Practice Exam
An example of an ad valorem tax is
property tax
A lender quotes a mortgage loan of $265,000 at 4.5% interest. The monthly payment is $1,342.72. How much of the first monthly payment will apply to interest?
A)$1,342.72 B)$993.75 C)$965.00 D)$1,195.25
Homeowners who have a homestead exemption on their current home in either of the two preceding years can transfer up to what amount of their Save Our Home benefit to a new home?
A)$100,000 B)$50,000 C)$500,000 D)$225,000
A seller listed a home for $200,000 and agreed to pay a commission rate of 5%. The MLS stated that the commission would be shared between the listing office and the selling office on a 50-50 basis. The home was sold four weeks later for 90% of the list price. The listing broker paid the listing sales associate 50% of the listing office's commission. The selling broker paid the selling associate 60% of the selling office's commission. How much commission did the selling sales associate receive?
A)$2,700 B)$5,400 C)$4,500 D)$3,000
How much personal money may a broker place in a property management escrow account?
A)$200 B)$1,000 C)None D)$5,000
An appraiser has assigned the following weights to three adjusted sale prices: Comparable 1: $322,500, 40% weight Comparable 2: $319,000, 35% weight Comparable 3: $312,000, 25% weight What is the estimated market value of the subject property?
A)$286,225 B)$270,275 C)$317,425 D)$318,650
A homesteaded property is located in Jupiter, Florida, in Palm Beach County. The property has been assessed at $185,000. The city tax rate is 8.8 mills, the county tax rate is 9.3 mills, and the school board levy is 6.5 mills. The owner is a widow and has qualified for and received homestead tax exemption. How much will the owner pay in property taxes?
A)$3,483.50 B)$3,308.70 C)$3,923.70 D)$3,471.20
You are appraising a five-year-old, single-family home. The livable area is 60 feet by 50 feet. The garage is 24 feet by 20 feet. According to figures obtained from a cost-estimating service, the base construction cost per square foot of livable area is $103 and $92 per square foot for the garage. Calculate the reproduction cost new of the structure.
A)$358,440 B)$345,440 C)$353,160 D)$303,72
The following taxes were paid at the closing of a new home: $1,540 state documentary stamp tax on the deed, $693 state documentary stamp tax on the note, and $396 state intangible tax on the mortgage. What was the purchase price of the home?
A)$440,000 B)$198,000 C)$346,500 D)$220,000
Three claimants are requesting relief from the Real Estate Recovery Fund. All three claimants were named in a single judgment (the same real estate transaction). What is the maximum payment from the Recovery Fund for this claim?
A)$50,000 B)$150,000 C)$1,000,000 D)$75,000
A woman has homesteaded her residence. Her home has an assessed value of $279,000. She is a nonveteran who is totally and permanently disabled as a result of a serious car accident. She is also legally blind. What is her cumulative county tax exemption on her homesteaded residence?
A)$51,000 B)$55,000 C)$26,000 D)$50,500
A homeowner originally purchased a new home for $244,900. During the period of ownership, the homeowner spent $27,000 in capital improvements. The homeowner sold the home 16 years later for $329,900. The homeowner paid a brokerage fee of 6% of the sale price and paid other closing costs totaling $2,750. What was the homeowner's capital gain from the sale?
A)$85,000 B)$35,456 C)$35,510 D)$62,45
A broker who changes the business address must notify the Commission of the address change within how many days?
A)10 B)30 C)5 D)60
A prospective tenant purchased a rental list from a broker and then rented a duplex that the list said included all utilities. The tenant discovered that only water was included in the rent and notified the broker within the legislated time limit. The tenant is entitled to
A)100% of the fee paid. B)no refund because the tenant agreed to rent the property. C)nothing unless the request for a refund is made in writing. D)75% of the rental list fee.
Within what period of time must landlords of five or more units notify tenants in writing of the method used to hold security deposits?
A)15 days B)21 days C)30 days D)3 business days
A developer purchased three oceanfront lots, each measuring 75 by 110 feet, for $20 per square foot. The developer later sold the lots for $200,000 each. What was the developer's percentage of profit on the sale of the three lots? (Round to nearest percentage.)
A)18% B)21% C)2% D)25%
A residential zone requires at least 7,500 square feet per lot. The developer is reserving 25 percent of the land for streets, sidewalks, and a community center. The tract of land for the development consists of 175 acres. How many residential lots are available for development?
A)762 B)254 C)813 D)1,106
Which individual must hold an active real estate license?
A)A salaried employee of an oil company who buys and sells land on behalf of the company B)An executor of a will who is selling the real property of a deceased individual C)A person employed by Meadow Hills Cemetery to sell cemetery lots D)A person who sells time-share periods for customer
Which statement does NOT describe a planned unit development?
A)A variety of types of housing may be used. B)Dwelling units are typically clustered, with planned green space areas between clusters. C)The open space areas are maintained by a community association. D)Industrial parks are a welcomed offshoot of the PUD concept
Which valuation assignment is exempt from USPAP requirements?
A)Appraisal for the purpose of refinancing the first mortgage loan B)Appraisal assignment conducted by a real estate broker for the purpose of an estate sale C)Broker's price opinion prepared for a lender concerning a short sale D)Appraisal report prepared by a certified appraiser
A real estate company represents a motel owner who wishes to list one of his motels for sale. The owner has told the listing agent that he does not want to sell the motel to any racial minorities. Which statement is TRUE?
A)Because this is not a sale of a residential dwelling under the Fair Housing Act, the listing agent may honor the owner's instructions. B)The listing agent may not refuse to show or sell the motel to a minority buyer; however, the owner may refuse to sell to certain individuals if he sells the property "for sale by owner." C)It is a violation of the Fair Housing Act to abide by the owner's wishes. D)To refuse to sell or lease any real property based on a party's race is a violation of the federal Civil Rights Act of 1866.
What authority originates from the U.S. Constitution and relates to protection of health and welfare of citizens at local levels?
A)Community protection power B)Situs C)Police power D)Escheat
Which variable does NOT influence demand?
A)Consumer tastes and preferences B)Availability of construction loans C)Availability of mortgage credit D)Income of consumers
A seller transfers title to a buyer with a general warranty deed. In which clause of the deed does the seller define the quality of ownership interest conveyed to the buyer?
A)Covenant of further assurance B)Habendum C)Seisin D)Covenant of quiet enjoyment
A property closes on June 10, with the day of closing charged to the buyer. The buyer is assuming the seller's mortgage loan with its principal balance of $227,500 at 4.5% interest. Which entry will appear on the closing disclosure?
A)Credit to seller and debit to buyer in the amount of $252.43 B)Credit to seller and debit to buyer in the amount of $589.01 C)Debit to seller and credit to buyer in the amount of $589.01 D)Debit to seller and credit to buyer in the amount of $252.43
Which entity is a primary mortgage lender that does NOT accept demand deposits?
A)Credit unions B)Savings associations C)Commercial banks D)Mortgage lender
A real estate license may be revoked without prejudice for which action?
A)Culpable negligence B)Conversion C)Failure to account or deliver escrow funds D)Issuance of a license by mistake of the Commission
Which governmental entity must be informed when the FREC takes disciplinary action against a real estate licensee?
A)Division of Florida Condominiums, Timeshares, and Mobile Homes B)County courthouse where the licensee resides C)Division of Firearms and Tobacco D)Florida Department of Administrative Law
A transaction broker does NOT have which duty?
A)Duty of using skill, care, and diligence in the transaction B)Duty to disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer C)Full fiduciary duties to both the buyer and the seller D)Duty of accounting for all funds
When the parties to a contract state the terms of the contract and show their intentions in words, either orally or in writing, what type of contract classification has been created?
A)Express B)Implied C)Executed D)Parol
A broker's license was involuntary inactive for two years and one month. To operate again as an active licensee, the broker must complete
A)FREC Course I and pass the sales associate's licensing exam. B)60 hours of the broker's post-licensing education course, 28 hours of continuing education, and pass the broker's licensing exam. C)FREC Course II and pass the broker's licensing exam. D)42 hours of continuing education and pass the continuing education course exam.
Which action is NOT a requirement under TILA-RESPA?
A)Give a copy of the special information booklet to the mortgage applicant within three business days B)Give the mortgage applicant a closing disclosure at least three business days before closing C)Give mortgage applicant the loan estimate disclosure within three business days D)Give mortgage applicant a list of competing lenders so that the consumer can comparison shop for the best rate
Which statement is TRUE regarding the monthly payments on a 30-year, fully amortized loan?
A)Initially, interest is the smallest portion of the payment. B)Initially, principal and interest are approximately equal. C)Level monthly payments means the same amount of principal is paid each month. D)Initially, interest is the larger portion of the payment.
The owner of a hardware store has filed for bankruptcy and the real estate is up for sale. The money that the property will bring at auction is BEST described as which type of value?
A)Investment value B)Liquidation value C)Salvage value D)Going-concern value
In Florida, real property is assessed on January 1 of each year, and property taxes become a lien on the property on
A)January 1, the same year. B)November 1, the same year. C)December 31, the same year. D)April 1, the next year.
Which statement concerning characteristics of the real estate market is FALSE?
A)Land is indestructible. B)The real estate market is organized and controlled centrally. C)The market is slow to respond to changes in supply and demand. D)Real estate is immobile.
Which type of appraisal technique is unique to business appraisal?
A)Liquidation analysis B)Working capital analysis C)Stock, bond, and debenture analysis D)Asset appreciation analysis
Which expense is subtracted to derive NOI?
A)Mortgage payments B)Income taxes C)Depreciation D)Vacancy and collection losses
Which property is NOT covered under the Fair Housing Act?
A)Multifamily housing of five or more units B)Commercial property C)Government-owned residential property D)Privately owned residential property listed by a broker
The formula to calculate the overall capitalization rate is
A)NOI ÷ value (or price). B)NOI ÷ owner's equity. C)NOI × value (or price). D)debt service × value (or price)
The DBPR may issue which penalty for an initial offense of a minor violation by a licensee?
A)Notice of noncompliance B)Final order C)Subpoena to appear D)Notice of assignment
Which individual is exempt from the continuing education requirement?
A)Out-of-state Florida licensee B)Real estate licensee who is also a Florida-licensed attorney C)Real estate licensee who earned a four-year degree or higher in real estate D)Real estate licensee who holds a voluntary inactive licens
Which entity may NOT be registered as a real estate brokerage?
A)Partnership B)Corporation for profit C)Corporation sole D)Sole proprietorship
Which term refers to a situation where, during the early years of a loan, the principal balance increases?
A)Positive leverage B)Reverse annuity C)Graduated payments D)Negative amortization
Which clause is included in a mortgage to prevent a subsequent buyer from assuming an existing mortgage loan?
A)Prepayment penalty clause B)Acceleration clause C)Due-on-sale clause D)Defeasance clause
Which item is entered on the Closing Disclosure as a credit to the seller?
A)Prorated property taxes that have not been paid prior to closing B)Purchase price C)Prepaid rent on rental property D)Seller's mortgage paid off at closing
Which disclosure must be given to the buyer of both new and resale residential condominium units?
A)Prospectus B)Declaration C)Estimated operating budget D)Governance form
A buyer or seller must be given a brokerage relationship disclosure for which transaction?
A)Purchaser of a single-family home working with a single agent buyer's broker B)Purchaser of 15 acres of land zoned for 15 residential homes C)Purchaser of an auctioned residential property D)Owner who lists a 10-unit town house property
The law requiring that the annual percentage rate be disclosed to consumers is the
A)Real Estate Settlement Procedures Act. B)Truth in Lending Act/Regulation Z. C)Florida "Little FTC Act." D)Equal Credit Opportunity Act.
The seller instructs the listing broker not to show his home to members of a protected class. The broker informs the seller that this is a violation of fair housing laws, but the seller is insistent. Which choice is the broker's best course of action under these circumstances?
A)Report the incident to the Fair Housing Administration B)Withdraw from the listing agreement C)Report the seller to the DBPR D)Follow the seller's instructions because to do otherwise would violate the broker's fiduciary duties to the seller
If you have located a township numbered T2S, R4E, the township due south of that township is
A)T2S, R3E. B)T3S, R4E. C)T2S, R5E. D)T2N, R1E.
Which estate includes the right of survivorship?
A)Tenancy in common B)Fee simple estate C)Tenancy for years D)Joint tenancy
Sales associate Terry Stoufer may have which information entered on his license, if applicable?
A)Terry's Real Estate Services B)Terry Stoufer, LLC C)Terry Stoufer Enterprises, LLC D)Best Homes, Inc.
A licensed real estate broker has been hired by a lender to appraise a home for a buyer who has applied for an FHA loan. Which statement is TRUE regarding this situation?
A)The broker may not charge for this assignment. B)The broker may not accept this appraisal assignment because to do so is a conflict of interest. C)The broker is required to be a state-certified appraiser to perform this appraisal assignment. D)The broker's license entitles him to appraise this property
Which statement is FALSE regarding a corporation for profit that is doing business as a real estate broker?
A)The broker must file the articles of incorporation with the Florida Department of State. B)All stockholders must be registered with the FREC as inactive brokers. C)There must be at least one officer who is an active real estate broker. D)The corporation must be registered with the FREC
Which statement is FALSE regarding advertising?
A)The brokerage firm's address is required in all advertising. B)All advertisements must include the name of the brokerage firm. C)Advertising includes flyers and promotional materials. D)Licensees may insert their personal names in ads provided they include their last name as registered.
Which statement concerning tenancy by the entireties is FALSE?
A)The estate includes right of survivorship. B)It is a form of concurrent ownership. C)The deed must specifically state intent to create such a tenancy. D)The property must be owned by a wife and her husband.
Which information must be disclosed to all prospective buyers?
A)The home is situated in a flood-prone area. B)The seller's brother was murdered in the residence. C)The neighborhood residents are Hispanic. D)A previous occupant was infected with HIV.
A man is a 72-year-old retired college professor. The local lender to whom the man applied for a 30-year mortgage denied the man's loan application, even though he has sufficient income from his pension plan and an excellent credit history.
A)The lender's actions violate the Equal Credit Opportunity Act. B)The lender's actions are legal because it is unlikely that the man will survive the term of the loan. C)This is a violation of fair housing laws. D)This is an example of redlining
An investor wanted to build a motel. A broker showed him three choice sites zoned hotel-motel. The investor promised to decide on a site in three weeks, so the broker took a two-week vacation. When the broker returned, the investor bought one of these sites. The broker sold the site, not knowing that the zoning on that site had been changed to industrial. Which is correct?
A)The property owner is guilty of fraud. B)The broker is guilty of fraud. C)The broker is guilty of culpable negligence. D)The broker is not guilty of wrongdoing.
Which element is NOT essential in a valid real estate sale contract?
A)The vendor's signature B)Competent parties C)An earnest money deposit D)A legal objective or purpose
A sales associate received a $5,000 earnest money deposit from a buyer. She immediately delivered the deposit to her broker. The broker deposited the check on the third business day into his general operating account.
A)This is the proper procedure, provided the broker uses a title company that has trust powers. B)This is the proper procedure for handling earnest money deposits. C)This is an example of commingling of escrow funds. D)The broker is guilty of dishonest dealing by trick, scheme, or devise
Which survey term is associated with a metes-and-bounds description?
A)Township B)Range C)Point of beginning D)Section
A real estate broker is accused of taking money from the company escrow account to pay personal expenses. The broker decides that she does not want to go through the hearing process so the broker turns over her real estate license to the DBPR. What term describes this situation?
A)Voluntary relinquishment for permanent revocation B)Revocation C)Suspension D)Emergency suspension
A sales associate who is employed by an owner-developer who owns properties in the name of various entities may be issued
A)a group license. B)a branch office license. C)multiple licenses. D)a commercial license.
Failure to comply with the statute of frauds will result in
A)a revocation of licensure. B)a charge of fraud. C)an unenforceable contract. D)an illegal contract.
An individual who acts as an intermediary between potential tenants and the property owner is referred to as
A)an absentee owner. B)a property manager. C)a community association manager. D)a rental agent
A mortgage in which changes in the interest rate may cause changes in the monthly payment amount is called
A)an adjustable-rate mortgage. B)a graduated-payment mortgage. C)an escalator mortgage. D)a partially amortized mortgage
For application and licensing purposes, a Florida resident is a person who has resided in Florida continuously in
A)an apartment in Florida for four weeks. B)a Florida hotel for six weeks. C)a recreational vehicle for four months. D)a Florida residence for two months
A developer who wants to develop a new subdivision must submit
A)an existing land-use study to the planning commission. B)a site plan to the zoning board of adjustment. C)a subdivision plat map to the planning commission. D)a thoroughfare study to the Department of Transportation
The Florida Real Estate Commission is empowered by law to
A)assess damages resulting from breach-of-contract suits. B)impose prison sentences up to 60 days. C)levy fines up to, but not exceeding, $500. D)fine or otherwise discipline licensees.
A buyer who obtains a mortgage loan that covers the purchase of a condominium plus furniture, appliances, and other personal property, such as towels and kitchen utensils, has a
A)blanket mortgage. B)wraparound mortgage. C)chattel mortgage. D)package mortgage.
A broker received a $5,000 deposit from a buyer on Tuesday at 1:00 pm. The seller will not be available until Monday. The broker's normal banking day is Monday. The broker is required to deposit the $5,000 before the end of
A)business on Wednesday. B)business on Friday. C)the next business day. D)business on Thursday.
You have been hired to appraise the local public library building. The approach that is likely to be the MOST relevant is the
A)comparable sales approach. B)cost approach. C)public land and property approach. D)income approach
The bundle of legal rights associated with real property ownership does NOT include the right of
A)control. B)possession. C)disposition. D)intent
A title theory state is one in which a mortgage
A)creates a joint tenancy for the lender until the loan is paid. B)creates a tenancy in common until the loan is paid. C)transfers title to the lender or escrow agent until the loan is paid. D)creates only an encumbrance on title to a property.
A licensee makes a statement that is material to the transaction as though it were a fact when the licensee does not know whether the statement is true or false, and the buyer relies on the statement. As a result of the statement made by the licensee, the buyer suffers damages. This situation constitutes
A)culpable negligence. B)breach of trust. C)fraud. D)deceptive services.
The rate of interest that the Federal Reserve Bank charges member banks for borrowing from the Federal Reserve Bank is called
A)discount points. B)the prime rate. C)the reserve requirement. D)the discount rate.
The financial term applied to the use of borrowed funds to finance the purchase of an office building is
A)disintermediation. B)liquidity. C)leverage. D)intermediation
A provision in all mortgages that allows the delinquent mortgagor to avoid foreclosure by paying all the back mortgage payments, late penalties, and costs of collection up until the time of foreclosure sale is the
A)equity of redemption. B)due-on-sale clause. C)defeasance clause. D)acceleration clause
A man owns a farm in fee simple. He deeds the farm to a friend until the friend dies, at which time a woman will acquire a fee simple title to the farm. The woman's interest in the farm is a
A)fee simple estate. B)life estate. C)reversion estate. D)remainder estate
If a seller refuses to pay a broker her sales commission after the residential property is sold, the broker may
A)file a vendor's lien on the owner's property. B)refuse to permit the closing to occur. C)keep the binder deposit as just compensation. D)file a suit in the courts for her commission.
The purchase price of a business minus the value of the tangible assets of that business equals the intangible assets of the business. This is called
A)goodwill. B)common stock. C)real property. D)personal property.
A single agent broker received an offer on a listed property at the seller's price and terms. Before informing the seller, the broker received a higher offer. The broker submitted only the first offer, and the seller, his principal, accepted it. The broker
A)has fulfilled his duty to the seller because the offer was for the seller's full price and terms. B)has violated his fiduciary duty to his principal. C)is guilty of conversion. D)is not required to submit the second offer.
When the Fed wants to ease a tight money supply, it may
A)issue new Treasury securities. B)raise the reserve requirement. C)increase the discount rate. D)buy Treasury securities.
individuals who solicit mortgage loans, accept applications for mortgage loans, and negotiate the terms of new mortgage loans on behalf of a borrower are called mortgage
A)lenders. B)loan originators. C)finders. D)agents.
The duties of a real estate licensee, owed to a buyer or a seller who engages the real estate licensee as a single agent, do NOT include
A)loyalty. B)dealing honestly and fairly. C)limited confidentiality, unless waived in writing by a party. D)presenting all offers and counteroffers in a timely manner, unless previously directed otherwise in writing
A person must hold an active real estate license if, for express or implied compensation, the person
A)manages condominium rentals as a salaried manager for single-unit owners. B)rents mobile home lots in a mobile home park. C)manages an apartment building complex on site and for salary only. D)advertises a list of available rental properties.
Depreciation (cost recovery)
A)may be taken on a principal residence. B)includes the cost of land in the amount to be depreciated. C)is an allowable deduction on investment property that requires no current outlay of cash. D)does not include the mortgaged portion of an apartment building in the amount to be depreciated.
A man earned a $7,500 commission by selling a coin-operated laundry business, which has six more years before the expiration of its present lease. The man
A)must be registered with the Florida Real Estate Commission as a business broker. B)must be registered with the Florida Retail Commission as a business broker. C)must be registered with the Florida Real Estate Commission as a real estate licensee. D)need not be registered with any state agency in the given situation.
A tenant signed a 10-year lease requiring a monthly base rent of $1,900, plus 2% of all monthly gross sales volume over $95,000. The tenant also must pay all property taxes, insurance, and other costs normally considered property owner's costs. This is a
A)net lease. B)fixed lease. C)gross lease. D)variable sale lease.
In relation to section 1 of a township, section 12 is due
A)north. B)west. C)south. D)east.
Constructive notice is
A)notarizing a conveyance. B)provided by recording in the public records. C)information learned by reading, seeing, or hearing. D)information advertised in the newspaper.
A comparable property has one more bedroom ($8,000) and is on a slightly larger lot ($2,000) than the subject property. The comparative market analysis requires a net adjustment of
A)plus $10,000 to the subject property. B)plus $2,000 to the subject property. C)minus $8,000 to the comparable property. D)minus $10,000 to the comparable property.
In a deed, the warranty of quiet enjoyment pertains to
A)property that is completely vacated. B)guaranteed satisfaction with the property. C)peaceful possession undisturbed by others' claims of title. D)peace and tranquility on and around the property.
The statute of limitations is the authority that outlines the
A)remedies available in case of breach. B)requirement that real estate sale contracts be in writing. C)period of time during which a contract may be enforced. D)essential elements of a contract.
Requirements of a valid deed do NOT include
A)signature of two witnesses. B)good or valuable consideration. C)signature of a competent grantee. D)voluntary delivery and acceptance.
A real estate brokerage company is a transaction broker for a buyer. The buyer wants to purchase a new home so the sales associate takes him to three model centers listed by three competing real estate companies. The sales associate must give a written no brokerage relationship notice to
A)the buyer. B)the model home employees at each model center. C)no one. D)the owner-developer of each new homes subdivision.
Local government exercises its greatest effect on the real estate business by
A)using zoning, taxation, and the planning process. B)creating tax shelters for those developing low-income housing. C)supervising contractors and their on-the-job performance. D)providing financing where justified.
Title to real property is technically conveyed when the deed is
A)voluntarily delivered and voluntarily accepted. B)signed and witnessed. C)recorded in the public records. D)acknowledged
