RE practice test

When the court determines that a contract existed due to the actions of the parties, the contract is referred to as:

an implied contract.

Which would offer a potential borrower the most favorable interest rate over the life of the loan?

4.0% plus 8 points

Which clause in a deed states the interest that is being conveyed?

Habendum

Which document is a real estate broker NOT legally allowed to prepare?

Lease

Which of the following best describes a contract?

Legally binding

What is the function of a mortgage?

It secures the repayment of the debt.

What is the maximum fine that may be imposed for a first time violation of the Florida Fair Housing Act?

$10,000

An appraiser is appraising a three-bedroom home that has only one bathroom. The standard for the neighborhood is two bathrooms. From an analysis of the market, the appraiser believes a bathroom contributes $4,000 to the value of a home. If a comparable property having three bedrooms and two baths recently sold for $126,000, and is similar in all other respects to the subject property, what value should be estimated for the subject property?

$122,000

A Palm Beach County property is being sold for $98,350 and the buyer is taking title subject to an existing mortgage in the amount of $61,220. What is the total amount of taxes due in this transaction?

$688.80

If a Broward County property sold for $102,750, what must be paid for the documentary stamp tax on the deed?

$719.60

How is 10 mills expressed as a decimal?

0.01

The Florida Real Estate Commission was first created in what year?

1925

A borrower has applied for a loan. The purchase price of the property is $280,000. If the borrower has $70,000 as a down payment, what is the loan-to-value ratio?

75%

Which of the following statements is correct regarding a broker's authority to act on behalf of the principal?

A broker must follow all legal instructions of the principal or withdraw.

What is a broker associate?

A broker who is employed as a sales associate

Which of the following best describes the free enterprise system?

A market system

Which of the following statements is true regarding a mortgage loan originator (MLO)?

A mortgage loan originator must have a separate license

Which statement best describes a short sale?

A settlement agreement where the lender agrees to a sales price that is below the outstanding loan balance.

A five-year lease of a 10,000-square-foot warehouse prohibits assignment. After two years the tenant is unable to continue with the full rent payments and arranges with another tenant to take over one-half of the space and pay one-half of the rent for the remaining term. What is this arrangement called?

A sublease

Real estate licensees are required to be knowledgeable in all of the following areas, EXCEPT:

Accounting

Which of the following assignments would be acceptable for a Florida real estate licensee who does not represent themselves as an appraiser, and follows the Uniform Standards of Professional Appraisal Practice (USPAP)?

An assignment to give an estimate of value for an attorney in a divorce case.

What is the term used to describe the consideration given by a buyer to indicate serious intent to buy a property?

An earnest money deposit

A buyer negotiates a contract to purchase property, takes possession and pays the property purchase price in installments, but does not receive the legal title until the full purchase price has been paid. What is this agreement called?

An installment contract, contract for deed, or land contract

Which of the following would not be a typical use of a physiographic study in preparing a comprehensive city plan?

Anticipating the future need for new or widened roads.

What must an unlicensed individual do when ordered to appear before the DBPR?

Appear

There is a dispute over an escrow deposit. The parties agree to have a 3rd party hear both sides and make the final decision. What settlement (escape) procedure is being used to settle the dispute?

Arbitration

Which document most closely resembles a deed?

Bill of Sale

Which of the following list of actions contain ways that a contract could be terminated?

Breach, Performance, or Lapse of time

Which standard or process establishes the minimum standards for design and construction of buildings or structures?

Building codes

How are local planning boards be selected?

By appointment

All of the following methods may be used to estimate replacement/reproduction cost, EXCEPT:

Economic age-life

All of the following business formations can register to conduct real estate transactions, EXCEPT:

Corporation sole

Which service provided by real estate licensees requires the most experience and knowledge?

Counseling

A buyer has agreed to purchase the seller's home. The contract calls for a deposit of $10,000, to be placed in the broker's escrow account. The sales associate forgets to collect the deposit. The sale falls through and the seller is claiming the uncollected deposit as liquidated damages. What will the sales associate likely be charged with?

Culpable negligence

A developer contracts to build a home according to the buyer's specifications. This is an example of which type of building?

Custom

When a developer completes construction of a new subdivision, all streets, electric, water, and sewer installation are finished and deeded to the city or county. What is this process called?

Dedication

Which instrument transfers title from one individual to another?

Deed

Which clause in a mortgage requires the lender to acknowledge performance by the borrower?

Defeasance

Real estate taxes in a transaction are $1,034. If a closing is to take place on April 16, with the day of closing belonging to the seller and the 365-day method is used, what is the amount of the proration and how is it handled?

Debit the seller and credit the buyer $300.28

Which of the following might be indicated if a neighborhood appears to have an abundance of "For Sale" signs and an unusually high number of rentals available?

Decline in the neighborhood may be indicated

The range of penalties that may be imposed on a licensee by the Commission for violation of law or rules includes which of the following?

Denial, reprimand, fine, probation, suspension and revocation

Under the Florida Residential Landlord and Tenant Act, a landlord is required to do all of the following, EXCEPT:

Deposit advance rent and security deposits in an interest-bearing account

What does the bundle of rights in real property include?

Disposition, use, and exclusion

What type of risk is caused by changes in general business conditions?

Dynamic

Broker Tom sold a property which was listed with broker Alice. Tom was unable to attend the closing, so Alice collected the entire commission. Alice refused to pay Tom his share of the commission. What could Alice be charged with?

Failure to account

An appraiser who is registered, licensed, or certified under F.S. 475, Part II, must be utilized in which of the following?

Federally-related transactions

A buyer drops off an escrow check on Tuesday. To avoid any trouble with FREC, the broker must deposit the check by close of business on which day?

Friday

Which tax will not be required in a transaction where the purchaser assumes an existing mortgage?

Intangible Tax

Why is the process of real estate investment analysis important to an investor?

It helps an investor select properties that meet personal objectives.

Which condition correctly describes the requirement for a lease longer than one year to be enforceable?

It is in writing, signed by the landlord, and witnessed by two persons.

What is the purpose of a receivership clause in a mortgage?

It is used to protect the value of property during the foreclosure process.

To which organization is real estate tax most important?

Local government

What type of value does an appraiser most commonly estimate?

Market

When asked about the size of a home, the sales associate quoted the home as containing 5,300 square feet of living area. In reality the home was only 4,300 square feet. This is an example of which fraudulent activity?

Misrepresentation

Often a commercial lease requires the tenant to pay the rent, plus also separately pay taxes, insurance, and maintenance. This is know as a:

Net Lease

What type of lease, that is often a commercial lease, requires the tenant to pay the rent, plus also separately pay taxes, insurance, and maintenance?

Net Lease

Which insurance policies can a real estate licensee offer to the public without additional state licensing?

None of the above

Which of the following is required to obtain title by adverse possession?

Notorious, open, hostile, adverse and exclusive possession of the property for seven or more consecutive years

What is the term used to describe the party who receives an offer?

Offeree

All of the following are correct regarding the Americans with Disabilities Act (ADA), EXCEPT?

Owners must make all accessibility modifications with no regard to the cost of improvement.

What does the term title refer to in real estate?

Ownership

All of the following are responsibilities of a property manager, EXCEPT:

Preparing leases

What is the purpose of the National Association of REALTORS?

Preserve the right of individuals to own real property through an exchange of information.

Where would information such as the loan amount, interest rate, term of the loan, and responsible parties be found?

Promissory note

Which legal instrument evidences the debt and states the interest rate, term, payment requirement, and other information related to the loan?

Promissory note

What is the purpose of the Florida Homestead protection?

Provide protection of the Homestead property from the debts of an improvident breadwinner.

What document stipulates which party pays which expense in a closing?

Purchase and sale contract

Homeowners who file itemized tax returns are allowed deductions for which of the following items?

Real estate taxes and mortgage interest

Prior to deregulation of the banking industry in the 1980s, which institutions were dominant in providing funds for the purchase of single-family residences?

Saving associations

Which of the following best describes the real estate brokerage business?

Service business

Which brokerage relationship status includes a full fiduciary relationship?

Single Agency

How does the real estate market react to shifts in consumer demand?

Slowly

What does the term "farming" refer to in real estate?

Specializing in one geographic area

Which of the following establishes the time period for enforcement of a contract?

Statute of Limitations

A husband and wife purchase a home together, at the same time, on the same deed. What type of tenancy has been formed?

Tenancy by the Entireties

All of the following estates include legal title to real property, EXCEPT:

Tenancy for years

Four partners purchase a property together, at the same time, and on the same deed, without the right of survivorship. What type of estate have they formed?

Tenancy in common.

A real estate licensee who is working with a seller receives a call from another broker stating that, "I am representing a buyer as the buyer's broker. I'm standing in front of one of your listed properties with my buyer. "What can the licensee infer from this conversation?

The agent who is calling is in a single agency relationship.

Which statement is correct concerning an applicant whose real estate application was denied by the Department of Business and Professional Regulation?

The applicant must be notified in writing of the reason for the denial and advised of the right to request a formal hearing.

Which statement correctly applies to an actively licensed attorney who is a member in good standing with the Florida Bar?

The attorney is exempt from biennial 14-hour continuing education requirements to maintain a real estate license.

Who is paid the balance due from the buyer that is shown on the closing statement?

The closing agent

What does the designation of REALTOR® signify?

The designation identifies the real estate professional as a member of the NAR.

An active Florida licensee decides to move to North Carolina, but wishes to keep her Florida license active and continue to practice real estate in Florida. Which of the following best describes this situation?

The licensee must notify the Department of her change of address, and continue to comply with all Florida regulations.

Interest rates for Federal Housing Administration mortgages are determined by which of the following?

The market

What will be the effect if the Federal Reserve Board decides to purchase government securities in the open market?

The money supply will increase and interest rates will decrease.

When financing the purchase of real estate, what is the role of the mortgagor?

The mortgagor gives a mortgage to a mortgagee.

A real estate brokerage firm advertises a listed property. Which requirement is correct?

The name of the brokerage must be included in the ad.

Six individuals decide to form a real estate brokerage partnership. All six individuals are planning to be active in real estate sales. Which statement best applies?

The partnership must be registered with the Commission, and all six partners must be active real estate brokers.

Which of the following statements regarding abstract continuation and title insurance in a real estate closing is correct?

The seller can provide either an abstract of title or title insurance as evidence of merchantable or marketable title.

A real estate appraiser's fee for professional service is based on which of the following?

The time and difficulty of the appraisal.

Which of the following best describes licensees who are involved in business brokerage?

They must be able to analyze financial statements and understand balance sheets.

A licensed sales associate wishes to work for Broker A during the week, and works in a different town with Broker B on the weekend. Which statement best describes this situation?

This is a violation of FS 475.

What is the purpose of the FREC disciplinary guidelines?

To give licensees notice of the range of penalties that normally will be imposed for violation of a law or rule

What is the rationale behind government planning of real estate development?

To manage future real estate growth.

What is the purpose of the closing statement?

To summarize the financial aspects of a real estate transaction.

A sales associate failed to complete the required post-license education prior to their renewal deadline. What is the status of the sales associate's license?

Void

In which condition does market equilibrium theoretically exist?

When supply and demand are in balance

Complete the statement. When determining proration's on a closing statement, the day of closing:

is determined by agreement.

Complete the statement. To be enforceable, a lease longer than one year ________.

must be in writing, signed by the landlord and witnessed by two persons.

Complete the statement. An option contract is a unilateral contract, binding upon the:

optionor