RE Practice Exam Set #2

In what year was the Morgan Taxpayers' Bill of Rights enacted?

1994 (2010)

Per accessibility requirements, what is a doorway's minimum width?

32 inches (36)

What is the minimum size that the International Symbol of Accessibility (ISA) logo painted on the accessible spot must be?

36 in by 36 in

Accessible parking spaces must have an access aisle. What is the minimum width of this aisle?

60 Inches. There is no parking area designed to allow those using accessible spaces room to maneuver. One aisle can accommodate multiple accessible spaces. (36 Inches)

Which of the following are the dimensions required for a handicap-accessible parking space?

9 x 18 feet long

A property manager has just started working for a new property owner who owns a small apartment building. The property manager learns that construction of a large apartment complex has been approved one block away from his client's apartment building. What type of analysis would include this information?

A Competitive analysis includes investigation into competing properties. (Market analysis)

The 1970 case against Prince George's County Board of REALTORS® involved a consent decree. What is this?

A compromise where the party agrees to stop certain illegal actions without admitting guilt. A consent decree is a compromise. (A decision issued by the court ordering the defendant to stop performing certain illegal actions.)

Which of these describes self-dealing?

A licensee sells her own property without informing all parties that she's licensed.

An area 60 inches wide and located adjacent to accessible parking spaces is called a(n) ________.

Access aisle (Clearance)

The MLS in your area prohibits limited service agents from listing properties for sale. This is ____________.

An antitrust violation

A portion of Lance's property can be used by the local utility company to maintain its power lines. What is this an example of?

An easement allows a person the right to use or cross over another's property for a specific reason. (Encroachment).

What does the FTC consider to be a deceptive ad?

Any ad likely to mislead consumers acting reasonable under the circumstances is considered a deceptive ad, according to the FTC's Deception Policy Statement. (Any ad or business practice that causes or is likely to cause injury)

At what point must an agency disclosure be given?

As soon as the relationship becomes more than casual. A mere meeting, conversation, or other form of contact may be passing and disclosure is not required, but as soon as the relationship becomes more than casual, disclosure is required. (At the first contact).

Advance fee agreements in California need to be approved by which regulatory body?

Bureau of RE

Which category of worker is classified by the common understanding of the profession? An example would be a food server.

Common law employee

Which type of analysis performed by a property manager includes a look at the properties within the market area that will be competing for tenants?

Competitive analysis includes a look at the properties within the market area that will be competing for tenants. Keep in mind that the competitive analysis focuses on sizing up the competition. (Market analysis).

This type of loan is generally seen with commercial properties and gives the lender the option to convert the outstanding balance owed into a specified percentage of ownership in the property.

Convertible mortgage

Jared is your client who is selling his four-bedroom home. When you ask him if he is aware of any physical defects with the property, he states that the property is "in fine shape." Yet you've noticed several issues with rotted doorsills, crumbling masonry, and a suspicious moisture stain on the ceiling. If Jared won't come clean about issues of property condition, what should you do?

Decline the listing. If a seller is evasive about issues with property condition, make sure that you educate them on the seller's legal obligation to disclose. If you still can't obtain cooperation, you should decline the listing. (Have Jared sign a waiver so that you cannot be held liable for issues he does not disclose)

The _________________ affects a property's tax basis.

Depreciated value affects a property's tax basis. (Assessed value).

Which of the following is a common problem with roof shingles?

Discolored or curling shingles mean roof repairs may be needed soon. (Water buildup and ice damming)

A parking structure has 350 total spaces. How many of these spaces must be accessible?

Eight

In the sample sales contract you reviewed, the cost of title insurance was allocated to the buyer or the seller in which subsection?

Escrow and Title

The funds placed in trust accounts are insured by the __________.

FDIC

"Complete remodel that's move-in ready!" is a phrase you'd most likely use when marketing a property for a __________ investor.

Fix-and-flip You'd most likely use phrases like this when marketing a property for a fix-and-flip investor. (Buy-and-hold)

_______ around pipes, vents, or other protrusions is a prime spot for roof damage or water leaks.

Flashing is a material that goes around pipes, vents, and other protrusions on a roof. Improper installation or damage to the flashing can lead to water leaks and other roof damage. (Soffit)

If you see sawdust that can't be explained, it's probably a sawdust-like material called frass created by ___________.

Frass is created by carpenter ants when they burrow through wood. (Termites)

Which of these dangers might buyer's agents see from clients in a cold market?

In cold markets, buyers may not feel the pressure to act quickly. Sometimes buyers will wait too long and miss prime opportunities. (Being outbid by another buyer)

Jerry, a licensee, received a commission check. Where should he deposit those funds?

In his own private account. Jerry knows that commingling non-trust funds with trust funds is bad news. He will deposit the commission check into his own private account. (In the trust account)

Kirby, a buyer, offers to allow the seller to remain for three days after closing. How might this be accounted for in the sample purchase agreement you reviewed?

In the Possession section

Which of the following is true regarding the BRNN?

It safeguards the licensee from claims of undisclosed dual agency.

What does the successor and/or assigns section of the Residential Listing Agreement state?

It states that the listing agreement is binding on the seller's heirs. If title is transferred to an heir in the event of the seller's death or assigned to someone else during the listing period, the agreement is binding with the new property owner. (It prohibits the seller from assigning the listing agreement to anyone else)

The C.A.R. Option Agreement form is designed to be used as an amendment to which two types of contracts?

Lease and purchase agreements

Which of the following strategies would help to make a 'Choose Your Neighbor' marketing letter non-discriminatory in its effect?

Listing the property on the MLS. If the 'Choose Your Neighbor' letter is used as one part of a complete marketing campaign, its effect is not restrictive. (Providing the letter in multiple languages for non-English speakers)

The ____________ Community Facilities Act allows an assessment for improvements even against properties that receive no direct benefit from the improvements.

Mello-Roos

What does a mortgage Real Estate Investment Trust invest in?

Mortgage REITs don't buy properties, but instead invest in RE debt, primarily commercial and residential mortgage-backed securities. (RE Property)

Your buyer clients are submitting an offer on a newly built home in a very trendy part of town. The seller requires that the home be sold for at least $450,000. What is a good strategy for structuring the offer in this case?

Offer full price or above.

Parking facilities must have accessible parking. Depending on the number of accessible spaces, some of these must be van-accessible. How many van-accessible spaces are required?

One in every six parking spaces.

Bonnie always schedules an in-person meeting with prospective buyers before she begins sending them data on properties. Why might this be?

One purpose of this meeting is to help her define the buyers' needs, wants, and readiness to purchase. She also demonstrates her professionalism to her potential clients and builds rapport with them during the meeting. (She needs to have them sign an agency agreement before she can work with them)

Effective gross income ‒ ______________ = net operating income

Operating expenses (Debt services)

Which section of the property management agreement requires owners to confirm that they are, in fact, the legal owner of the property?

Owner's covenants

What does an equity Real Estate Investment Trust invest in?

RE Property. Equity REITs purchase properties. They make money primarily from their properties' rents. (RE debt)

Which act prohibits the payment of kickbacks between settlement service providers?

RESPA - Real Estate Settlement Procedures Act

What type of real estate investment is similar to collateralized mortgage obligations (CMOs)?

Real Estate mortgage investment conduit. REMICs are similar to collateralized mortgage obligations (RE Investment trust).

Deborah was initially thrilled when she signed a listing agreement with her client, Jeb, to sell his five-bedroom colonial in a beautiful neighborhood. Since then, however, it was becoming more and more difficult to get along with Jeb. She felt like she was doing her best to sell his house, but with every day that passed without an offer, he became more and more disagreeable. She wondered what she could do to resolve the situation. What advice would you give Deborah?

Refer Jeb to a colleague who might be a better match and take the referral fee. Not every client will be a match, so if you truly can't get the relationship to work, it's better to refer the client to a colleague. (Tough it out and do what it takes to make the client happy)

Water buildup, ice damming, and a fascia damaged by moisture are common ______ issues.

Roof

Which type of contract allows a buyer to legally possess the property after all of the terms and conditions have been met?

Sale agreement allows a buyer to legally possess the property after all of the terms and conditions have been met. (Mortgage loan commitment)

Marco needs to sell his property before he can afford to buy new property. What addendum must be included with his offer on a house?

Sale of Buyer's Property contingency

Material facts that are required for disclosure can be captured on the _______ in addition to, but not as a substitute for, the Transfer Disclosure Statement.

Seller Property Questionnaire

Which of the following factors should be considered when determining an acceptable sales price?

Seller's loan payoff amount and other debts are important factors to consider because they'll impact the seller's net proceeds. (What type of financing the seller will accept from the buyer)

Which party tends to benefit in a hot market?

Seller. Hot markets tend to favor sellers. It's not unusual to see multiple offers from buyers at or above list price.

Zack has an investor client who makes a lot of offers, but frequently doesn't have the offer accepted because he is always substantially below asking price. Zack has learned that it is important to _____________.

Set an expiration date for the offer. A reasonable expiration date ensures that the deal doesn't drag on, but allows time for any necessary bureaucratic processes. (Avoid getting too hopeful about each offer).

Brandon recently purchased an old warehouse building. This building will serve as a hub for local deliveries of fruits and vegetables within the state. During its first week in operation, one of the delivery drivers was involved in an accident that spilled coconuts all over the road and shut down the interstate for hours. What type of risk is this?

Static risks are those where the effect can be lessened with insurance. This includes vandalism, theft, fire, and accident liability. (Dynamic)

Three categories exist for this classification of a worker, who is defined in statute under tax law as an independent contractor and not an employee: direct seller, licensed real estate agent, and a certain companion sitter. This worker's status is ________.

Statutory non-employee. For taxing purposes, these worker categories are classified as statutory non-employees, who is defined in statute under tax law as an independent contractor and not an employee. (Common law employee)

Blane owns a music store. He polls his customers and learns that they tend to come from less than a mile away. That's probably because Blane's store is in this type of location.

Strip malls tend to draw their customers from very close proximity (Neighborhood center)

Which entity is ultimately responsible for creating standardized real estate forms in California?

The California Association of REALTORS

The Federal Trade Commission is concerned with all ad claims but is most likely to be concerned with which types of ad claims?

The FTC is concerned with all ad claims, but is most concerned by any ad that makes a health or safety claim or any claim that is difficult for the consumer to evaluate (Any ad likely to mislead consumers acting reasonable under the circumstances)

The IRS withholds _____ of the gross purchase price when a non-resident sells real property owned in the U.S.

The IRS withholds 15% to ensure that it receives any capital gains tax owed. (12.5%)

What is the name of the standard form that allows sellers of residential property to provide buyers with disclosures required by statute?

The RE Transfer Disclosure Statement

When Tara is working with a client to sell his mountain cabin, she asks the client to complete the Seller Property Questionnaire and the TDS. The seller says, "But we haven't received any offers yet." What can Tara tell him about the timing required for providing the TDS?

The TDS must be completed as soon as is practicable, and before the execution of any sales contract or transfer of title. (The TDS is required to complete the agency agreement, and must be completed as soon as possible.)

A seller may obtain required disclosure information about Mello-Roos fees from _____________.

The assessing agency

Data regarding Mello-Roos fees disclosed to a prospective buyer should include the amount of the fees, as well as _______.

The assessment's purpose. Disclosure regarding Mello-Roos taxes should include the purpose of the fee and how much it may increase. (The history of the Mello-Roos disctrict)

The appraisal finally came in and it's lower than the sales price the parties have contracted; an appraisal contingency was in place, but the lender failed to meet the appraisal deadline. What happens now?

The buyer's earnest money is at risk.

Frank's youngest daughter recently died of AIDS. He and his wife are selling the home where she lived her last few weeks, and where she died. Which of the following is true?

The death must not be disclosed, even if asked directly, because it was caused by aids. Death as a result of AIDS should not be disclosed because it is a condition that is protected under fair housing law. (The death on the property must be disclosed, but the cause of death cannot be disclosed unless a buyer asks directly.)

Michael scours the local newspaper, looking for homes for sale without real estate professional representation. This isn't because he wants to buy the house, but because he wants to represent the seller. What approach is this?

The owner sales approach involves not only contacting homeowners selling their own property, but also convincing them that they'll achieve a better outcome by listing with a real estate licensee. (Farming).

In Easton v. Strassburger, what caused the court to rule that the seller and seller's broker were negligent?

The seller had knowledge of a defect that was not disclosed to the buyer.

According to the California real estate commissioner's regulations, which of these requirements are correct if a broker chooses to use a method of keeping records other than columnar records?

They must be easy to trace; there is no requirement for quarterly audits, notarization, or electronic form. (They must be notarized monthly)

Which of the following statements applies to independent contractors?

They're supervised by their broker. Unlike employees, independent contractors can set their own hours, work in any location, and are paid by the job, not by the hour. However, both employees and independent contractors are subject to broker supervision. (They're paid by the hour, not by the job).

The mediation provision found in the sample purchase agreement you reviewed applies _________________.

To all parties, even if the provision is not initialed.

Use tax is owed to the state for the ____ of personal property

Use (purchase)

Actual gross potential income is offset by ________________.

Vacancy and credit loss (Operating expenses)

Which of the following situations would qualify as "more than casual," and therefore require an agency disclosure form to be signed?

When a 'for sale by owner' seller asks a licensee whether the licensee believes the house is overpriced Reliance on the licensee's advice would be a tip off that a relationship has become more than casual. (When a listing agent shows an unrepresented buyer their own listing)

Savvy is a buyer's agent whose client made an offer on a property, but is having second thoughts. Savvy tells her client that she'll ask the seller's agent for an extension on the inspection period "to gather more bids," and use that time to look at other properties while avoiding losing out on the current property. Savvy's client found a property she liked better, so they made an offer. The offer was accepted, so Savvy contacted the first property's agent to terminate that offer. Is this wrong?

Yes, she did not treat the other party honestly, or act in good faith. Licensees can't let duties to their client blur the duties of honesty and fairness to others. Savvy was deceptive when she told the seller's agent she wanted to gather more bids. (Yes, she broke a contract)

You have listed a property for Jim and Alice, a couple who loves DIY projects. Does the TDS provide a place for sellers such as these to disclose non-permitted work they have done on the property?

Yes, they can record such issues in the seller's information section of the TDS.

If you're working with a seller client who agreed to pay for the cost of a home warranty during negotiations, do you need to add an additional provision to the sales contract?

Yes, unless it's already included in the contract.

Mobile homes are subject to _________ tax after they are sold.

property

If a seller removes a building from the land prior to sale of the property, the seller may be responsible for paying _______ on that building

sales tax