Failed State Exam Questions
A salesperson obtains a listing and advertises the property as follows: "Spacious 3 bdrm., ideal loc. near schools, shops, and trains. Seller anxious to move. Deal direct w/ agent and save. Call Paula after 5 at 123-4567." Why is this ad in violation of Board regulations? Select one: A. The price is not mentioned B. The broker's name is missing C. There is no property address D. Financing options are not shown
(advertising) All ads for the sale of property MUST include the name of the brokerage firm. A salesperson cannot advertise a listed property with only his or her name. The correct answer is: The broker's name is missing
A developer has prepared an advertisement, offering several lots for sale. One lot is $10,000 and all others are in the $15,000 - $20,000 price range. Prior to actually running the ad, the developer receives an offer for the $10,000 lot which he intends to accept. Which of the following statements is true regarding the advertisement? Select one: A. The developer may publish the ad as planned B. The developer cannot publish the ad as planned C. The developer may publish the ad as planned, but it cannot run for more than 4 weeks D. The developer may publish the ad as planned until 50% of the lots are sold
(advertising) The question did not say the offer had been accepted, only that he intended to accept it. As such, this is not a "bait and switch" and the ad may run as planned. The correct answer is: The developer may publish the ad as planned
Board regulations require that licensees disclose agency relationships to the principals in a real estate transaction. When is such disclosure required? Select one: A. When the licensee has substantive discussions about a specific property B. While showing a specific property C. At the time the closing is conducted D. At the time of contract ratification
(agency disclosures) It is too late if you are already showing the property. Instead, you should disclose this information as soon as you have substantive discussions with a prospective customer. The correct answer is: When the licensee has substantive discussions about a specific property
When a salesperson transfers from one broker to another, it is the salesperson's responsibility to: Select one: A. Pay a license reinstatement fee B. Return his or her license to the Board C. Apply for inactive status until the new broker has business cards printed D. None of the above
(applying for individual licenses) The former broker (NOT the salesperson) must return the license to the Board if a salesperson transfers to another firm. Therefore, none of the above are true. The correct answer is: None of the above
Licensees must respond to Board inquiries within: Select one: A. 10 days B. 15 days C. 21 days D. 31 days
(disciplinary procedures) A licensee must respond to an "inquiry" (question or demand for non-financial records) within 21 days. Remember that this is different than a "request" from the Board. A "request" is for financial records, which must be presented to the Board within 10 days. The correct answer is: 21 days
Hearings before the Virginia Real Estate Board must be held in accordance with the: Select one: A. Virginia Association of Realtors Regulations B. Uniform Commercial Code (UCC) C. Administrative Process Act D. Supreme Court Judicial Procedures Act
(disciplinary procedures) Note that the License Law gives the Real Estate Board authority to conduct hearings in accordance with the Administrative Process Act. The correct answer is: Administrative Process Act
When a broker establishes an account to hold money belonging to others, which of the following statements is true? Select one: A. All checks, deposit slips, and bank statements must include the word "Escrow" as part of the account name B. Accounts may be labeled as either "Trust" or "Escrow" C. The money cannot be held in the same bank as the broker's operating account D. An individual account is required for each transaction
(escrow accounts) All escrow accounts and all deposits into such accounts must be labeled as "escrow." The correct answer is: All checks, deposit slips, and bank statements must include the word "Escrow" as part of the account name
Broker Tom can remove money from his escrow account in all of the following circumstances, except: Select one: A. When a court orders the broker to do so B. With written permission of all parties to the contract C. Rescission of the contract by the seller D. Termination of the contract, by performance
(escrow accounts) The only listed situation where a broker CANNOT remove escrow funds is if there were a unilateral rescission--which means the contract was breached. The parties might have accounted for that in the original sales contract (if so, the broker can follow the terms of the contract). However, disputes usually require a successful interpleader or court order before the broker may release funds from escrow. The correct answer is: Rescission of the contract by the seller
Mitch, the principal broker at ZYX Firm, has reasonable suspicion that one of his associate brokers is stealing escrow funds. As a principal broker, Mitch must report this violation within how many business days? Select one: A. 5 B. 4 C. 3 D. 2
(financial records and escrow management) All licensees must report known escrow violations. Principal brokers must report escrow violations to the Board within three (3) business days of forming a reasonable belief that any violation occurred. The correct answer is: 3
Jack the Broker sends an email to Mike. The email describes the real estate services Jack provides and encourages Mike to call for more details. Jack makes the required disclosures in the middle of his email, in bold lettering. Jack's email: Select one: A. Complies with the regulations B. Does not comply with the regulations C. Is not regulated by the Board D. Complies with the regulations, so long as it is at least 12 point, bold font
(internet advertising) According to the regulations, email advertising must include the requisite disclosures on the main page or no more than one click away. Jack's email is in compliance. The correct answer is: Complies with the regulations
When a real estate license has expired, when can a person reinstate his license without monetary penalty? Select one: A. Within 15 days B. Within 30 days C. Within 1 year D. The licensee cannot be reinstated after expiration
(licensing procedures) Licensees must renew their license BEFORE it expires. Licensees may reinstate their license within 30 days by paying the regular renewal fee (no additional penalty). Afterwards, licensees must pay a reinstatement fee (Day 31 to 1 yr) or re-apply for initial license if not reinstated in a timely manner (more than 1 yr). The correct answer is: Within 30 days
When a broker renews his license, which of the following items must accompany that renewal application? Select one: A. The renewal fee B. The renewal fee, plus $20 payment for the Transaction Recovery Fund C. The renewal fee, plus proof of membership in the Association of Realtors D. The renewal fee, plus proof of Errors and Omissions Insurance
(licensing procedures) The $20 fee for the Transaction Recovery Fund is only paid when a person first applies for their license. However, an additional assessment could be imposed if the fund drops below $400,000. To renew one's license, a person must complete all required education, fill out the renewal application, and send the renewal fee to the Board. The correct answer is: The renewal fee
A seller gave a friend power-of-attorney in order to consummate the sale of her personal residence. Which of the following statements is true? Select one: A. The friend must be licensed as a broker B. The friend must have a law degree C. The friend need not be licensed D. The friend need not be licensed, only if he or she does not get paid
(licensing requirements) An unlicensed person can (under power of attorney and without compensation) perform an act of real estate in order to authorize the final performance of a contract. For example, this would allow the authorized person to negotiate with buyers or sign the final papers at settlement. The correct answer is: The friend need not be licensed, only if he or she does not get paid
A builder wants to sell tracts of land that he owns. This person: Select one: A. Must have a broker's license B. May allow unlicensed employees (on a regular salary) to sell the tracts C. May only employ licensees to sell each tract D. Must register with the Real Estate Board
(licensing requirements) Regular, salaried employees of a property owner can sell or lease the property without needing a license. This is true because owners are allowed to sell their own land without being licensed. The correct answer is: May allow unlicensed employees (on a regular salary) to sell the tracts
Craig the Broker got his license two years ago, so it is up for renewal. Unfortunately, Craig has been so busy that he hasn't taken any continuing education yet. What will happen to Craig's license if he doesn't complete the required courses before renewal? Select one: A. His license is null and void B. He can pay a fine to extend the renewal date C. His license will expire D. He will have to retake the licensing exam
(maintaining individual and firm licenses) Licenses that are not timely renewed will expire (unless the Board has granted an exemption for certified illness or undue hardship). Craig did not meet these exemption standards. Therefore, once expired, the licensee cannot engage in regulated activity. Expired licenses may be reinstated for up to one year following expiration, though the Board has the power to deny any reinstatement application (as with renewal and initial licensure). The correct answer is: His license will expire
If a broker operates the firm from an office in his home, it must: Select one: A. Be clearly separate from the living area B. Not exceed 500 square feet in size C. An office cannot operate on a residential property D. Only be accessible to the public
(operating a firm) A firm cannot operate on residential property unless the business office is completely separated from the living quarters (i.e., separate entrances). The correct answer is: Be clearly separate from the living area
The principal broker must keep all of the following records at the main firm office, EXCEPT: Select one: A. Firm license B. Branch license C. Principal broker's license D. Salesperson licenses
(operating a firm) The principal broker must keep the the firm (NOT the branch) license, his own license, and all salesperson and associate broker's licenses at the main office location. Meanwhile, a branch license must be conspicuously displayed at that particular branch office. The correct answer is: Branch license
The unit owners of a condo project are unhappy with their association's management. As a result, they want to amend the bylaws. What is the minimum percentage of affirmative votes to change the bylaws? Select one: A. 33.33% B. 66.66% C. 75% D. A simple majority
(virginia condominium act) The declarant sets up the form of governance and voting allocations in the condominium instruments and POS. These bylaws can be changed by a simple majority vote of the unit owners. Note that a minimum amount of the voting interest must be present at the meeting before such a vote can begin. The correct answer is: A simple majority
Which of the following actions would violate the Virginia Fair Housing Law? Select one: A. Refusing to list a commercial property owned by a particular minority B.Hiring office personnel on the basis of sex, regardless of qualifications C. Placing ads printed in a foreign language D. Taking a listing with intent to change the racial make-up of the neighborhood
(virginia fair housing act) The Virginia Fair Housing Act is violated when a licensee takes a listing with intent to change the racial composition of a neighborhood. This is known as "blockbusting." The correct answer is: Taking a listing with intent to change the racial make-up of the neighborhood
If performed by a landlord, which action would violate the Virginia Landlord and Tenant Act? Select one: A. He disclosed personal information to a broker since you mentioned buying a home soon B. He disclosed personal information to the local law enforcement without your consent C. He disclosed a summary of your rental payments to staff at an apartment complex D. None of the above
(virginia landlord-tenant act) A landlord cannot release confidential information about tenants without written consent. However, there are certain exceptions to the rule. A landlord may release such information if the information was already public, only a summary of rental payments, related to law enforcement or emergency, for military purpose, for tax purpose, for the U.S. Census, requested by subpoena, or if requested by the landlord's property manager, lender, attorney, collection agency, or subsequent buyer of the property. The correct answer is: He disclosed personal information to a broker since you mentioned buying a home soon
Under the Virginia Landlord and Tenant Act, landlords: Select one: A. May impose automatic renewal clauses, including a change in the rental amount B. May make a major change in house rules, so long as tenant is notified verbally or in writing C. May require a cash payment within 5 days of any checks that bounce D. May release a tenant's information to the public without consent
(virginia landlord-tenant act) Major changes to the house rules require WRITTEN agreement from the tenant. Although landlords can impose automatic renewal clauses, they cannot make material changes (ex. increase the rental amount) without receiving written agreement from the tenant. The correct answer is: May require a cash payment within 5 days of any checks that bounce
Jon and Julie enter into a valid sales contract. Pursuant to state law, Jon gathers information about the property condition (including appliances, structural elements, and exterior items). However, Jon gets tired of gathering information and instead decides to sell his home "as is." Can Jon do this without violating the law? Select one: A. Yes, as long as Jon completes the necessary paperwork B. No, Jon must disclose each defect C. Yes, as long as a buyer agrees D. No, Jon must discover and disclose each defect
(virginia property disclosures) At minimum, Virginia requires sellers to provide a mandatory Disclosure Form to the buyer. This form serves as a "buyer beware" reminder and states that the owner makes no representation as to the condition of the property. The seller may need to provide further disclosures as specified by law. Nevertheless, if Jon completes the necessary paperwork, he will be able to sell his home "as is" without violating the law. The correct answer is: Yes, as long as Jon completes the necessary paperwork
Ben and Barry enter into a valid sales contract, which specifies that the trash compactor will be in working order. Ben signs a disclaimer/waiver about the property, which states that he is selling "as is" and gives no opinion on the condition of specified systems. When Barry takes possession of the house, the trash compactor is not operational. Does Barry have a cause of action against Ben? Select one: A. No, because Ben sold the home "as is" B. Yes, because Ben's disclosure was defective C. Yes, because Ben is in breach D. No, because Barry took possession
(virginia property disclosures) Ben's disclosure was permissible--one can disclaim knowledge of the condition of specified systems and sell "as is." However, the disclaimer must not contradict the sales contract. In this case, it appears that Ben is in breach because he promised to deliver the premises with a working trash compactor, but failed to do so. Therefore, Ben's disclaimer contradicts the sales contract, and Barry has a cause of action against Ben. The correct answer is: Yes, because Ben is in breach
The Real Estate Board is responsible for: Select one: A. Determining commission splits between all MLS brokers B. Waiving education or experience requirements C. Standardization of the clauses contained in a listing agreement D. Setting the commission rates for different types of property
(virginia real estate board) Of the items listed, the only thing that the Board has any involvement in are the education and testing requirements. The Board may choose to waive experience or education requirements for a candidate who applies for a license by reciprocity. They may also waive/reduce CE requirements in cases of certified illness or undue hardship. However, the licensee still needs to pass the Virginia Law portion of the licensing exam. The correct answer is: Waiving education or experience requirements
The real estate license of any person or firm may be revoked by which of the following entities? Select one: A. Attorney General of the Commonwealth B. Virginia Association of Realtors C. Virginia Real Estate Board D. Both A and C
(virginia real estate board) Only the Board has power to issue and revoke licenses. The Attorney General may suggest that the Board revoke a license as a form of punishment, but he/she cannot revoke a license. The correct answer is: Virginia Real Estate Board
An initial time share purchaser has the right to rescind a contract without penalty. This right: Select one: A. Must be voided by the seller (developer) B. May be extended upon receipt of a revised POS C. Must be exercised within 3 days D. Must be exercised within 45 days
(virginia time share act) The initial purchaser of a time-share has a 7-day right of rescission after signing the contract. However, if there is a material change to the public offering statement (POS), this rescission period starts again from the date that the revised POS is received. The correct answer is: May be extended upon receipt of a revised POS
If a judgment has been awarded to a claimant, what must the claimant do before the Board will authorize payment from the Transaction Recovery Fund? Select one: A. The claimant must have gone after any assets and property belonging to the debtor B. The respondent must assign all commissions and personal property to the claimant or the Board C. The respondent must file bankruptcy and sell all property D. The respondent must submit to interrogatories by claimant
(virginia transaction recovery fund) After the claimant has obtained a judgment, he must pursue all legal avenues for reimbursement. This would include a legal attempt to seize and sell all of the respondent's assets. Then, and only then, is the claimant eligible for payment from the Fund. The correct answer is: The claimant must have gone after any assets and property belonging to the debtor
New licensee applicants are required to pay into the Transaction Recovery Fund. If necessary, the Board may reassess licensees: Select one: A. $20 every year B. $20 in a two year period C. $20 every two years D. $30 in a two year period
(virginia transaction recovery fund) If the Fund falls below the $400,000, the Board may assess licensees an additional $20 each. This assessment can only be requested once during a two year period (which always ends on June 30th). The correct answer is: $20 in a two year period
If the Board has authorized payment from the Transaction Recovery Fund, what is the effect for the licensee who committed the misconduct? Select one: A. The licensee has 4 years to repay the Fund B. The license will be automatically revoked C. The license will be automatically suspended D. The licensee may continue to sell real estate if a court has adjudicated him as bankrupt
(virginia transaction recovery fund) Once a payment is made from the Fund, the person's license is revoked without benefit of a hearing. The correct answer is: The license will be automatically revoked
Harry is a broker. He works out a deal with Larry (a developer), Darrell (a contractor), and Tony (a mortgage banker). The deal states that Harry will sell all of the houses that Darrell built on Larry's land. After that, Tony would handle the mortgages of any buyers through his bank. Harry sells three houses, then runs off with all the funds. Larry, Darrell, and Tony all file claims for payment from the Transaction Recovery Fund. Who is most likely to collect? Select one: A. Larry, the developer B. Darrell, the contractor C. Tony, the mortgage banker D. No one
(virginia transaction recovery fund) People who regularly deal in real estate transactions are not eligible for payment from the Transaction Recovery Fund. This includes real estate agents, bankers, developers, and contractors. The correct answer is: No one
If the Board honors a claim and authorizes payment from the Transaction Recovery Fund, the claimant subrogates his rights to the Board. The Board now has the right to: Select one: A. File a claim against to the licensee to recover the amount paid from the Fund B. File a claim against the licensee to recover the judgement amount awarded by the court C. Only to revoke the license, as provided by Virginia law D. Sentence the licensee to a prison term of no more than 12 months
(virginia transaction recovery fund) The Board can only seek to recover the amount paid from the Fund on behalf of the licensee. The court ordered judgment could include other damages. The correct answer is: File a claim against to the licensee to recover the amount paid from the Fund
What is the maximum amount that can be paid from the Transaction Recovery Fund for claims against the same licensee during a two year period? Select one: A. $10,000 B. $20,000 C. $50,000 D. $100,000
(virginia transaction recovery fund) The maximum amount that any one person can claim from the Fund is always $20,000. However, if multiple claimants file against the licensee from a single transaction, the maximum paid to all claimants would be a total of $50,000 during any 2-year period. If the licensee is involved in multiple transactions, the maximum that the Fund will pay to all claimants is $100,000 during any 2-year period. The correct answer is: $100,000
A real estate license could be suspended without investigation if the licensee: Select one: A. Engages in acts of brokerage while on inactive status B. Violates the Virginia Real Property Act C. Does not pay the Transaction Recovery Fund assessment D. All of the above
(virginia transaction recovery fund) The only instance where your license can be suspended or revoked without a hearing is in relation to the Transaction Recovery Fund. Specifically, a license will be suspended if you fail to pay your assessment, and it will be revoked if you cause payment from the Fund. The correct answer is: Does not pay the Transaction Recovery Fund assessment
Kerra the Consumer has filed a claim for payment from the Transaction Recovery Fund. Which of the following statements must be incorrect? Select one: A. Kerra filed suit against the local Association of Realtors B. Kerra has obtained a judgement in court C. Kerra claim cannot include interest in her damages D. Kerra must wait until there is sufficient money in the Fund before payment
(virginia transaction recovery fund) There is no requirement to sue the Association of Realtor--in fact, there is no reason to sue them if she's trying to get a TRF payment. All of the other answers are correct statements. The correct answer is: Kerra filed suit against the local Association of Realtors
Which of the following statements about the Transaction Recovery Fund is correct? Select one: A. If the Fund falls below $400,000, the Director may only assess active licensees to restore the Fund B. A licensee accused in the claim must sell all personal possessions to satisfy the claim C. A claimant may collect up to $20,000 D. When a claim is paid, the respondent's license will be automatically suspended
(virginia transaction recovery fund) When necessary, the Board may assess active and inactive licensees in order to restore the Fund. If the claim is deemed to be valid, the respondent's license is revoked, not suspended. A licensee must also repay the Fund (plus interest), but there is no requirement to sell one's personal belongings in order to satisfy the debt. The correct answer is: A claimant may collect up to $20,000
If a person wants to make a claim from the Transaction Recovery Fund, where should this claim be filed? Select one: A. A court of competent jurisdiction B. The Virginia Association of Realtors C. The Real Estate Board D. The principal broker of the respondent
(virginia transaction recovery fund) You can ONLY file a claim with the Real Estate Board. However, a claimant must first obtain a final judgment against the licensee from a court of competent jurisdiction. The correct answer is: The Real Estate Board
Which of the following persons must be licensed when selling real property for others? Select one: A. A trustee, appointed by court B. A receiver in a bankruptcy proceeding C. An executor of a will D. An appraiser
An appraiser acting as an appraiser needs an appraiser's license. However, an appraiser selling real estate for others must be licensed as a real estate agent. A trustee, executor, and receiver could qualify for an exception to the license law. We do not know whether an exception applies under this situation, but that fact that one could apply makes "appraiser" the best answer. The correct answer is: An appraiser
Ben and Jerry are communicating for the first time via instant messages. Ben is a licensee and Jerry is interested in locating property in Ben's area. Ben suggests that he may be able to help. Which of the following disclosures must Ben make? Select one: A. Ben must disclose his firm name, city, and state B. Ben must disclose his username C. Ben must disclose his email address D. Ben is not required to make any disclosure because instant messages are not advertisements
Ben must disclose his firm name, city, and state since Board regulations now cover instant messages. These disclosures must be viewable on the main page or no more than one click away from the main page. The correct answer is: Ben must disclose his firm name, city, and state
Every Virginia licensed broker who is also a Virginia resident MUST: Select one: A. Maintain an office in the state of Virginia B. Maintain an escrow account in an insured depository in the state C. Identify his place of business with an appropriate sign D. All of the above
Resident brokers must maintain an office in Virginia. However, only brokers who receive escrow funds must establish escrow accounts. Similarly, there is no requirement that firms post a sign outside their place of business. However, if a firm does post a sign, the advertising regulations specify that it must include the firm's licensed name. The correct answer is: Maintain an office in the state of Virginia
The Board may discipline licensee misconduct by all of the following actions, EXCEPT: Select one: A. Suspending a license B. Revoking a license C. Imposing a fine up to $5,000 per violation D. All of the above
The Board has authority to suspend or revoke licenses. In addition, it may impose monetary penalties. However, it may only impose penalties up to $2,500 per violation, not $5,000 per violation. The correct answer is: Imposing a fine up to $5,000 per violation
Virginia Real Estate Board members include: Select one: A. Brokers only, with at least 5 years active experience B. Either salesperson or brokers with at least 5 years active experience, and consumers (unlicensed persons) C. At least one salesperson whose license has been on inactive status for the last 9 months D. Salepersons only, with at least 10 years of active experience
The Real Estate Board consists of 9 members--7 licensees (salespersons and/or brokers) with at least 5 years of experience, and 2 citizens (unlicensed). The correct answer is: Either salesperson or brokers with at least 5 years active experience, and consumers (unlicensed persons)
Which of the following actions is NOT an act of real estate brokerage? Select one: A. Renting 1/2 of a duplex for a friend B. Helping a friend sell his house for a fee C. Selling a business for a relative D. Taking a listing
Your answer is correct. (licensing requirements) Note that businesses are classified as personal property. You do not need a real estate license to sell personal property. The correct answer is: Selling a business for a relative
Virginia Fair Housing Laws apply to: Select one: A. Residential sales only B. Residential sales and rentals C. All real estate transactions D. All real estate transactions with the exception of industrial sales
Your answer is incorrect. (virginia fair housing act) The Virginia Fair Housing Act applies to residential sales and rentals only. The correct answer is: Residential sales and rentals