Real Estate Wrong Questions from Practice Tests
If a contractor violates Article 36-A relating to payment schedules, how high can the fine be?
$250 or 5% of the contract price, up to $2,500 - The fine can be up to $2,500, or 5% of the contract price, whichever is less. The minimum fine is $250.
q - What types of misrepresentation exist?
- Positive and unintentional - Misrepresentation can be either positive or unintentional.
q - Paul allows his real estate license lapse. One year later, he decides to reactivate his license. To do so, he needs to _________
.a - Complete all of the requirements for renewal by meeting the CE requirement, submitting the application, and paying a feeAs long the requirements for renewal are met within the renewal period, you're good to go.
q - A dual agency disclosure informs the parties of the risks involved in dual agency and obtains their permission for assuming that risk. A copy of the signed disclosure ______________
.a - Must be kept by the licensee providing it for three yearsThe signed disclosure must be retained by the licensee for three years.
q - An unrepresented ______ who's a party to a transaction is known as a principal
.a - customer - A customer is a principal when the customer is a party to a transaction, such as a buyer or a seller.
According to Article 36-A of the New York General Business Law, how long does a homeowner have to cancel a home improvement contract after signing it?
3 days - Homeowners have three days in which to cancel home improvement contracts covered by Article 36-A.
If an appraisal is lower than the agreed-upon sales price, what steps can the seller take?
A second appraisal can be ordered, although there should be good reason to question the first appraisal. It's rare for a second appraisal to help, and it can sometimes backfire. For that reason, a second appraisal should be ordered only if there's good reason to question the validity of the first one.
q - Which of the following is an example of constructive eviction
A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.
What do you get when you add the purchase price to closing expenses and the cost of any improvements during the time of ownership, then subtract any depreciation taken?
Adjusted basis
Whether commercial, agricultural, residential, or industrial, all real property within a jurisdiction has which of the following characteristics?
All are assessed. - They're all assessed, but they may be either exempt or taxable, depending on the circumstances and property type.
q - Licensing procedures and regulations for mortgage professionals are regulated by _________
Articles 12-D and 12-E of New York Banking Law
q - Licensing procedures and regulations for mortgage professionals are regulated by _________.
Articles 12-D and 12-E of New York Banking Law
q - When you're putting together a listing presentation, which of these is a key point to address?
Buyers won't pay more for a home than the market dictates. Sellers need to know that buyers dictate price, not sellers and not real estate licensees.
Which of the following prohibits any licensee from soliciting in a specific area in New York state? a -
Cease and desist zone A cease and desist zone is defined by the New York State DOS as an area designated in regulation to address aggressive real estate solicitation. State regulations prohibit the solicitation of a real estate listing from any homeowner whose name appears on a DOS-issued cease and desist list.
What type of notice results from publicly recording a title transfer?
Constructive notice - The purpose of recording is to give the public constructive notice of a transfer of ownership. Recording doesn't transfer title; it informs the public that a transfer of title has occurred.
Which of the following is part of the eave system?
Fascia - The frieze board, soffit, and fascia are all part of the eave system.
Which act created the Office of Fair Housing and Equal Opportunity under the Department of Housing and Urban Development?
Federal Fair Housing Act of 1968
Broker Francine would like to move her office into her home, which is zoned as residential and, as such, does not permit signs in the yard or front windows. Francine ________.
Is NOT allowed to violate zoning ordinances in order to comply with license law. Brokers cannot violate law in order to meet a real estate requirement.
What effect does a pre-approval letter have on an offer?
It assures the seller that the buyer's financial information has been verified.The pre-approval is a verified pre-qualification. It provides more assurance to the seller that the buyer will be able to complete the transaction.
What's a practical reason many cooperative boards don't allow subletting?
It makes it difficult to qualify for loans or refinance.
Which of the following is true about the New York Fair Housing Notice?
It must be prominently displayed in all brokerage offices and branches. The New York Fair Housing Notice is an informational bulletin that must be displayed in the window of every brokerage office and branch, where it's visible from the sidewalk, or in another prominent location. It must also be prominently displayed on all brokerage websites.
When might the buyer be required to carry mortgage insurance to protect the lender from buyer default?
Less than a 20% down payment
According to the New York Attorney General's Office, a possible penalty for violating fair housing law is ______.
Making the housing or loan available that has otherwise been denied to the complainant Fair housing law violators may be required to make available the housing or loan the complainant was denied.
q - Which agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations?
Office of Fair Housing and Equal OpportunityIndividuals who have experienced housing discrimination can file a complaint with the Office of Fair Housing and Equal Opportunity. The FHEO is charged with enforcing fair housing laws.
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?z
Prior appropriation - The doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely live in the western part of the U.S. where many states subscribe to this doctrine.
the municipal officer who collects water bills, sewer rentals, permit fees, and other fees and charges payable to the local government is the _________.
Receiver of Taxes
The process of protesting a tax assessment starts with _______.
Reviewing a tentative assessment roll
To obtain financing to fund a cooperative purchase, a buyer will apply for a ______.
Share loan - Cooperative ownership is ownership in shares of a corporation, not real property.
Your client is upset and begins bad-mouthing the other party's ridiculous terms. In response, you should ______.
Stay calm, listen, and empathize - Don't let the conversation get emotional or personal. You can stay calm, listen, and empathize. Be the professional and stay objective.
Which of the following is a potential disadvantage for a buyer who enters into a lease with an option to buy contract?
The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease's terms.
q - When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale?
The licensee is permitted to list other properties for sale, even if they're competing properties.
Which of the following is a characteristic of New York's equalization program?
The program ensures equitable distribution of state aid for education funds and other functions. New York's equalization program ensures equitable distribution of state aid for education funds and other functions by attempting to measure locally assessed values against market value.
Which of the following will be issued only if title is acceptable and an attorney provides a certificate of title opinion?
Title insurance policy - The title commitment comes before closing; the title insurance policy is issued after closing. The commitment says that a title company is willing to issue title insurance under certain conditions. The policy provides coverage for the property.
You've committed a per se antitrust violation. Which of the following is true?
Your defense will not be allowed in court. A per se violation is one where guilt is determined simply by the circumstances; no defense is allowed, needed, or permitted.
q - Your client wants to include multiple contingencies in his offer. But you know several buyers are interested in the property, and it's going to be a competitive bidding situation. You say to your client, ___________.
a - "Let's evaluate which contingencies matter most to you and consider omitting the rest." - Just like buyers, sellers are looking for the most favorable terms. Contingencies create buyer loopholes that make sellers nervous. However, buyers shouldn't give away the farm.
q - Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?
a - $1,042.29 - In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).
q - An underground storage tank has been in place for 15 years. What is its remaining useful life, on average?
a - 0 - The typical underground storage tank has a useful life of 15 years. This one is at the end of its useful life.
q - A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?
a - 180 - The borrower will have 180 payments (assuming the loan isn't paid off early). This is 12 monthly payments per year for 15 years: 12 x 15 = 180.
q - PCB-like chemicals were discovered in the Hudson River as early as when?
a - 1865 - As early as 1865, PCB-like chemicals were discovered in the Hudson River.
q - According to the PMI Act of 1998, at what percentage of equity position does personal mortgage insurance automatically cancel for homeowners
a - 22% - The automatic cancellation is 22%, but homeowners can petition for removal once their equity position reaches 20%.
q - In New York, after an insurance policy has been in place for at least 60 days, how long must an insurance company wait before cancelling the policy or refusing to renew it (providing payments are kept up to date)?
a - 3 yrs - Insurance companies may not cancel or refuse to renew for three years after signing up a new policyholder provided the policy has been in place for at least 60 days.
q - John wants to do a 1031 tax exchange with a property he just sold. How many calendar days does he have to identify a new property for the exchange?
a - 45 - The new property must be identified within 45 calendar days from the sale of the relinquished property.
q - Which of these is an example of blockbusting?
a - A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she'll never be able to sell.
q - What is dynamic risk?
a - An uninsurable business risk resulting from economic, tax, and market changesDynamic risks are those business risks that cannot be lessened with insurance.
q - At the end of the three-year period, an insurance company can refuse to renew a policy, but it has to give notice. How much notice?
a - At least 45 days but not more than 60 days before the policy will terminate
q - Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?
a - Broker's price opinion - is not a detailed analysis but is a broad opinion of price.
q - The land use department with responsibility for building codes and building code enforcement is the ________.
a - Building departmentThe building department is responsible for building codes and building code enforcement.
q - Cam is a broker. His licensees, Jane and John, represent two sides in a single transaction. Jane represents the seller; John represents the buyer. What relationship does Cam have to the buyer and the seller?
a - Cam is a dual agent to both the buyer and seller.
q -Where can an agent report an antitrust violation?
a - Citizens Complaint Center of the DOJ's Antitrust DivisionAfter discussing the situation with their broker, agents should contact the Citizens Complaint Center of the DOJ's Antitrust Division.
q - Renae moved to the U.S. from Nigeria and became a citizen. Which act specifically provides Renae with the right to buy, sell, convey, inherit, and possess property?
a - Civil Rights Act of 1866The Civil Rights Act of 1866 provided the right to every U.S. citizen to buy, sell, convey, inherit, and possess property.
q - Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing?
a - Fair Housing Amendments Act of 1988 - In 1988, the Fair Housing Amendments Act provided consumers with certain remedies for discrimination, which added teeth to existing laws.
q - Katy's home that was listed for sale was destroyed by fire. Under which of these methods will her listing agreement terminate?
a - Force of law
q - What might Trina's mother have bequeathed to Trina?
a - Her jewelry and fine china - A bequest or legacy is a gift of personal property. In this case, Trina is the legatee (recipient).
q - Wilma died without a will. How will her heirs be determined?
a - If a person dies without a will, the order of inheritance is called intestate succession.
q - What's the definition of "potential gross income"?
a - Income that a property could bring if fully leasedBy calculating what a property could bring if fully leased, an investor can determine potential gross income.
q - Capitalization is the process of using ______.
a - Income to calculate value - Capitalization uses income to calculate value. The process uses a capitalization rate that's based on comparable companies.
q - Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?
a - Multiple listing clause - MLS clause
q - Which organization establishes relationships with financial institutions to offer home ownership programs that include down payment assistance through grants and favorable terms
a - NHF - The National Homebuyer's Fund (NHF) offers all of this and more to first-time home buyers and others.
q - Insurers are required to offer premium discounts for ______.
a - Preventive measures taken against hurricanes and storms. Insurers are required to offer premium discounts for some hurricane and storm protections, such as shutters or hurricane-resistant laminated glass.
q - When pricing a home for the market, what should a licensee try to get sellers to do?
a - Put themselves in the buyers' shoesBy viewing the property from a buyer's perspective, sellers can gain a realistic view of pricing.
q - In housing discrimination, punitive damages may be awarded to the complainant and New York may require ______.
a - Repayment of any profits realized from the discriminatory behavior - New York law may require the repayment of any profits the guilty party made off of the discriminatory behavior.
q - A bargain and sale deed may come with or without covenants of warranty. In most states, if it contains covenants, it is known as a __________.
a - Special warranty deedA bargain and sale deed with covenants is called a special warranty deed.
q - Augustine wants to move to a different area of town. He doesn't have a car; he prefers to walk or take public transportation everywhere. He's looking for housing near the subway. Communities designed and developed around access to public transportation are known as what?
a - TOD - Transit-oriented design or transit-oriented development (TOD) is a type of mixed-use development that focuses on access and proximity to public transportation, such as a train or subway line or bus station.
q. - Local governments can become involved in environmental conservation in which of the following situations?
a - The construction activities are within the local government's borders and near wetlands or within wetlands.Local governments are permitted to get involved when the construction activities are near or in wetlands that exist within the local government's borders.
q - Why might some agents work for buyers without ever having met them?
a - They're afraid to turn down any business.Some agents are willing to work for buyers without an agency agreement and without ensuring buyer loyalty. This can be a waste of time.
q - Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates?
a - To assess the adequacy of tenant income screening processesIf rental delinquency rates are increasing, it may be necessary to implement stricter income requirements and screening processes.
q - When pricing a property, which of the following is a reason a licensee would consider expired listings?
a - To determine the price at which a property won't sellKnowing the prices at which similar properties didn't sell can help a licensee show sellers what might be an unreasonable sales price expectation.
q - What's the purpose of sharing the history of buyer representation with buyers?
a - To show the progression toward buyer representation over time - Sharing the history of buyer agency demonstrates to buyers how agency has evolved to their benefit.
q - The buyers sign the sales contract on January 4 and the sellers orally confirm their acceptance on January 5 but do not sign the contract until January 6. If the buyers agreed to deposit earnest money within two days of offer acceptance, when must earnest money be deposited?
a - Within two business days after the sellers signed the contract - The contract is not considered accepted until the sellers sign it, so the earnest money must be deposited within two business days after the sellers actually signed the contract.
q - Licensee Janice has found a way to work with prospective buyers without ever leaving her desk: She sets them up with automated email messages for listings that meet their criteria, and answers any questions they have when they call. Is Janice doing anything wrong?
a - Yes, because she should meet them in person before working for them - Janice should meet buyers in person before she works with them. This demonstrates her professionalism and sets a solid foundation for an agent/client relationship.
q = SEQRA requires an environmental assessment by ___________ any time any action is taken that may impact the environment.
a - all govt' levelsSEQRA requires an assessment at all government levels.
q - What type of policy insures a home and contents against the perils in the HO-1 and other additional perils, such as falling objects, weight of ice, snow, sleet, and damage from water or steam discharge?
a - broad form policy - This is the broad form policy, so-called because of the broad range of calamities it insures against.
q - Dynamic and static risk are considered ________ risks.
a - business - Dynamic and static risks are types of business risks. One is insurable, the other is not.
q - Which of the following is an example of a universal agent?
a - conservator - A universal agent has broad authority to act on behalf of the principal, such as a person with a power of attorney or a conservator.
q - The parties are in conflict. What should they focus on to reach a resolution most quickly?
a - how conflict happened - How refocuses on resolving the conflict, rather than blaming the situation on an event or a person, or dwelling on the conflict.
q - Which fair housing case tested discrimination in a private sale?
a - jones vs mayer - The U.S. Supreme Court decision in Jones vs. Mayer stated definitively that racial discrimination is not allowed in any sale of property within the U.S.
q - Which type of agent is an escrow officer?
a - limited agent - An escrow officer works in limited agency capacity.
q - Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing?
a - loan estimate - The Loan Estimate provides buyers with the costs they are likely to pay at settlement and is closely related to the actual costs at closing on the closing disclosure.
q - Which of these is a dynamic risk?
a - market change - Dynamic risks are those business risks that cannot be lessened with insurance. This includes economic, tax, and market changes.
q - The assessed value is a percentage of ______.
a - market value - Assessed value is a percentage of the probable sales price (market value).
q - Transfer of which of the following always requires a certificate of occupancy?
a - new construction
q - Malcolm loves his apartment, even though he's rarely there. His job in international development has him on the road for months at a time. He doesn't have to worry about missing out on his lease renewal, though, because he has ______.
a - periodic estate - A periodic estate renews automatically at the end of each period specified in the lease agreement.
q - Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?
a - purhcase money mortgage - A purchase money mortgage is a type of seller financing in which the seller gives a mortgage to the buyer. It's put toward the purchase price.
q - All of these are components of the flooring system EXCEPT _______.
a - soffits - The sill plate, beam, and lally column are all flooring components. The soffit is part of the roof.
q - When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent?
a - special agent - Real estate licensees most often serve as special or specific agents. They have a limited scope of authority when compared to a general agent.
q - Forecasting the income and expenses that we can reasonably expect to bring in and pay out over a short term results in a budget that's every property manager's dream. That budget is ______.
a - stabilized - You can create a stabilized budget by carefully forecasting the income and expenses that you can reasonably expect to bring in and pay out over a short term, like five years.
q.- Roberta worked with an attorney to prepare her will. What kind of will is this?
a - statuatory - A will prepared by an attorney is called a statutory will.
q - Which hot water system gives a constant supply of hot water on demand?
a - tankless - With a tankless water heater, the flow of water activates a heating device.
q - Who is appointed by the Town Board and responsible for sewage, water supply and distribution systems?
a - town engineer -
q - In the New York town of Greenville, a citizen has requested a zoning variance in order to run a business out of her home, an activity that isn't currently allowed in the neighborhood where she lives. Before it makes a decision, the zoning board of appeals may seek input from ______.z
a - town's planning board - One of the planning board's responsibilities is to provide professional advice to all agencies and boards within the town on land use matters.
q - Issuing a pre-approval letter means that borrowers have completed the loan application and provided their debt, total income, and savings information, and the _______ has verified this information.
a - underwriter - The underwriter checks the applicant's creditworthiness and debt load, and verifies income before the lender will pre-approve the loan.
q - Which of the following is a type of loose-fill insulation?
a - vermiculite - Types of loose-fill insulation include vermiculite, perlite, wood paper, or cotton fibers.
What does DUST stand for?
demand, utility, scarcity and transferability
What's the process of paying off a loan by making periodic payments?
amoritization
q -Which lease clause verifies facts that are already in writing?
estoppel - Estoppel "stops" tenants from claiming they never agreed to prior terms by asking them to verify that they did so.
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns ______.
freehold estate
Paulo is a property manager for several large properties. Which type of agent is he in relation to the landlord/client?
general
q - In a mortgage, the property is used as collateral for the loan. What's the term for the process of pledging something as collateral?
hypocathation - Using a property as collateral for a mortgage is known as hypothecation. If it helps, think "Hypothetically, if I didn't pay my mortgage, you could take my house."
What is the most likely action by the DOS when a fair housing complaint made against a New York licensee is found to have merit?
suspend or revoke the license