Illinois Real Estate Licensee Practice Questions
In Illinois, when must escrow monies held by the broker be released from the escrow account? a) The next business day after consummation or written authorization of both parties b) Upon completion of the Settlement Statement (HUD-1) c) Within three business days after closing d) There is no required time period for releasing the money
a) The next business day after consummation or written authorization of both parties
Which of these best describes the primary purpose of the Real Estate License Act of 2000? a) To protect the public from unqualified or dishonest licensees b) To attract new people to the real estate profession c) To ensure an adequate number of real estate salespeople are available d) To raise revenue for the state through licensing fees
a) To protect the public from unqualified or dishonest licensees
Under the Real Estate License Act of 2000, a person who seeks or receives real estate brokerage services is a a) consumer. b) client. c) customer. d) third party.
a) consumer.
Title to property is transferred by a deed when the deed is a) delivered and accepted by the grantee. b) signed by the grantor. c) signed by the broker. d) recorded in the public records.
a) delivered and accepted by the grantee.
Compensation disclosure rules in Illinois include a) disclosing the sponsoring broker's compensation cooperation policy. b) informing the buyer that the seller always pays the commission. c) informing the general public by advertisement that commission is due on all transactions. d) paying a commission when earned to the agent who had the sale.
a) disclosing the sponsoring broker's compensation cooperation policy.
A person dies intestate with no will or heirs. The government may take possession of the property through its right of a) escheatment. b) eminent domain. c) descent. d) condemnation.
a) escheatment.
The deed that contains the most covenants or guarantees to the grantee is a a) general warranty deed. b) trust deed c) quitclaim deed. d) special warranty deed.
a) general warranty deed.
The owner of a property died and left a will written entirely in the owner's handwriting. This type of will is called a a) holographic will. b) nuncupative will. c) living will. d) formal will.
a) holographic will.
An appraiser estimating the value of a house with outmoded bathroom fixtures must take into consideration a) incurable physical deterioration. b) curable physical deterioration. c) external obsolescence. d) functional obsolescence.
a) incurable physical deterioration.
Both owners of cooperative apartments and owners of condominium units a) must pay assessments if levied. b) own real property. c) receive an annual real estate tax bill. d) own shares of stock.
a) must pay assessments if levied.
The amount of commission to be paid to the sponsoring broker by the client is determined by a) mutual agreement. b) the MLS. c) real estate licensing laws. d) court order.
a) mutual agreement.
A businessperson owns and operates a barbershop in an area that was recently annexed by a neighboring suburb. The area annexed was zoned as a single-family residence by the suburb, but the barbershop is allowed to continue operating. The allowance for the barbershop's continued operation is known as a) nonconforming use. b) spot zoning. c) variance. d) conditional use.
a) nonconforming use.
In Illinois, sponsored licensees may receive a commission a) only from their sponsoring broker. b) directly from the client. c) from a service provider used in the transaction d) from the seller or buyer.
a) only from their sponsoring broker.
The owner of a parcel of land holds an easement right over an adjoining parcel of land. The parcel of land on which the easement runs is called the a) servient tenement. b) dominant tenement. c) tenement in gross. d) condemnation tenement.
a) servient tenement.
A legal action started by one of the parties to a contract to force the other party to carry out the terms of the contract is called a) specific performance. b) injunction. c) lis pendens. d) contingency action.
a) specific performance.
An unmarried couple wants to buy a house and take title so that when one of them dies the deceased's share will go to the deceased's heirs. The form of ownership they should use when they purchase the house is a) tenancy in common. b) joint tenancy. c) community property d) tenancy by the entirety.
a) tenancy in common.
The law that requires finance charges to be stated as an annual percentage rate is called a) the Truth in Lending Act. b) an usury law. c) the Real Estate Settlement Procedures Act. d) the Equal Credit Opportunity Act.
a) the Truth in Lending Act.
The number of discount points charged by the lender to the buyer in a real estate transaction is set by a) the lender. b) government regulations. c) federal usury laws. d) the FHA.
a) the lender.
A property sold for $320,000 and the salesperson was entitled to 60% of the total commission. If the commission was 6% of the selling price, how much did the salesperson earn? a) $7,488 b) $11,520 c) $18,720 d) $187,200
b) $11,520
What is the amount of real estate tax due on a condominium with a market value of $280,000 if it is assessed at 30% of market value, has an equalizer of 1.5, and a tax rate of $5 per $100 of assessed value? a) $4,200 b) $6,300 c) $14,000 d) $21,000
b) $6,300
An investor purchased a building for $360,000 by paying 10% down and financing the rest of the purchase price. The lender charged two points as a loan origination fee. How much was the investor charged for the fee? a) $792 b) $6,480 c) $7,920 d) $67,440
b) $6,480
In Illinois, how much time does a lender have to deliver a release or satisfaction document to the borrower after full payment of the loan? a) 14 days b) 30 days c) 60 days d) 120 days
b) 30 days
If a property is valued at $450,000 and has annual net income of $36,000, what is the capitalization rate? a) 6.6% b) 8% c) 9% d) 12.5%
b) 8%
Which of these is a requirement for a valid deed in Illinois? a) A description of how the broker's commission is to be determined b) A granting clause c) Recording of the deed in the public records d) Notarization of the deed
b) A granting clause
Which activity requires a real estate license? a) An executor selling a decedent's building b) A service that, for a fee, matches individuals from different parts of the state who want to exchange properties c) A MLS providing listing information to participants d) A resident manager who collects rent on behalf of a building owner
b) A service that, for a fee, matches individuals from different parts of the state who want to exchange properties
Which of these can typically be determined by a survey of the property? a) An easement in gross b) An encroachment c) An easement appurtenant d) A mechanic's lien
b) An encroachment
In Illinois, managing broker licenses are renewed every two years by a) April 30 in even-numbered years. b) April 30 in odd-numbered years. c) July 31 in even-numbered years. d) July 31 in odd-numbered years.
b) April 30 in odd-numbered years.
Which of these is exempt from licensing under the Real Estate License Act of 2000? a) Individuals who open real estate to the public for marketing and selling purposes b) Attorneys-in-fact acting under power of attorney c) Persons who, for compensation, agree to collect rent for the use of real estate d) Individuals who negotiate the exchange of property
b) Attorneys-in-fact acting under power of attorney
Which government agency is involved in regulating the country's money supply? a) Federal Housing Administration b) Federal Reserve System c) Government National Mortgage Association d) Federal National Mortgage Association
b) Federal Reserve System
What kind of a lien is created as a result of a judgment, estate or inheritance taxes, the decedent's debts, or unpaid federal income taxes? a) Specific b) General c) Voluntary d) Equitable
b) General
Complaints pertaining to the Illinois Human Rights Act may be filed with the a) Real Estate Administration Board. b) Human Rights Commission. c) Real Estate Advisory Council. d) federal circuit court.
b) Human Rights Commission.
What environmental hazard is a product of the natural decay of radioactive substances found in the ground? a) Lead b) Radon c) Asbestos d) Carbon monoxide
b) Radon
A broker who has a listing contract to sell an owner's house is what type of agent? a) Universal b) Special c) General d) Dual
b) Special
Which of these is a licensing requirement for an Illinois broker's license? a) Licensed at least two out of the preceding three years as a real estate broker or salesperson b) Successfully complete 75 hours of instruction at an approved real estate school c) Successfully complete 30 hours of situational activities and case studies at an approved real estate school d) Successfully complete a four-year course of study in college
b) Successfully complete 75 hours of instruction at an approved real estate school
A brother and sister own a parcel of real estate as joint tenants. The brother sells his interest in the property to a cousin. What is the relationship between the sister and the cousin? a) The sister and cousin are joint tenants. b) The sister and cousin are tenants in common. c) The sister and cousin are tenants by the entirety. d) The brother and sister are still joint tenants since the brother would be prohibited from selling his interest.
b) The sister and cousin are tenants in common.
Under the TILA, a lender is required to provide an applicant for a real estate loan with a copy of a) a deed. b) a loan estimate disclosure. c) a closing statement. d) an amortization schedule.
b) a loan estimate disclosure.
A broker and seller enter into a listing agreement. Under the terms of the listing, the seller will receive $195,000 from the sale with any sales proceeds over that amount going to the broker. This type of listing is called a) an open listing. b) a net listing. c) a multiple listing. d) a gross listing.
b) a net listing.
In Illinois, if real estate taxes are not paid by the due dates, a) a penalty of 1.5% per month is added to any unpaid amount. b) a penalty of 2% per month is added to any unpaid amount. c) the owner is subject to a fine of $250. d) the owner is subject to a fine of $500.
b) a penalty of 2% per month is added to any unpaid amount.
A homeowner wishes to make an improvement to the property that does not comply with the local zoning ordinances. The property owner should request a) a nonconforming use. b) a variance. c) condemnation proceedings. d) an amendment.
b) a variance.
The clause in a mortgage requiring the loan to be paid in full if the property is sold is called a) an acceleration clause. b) an alienation clause. c) a habendum clause d) a defeasance clause.
b) an alienation clause.
A borrower has a mortgage loan that requires monthly payments of $1,200 for 10 years and a final payment of $42,257. This type of loan is best described as a a) reverse annuity loan. b) balloon loan. c) graduated payment loan. d) blanket loan.
b) balloon loan.
The buyer in a real estate transaction records the documents affecting his or her title and interest in the real estate to legally provide a) actual notice. b) constructive notice. c) legal notice. d) authorized notice.
b) constructive notice.
Repairing a faulty air conditioning unit is considered a) routine maintenance. b) corrective maintenance. c) preventive maintenance. d) construction maintenance.
b) corrective maintenance.
In performing an appraisal of real estate, the appraiser a) determines the property's final selling price. b) estimates the property's market value. c) establishes the cost basis of the property. d) sets the assessed value of the property.
b) estimates the property's market value.
An Illinois real estate licensee who is engaged as an independent contractor a) is considered an employee by the IRS for tax purposes. b) must have a written independent contractor agreement with the sponsoring broker. c) may work as an independent contractor for multiple brokers. d) must be covered by workers' compensation.
b) must have a written independent contractor agreement with the sponsoring broker.
A homebuyer obtains a loan to finance the purchase of the house as well as personal property. This type of loan is called a a) wraparound loan. b) package loan. c) blanket loan. d) term loan.
b) package loan.
A couple purchased a house for $350,000, making a down payment of $100,000. The buyers get a new mortgage of $230,000 from a lender and financed the remaining $20,000 through a mortgage given to them by the seller. The $20,000 mortgage is called a a) wraparound mortgage. b) purchase money mortgage. c) blanket mortgage. d) balloon mortgage.
b) purchase money mortgage.
In determining a property's value when using the income approach, an appraiser uses a capitalization rate. The rate represents the a) expected annual increase in the property's value. b) rate of return the owner could expect from the property. c) rate used by the insurance company to calculate the insurance premium on the property. d) rate that would most likely be used to determine the property's real estate taxes.
b) rate of return the owner could expect from the property.
A broker representing the seller would be violating the license act regarding property disclosure if the broker a) does not disclose that a known sex offender resides near a listed home. b) does not disclose to the buyer that the occupant of the property is afflicted with HIV. c) discloses to the buyer latent material defects in the property of which the broker is aware. d) counsels the seller not to tell the broker of any latent defects since the broker will have to disclose them to buyers, making the sale more difficult.
d) counsels the seller not to tell the broker of any latent defects since the broker will have to disclose them to buyers, making the sale more difficult.
The sale of a single-family home by the owner is exempt from the Illinois Human Rights Act if the owner a) used discriminatory advertising in marketing the property. b) used the assistance of a broker in selling the home. c) discriminates based on race. d) does not own more than three single-family homes at one time.
d) does not own more than three single-family homes at one time.
Advertising by a sponsored licensee in Illinois must a) include the name of the sponsored licensee's branch manager. b) include the sponsored licensee's name in a specific print size. c) provide a business email address where sponsored licensee can be reached. d) include the name of the sponsoring broker's business in a larger font size.
d) include the name of the sponsoring broker's business in a larger font size.
According to the Illinois descent and distribution law, if an individual dies without a valid will and leaves a spouse and a child, the deceased's real estate a) goes entirely to the wife. b) goes entirely to the child. c) is split between the wife and child; two-thirds go to the wife and one-third to the child. d) is split between the wife and child; one-half goes to the wife and one-half to the child.
d) is split between the wife and child; one-half goes to the wife and one-half to the child.
When a sponsoring broker's real estate license is suspended or revoked, the licensees working for the broker a) lose their licenses. b) may continue their selling activities. c) must obtain their own managing broker's licenses. d) must stop listing and selling property.
d) must stop listing and selling property.
If a tenant pays a fixed amount of rent plus all the property's expenses, the tenant's lease is known as a a) graduated lease. b) percentage lease. c) gross lease. d) net lease.
d) net lease.
At the closing for the sale of a home, the lender requires the buyer to place a sum of money into an escrow account. The purpose of this money is most likely for a) title insurance fees. b) loan processing fees. c) discount points. d) payment of future real estate taxes or property insurance.
d) payment of future real estate taxes or property insurance.
In a real estate closing, the buyer would most likely pay for the a) listing broker's sale commission. b) release of the seller's existing mortgage. c) preparation of the deed. d) recording of the new mortgage lien and deed.
d) recording of the new mortgage lien and deed.
A homeowner has made the final mortgage loan payment to the bank. To ensure the bank's mortgage lien has been released, the homeowner should get a a) mortgage novation. b) mortgage rider. c) lis pendens. d) satisfaction of mortgage.
d) satisfaction of mortgage.
To be a valid deed in Illinois, the deed must be signed by a) a public notary. b) the grantee. c) two witnesses. d) the grantor.
d) the grantor.
What is the cost of installing a fence around a rectangular shaped lot if the cost of the fence is $3.25 per linear foot and the lot is 80 ft. wide and 120 ft. deep? a) $105 b) $325 c) $1,300 d) $15,600
c) $1,300
A property owner in Illinois is entitled to a homestead estate in their principal residence up to a value of a) $5,000 per head of household. b) $10,000 per head of household. c) $15,000 per head of household. d) $100,000 in total.
c) $15,000 per head of household.
A real estate broker earned a sales commission of $13,440, which was a rate of 6%. What was the selling price of the property? a) $71,489 b) $79,787 c) $224,000 d) $125,000
c) $224,000
A property has a monthly net income of $3,600 and an expected rate of return of 9%. What is the value of the property using the income approach? a) $40,000 b) $43,200 c) $480,000 d) $4,800,000
c) $480,000
In Illinois, a person wishing to obtain an easement by prescription must use the property continuously for a) 2 years. b) 7 years. c) 20 years. d) 30 years.
c) 20 years.
Residential property in all Illinois counties except Cook County is assessed at what percent of fair market value? a) 10% b) 26% c) 33.33% d) 40%
c) 33.33%
A rectangular parcel of land is 260 feet deep and 50 yards wide. How many square feet does it contain? a) 13,000 sq. ft. b) 36,400 sq. ft. c) 39,000 sq. ft. d) 52,000 sq. ft.
c) 39,000 sq. ft.
Which of these situations would be considered a dual agency? a) A broker representing the seller but also cooperating with a broker acting for the buyer b) Brokers from two offices splitting a sales commission c) A broker acting for both the buyer and seller in the same transaction d) A licensee and his or her employing broker splitting the commission
c) A broker acting for both the buyer and seller in the same transaction
The act that establishes requirements for those who send commercial email is called the a) Do Not Call Act. b) No Solicitation Act. c) CAN-SPAM Act. d) Telecommunications Act.
c) CAN-SPAM Act.
An appraiser would use accrued depreciation in which of the approaches to estimating value? a) Income approach b) Sales comparison approach c) Cost approach d) Gross income multiplier approach
c) Cost approach
A tenant negotiated a net lease with a property owner. Under the terms of the lease, the tenant would probably be responsible for paying which of these expenses? a) Mortgage expense b) Property owner's income taxes c) Maintenance expense d) Depreciation expense
c) Maintenance expense
The owners of a shopping center negotiating a lease with a department store wish to base the rent on payments based on the store's sales. What type of lease should the owners use? a) Net lease b) Ground lease c) Percentage lease d) Gross lease
c) Percentage lease
Which of these deeds should the grantor use to transfer title without providing any warranties to the grantee? a) General warranty deed b) Special warranty deed c) Quitclaim deed d) Grant bargain and sale deed
c) Quitclaim deed
A property buyer obtains a term loan to finance the purchase of the property. Which of these is TRUE regarding the buyer's loan? a) The loan payments include both interest and principal. b) All of the interest is paid at the end of the loan period. c) The entire loan principal is due at the end of the loan period. d) The balance will be amortized over the life of the loan.
c) The entire loan principal is due at the end of the loan period.
A sister and brother bought a house, taking title as tenants in common. If the brother dies, which of these is TRUE about ownership of the house? a) The sister owns the property in severalty. b) The sister holds a life estate in the brother's share of the property. c) The sister continues to hold her original interest, and the brother's interest goes to the brother's heirs. d) The sister holds fee simple ownership in the brother's share of the property.
c) The sister continues to hold her original interest, and the brother's interest goes to the brother's heirs.
In Illinois, before a real estate license can be suspended or revoked, the licensee is entitled to a) a hearing in the local federal court. b) an arbitration hearing. c) a hearing before the disciplinary board. d) representation by the state's attorneys in court.
c) a hearing before the disciplinary board.
A fee simple holder of a parcel of real estate grants a life estate to his son and stipulates that upon the son's death the property will pass to his grandson. The grandson's interest in the property is called a) an estate at sufferance. b) a legal life estate. c) a remainder estate. d) a reversionary estate.
c) a remainder estate.
A buyer purchases a home under an installment sales contract. Until the buyer has completed making payments to the seller, the buyer a) is not responsible for the property's real estate taxes. b) has actual title to the property. c) has an equitable ownership interest in the property. d) cannot occupy the property.
c) has an equitable ownership interest in the property.
A lease agreement contains a clause that gives the tenant the right to purchase the property at a specified price. This type of agreement is called a a) subordination. b) contingency clause. c) lease with option to buy. d) percentage lease.
c) lease with option to buy.
On Wednesday, a property seller offers to sell his house to a potential buyer for $320,000. On Sunday, the buyer makes a counteroffer of $310,000. On Friday, the buyer withdraws the counteroffer of $310,000 and accepts the seller's offer of $320,000. In this situation there is a) no valid agreement because the seller's offer was accepted too late. b) no valid agreement because the buyer's offer was made on a Sunday. c) no valid agreement because the buyer's counteroffer ended the seller's offer. d) a valid agreement since the buyer accepted the terms of the seller's original offer.
c) no valid agreement because the buyer's counteroffer ended the seller's offer.
An attorney reviewing the deed in a real estate transaction noted a number of limitations regarding its use. These limitations are commonly called a) codicils. b) building codes. c) restrictive covenants. d) eminent domain.
c) restrictive covenants.
If the sole owner of a property with a fee simple absolute ownership interest dies and leaves no will, the owner's title passes in accordance with the a) laws of descent and distribution. b) laws of escheat c) right of survivorship. d) recording laws.
c) right of survivorship.
The final decision on the listing price for a property is made by the a) listing broker b) sponsoring broker c) seller d) appraiser
c) seller
A requirement for obtaining title to property under the concept of adverse possession is that a) the possession must be with the owner's consent. b) use of the property must be hidden. c) the party must take possession continuously for a time period prescribed by law. d) the party taking possession must compensate the owner.
c) the party must take possession continuously for a time period prescribed by law.
One general rule of the federal do-not-call regulations is a) real estate offices are exempt from the laws. b) the national registry must be updated once a year. c) unsolicited phone calls are prohibited to a number listed on the national registry. d) states must maintain separate do-not-call lists.
c) unsolicited phone calls are prohibited to a number listed on the national registry.
The clause in a mortgage that gives the lender the right to consider the entire balance due if there is a default in any payment is called a) a prepayment penalty clause. b) an alienation clause. c) a defeasance clause. d) an acceleration clause.
d) an acceleration clause.
Brokers should deposit all earnest money checks they receive into an escrow account to prevent being accused of a) antitrust violation. b) fraud. c) misrepresentation. d) commingling.
d) commingling.
If a property is valued at $160,000 and the lender is willing to make a loan of 80% of the loan-to-value ratio, what is the loan amount? a) $128,000 b) $160,000 c) $180,000 d) $220,000
a) $128,000
A real estate buyer also wishes to purchase the seller's lawn mower. Which of these documents would be prepared to accomplish this? a) A bill of sale b) An option c) A blanket loan d) An installment contract
a) A bill of sale
What is the difference between a specific lien and general lien? a) A general lien covers all of a debtor's property, while a specific lien covers a specific property. b) A specific lien is held by one party, while a general lien can be held by several parties. c) A general lien is against only personal property, while a specific lien is against real property. d) There is no difference between a specific and a general lien.
a) A general lien covers all of a debtor's property, while a specific lien covers a specific property.
Which of these is an encroachment? a) A property owner's fence that extends over the property line between the owner's property and the adjoining property b) An access road that runs across a property from a public road c) A right-of-way for high voltage electric lines that cross a property d) A tenant's car parked on the lessor's property
a) A property owner's fence that extends over the property line between the owner's property and the adjoining property
A seller has a listing agreement with a real estate company. A second real estate company brings a buyer for the house. If the seller owes a commission to the second real estate company who brought the buyer and not the first company, what type of listing agreement must the seller have had with the first company? a) An open listing b) A net listing c) An exclusive-right-to-sell listing d) An exclusive agency listing
a) An open listing
What BEST describes the agreement between an owner and a developer who leases the property from the owner with the intention of constructing an office building on the property? a) Ground leasehold b) Sale and leaseback c) Lease option d) Land contract
a) Ground leasehold
A property sold for $120,000 and the broker earned a 51/2% commission on the sale. What was the amount of the commission? a) $660 b) $6,000 c) $6,240 d) $6,600
d) $6,600
The Real Estate License Act of 2000 is administered by the a) Commissioner of Banks and Real Estate. b) Real Estate Disciplinary Board. c) Real Estate Advisory Council. d) Illinois Department of Financial and Professional Regulation.
d) Illinois Department of Financial and Professional Regulation.
When acting as a dual agent, what information can a licensee provide without the permission of the client? a) Price the buyer is willing to pay b) Confidential information the licensee may know about a client c) Price the seller will accept other than the listing price d) Information about comparable properties that have sold
d) Information about comparable properties that have sold
Which of these activities would a real estate company be allowed to perform under the antitrust laws? a) Agreeing with other real estate companies in the area on a standard commission schedule b) Agreeing with other real estate companies in the area to divide the market based on the location of their offices c) Agreeing with other real estate companies in the area to divide the market based on the value of homes d) Licensees in a real estate office dividing the area among themselves for soliciting listings
d) Licensees in a real estate office dividing the area among themselves for soliciting listings
Which of these statements applies to a corporation that wants to receive a broker's license? a) Every officer must hold a broker's license, even if not actively practicing. b) No more than 50% of the shares of stock in the corporation can be held by individuals with broker licenses. c) The corporation's broker's license expires October 31 in even-numbered years. d) The corporation must employ a designated managing broker.
d) The corporation must employ a designated managing broker.
A property manager's compensation is typically based on a) a rate set by the MLS. b) average fees in the area. c) a percentage of the operating expenses. d) a flat fee.
d) a flat fee.
The continued use of a property that was lawful at the time the use began but now is in violation of a zoning regulation is an example of a) an amendment. b) a variance. c) an exclusion. d) a nonconforming use.
d) a nonconforming use.
Hostile, open, adverse, and continuous use of another person's land for a prescribed period of time is called a) escheat. b) voluntary alienation. c) eminent domain. d) adverse possession.
d) adverse possession.
The amount of the earnest money deposit in a real estate sales contract is determined by a) agreement between the seller and the broker. b) the local multiple listing service. c) the listing broker's office policy. d) agreement between the buyer and seller.
d) agreement between the buyer and seller.
