General Exam 4
What is the maximum fine a licensee faces for improper conduct as defined by Kentucky license law?
$1,000
If a sales associate wishes to be named as an affiliated name within the company's name, what conditions must he or she meet?
Have worked for the company at least 20 hours per week for a minimum of 2 years.
Which of the following best describes an exclusive right-to-buy contract?
It is equivalent to an exclusive right-to-sell listing agreement.
Two salespeople, Jean and Jeff, work for the same realty company. Jean asks Jeff to hold an open house for her and gives him $50 as compensation. Which is TRUE?
Jean and Jeff have violated real estate law.
Can a real estate broker list a property for sale based on the "net price"?
NO
A seller sold a property to a buyer knowing that a third party had a claim in the property. Would the buyer get marketable title?
No, because there was a cloud on the title
Are "net listings" legal in Kentucky?
No, net listings are considered improper dealing and in violation of Kentucky license law.
Which of the following is true regarding the useful life of a property?
The physical life is generally greater than the economic life.
Which of the following is NOT a purpose of the Federal Reserve System?
To buy loans in a depressed area or in times of a tight money market
Mary has purchased a timeshare plan but 2 days after signing the contract she has reconsidered and wished to back out. Can she do so?
Yes, Mary has 3 days to opt out and cancel the contract without penalty.
The owner of a condominium unit learns that a neighbor has failed to pay his real estate taxes. If this neighbor does not pay the taxes,
a lien can be filed against the neighbor's unit and his percentage of the common elements.
The instrument that pledges real property as security is
a mortgage or a deed of trust.
Broker Noah was asked by a purchaser to explain a budget mortgage. His best answer would have been
a mortgage with payments including principal, interest, taxes, and insurance.
what is a naked title?
a title without the usual rights of ownership.
A joint tenancy with right of survivorship may be created
by deed or will
In a repayment of a mortgage loan, which type of interest is used?
simple
Ad valorem taxes are based on
the assessed value of the property.
Just before the sheriff begins the auction sale of foreclosed property, the delinquent borrower offers to pay the outstanding debt and all costs incurred because of his default. In such a case,
the borrower may pay the judgment and reclaim his property under equitable rights of redemption.
Earnest money is provided when
the offer to purchase real estate is made.
A straight note for $13,400 was executed at 8% annual interest. If the borrower actually paid $3,752 in interest, how many months did he take to pay it off?
42
How does subdividing differ from real estate development?
A developer constructs improvements to the land; a subdivider separates it into sections.
Which of the following would be considered an exclusive listing agreement?
An exclusive right-to-lease agreement
what BEST shows the difference between an exclusive right to sell and either an open or an exclusive agency?
An exclusive right-to-sell guarantees the listing broker a commission if he/she procures a ready, willing and able buyer; exclusive agency and open listing do not provide the same protection.
How do you calculate the tax base of an area?
Assessed value - exemptions
If a broker deposits the buyer's earnest money in a trust account, at what time is the seller entitled to receive it?
At the time of settlement
Tina is a licensee who wishes to sell her own property. When advertising her property, what MUST Tina do?
Disclose the fact that she is a licensee
Which of the following is an example of involuntary alienation?
Having a piece of land sold for delinquent taxes
Under which circumstances may a licensed sales associate hold a concurrent license with more than 1 broker?
Under no circumstances
Which of the following deeds is the most commonly used in the United States?
Warranty
Rich put in writing that Rich would sell Mark a strip of land between the road and Mark's property line for $3.15 per square foot. Rich agreed to transfer the land in 6 months. The 6 months passed and Rich refused. Does Mark have any recourse?
Yes, anything in writing is enforcable.
An owner of a 12-unit apartment building lived in one of the apartments. The owner refused to rent to a person because of his national origin. Based on Federal Fair Housing Laws, does the person have a valid complaint?
Yes, because it was a 12-unit apartment building.
Ann Carr planted a rose garden on the corner of Mrs. Baird's property. Mrs. Baird was homebound and never left her house. Mrs. Baird never knew that Ann Carr had planted a rose garden on her property. The statutory period had elapsed and Ann Carr claimed the rose garden. Would Ann Carr have a good chance of getting rights to an easement by prescription?
Yes, because she had made open use of the property.
A buyer and seller entered into a contract for the sale of a house. The buyer applied for and was approved for a loan. At the last minute the seller backed out of the sale. Is the broker due a commission?
Yes, because the buyer was able to perform all of the requirements in the contract.
A property was listed for $100,000. A broker was showing the property to a buyer who wanted to offer $70,000. The broker told the buyer a shopping center would be built down the street within one year and, therefore, the property was worth $100,000. The buyer then purchased the property for $100,000. Five years later, the shopping center still was not built and the buyer was forced to sell the property for $65,000. Could the buyer recover any losses from anyone?
Yes, from the broker because of the misrepresentation about the building of the shopping center.
Which BEST characterizes the difference between zoning laws and building codes?
Zoning laws deal with use; building codes deal with building materials.
A woman bought a house and wanted to bring along her pet cougar to keep in the backyard. Which would most likely keep her from doing this?
Zoning ordinances, because often these contain which animals may be kept.
Some states also allow a licensee to act in a non-agency capacity. Depending on the state, the licensee could be known as all of the following except
a subagent.
Broker Conrad represents a party in a transaction where there is a dispute regarding $4,000 of deposited escrow money. What should Conrad do?
Hold the money until both parties (or their lawyers) provide a written release.
What are the two primary types of advertising utilized by real estate firms?
Institutional and product
When an agency agreement states, "Broker will receive the agreed upon compensation regardless of whether Broker, Client, or some other party locates the property ultimately purchased by Client", what kind of agreement is it?
It is an exclusive buyer-agency agreement.
Which of the following items would MOST likely be enforced by the forced sale of a property?
Judgement
Which of the following is NOT a type of listing contract?
MLS contract
Broker Nancy agrees to finance a condominium development since the developer agrees to give her the exclusive right to sell the finished condo units. The developer is not able to revoke the listing agreement. This is
agency coupled with an interest.
A metes and bounds legal description must
commence and finish at the same identifiable point.
Broker Sandra decides not to disclose to a buyer that the property's well is almost dry. Sandra has
committed passive fraud.
Which BEST describes the principle that a home maintains its highest value in a neighborhood with similar homes and similar type housing?
conformity
A land contract provides for the
conveyance of legal title at a future date.
Spence Construction Company built a hangar for an helicopter, which was kept on the owner's property. The owner did not pay for the hangar, so Spence filed a mechanic's lien on the helicopter. Was Spence Construction Company justified in doing this?
No, because a mechanic's lien can only be placed on the improvement.
A broker produces a supposedly ready, willing and able buyer. At closing, the seller is unable to provide marketable title to the property and the buyer cannot come up with the financing to purchase the home. Is the broker due a commission?
No, because he did not produce a ready, willing and able buyer.
A tenant agreed to lease a commercial space for $2,000 per month. The tenant needed a sign to advertise the business and requested that the owner provide a sign. The owner agreed to erect a sign but required in return that the tenant sign a 5-year lease and pay rent of $2,200 per month until the cost of the sign was recovered. At the termination of the lease, could the tenant be allowed to take possession of the sign?
No, because it was installed by the owner and therefore it is the owner's real property.
A metes and bounds description is given as follows: "A piece of property beginning at the cross section of highways 32 and 7, thence South 355 feet, thence West 280 feet, thence North 260 feet, thence East 315 feet." Is this a valid description?
No, it is imperfect, as it does not end at the point of beginning.
Dave is the sales associate for Anne who is trying to sell a property. Both agree that the property will be difficult to sell and because Anne is in no hurry they decide that the listing agreement should have an automatic extension of 6 months if the property has failed to sell in the initial listing period. Is this legal?
No, listing agreements must NOT have automatic continuation clauses and MUST have a fixed termination point.
Does Kentucky enter into reciprocal agreements with other states whose out-of-state licensees wish to obtain Kentucky licenses?
No, the Commission no longer enters into reciprocal agreements with other states for out-of-state licensees.
Which of the following duties is NOT applicable to both residential apartment managers and condominium managers?
Occupancy levels
A subdivision developer obtained a loan to purchase twenty lots. What type of clause might she/he be required to agree to in the security instrument (mortgage or deed of trust)?
Partial release
. An owner was constructing a building and was using second-hand materials. A building inspector checked the construction on numerous occasions; however, the construction continued. Which of the following would this accelerate?
Physical depreciation
Which of the following items would be LEAST important in a property management agreement?
Rental price of each unit
Which of the following liens is highest in priority?
Special assessment
In the event of a principal broker's death, what will be the Commission's actions towards the brokerage?
The Commission may allow 1 sales associate to complete any of the brokerage's existing business.
What is the principal federal statute that covers competition and is one of the most important pieces of antitrust legislation?
The Sherman Antitrust Act of 1890
Celia is a licensed broker representing a seller. A buyer makes a written offer which the seller accepts, but then the buyer changes his mind. What is Celia entitled to in this situation?
The transaction qualifies as a sale and Celia can expect to collect a commission.
Which of the following is true of discount points?
They are usually charged to improve the yield on a mortgage.
Which of the following items protects a lender from having the loan assumed by another party?
due on sale
The major intent of zoning regulations is to
ensure the health, safety and welfare of the community.
true or false---An unexecuted option creates certain rights to the use of the land by the optionee.
false
a blanket mortgage is
is a single loan for a number of properties
Which of the of the following is not an advantage of a business leasing commercial space?
lack of control over rent
A sale-leaseback converts a fee simple estate to a(n)
less than freehold estate.
The finance fee charged by the lender to make the loan is a(n)
loan origination fee
The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the
loan to value ratio
An agent wishes to purchase his principal's house. The laws of agency state that an agent
may not purchase the house in another person's name and later convey it to himself/herself without full disclosure.
A trust deed gives the lender a right to request that the trustee perform certain tasks in order to fulfill the terms of the trust. The trustee may take action in those circumstances because he holds
naked title
Jen just helped the Thompsons find a new home. After the contract was accepted, the Thompsons asked Jen to help them find a mortgage broker. Jen knows a broker who pays referral fees to real estate agents. Can she refer the Thompsons to that broker?
no
The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the
open-end mortgage
After the construction of a building over a railroad right of way, the trains can
operate as usual
Which of the following would NOT affect supply?
population
When the supply of a commodity decreases
prices and demand tend to rise.
The effort that brings about the desired result in a real estate sale is known as
procuring cause
An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a
purchase money mortgage.
An offeree has the right to
reject an offer
Which non-governmental organizations have their greatest investment in first mortgages on single family residences?
savings and loans
Property over which an easement runs in favor of another parcel of real estate is known as a
servient estate.
As an agent for the seller, a real estate broker can
solicit an offer to purchase the property from a prospective buyer.
If the buyer defaulted some time ago on a written contract to purchase a seller's real estate, the seller can still sue for damages if he is not prohibited from doing so by the
statute of limitations.
The severalty owner of a parcel of land sells it to a buyer. The buyer insists that the owner's wife join in signing the deed. The purpose of obtaining the wife's signature is to
terminate any rights the wife may have in the property.
Many states determine the order of water rights according to which users of the water hold a recorded beneficial use permit. This allocation of water rights is determined by
the doctrine of prior appropriation.
A lease agreement is signed by a lessee who is 17 years of age. Which of the following is true?
the lease agreement is voidable
If the amount realized at a sheriff's sale as part of a mortgage foreclosure is more than the amount of the indebtedness and expenses, then the excess belongs to
the mortgagor
A buyer purchased an option on a property. In this case
the optionee would lose the money paid if he does NOT exercise the option within the option time period.
When a tenant sublets all or any part of the premises rented under a written lease
the original lease is unaffected unless it contains a provision that prohibits such subletting.
Who cannot be an escrow agent?
the seller
. The formal Code of Ethics and Standards of Practice set forth by ________ calls for professionals to observe the "Golden Rule" and to conduct themselves and their real estate business in accordance with certain standards.
the united association of relators
A licensed salesperson was assisting a seller in establishing a listing price for the seller's home. Prior to giving the seller the information the salesperson had gathered, the seller told the salesperson what price the seller wanted to use to list the home. Which of the following statements BEST describes what the salesperson should suggest as a list price
within range of the most recent "asking" and "sold" comparables in view of the seller's urgency and market conditions.
Which is an example of ostensible agency?
The principal showed by his or her actions that the agent's actions were accepted.
Under which of the following circumstances is the broker due a commission?
The broker procures a buyer who can meet the seller's terms and conditions.
Which of the following is NOT required on the homepage of a real estate company's website?
The company's hours of business operation
In which of the following cases would an estoppel certificate be needed?
The holder of a mortgage loan sells it, and the buyer of that loan wants the mortgagor to acknowledge the full amount of the debt still owed.
The foremost consideration in the purchase of a home is its affordability. What is the second?
The location of the property
Tyler purchased a home and applied for a mortgage at Southgate Bank. The loan was made and payments were to be made on the 1st of each month. After making payments for three years, Tyler lost his job and could not make the payments. Which of the following statements is correct?
The mortgagee could file a court action to have the house sold to satisfy the debt
A salesperson, when doing a comparative market analysis (CMA), would be LEAST concerned with which of the following sets of information?
The original price the owner paid for the property
