physical deterioration
c. Operating depreciation and taxing authority
d. Tax depreciation and physical deterioration
1592) A three-unit income-producing property has a sales price of $600,000. Monthly gross rent is estimated at $6,000. What’s the gross rent multiplier?
a. 100x
b. 10x
c. 83x
d. 8.3x
1593) “Income received before expenses are deducted” is the definition of ______.
a. Effective gross income
b. Gross income
c. Net income
d. Taxes
1594) Which one of the following is a description of economic depreciation?
a. Investors can take a business deduction for annual depreciation.
b. The asset is worth less because the economy took a downturn.
c. The asset is worth more because of capital improvements.
d. The owner/investor is making less income from the property than previously.
1595) Capitalization is the process of using ______.
a. Capital to build equity
b. Income to calculate value
c. Sales to determine income
d. Value to calculate income
1596) A comparable residential property sold one month ago for $300,000. That property is on a busy street, whereas the subject property you’re preparing to list is a corner lot on a quiet street. What should you do to determine the subject property’s market value?
a. Adjust the comparable’s price down
b. Adjust the comparable’s price up
c. Adjust the subject’s price down
d. Adjust the subject’s price up
1597) Yanni is an investor who has just purchased a building for $300,000. Similar buildings are returning a rate of 7%. What can Yanni anticipate his annual net operating income to be?
a. $18,700
b. $21,000
c. $30,000
d. $7,000
1598) In the capitalization formula, what does the I stand for?
a. Impact
b. Income
c. Interest
d. Investment
1599) Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property?
a. 27.5 years
b. 39 years
c. Indefinitely
d. Zero years (personal residences cannot be depreciated)
1600) Malcolm purchased an old convenience store, and after renovations will open a small vegan grocery. He paid $517,000, of which $417,000 was for the building, and renovations cost him $107,000. What does the amount $524,000 represent?
a. Cash position
b. Depreciable basis
c. Income baseline
d. Investment basis
1601) Based on capitalization rate alone, which investment will have the higher appraised value: one with a 10% cap rate or one with a 4% cap rate?
a. 10%
b. 4%
c. Cap rates have nothing to do with appraised value.
d. It’s impossible determine based on cap rate alone.
1602) When a subject property has a feature that a comparable property doesn’t have, what should the licensee preparing a CMA do?
a. Adjust the comparable’s price down
b. Adjust the comparable’s price up
c. Adjust the subject’s price down
d. Adjust the subject’s price up
1603) Which one of the following statements about investors and tax depreciation is true?
a. Depreciation is not limited to investment properties.
b. Investors are not allowed to take a business deduction for annual depreciation.
c. Investors can depreciate an appreciating asset.
d. Most investors try to avoid depreciation.
1604) A property valued at $500,000 is returning a net annual income of $45,000. What is the cap rate for this investment?
a. 12.5%
b. 7.5%
c. 8%
d. 9%
1605) A comparable property sold one month ago for $400,000. That property has a three-car garage, whereas the subject property you’re preparing to list only has a two-car garage. What should you do to determine the subject property’s market value?
a. Adjust the comparable’s price down
b. Adjust the comparable’s price up
c. Adjust the subject’s price down
d. Adjust the subject’s price up
1606) The sales price, acquisition costs, and capital improvement costs (such as renovations or additions) of a property combine to make up what?
a. Appraisal value
b. Basis
c. Debt coverage
d. Market value
1607) A 30-unit income-producing property has a sales price of $9 million. Annual gross income is estimated at $750,000. What’s the gross income multiplier?
a. 10x
b. 12x
c. 14x
d. 8x
1608) Maya owns a small graphics shop and is meeting with her tax professional to review the year’s receipts and other tax documentation. Her tax advisor lets her know that she has an appreciating asset, which makes Maya very happy! Which of the following is Maya’s appreciating asset?
a. Her new 3-D printer
b. The digital printing press that she bought six months ago
c. The retail addition she put onto the building she already owned
d. The van she’ll use for trade show setups
1609) When a comparable property has a feature that the subject property doesn’t have, what should the licensee preparing a CMA do?
a. Adjust the comparable’s price down
b. Adjust the comparable’s price up
c. Adjust the subject’s price down
d. Adjust the subject’s price up
1610) “Effective gross income” most closely means ______.
a. Income after losses from vacancies and credit losses are deducted from potential gross income
b. Income after operating expenses are deducted
c. Income after taxes are deducted
d. Income that a property could bring if it were leased at full capacity
1611) The income a property could bring if it’s fully leased is known as the ______.
a. Depreciated gross income
b. Effective gross income
c. Net operating income
d. Potential gross income
1612) The gross income multiplier for an area is 12x. If the estimated annual rent is $10,000, what’s the property’s estimated value?
a. $10,000
b. $100,000
c. $12,000
d. $120,000
1613) Your client Joseph has a commercial income-producing property. How long does he depreciate this property?
a. 27.5 years
b. 39 years
c. Indefinitely
d. Zero years (commercial properties cannot be depreciated)
1614) The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels’ depreciation basis calculations?
a. The cost of the electrical system upgrades they did after purchase
b. The cost of the title insurance for the property
c. The loan origination and lender fees that they paid at closing
d. The price that they paid for the property, minus any land costs
1615) You know a property’s effective gross income and its operating expenses. How would you calculate the net operating income?
a. Add income to tax deductions.
b. Multiply annual return by .05 of the property’s value.
c. Multiply monthly income by 12.
d. Subtract operating expenses from effective gross income.
1616) What’s the definition of “potential gross income”?
a. After-tax income
b. Before-tax income
c. Income received after expenses are deducted
d. Income that a property could bring if fully leased
1617) Based on capitalization rate alone, which investment involves more risk: one with a 12% cap rate or one with a 8% cap rate?
a. 12%
b. 8%
c. It’s impossible determine based on cap rate only.
d. They’re equally risky.
1618) Capitalization is the process of using ______.
a. Capital to build equity
b. Income to calculate value
c. Sales to determine income
d. Value to calculate income
1619) Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?
a. 2019
b. 2029
c. 2039
d. 2048
1620) If a property has a potential gross income of $50,000, a vacancy and collection loss of 10%, and taxes are another 10%, what’s the effective gross income?
a. $40,000
b. $45,000
c. $50,000
d. $55,000
1621) A property has 10 units and is 90% occupied. Rent is $500 per month. Total vacancy and collection loss equals 10%. What’s the potential gross income?
a. $4,500
b. $5,000
c. $54,000
d. $60,000
1622) Carmen is a builder. Which of the following is true about construction codes as they apply to her next project?
a. Carmen must adhere to all federal, state, and local building codes, which are enforced at the local level.
b. Carmen must adhere to local, but not state or federal, building codes.
c. Carmen must adhere to local, state, and federal building codes, but only if her project is a commercial (non-residential) project.
d. If Carmen builds four or fewer homes, building codes don’t apply at the local level.
1623) Although codes can be established at the local, state, and federal level, they’re generally enforced by local or county authorities.
1624) Which of the following might a builder use to conceal unsightly areas, reduce noise levels, define space, and prevent soil erosion?
a. Foundation
b. Grading
c. Landscaping
d. Paving
1625) May homeowners perform work on their own properties without a contractor’s license?
a. No, a license is needed for any work, no matter who does the work.
b. Yes, homeowners are exempt from contracting laws.
c. Yes, provided it is for a kitchen or bathroom remodel only.
d. Yes, provided the homeowner doesn’t intend to sell right away.
1626) Who must stamp a blueprint to verify its accuracy?
a. An architect or engineer
b. The builder
c. The buyer
d. The real estate licensee
1627) If a site has improper drainage, what might happen?
a. Flooding can occur.
b. Water bills will be higher.
c. Water bills will be lower.
d. Water tables will be lower.
1628) What type of requirements must a contractor applicant meet in order to obtain a license?
a. Pay a fee and post a bond
b. Pay a fee, post a bond, meet educational and experience requirements
c. Perform a 30-hour practicum with a licensed contractor, pay a fee, and post a bond
d. Post a bond and pass an exam
1629) Bob is quite proud of the 600-square-foot garage he’s included in his new home. According to national standards, how can he include the garage square footage in his total?
a. He cannot.
b. He can only include it as unfinished square footage.
c. He can only include it if it cost more than $50,000 to construct, including labor.
d. He can only include it if its value is more than 33% of the home’s value.
1630) According to national standards for measuring square footage of a dwelling, which space should be included?
a. Attached accessory apartment
b. Garage
c. Unfinished attic
d. Unfinished basement
1631) When you’re working with a client who is looking for a home to purchase, why should you determine if any additions to the home have been permitted?
a. Because the buyer may be subject to fees from an HOA if the addition doesn’t meet the CC&Rs.
b. Because the permitting process ensures building code compliance.
c. Because this may provide negotiating power on the offering price.
d. Because this will determine the amount of property tax the buyer will pay.
1632) Cory is applying for his contractor’s license. He has met the educational and experience requirements, and has filed a Certificate of Self-Insurance with the Contractor’s State License Board. What else must he do?
a. Complete a 30-hour practicum with a licensed contractor
b. Post a cash deposit or bond with the state
c. Provide proof of citizenship
d. Register with HUD
1633) Before a builder can obtain a permit, two items must be submitted to the building department. What are these items?
a. A blueprint and building specifications
b. A list of code discrepancies and an environmental assessment
c. A list of contractors and the developer’s bonding number
d. A plat map and contractor verification
1634) Kenny is updating a bathroom. Under what circumstances is a contractor’s license required?
a. If he is not the homeowner and the work costs less than $500
b. If he is preparing his house to sell
c. If he is the homeowner
d. If he is the homeowner and the work costs more than $500
1635) Which of the following individuals is exempt from contractor licensing requirements?
a. Diedre, who is remodeling her kitchen because extended family is coming to live with her
b. May, who is updating her bathroom to prepare her house for market
c. Ray, who is replacing his neighbor’s garage door for $550
d. Thomas, who is putting in a covered porch for Susan at a cost of $1,250
1636) At which level does the Department of Housing and Community Development operate?
a. Federal
b. International
c. Local
d. State
1637) What is another name for a blueprint?
a. Building plan
b. Plat map
c. Road map
d. Tax assessor map
1638) Positioning a house on a lot in order to take advantage of a view is called ______.
a. Dedication
b. Infrastructure
c. Paying the piper
d. Siting
1639) You’re measuring the square footage of a single-family home you’ve just built. What national requirements apply to your measurements?
a. There are no national requirements.
b. You must measure from the inside out.
c. You must measure from the outside in.
d. You must measure from the top down.
1640) Jeb is performing work for a cousin and charging him $450. What requirements relate to Jeb?
a. He must be a licensed contractor.
b. If Jeb is not licensed, he may not charge his cousin for the work.
c. If Jeb is not licensed, he must disclose it.
d. Jeb must post a bond with the state equal to 1.5 times the cost of the work ($675).
1641) Which of the following is true regarding national standards for measuring square footage?
a. They’re required.
b. They’re voluntary but recommended.
c. You should measure to the nearest foot.
d. You should only include attic square footage if the ceiling height exceeds six feet.
1642)
1643) What can proper drainage do for a building site?
a. Improve aesthetics
b. Prevent water pressure problems
c. Protect the foundation
d. Provide a water feature
1644) What benefit is provided by grading a building site?
a. It can improve drainage.
b. It provides a level foundation for out-buildings.
c. It provides an alternative to public water.
d. It provides a score that can be used to market the property.
1645) Glen is a skilled carpenter, and he is building his own home on the unimproved lot he and his wife Sandy purchased. Sandy takes responsibility for handling the permitting and inspection process. Which part of their custom home will Glen and Sandy NOT need to have a permit and inspection for?
a. Interior design
b. Materials used
c. Method of construction
d. Plumbing, electric, and sanitation systems
1646) What are building specifications?
a. A blueprint
b. A survey
c. A written narrative of the building plan
d. The building plan
1647)
1648) What will you find in building specifications?
a. Color choices and a list of appliance vendors and sub-contractors
b. Energy ratings and certifications, and water flow indicators
c. Fixture and furnishing choices
d. Major systems, construction details, and landscaping
1649) At which level of government are building codes generally enforced?
a. Board
b. Federal
c. Local
d. State
1650) Which type of site provides better natural drainage?
a. Hilly site
b. Level site
c. Paved site
d. Sloped site
1651) What is the most severe penalty a person may receive for performing contracting work without appropriate licensure?
a. Criminal charges
b. Fines
c. Revocation of their bond
d. Revocation of their license
1652) A new development is complete, and almost all the homes are now occupied. All is well for the first year, but after a season of heavy rains many homeowners are experiencing issues with sewage backing up into their homes. What process should have prevented this from happening?
a. Compliance with building codes and inspection by a local health official to ensure sanitation and drainage systems were adequate
b. Establishment of special assessment districts to fund adequate drainage systems for the community
c. Professional home inspections ordered by homebuyers prior to closing
d. Seller disclosure requirements regarding potential environmental hazards in a flood plain
1653) What are the national requirements for measuring a dwelling’s square footage?
a. Measurement is required for any home valued at more than $500,000.
b. Only a contractor/builder may measure it.
c. Only the homeowner may measure it.
d. There are no national requirements.
1654) You’re a builder who wants to follow the national standards for measuring the square footage of a home you’ve built. Which of the following areas do you include?
a. A master suite
b. An unfinished attic with six-foot ceilings
c. Attached garage
d. Detached pool house
1655)
1656) According to national standards, under what circumstances may a pool house be included in total square footage?
a. If it is attached to the main house by a hallway or stairway
b. If it is larger than 500 square feet
c. If it is smaller than 500 square feet
d. If its total cost is more than $25,000
1657) What’s one measure a builder would likely take to improve a site’s drainage?
a. Grade the lot
b. Install a moat
c. Install concrete walls
d. Pave the lot
1658) Which type of insulation is no longer manufactured due to concerns about formaldehyde?
a. Flexible
b. Rigid
c. UFFI
d. Vermiculite
1659) Foundation walls are constructed on top of which of these items?
a. Footings
b. Girders
c. Joists
d. Slabs
1660) What must a foundation wall or floor have if it’s in contact with the soil?
a. A radon detector
b. A radon detector and drainage field
c. A sump pump
d. A vapor barrier and termiticide
1661) Which of the following is part of the eave system?
a. Composites
b. Fascia
c. Framing
d. Shingles
1662) Which of the following is a type of loose-fill insulation?
a. Batting
b. Fiberglass roll
c. Vermiculite
d. Wallboard
1663) Architect Camilla is drawing up plans for a house. Her client is passionate about wanting it to be a Craftsman style. Which of the following parts of the roofing system should Camilla check most closely to make sure her client is happy?
a. The flashing that’s installed near the edge of the eaves in the front
b. The pitch
c. The ridge beam, or girder
d. The soffit
1664) What’s used on areas in direct contract with the ground in order to keep moisture out of the structure?
a. Grading
b. Level
c. Termiticide
d. Vapor barrier
1665) Foundation walls are often constructed out of which of the following?
a. Gypsum, concrete, or brick
b. Poured concrete, bricks, or concrete blocks
c. Poured concrete or steel girders
d. Wood, steel, or brick
1666) What is slab on grade?
a. A basement
b. A footing
c. A foundation
d. A wall
1667) When constructing a foundation, besides a vapor barrier, what might local building codes require?
a. Bricks
b. Poured concrete instead of blocks
c. Soil
d. Termiticide
1668) Which structural component is described as “the concrete base that supports the foundation of a building”?
a. Beam
b. Footing
c. Foundation
d. Lally column
1669) Which of the following is a true statement about insulation types?
a. Loose insulation includes batting and UFFI
b. Reflective and sprayed are types of insulation
c. Vermiculite often comes in 15.5-inch rolls for ease of carrying
d. Wallboard and UFFI are types of flexible insulation
1670) Which type of framing is most commonly used in housing?
a. Balloon
b. Platform
c. Post-and-beam
d. Sub-form
1671) What are constructed on top of footings?
a. Foundation walls
b. Joists
c. Lally columns
d. Steel girders
1672) Where would you likely find loose-fill insulation?
a. Attic floor
b. Basement
c. Crawl space
d. Walls
1673) As the most important foundation building block, what’s the purpose of a foundation footing?
a. Act as a mold
b. Make up the foundation wall
c. Provide decorative curb appeal
d. Support the entire weight load of the building
1674) This round steel column is filled with concrete and rests on a base plate called the column footing pad.
a. Beam
b. Girder
c. Lally column
d. Sill plate
1675) What is the purpose of a termiticide?
a. Increases air circulation
b. Prevents moisture build-up
c. Prevents pest damage
d. Prevents water intrusion
1676) In which type of framing are the framing members much larger and spaced much farther apart?
a. Balloon
b. Platform
c. Post-and-beam
d. Sub-form
1677) Where would you likely find blanket insulation?
a. Basement
b. Bedrooms
c. Crawl space
d. Rafters
1678) Which of the following is a framing member?
a. Footings
b. Rafters
c. Soffits
d. Sticks
1679) All of these are components of the flooring system EXCEPT _______.
a. Beams
b. Lally columns
c. Sill plates
d. Soffits
1680) Why is UFFI insulation no longer used?
a. Environmental concerns
b. Not energy efficient
c. Too expensive
d. UFFIs are an endangered species
1681) Which type of framing involves a single system of wall studs run from the foundation through the first and second floors to the ceiling support?
a. Balloon
b. Platform
c. Post-and-beam
d. Sub-form
1682) Why does blanket insulation often come in fiberglass rolls that are 15.5 inches wide?
a. Building code requires it to be no more than 16 inches wide
b. Ease of carrying
c. For ease of blow-in
d. To fit between framing members
1683) What is slab on grade?
a. A basement
b. A footing
c. A foundation
d. A wall
1684) Where would you likely find loose-fill insulation?
a. Attic floor
b. Basement
c. Crawl space
d. Walls
1685) Why must a water heater be strapped?
a. Insulates for energy efficiency
b. Prevents bursting
c. Prevents theft
d. Prevents tipping
1686)
1687) A carbon monoxide detector would be required for which of the following dwellings?
a. A duplex with electric heat and appliances
b. A single family home with a detached garage and electric appliances
c. A single-family home with an attached garage
d. A single family home with an attached pool house
1688) What is a seller’s responsibility regarding water heaters?
a. Ensure energy efficiency
b. Provide buyer notice that it meets earthquake requirements
c. Provide energy efficiency disclosure to buyer
d. Replace before placing the home on the market if the water heater is more than five years of age
1689) Which of the following plumbing elements in a dwelling should be vented?
a. Sink, toilet and tub
b. Sink, toilet, tub, and washing machine
c. Washing machine and sink
d. Washing machine and toilet
1690) Which system uses a central exhaust fan and ducts to move stale air out of the building?
a. Air conditioning
b. Forced air
c. Heating
d. Ventilation
1691) Raymond was comparing two air conditioners. Air conditioner “A” had an EER of five; air conditioner “B” had an EER of eight. What does Raymond know about these two units?
a. A is far more efficient
b. A will cost less to use
c. B is far more efficient
d. B will cost more to use
1692) “That plumbing fixture must be vented.” For which plumbing fixture or fixtures might this statement apply?
a. All plumbing fixtures
b. Sink
c. Sink and toilet
d. Toilet
1693) What type of heating system uses a furnace to heat cool air and transports the warm air via ducts?
a. Electric heating system
b. Forced air system
c. Hot water system
d. Radiant system
1694) All single-family homes sold on or after January 1, 1986 must have operable _____________ detectors.
a. Radon
b. Smoke
c. Smoke and carbon monoxide
d. Smoke, carbon monoxide and radon
1695) Which system pulls stale air out of the kitchen, bathrooms, and other places where smells and pollutant concentrations occur?
a. Air conditioning
b. Forced air
c. Heating
d. Ventilation
1696) Which type of heating system takes cool air and passes it through the heat source using a fan or blower?
a. Boiler
b. Forced air
c. Hot water
d. Steam
1697) You’re evaluating an air conditioning unit. Based on the following energy efficiency ratios, which one is the most energy efficient?
a. 3.0
b. 4.5
c. 5.0
d. 6.5
1698) In older houses built before 1950, which type of electrical system would frequently be found?
a. BX
b. Conduit
c. Greenfield
d. Romex
1699) What type of heating system uses a boiler to produce steam, which is transferred to rooms through a pipe?
a. Forced warm air system
b. Hot water system
c. Radiant system
d. Steam system
1700) You’re a seller of a home built in 1975. What must you have installed before selling your property?
a. Carbon monoxide detector
b. Smoke and carbon monoxide detector
c. Smoke, carbon monoxide and radon detector
d. Smoke detector
1701) We’ve all had this happen: We turn on every appliance in the kitchen and are happily cooking away, then all of a sudden, we’re plunged into darkness and silence. What probably just happened?
a. A circuit breaker tripped.
b. An earthquake has hit.
c. The food we’re cooking splashed into an uncovered outlet.
d. There is a storm outside, and a power line has been hit, taking out your electricity.
1702) What does PVC stand for?
a. Pipe-venting conductor
b. Plumbing viscosity volume
c. Polarity-voltage conductor
d. Polymerized vinyl chloride
1703) What does EER stand for with regard to air conditioners?
a. Electricity energy runoff
b. Energy efficiency rating
c. Energy efficiency ratio
d. Energy Star Rating
1704) Which of the f ollowing is a type of water heater?
a. A/C vent
b. Blower
c. Register
d. Resister
1705) Your clients, the Rawlings, forgot to include smoke detectors or a disclosure about the smoke detectors when they sold their property to the Englebrights. What could happen?
a. The Englebrights can back out of the sale.
b. The Englebrights can sue the Rawlings and you for up to $1,000, plus attorney costs.
c. The Rawlings could be fined $100 plus attorney costs.
d. The Rawlings must pay the Englebrights’ heating bills for the first year.
1706)
1707) Air conditioner efficiency is rated based on _________, which calculates the amount of energy or electricity needed to run a unit.
a. BTUs
b. CSIs
c. EERs
d. ICCs
1708) Where is aluminum wiring used in construction today?
a. In appliances
b. In branch circuit wiring, which goes from the panel through the walls to the outlets and switches
c. In motor vehicles
d. Where the current is heaviest, such as at the service entrance
1709) If a seller fails to install a smoke detector and also fails to provide a smoke detector disclosure to the buyer, what damages may apply?
a. Up to $100, plus court costs
b. Up to $100 total
c. Up to $500, plus court costs
d. Up to $500 total
1710)
1711) Joe is finally remodeling his parents’ home from the late 1960s and, to his mother’s delight, it’s time to install a new washer and dryer. As he is hooking up the new machines, what type of wiring is he likely to encounter?
a. Aluminum
b. Copper
c. Gold
d. Silver
1712) Shannon received a tax credit due to her energy choice option. She likely selected ___________ to provide energy to her home.
a. Coal
b. Gas
c. Oil
d. Wind
1713) Which of the following is a type of pipe often used in construction?
a. Aluminum
b. Polymerized Vinyl Chloride
c. Titanium
d. Wood-framed metal
1714) Which of the following is a type of water heater?
a. Coal
b. Geolectric
c. Tankless
d. Wind
1715)
1716) In an air conditioning system, what takes heat from the air and brings it to the refrigerant?
a. Compressor
b. Condenser
c. Evaporator
d. Recycler
1717) What’s supposed to be installed wherever water can be found, such as in bathrooms, kitchens, basements, utility rooms, garages, outdoors, and near swimming pools, to protect people from getting electrocuted?
a. BX
b. GFCI
c. NEC
d. PVC
1718) If you suspect there might be an environmental issue with a property you’re selling but you’re not sure, what should you do?
a. Ask a lot of questions, ask for help, and disclose everything if issues do exist.
b. Ignore your hunch; it’s not your responsibility.
c. Refuse to sell the property.
d. Sell the property as quickly as possible and cash that commission check.
1719) Your client, Eric, is interested in purchasing an industrial property to start a new business. You’ve recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn’t feel these tests are necessary. What should you do?
a. Keep records of your recommendations and a written response from Eric.
b. Perform the tests yourself.
c. Refuse to be a part of the transaction.
d. Support Eric in his decision and do nothing further.
1720) Which of the following is one of a licensee’s responsibilities when the licensee suspects an environmental issue exists on a property?
a. Hire environmental experts to perform audits of all property when representing the seller.
b. Investigate and discover hidden environmental issues associated with a property.
c. Know when, where, and how to seek expert assistance regarding environmental issues.
d. Pay for any required environmental audits.
1721) Which of the following scenarios accurately represents your environmental disclosure responsibility as a real estate licensee?
a. You must disclose all known environmental hazards for both residential and commercial properties.
b. You must disclose all known environmental hazards for commercial properties only; residential disclosure is the seller’s sole responsibility.
c. You must disclose all known environmental hazards for residential properties only; commercial disclosure is the seller’s sole responsibility.
d. You must disclose all suspected environmental hazards for both residential and commercial properties.
1722) Mercedes is assisting a buyer who wants to purchase a home in a particular neighborhood. When looking at homes with her client, where should Mercedes look for potential environmental concerns?
a. At her broker’s office
b. Inside the home and other structures
c. The area where the home is built, outside the home, and inside the home
d. The outdoor areas of the property
1723) A licensee must understand risks and provide disclosure of known environmental issues. A licensee must also do which of the following?
a. Be an expert in every aspect of environmental science.
b. Hire professional inspectors.
c. Know when to ask questions.
d. Perform environmental testing.
1724) Your client, Eric, is interested in purchasing an industrial property to start a new business. You’ve recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn’t feel these tests are necessary. What should you do?
a. Keep records of your recommendations and a written response from Eric.
b. Perform the tests yourself.
c. Refuse to be a part of the transaction.
d. Support Eric in his decision and do nothing further.
1725) Stan is a home inspector who’s evaluating a home for potential buyers. He pointed out that neither of the two bathrooms had vent fans installed. Why is this a potential problem that will be noted on the inspection report?
a. Bathroom fans can mitigate lead paint particles.
b. Bathroom fans vent radon to the exterior of the home.
c. The lack of air circulation in a moist room can lead to mold growth.
d. Unseemly smells located that close to the kitchen are a problem.
1726) Radon can cause _____, if inhaled.
a. Brain cancer
b. Heart attacks
c. Lung cancer
d. Permanent paralysis
1727) What must be provided to consumers who are buying homes built prior to 1978?
a. A list of lead-abatement contractors
b. An Environmental Conservation Law handout
c. The EPA pamphlet titled “Protect Your Family from Lead in Your Home”
d. The hotline number for Lead Poison Control
1728) What act requires sellers, landlords, and their agents to disclose any known lead hazards in the home?
a. DECs Lead Reduction Act
b. Federal Lead Disclosure Act
c. Residential Lead-Based Paint Hazard Reduction Act
d. Universal Lead-Based Paint Disclosure Act
1729) Which one of the following is a reason mold is an environmental issue?
a. It can grow without water or moisture.
b. It damages what it grows on and can be unhealthy to humans.
c. It produces off gasses.
d. It releases radon as it breaks down.
1730) Which one of the following may cause carbon monoxide to be present in a home?
a. A detached garage
b. A gas furnace
c. An electric dryer
d. An electric stove
1731) What makes urea formaldehyde foam insulation a health hazard?
a. It contains asbestos.
b. It contains formaldehyde.
c. It contains radon.
d. Levels increase over time.
1732) Volatile organic compounds can make indoor air quality toxic. Where are VOCs likely to be found?
a. Air fresheners
b. Bamboo
c. Jute
d. Wool
1733) Certain homes and other buildings are designated as “target” dwellings by the EPA. What does this mean?
a. There are specific requirements for contractors performing lead abatement or remodeling these homes.
b. These are the most desirable homes for green living.
c. These homes cannot be inhabited until lead abatement has been performed.
d. These homes have been targeted for removal.
1734) Which one of the following is a substance found in air fresheners, cleansers, paint, and building materials that at high levels can make indoor air quality toxic?
a. BPA
b. Natural scents
c. PCBs
d. VOCs
1735) Under what circumstances should real estate licensees advise buyers to have listed homes tested for radon?
a. In all circumstances, regardless of location
b. Only if the home is located in a high-risk area
c. Only if the home were built before 1978
d. When they’re feeling ill
1736) What are the first symptoms of carbon monoxide poisoning?
a. Dizziness and nausea
b. Heart palpitations
c. Ringing in the ears
d. Sore throat
1737) In addition to providing a disclosure of any lead-based paint hazards in homes built before 1978, what must a seller’s agent provide to prospective buyers?
a. Assurance that the home is lead-free before offering it for sale
b. EPA lead safety pamphlet
c. List of reputable home improvement contractors
d. Written proof that the home is lead-free
1738) What is the name of the fibrous material found in rocks and soil worldwide that was used in construction of older homes and causes chronic lung disease and cancer?
a. Asbestos
b. Lead paint
c. Radon
d. Silicone
1739) Dizziness and nausea are the first signs of what?
a. Asbestosis
b. Carbon monoxide poisoning
c. Good air quality
d. Radon exposure
1740) Radon is an important environmental issue because it causes what?
a. Brain cancer
b. Heart attacks
c. Lung cancer
d. Permanent paralysis
1741) Why is asbestos an environmental issue?
a. It causes brain clouds.
b. It causes chronic lung disease.
c. It causes depression.
d. It takes up space in a landfill.
1742) Which one of the following statements about asbestos is true?
a. Homeowners can safely remove it.
b. It’s harmful only if left in place.
c. It’s not harmful at low levels.
d. No amount of it is considered safe.
1743) Children and pregnant women are especially vulnerable to poisoning caused by what hazard?
a. Asbestos
b. Lead
c. Oil
d. Pigment
1744) Which of the following statements is true about radon?
a. It’s a man-made chemical.
b. It’s a naturally occurring gas.
c. It’s only a problem outdoors.
d. It’s safe at any level.
1745) When lead is present, what rule covers remodeling of the property?
a. Lead Removal, Repair, and Paint (RRP) Rule
b. Lead Removal, Repair, and Renovation (RRR) Rule