National Exam (PSI)

Which of the following statements is true regarding timeshare estates? A. Timeshare estates are illegal. B. Timeshare estates can be sold or passed down to heirs. C. Timeshare estates cannot be passed down to heirs. D. Timeshare estates cannot be sold.

B. Timeshare estates can be sold or passed down to heirs. Like other forms of fee simple ownership, timeshare estates can be sold or passed down to heirs.

When does a transfer tax become a payable? A. 30 days after recording of the deed B. Upon recording of the deed C. When an offer to buy is made D. When the inspection report is complete

B. Upon recording of the deed The transfer tax is payable upon recording of the deed.

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

1. $1,145.83 ($250,000 x 0.055) / 12 = $1,145.83

Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have? A. $105,000 B. $155,000 C. $205,000 D. $230,000

A. $105,000 Gabi's home value has risen $30,000 in the eight years since she bought it ($200,000 x .15). That brings her home's market value to $230,000. She owes $125,000, which brings her equity amount to $105,000 ($230,000 - $125,000).

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

A. $208,000 A 60% LTVR means that Heather is financing 60% of her purchase and putting down 40%. Forty percent of $520,000 is %208,000 (520,000 x 0.40).

Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she's going to pay on her loan? A. $10,170 B. $16,950 C. 4,520 D. 6,780

A. $10,170 A point is 1% of the loan amount. Faye's loan amount is 60% of the sales price, or $339,000 ($565,000 x 0.60). Her lender is charging three points total, or 3% of the loan amount. That comes out to $10,170 ($339,000 x 0.03).

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

A. A minimum down payment of 3.5% is required Borrowers with an FHA loan must pay a minimum down payment of 3.5% and have MIP. Prive mortgage insurance (PMI) applies only to conventional loans.

Frontage (or front foot) refers to what? A. A property's boundary line that's adjacent to a road or waterway B. A property's cost per foot C. A property's depth (from the front to the rear) D. The property's perimeter

A. A property's boundary line that's adjacent to a road or waterway A frontage or front foot refers to a property's boundary line that's adjacent to a street, road, or waterway.

Eric didn't have direct access to the small lake in his subdivision; he had an easement arranged with his neighbor. Ten months ago, the developer built a public access road to the lake, so Eric stopped using the easement. What type of easement termination is this? A. Abandonment B. Express C. Merger D. Necessity

A. Abandonment Easement abandonment is when the dominant estate owner takes action that shows a clear intent to stop using the easement.

What's it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer? A. Acceptance B. Binding acceptance C. Contract closing D. Exercise of an option

A. Acceptance Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.

Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make 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

A. Accepting partial performance In this example, Drake accepted partial performance as a means of remedying the breach of contract.

What does the Federal Trade Commission consider to be an unfair ad? A. Any ad or business practice that causes or is likely to cause injury B. Any ad that is likely to mislead consumers acting reasonably under the circumstances C. Any ad that makes a health claim D. Any ad with a claim that's difficult to evaluate

A. Any ad or business practice that causes or is likely to cause injury Any ad or business practice that causes or is likely to cause injury is considered an unfair ad, according to the FTC's Unfairness Policy Statement.

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.

A. Both easements and encroachments affect the property's lot size, enjoyment, and use, which can affect a property's value. A property's enjoyment and use can be impacted by easements or encroachments

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

A. Civil Rights Act of 1866 Unique among anti-discrimination law, the Civil Rights Act of 1866 recognized all U.S.-born persons as citizens and allowed no exceptions for discrimination based on race or color.

Philip owns land in a state where growing marijuana is illegal. He wants to set up a small marijuana growing operation and export to states where marijuana has been legalized. He asks his attorney about the possibility. "No," his attorney explains. "It's not possible. Although you own the property outright, the right of ________ only allows you to manage the property. In ways that are legal in this jurisdiction. A. Control B. Disposition C. Exclusion D. Possession

A. Control The right of control allows owner Philip to manage the property in any way he sees fit as long as the enterprise is legal in the given jurisdiction. Other regulations, such as H.O.A. regulations, may also apply.

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)

A. Conventional Conventional loans aren't insured or guaranteed by federal government agencies.

Which one of these is an example of the doctrine of estoppel? A. Corrie shows Marvin several properties and prepares CMAs for each. She assists him in making an offer on one. He becomes difficult to work with, and she then says she's not his agent because they don't have a signed agency agreement. B. Josie represents Carmine in his search for a rural property. Josie shoes Carmine a property that's perfect, but she never hears from Carmine again. She then discovers that Carmine bought the property directly from the seller. C. Roark tells all his buddies at coffee that he's getting $600 a month rent out of his old barn. His best friend just shakes his head, knowing that Roark is only getting half that amount. D. Tonya tells Kinsey that she's a licensed agent and proceeds to represent Kinsey as a buyer's agent. Kinsey later discovers that Tonya isn't licensed.

A. Corrie shows Marvin several properties and prepares CMAs for each. She assists him in making an offer on one. He becomes difficult to work with, and she then says she's not his agent because they don't have a signed agency agreement. The doctrine of estoppel prevents individuals from making an assertion or claim, even by actions or behavior, and later denying it.

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

A. Cost Approach The cost approach to finding appraised value measures value as a cost of production, including acquisition of the land and the construction costs.

Which one of the following actions is a licensee required to take as a fiduciary duties? A. Disclose personal interest and licensed status when buying personal property. B. Indemnify seller clients from damages from failing to disclose a material defect. C. Provide advice to clients regarding how to take title to their property. D. Reimburse the state's recovery fund for damages paid out on her behalf.

A. Disclose personal interest and licensed status when buying personal property. The fiduciary duty of disclosure requires that licensees disclose any conflict of interest.

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 fall 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.

A. Discuss the issue with your clients and let them decide. This is a time when you need to have a talk with your clients, explain the situation, then let them decide.

Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal? A. Document health and safety issues that may affect both the cost and enjoyment of the home. B. Estimate how much cosmetic upgrades may cost the buyers. C. Verify lot lines and acreage calculations. D. Verify the presence of any easements or encroachment on the property.

A. Document health and safety issues that may affect both the cost and enjoyment of the home. Inspectors will seek to uncover any safety or health hazards on a property during a home inspection, as well as defects that could jeopardize a structure's integrity, such as moisture or pest intrusion.

Shannon is reading through paperwork related to her upcoming home purchase, and she comes across the following: 'Southwest quarter of Southwest quarter (SW 1/4 of SW 1/4) and West Half of Southeast quarter of Southwest quarter (W 1/2 SE 1/4 SW 1/4) 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

A. Legal description This is a legal description, which provides a more complete description of a property than a street or postal address. This particular legal description uses the rectangular government survey system.

Which of the following is an example of commingling? A. Mixing earnest money with personal funds B. Mixing two earnest money deposits C. Paying licensee bonuses from forfeited escrow deposits D. Using escrow funds to pay business expenses

A. Mixing earnest money with personal funds Commingling occurs when escrow funds, such as earnest money, are mixed with personal funds.

Your clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. How much would their principal and interest payment be per month? Plug in the numbers using the amortization chart in your resources see what the payment per month would be. Remember: The monthly payment multiplier is per $1,000 of the mortgage. A. $1,001.32 B. $1,073.64 C. $1,296.21 D. $1,347.91

B. $1,073.64 The estimated payment is $1,073.64. Remember to divide $200,000 by $1,000 then multiply the factor (5.36822) by 200

Michael paid $385,000 for his home, which now has an assessed value of $392,000. His tax rate is 0.51%. How much with his monthly taxes be? A. $163.62 B. $166.60 C. $186.52 D. $297.50

B. $166.60 Annual property tax amount = assessed value x tax rate. Multiply $392,000 x 0.51% (or .0051) for a total of $1,999.20. Then, to find the monthly property tax amount, divide $1,999.20 by 12 (months in a year) = $166.60.

Seller Adelaide and buyer Collin 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

B. $2,064.48 In many states, the seller is considered the property owner on closing date. Divide the monthly income by the days in March ($4,000 / 31 = $129.03) for daily rent, then multiply that by the 16 days Colin will own the property for the total of $2,064.48

Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment? A. $35,025 B. $54,150 C. $57,000 D. 62,100

B. $54,150 Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750). Her total down payment is 20% of her accepted offer of $270,750, which is %54,150 (or $270,750 x .2).

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

B. $720 $80,000 x .9 = $72,000 (loan amount), and 1% of $72,000 = $720

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio? A. 72% B. 75% C. 82% D. 96%

B. 75% Lenders use the lesser of the sales price of appraised value. This results in an LTV ratio of 75% ($300,000 / $400,000)

Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions? A. A mechanic's lien recorded by A1 Siding and Windows B. A verbal lease agreement Martha has with her neighbor who leases Martha's garage C. Last year's unpaid property taxes D. The current year's unpaid property taxes

B. A verbal lease agreement Martha has with her neighbor who leases Martha's garage The title policy doesn't exclude property taxes (assuming they're property recorded), though the taxes must be paid before the policy is issued. The verbal lease agreement is excluded since it's not shown in public records.

Rennie owns a 240-foot by 130-foot lot. How do you calculate the perimeter? A. Add the length and width and divide by two B. Add two times the length to two times the width. C. Multiply 240 by 130 D. Multiply 240 by 130, then multiply by two

B. Add two times the length to two times the width The perimeter equals the sum of the lengths of each side of the shape (240 x 2) + (130 x 2)

The property management ________ cements the agency relationship between the property manager and the owner. A. Addendum B. Agreement C. Lease D. Waiver

B. Agreement Like other agency agreements, the property management agreement details the terms of 'employment' between the property manager (agent) and the owner (client).

Which of the following is an 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, with one agent representing the buyer and the other representing the seller.

B. An agent from one firm acts as the agent for the buyer. The only time single agency exists is when one agent and one firm represent one side of the transaction.

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

B. Comparables When sizing up the competition to the subject in the marketplace, comparable properties must be selected and compared both qualitatively and quantitatively.

Which of these helps a license determine an appropriate listing price range? A. Appraisal B. Comparative market analysis C. Creative market analysis D. Proforma

B. Comparative market analysis A comparative market analysis (CMA) helps determine the price at which to market a property.

Shemar owns a starter home a few miles outside of the city center, and he wants to deed it to his grandson, Tyler. According to the paperwork Shemar had drawn up. Tyler will own the property as long as he continues to pay the property taxes on time. After the second missed property tax payment, ownership would revert to Shemar. What did Shemar place on the deed? A. CC&Rs B. Deed condition C. Deed covenant D. Deed limitation

B. Deed condition A condition grants ownership with a requirement placed on the new owner using specific language in the deed. If the condition is violated, the current owner may lose the property.

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

B. Everything that's not real property Personal property is everything that's not real property

Which entity services rural development loans? A. FNMA B. FSA C. GNMA D. HUD

B. FSA The Farm Service Agency, an agency of the USDA, administers this program.

Roxanne just finished making a buyer presentation to Fred and Regina Jones. Now that they understand the difference between being customers and being clients, they're anxious to be represented. What is one of Roxanne's duties to them as their buyer's agent? A. Ensuring that she earns a commission B. Finding properties to show to Fred and Regina C. Notifying the Jones family of any material changes. D. Sharing their motivations and pricing strategies with seller's agents.

B. Finding properties to show to Fred and Regina. Under a buyer rep agreement, the agent's duties include showing properties, assisting in negotiations and providing guidance.

Which of the following duties are owed to customers and other parties to a real estate transaction? A. Fairness and loyalty B. Honestly and fairness C. Honesty and obedience D. Obedience and loyalty

B. Honestly and fairness Customers and other parties are owed the duties of honestly and fairness. Licensees must also disclose all material facts to these parties.

Why is proof of ownership required when transferring real property? A. It places the new owner's name on the deed. B. It provides evidence that the title is marketable. C. It provides proof that property taxes have been paid for the property. D. It verifies the property address.

B. It provides evidence that the title is marketable. Proof of ownership is required to ensure that the title is marketable.

Carlton listed his property with an agreement end date of August 31. The property went under contract on May 12 and closed on July 2. When did Carlton's listing agreement officially terminate? A. August 31 B. July 2 C. May 12 D. Upon revocation by the agent

B. July 2 The listing agreement officially terminated on July 2, the date the transaction closed and was complete.

Which type of agent is an escrow officer? A. General agent B. Limited agent C. Single agent D. Universal agent

B. Limited agent An escrow officer works in limited agency capacity.

Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence? A. Listing a multi-million-dollar residence in the city's exclusive lakeshore estates. B. Listing a property in the main part of the city that she'll marker as a fixer-upper. C. Working with a buyer client to purchase a condo. D. Working with an investor who intends to purchase a rental property.

B. Listing a property in the main part of the city that she'll market as a fixer-upper. Listing a fixer-upper doesn't pose any variations that would cause it to be outside Annabelle's scope of expertise. Each of the other situations could require Annabelle to seek assistance from her broker or another expert in her firm.

Robert is the general contractor for a home being constructed in a new development. The foundation has been poured, and he's working with the homeowners to make some decisions that weren't identified in the blueprints he's working from. Which of the following details will be guided by local building codes? A. Material used for shingles B. Number and type of electrical breakers C. Number and type of windows per square foot D. Placement of gas range in the kitchen

B. Number and type of electrical breakers Electrical safety standards are typically a component of building codes in almost any location.

Duke's client has asked him for advice on a legal matter. Based on the duty of reasonable skill and care, what should Duke do? A. Give the client the best advice he can based on personal experience. B. Refer his client to an attorney. C. Research the question online and give his client advice based on what he finds. D. Talk to an attorney and relay the information to his client.

B. Refer his client to an attorney. Because agents should never operate outside of their scope of expertise, they should refer clients and customers to a competent professional when asked for advice on matters that aren't related to real estate.

Chris is in the process of purchasing a property with 20 acres of farmland in a rural area of the state. Assuming his income meets the criteria of the program, what type of loan may Chris find the most desirable? A. Growing equity mortgage B. Rural development loan C. VA-guaranteed loan D. Wrap-around mortgage

B. Rural development loan Rural development loans are government loans specifically for family farms and to help finance housing in rural areas through the Farm Service Agency, an agency of the USDA.

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.

B. She discloses the terms of the listing agent's compensation to her trust. The fiduciary duty of accounting means that the licensee properly handles all funds, paperwork, and property.

Jerry and Simon signed a contract so that Jerry could purchase all of Simon's restaurant equipment for one price after Simon closes his restaurant next month. The contract contains a provision that states Jerry has one year from the purchase date to file a suit relative to the purchase. After the year is up, Jerry forfeits the right. What kind of contract clause is this? A. Specific time B. Statute of limitations C. Time is of the essence D. Time of performance

B. Statute of limitations The statute of limitations states the time frame in which a party can file a lawsuit relative to the contract.

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

B. The client and agent mutually agree to terminate the listing. Mutual agreement to terminate a listing typically doesn't result in any penalty to either party.

Which of the following is an example of easement termination by merger? A. The dominant estate owner takes action that shows a clear intent to stop using the easement. B. The owner of a servient estate buys the property of the dominant estate. C. The owner of the dominant state has an alternate route and no longer needs the easement. D. The owners of both estates descide not to use the easement

B. The owner of a servient estate buys the property of the dominant estate. An example of a merger that terminates the need for an easement is when the owner of a servient estate buys the property of the dominant estate, thereby making the easement unnecessary

Bob and Mary are financing $180,500 for a new home. Their lender will approve an interest rate of 5% if Bob and Mary pay two discount points at closing. How much will this cost them? A. $180.50 B. $32,000 C. $3,610 D. $9,025

C. $3,610 A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610

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

C. $608,292.40 First, multiply the monthly payment by the total number of payments. Then subtract the original loan value; $3,078.59 x 360 = $1,108,292.40. $500,000 = $608,292,40

Which of the following statements about material facts is true? A. All material facts are related to physical conditions. B. All parties considering a property would regard each material fact in the same way. C. A material fact may have more or less effect on a buyer based on the buyer's needs and values. D. Material facts are only those that can be easily seen or discovered.

C. A material fact may have more or less effect on a buyer based on the buyer's needs and values. Information is material if it affects a buyer's decision to buy a given property. Different information will be weighed differently based on the buyer.

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 of the feasibility of developing land

C. An opinion or estimate of a property's value as of a specific date An appraisal is an objective opinion or estimate of a property's value based on specific criteria.

REALTOR Arnold was instructed by his client Sebastian to find a buyer who would 'fit into the neighborhood.' What is Arnold's responsibility in this situation? A. Arnold must comply with his client's instruction, regardless of his own feelings on the subject. B. Arnold must conduct his usual advertising strategies and find covert methods for selecting buyers that meet his client's desired profile. C. Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws. D. Arnold must explain to Sebastian that he cannot continue to work as his agent under the circumstances.

C. Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws. Arnold's responsibility is to comply with the law; if his client asks him to do anything illegal, he must not obey the instruction.

Which of the following is the most common type of buyer representation agreement? A. Exclusive right-to-lease agreement B. Exclusive right-to-list agreement C. Exclusive right-to-represent agreement D. Exclusive right-to-sell agreement

C. Exclusive right-to-represent agreement An exclusive right-to-represent agreement is the most popular form of a buyer representation agreement because it gives the licensee the sole right to represent the buyer.

Georgina is an escrow agent who's holding funds for several transactions. Which of these statements about how she'll disburse these funds is true? A. If the transaction closes, Georgina will disburse the earnest money to the listing broker as part of his commission. B. If the transaction closes, she'll refund the earnest money to the buyer, since the buyer brings the full amount necessary for the down payment and loan costs to closing. C. If the transaction doesn't close. Georgina will disburse the earnest money as instructed by the parties or according to state law. D. If the transaction doesn't close. Georgina will refund the earnest money to the buyer.

C. If the transaction doesn't close. Georgina will disburse the earnest money as instructed by the parties or according to state law. If the transaction fails to close, she'll disburse the funds as instructed by the parties, or until the parties agree to a solution or a court does.

Sander and Ginny bought an old industrial site and plan to get grant money to put an environmental education center on the site. There are a few structures on the property, but they are in disrepair, and it will likely be less expensive to tear them down and build new than to rehabilitate them. However, the new owners are sure they they've made a great investment because the land is in great shape. This reflects which physical characteristic of real property? A. Immobility B. Improvements C. Indestructibility D. Uniqueness

C. Indestructibility Indestructibility is the physical characteristic that states that while improvements may deteriorate, land can't be destroyed.

Which of these is essentially the same as fraud? A. A misstatement B. Fact bending C. Intentional misrepresentation D. Puffing

C. Intentional misrepresentation Deliberate misrepresentation is an act of fraud.

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 given to tell.

C. It's owned as an estate in severalty. Corporations are legal entities and hold property similar to the way a sole proprietor or an individual does: in severalty.

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 leak, Jessie doesn't need to disclose it to her buyer.

C. Jessie should disclose this to her buyer. Jessie's duties of disclosure and loyalty require her to disclose this potential issue to her buyer, so the buyer can follow up on the repair.

Which option is of the most concern to licensees and advertising when it comes to the Federal Trade Commission? A. Excessive advertising costs B. Location of ads C. Misleading ads D. Paper waste

C. Misleading ads Licensees should be most concerned that their advertisements don't mislead consumers or contain errors of fact. It's important that licensees keep listings up to date.

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

C. Mutually rescinding the contract In this example, the parties mutually rescinded the contact as a means of remedying the situation.

Carrying out a client's instruction describes the duty of ____. A. Accounting B. Loyalty C. Obedience D. Reasonable skill and care

C. Obedience Carrying out a client's legal instructions is the duty of obedience. You shouldn't blindly follow these instructions, however. If the instruction may have a negative impact on the transaction, discuss it with your client.

Gene, a real estate licensee, prefers to use electronic documents and signatures because it means he doesn't have to track people down to deliver documents or have them signed. Which of these statements is true? A. Brokerage firms can require that clients accept the use of electronic documents and signaures. B. Licensees can require clients to accept the use of electronic documents and signatures. C. Parties to the contract decide whether or not to accept the use of electronic signatures and documents. D. Some states require the use of electronic documents and signatures in real estate transactions.

C. Parties to the contract decide whether or not to accept the use of electronic signatures and documents. Some states allow electronic signatures and documents only if parties to the contract agree to their use.

Ken, Dale, and James are brothers who own more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result is that the court gave each brother a designated set of acres to own. What was granted by the court? A. Bifurcation B. Parcel C. Partition D. Severalty

C. Partition Partition is the term used to describe a specific, divided portion of property that's created as part of a co-ownership termination.

The buyer you're working with doesn't want to enter into an agency relationship. However, the buyer begins to rely more and more on your advice and, indeed, implied agency has begun! You could have avoided this issue by providing appropriate disclosure, but now that you've created implied agency, what should you do? A. Create an estoppel agreement with the buyer. B. Disclose to all sellers your relationship with the buyer. C. Ratify the implied agreement by getting a signed agency agreement D. Terminate the agency relationship

C. Ratify the implied agreement by getting a signed agency agreement You need to get your implied client to become an actual client. Ratify what's actually going on by signing an agency agreement with the buyer.

Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure? A. August 6 B. July 31 C. September 18 D. September 24

C. September 18 Lenders must provide the Closing Disclosure three days before closing (September 18).

Centennial Development is constructing a new condo. The exterior of the building is 60 feet square. Which of these about the air lot is true? A. The air lot above the condo extends to the middle of the adjacent streets. B. The air lot is the same area as the condominium building. C. The air lot is the same perimeter as the condo and the lot on which it's built. D. The air lot perimeter is the same as the condominium's perimeter.

C. The air lot is the same perimeter as the condo and the lot on which it's built. Picture a box drawn over the property boundaries. The perimeter of this box is the perimeter of the air lot.

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 decor, 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 chimenea on the back patio

C. The chandelier in the foyer The chimenea, area rug, and banker's lamps are all free-standing and easily removed. The chandelier, however, is not a free-standing light fixture and should be considered real property.

Which of the following is true about tie-in arrangements? A. They involve market allocation. B. They involve price fixing. C. They're an antitrust violation. D. They're a type of mortgage fraud.

C. They're an antitrust violation. Tie-in arrangements are antitrust violations that involve predicating the delivery of one service on the consumer purchasing a second service from a recommended business.

How many parties does a deed of trust 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

C. Three:borrower, lender, and trustee

As a licensee, which of the following questions from a potential buyer could you answer while staying within your scope of expertise? A. Do the wood shavings outside the basement window mean there are termites in the home? B. Is the mold in the basement the dangerous kind? C. What are the property taxes for this property? D. Will an investment in this property lower my income taxes?

C. What are the property taxes for the property? As a licensee, you're only expected to be an expert in real estate, so only the question about property taxes is within your scope of expertise. You should refer questions outside your scope of expertise to the experts.

Kennedy tends to be rather informal about her real estate business. Her daughter's teacher, Matthew, tells Kennedy that he'd like her help selling his house. Kennedy agrees and tells Matthew she'll perform all the tasks she'd perform for any listing, though she has no written agency agreement with Matthew. Do Matthew and Kennedy have a legal agreement? A. No. There's no signed agreement. B. No. Verbal agreements are illegal. C. Yes. Express agreements may be verbal or written. D. Yes. They have a verbal implied agreement.

C. Yes. Express agreements may be verbal or written. Kennedy and Matthew have an express verbal agreement. The agreement isn't implied because Kennedy agreed to perform all the tasks she'd perform for any listing.

You're working with buyers who are pre-approved for a loan of as much as $200,000. Assuming they look 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

D. $875 The formula is loan balance x interest rate / months per year. Loan balance is :$200,000 x 0.0525 = $10,500; $10,500 / 12 = $875

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

D. A VA loan, which requires no down payment Current and former members of the military may be eligible for a VA loan. Although the FHA 203k loan allows for renovation financing, VA loans require no down payment

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

D. A right of way provides a pass-through, but not a right to use the property A right of way doesn't grant the right to use the property in any way, or to construct anything on it. It merely grants an individual or a business the right to pass through the property to get to another property.

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

D. Identify the contracting parties The statute of frauds requires that the contracting parties be identified in the agreement, and that both parties sign the agreement to make it legally enforceable.

Patsy's home had been on the market for five weeks, and two brokers had buyers who were ready to make offers. If Patsy accepted one of those offers, the corresponding broker would be the only one to earn a commission. What type of listing does this describe? A. Exclusive agency B. Exclusive right to sell C. Net listing D. Open listing

D. Open listing With an open listing, only the broker who brings the buyer earns a commission.

According to UETA, an electronic signature is defined as "an electronic sound, symbol, or process attached to or logically associated with a(n) ________ and executed or adopted by a person with the intent to sign. A. Computer B. Email C. Real estate broker D. Record

D. Record UETA supports the use of electronic records and allows the parties involved to decide whether or not to use an electronic medium.

Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this? A. Lot and block B. Metes and bounds C. Monument and benchmark D. Rectangular government survey

D. Rectangular government survey Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.

Kiley Ann is thrilled to have her real estate license and to be hired on at New beginnings Brokerage. She's not positive about Luis, her employing broker, though. He seems a little sketchy. For example, when she looks at her independent contractor agreement. It says that she's not entitled to unemployment insurance and has to pay her own income taxes. What should she do? A. Consult with a more experienced licensee at New Beginnings Brokerage to find out if this is standard practice for independent contractors at the firm. B. Contact the state's labor department and report Luis for attempting to avoid his legal obligations as her employer. C. Find a new broker to work for: Luis is trying to take advantage of her inexperience D. Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance.

D. Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance. Independent contractors aren't given the same benefits as individuals who are actual employees of a firm. Luis isn't required to pay unemployment insurance or withhold taxes. In fact, if he does this, he might be putting Kiley Ann's independent contractor status at risk.

Ron's company leased a building so that they could build an escape room experience. After operating for two years, their attendance (and thus their profits) started to drop significantly, so they decided it was time to close the location. When they started taking down the installation, they realized that some of the structures they built will damage the walls if they 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.

D. Ron may take the fixtures as long as he repairs any damage caused by removal. According to the law, commercial tenants may remove trade fixtures when the lease ends, but only if they are detachable without damaging the property or if the damage is repaired.

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 acceptable to the seller.

D. Seek a sale at the best price at terms acceptable to the seller. A seller's agent can't guarantee profit; the market will dictate the sale price. However, the seller's agent can seek a price and terms acceptable to the seller.

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

D. Substitution Margot knows paying $50,000 more for a nearly identical substitute property isn't the smart choice.

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.

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. The Fair Housing Act of 1968 made race, color, national origin, and religion protected classes and prohibits housing and housing financing discrimination. The ECOA prohibits discrimination based on any protected class.

What title guarantees will Jody have if her property is deeded to her after a foreclosure? A. The covenant against encumbrances B. The covenant of further assurances C. The covenant of quiet enjoyment D. The covenant of seisin

D. The covenant of seisin Foreclosed property may be conveyed with a referee's deed, which offers only the covenant of seisin.

Which 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 another addendum to the sales contract. C. There is an unexpected death in the agent's family D. The term specified in the agency agreement expired.

D. The terms specified in the agency agreement expired. If the specified term in the agency agreement expires, the agency agreement would be terminated.

Assuming licensee Shannon has actual knowledge of all of the following property issues, which should she disclose to prospective buyers? A. The nearby school system is one of the worst in the area. B. The neighbors like to throw a lot of parties. C. The tree in the front yard is at least 50 years old. D. The upstairs bathroom has a leaky toilet

D. The upstairs bathroom has a leaky toilet. Shannon needs to tell prospective buyers about the leaky toilet, since this is a material fact and can adversely affect the property's physical condition.

If individuals want to use their property in a way that's not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which one of the following groups? A. The architectural review board B. The building department C. The planning board D. The zoning board of appeals

D. The zoning board of appeals Requests for variances and special use permits must be submitted to the zoning board of appeals

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.

D. There could be hidden title issues. While a foreclosed property may very well be a fixer-upper, typically you should be more concerned with any hidden title issues it may have.

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend from themselves. Shakira should leave the discussion because _______. A. She needs to get to work developing this model for herself B. The group seems bent on creating a tie-in arrangement C. This conversation seems to be turning into a discussion of market allocation D. This conversion sounds like it might become an antitrust violation

D. This conversation sounds like it might become an antitrust violation. This conversation sounds like it could lead to group boycotting, an antitrust violation.

What's another name for an escrow account? A. Closing fund B. Locked account C. Savings account D. Trust account

D. Trust account Escrow funds are also called trust funds, just like escrow agents can also be called trustees. Escrow/trust funds are kept in a trust account.

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

D. Two-and-a-half An acre is 43,560 square feet, so 108,900 square feet is equal to two-and-a-half acres.

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

D. Uniqueness One piece of land isn't exactly like another. This is the concept of nonhomogeneity.

Damien and Sandy bought a lot with a condemned house. They want to tear it down and build a duplex, so that they can live on one side and rent out the other. Unfortunately, the property is zoned single-family residential. If they can make a case for economic hardship, they may apply for and be granted a _______ A. Area variance B. Moratorium C. Special use permit D. Use variance

D. Use Variance This is a use variance. The existing zoning only allows single-family homes, so a duplex represents a use other than the originally intended use.

Which factor that influences value considers the property's function? A. Demand B. Scarcity C. Transferability D. Utility

D. Utility Utility looks at the property's use or function.

Which of the following can be defined as what a property is worth? A. Appraisal B. Cost C. Price D. Value

D. Value Value means worth. It is different from cost and price.

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

D. Voidable Because Ken was a minor when he entered into the contract, he had the option to cancel it (making it a voidable contract). However, the parties to a voidable contract may choose to execute it, which is what happened here.