State Exam Prep (Random Questions) 12/22

Homestead protection can be terminated in all of the following ways, except: A. If the homestead is sold B. If a creditor brings a legal action against the homesteader in bankruptcy court C. If the homesteader files a declaration of abandonment D. If the homesteader files a declaration of homestead on another property

B. If a creditor brings a legal action against the homesteader in bankruptcy court Homestead laws are favored by law and custom and are favorable construed to protect the homestead. Once a homestead is established, it is presumed to continue until terminated.

To record a lease, there must be an acknowledgement of the document by the __________ witnessed by an appropriate official. A. Lessee B. Lessor C. Notary D. Realtor

B. Lessor A requirement of recording is that a document must be acknowledged by the party transferring an interest in real property. For the transfer of a lease, that would be the lessor.

Prima facie means: A. First in priority B. Primary evidence C. Main balance D. Principal

B. Primary evidence The literal meaning of this Latin term is "at first look," or "on its face," referring to a fact presumed to be true or legally sufficient to establish that fact unless evidence is presented to the contrary.

A lesser-valued property is worth more due to a higher-valued property being nearby. This concept is termed the Principle of __________. A. Similarity B. Progression C. Favorable association D. Duplication

B. Progression The Principle of Progression is the opposite of the Principle of Regression. This appraisal principle holds that the worth of a residence of lesser quality will be raised by its association with residences of higher quality in the same area.

The judicial proceeding used to decide ownership when there is a "cloud on title" is called: A. Suit for partition B. Quiet title C. Action for unclouded status D. Partition

B. Quiet title A quiet title action provides a binding judicial ruling on which parties possess title.

The body of laws created in 1952 by a national commission and the American Law Institute to help regularize the law of sales across the nation is called the: A. Library of Sales Codes B. Uniform Commercial Code (UCC) C. National Sales Standardization Protocol D. None of the above

B. Uniform Commercial Code (UCC) States periodically change the way they apply the various UCC provisions, as California did most recently in 2014 when it amended how individual debtors are identified in UCC financing statements.

Borrower Brian defaults on a scheduled event in his loan agreement, his monthly payment. Lender Lennie then has the right to declare Brian's entire loan balance--all the principal amount still owed--due and payable without delay, because of a(n): A. Alienation clause B. Forfeiture clause C. Acceleration clause D. Due-on-sale clause

C. Acceleration clause The acceleration clause enables the lender to demand payment of the entire balance if the borrower defaults on any portion of the loan agreement. Exercising the acceleration clause is also termed "calling the note" or the "call provision."

Which of the following is not an example of police power? A. Zoning ordinances B. Building codes C. Condemnation D. Subdivision regulations

C. Condemnation To protect the public from problems caused by the unrestricted usage of private property, the government can impose regulatory controls without the need to compensate the private owners for their compliance. Condemnation, the taking of property for legitimate public use under the power of eminent domain, must include just compensation provided to the owner.

In business, "liquidity" refers to: A. Whether the business can be sold within 90 days B. Yearly receipts C. Current assets and current liabilities D. Bank deposits

C. Current assets and current liabilities Liquidity refers to the availability of cash for a business. Subtracting current liabilities from current assets demonstrates how much cash is available.

Which of these instruments must be recorded in the county recorder's office to be valid? A. Easement in gross B. Commercial rental lease C. Declaration of Homestead D. Land contract

C. Declaration of Homestead Although some states require that land contracts be recorded for validity, California does not. Easements and leases also do not need recording, but a Declaration of Homestead does.

The right of a utility company to string power lines across privately-owned land is an example of: A. Zoning ordinance B. Eminent domain C. Encumbrance D. Condemnation

C. Encumbrance An easement is gross is an easement that is not created to benefit a particular parcel of land, but to benefit a specific user, in this case a power company. Easements in gross are in the larger category of encumbrance.

This kind of damages is meant to place the party damaged by a breach of contract in the position they would have had if the breach had not occurred: A. Fairness damages B. Compensating damages C. Expectation damages D. Damages of consequence

C. Expectation damages An award of expectation damages protects the injured party's interest in realizing the value of the expectancy that was created by the promise of the other party.

The following is NOT a major participant in the secondary mortgage market: A. Ginnie Mae B. Fannie Mae C. Federal Reserve Board D. Freddie Mac

C. Federal Reserve Board The Fed regulates the nation's monetary policy and greatly influences the economy. The other three agencies supply mortgage funds by transferring them from U.S. regions with a surplus of funds to those areas with a shortage.

A listing agreement authorizes a broker to __________. A. Accept offers at his own discretion on the owner's behalf B. Convey title to the property C. Find a buyer who is ready, willing, and able to buy the property on the owner's terms D. None of the above

C. Find a buyer who is ready, willing, and able to buy the property on the owner's terms Listing agreements are employment contracts, usually with the broker promising his best efforts to find a suitable purchaser and the owner promising to pay a commission is such a buyer is found.

Prospective buyers should be able to assume that whatever is attached to the property that is essential to its use will be included when proeprty possession is conveyed. A. Appurtenant B. Landmarks C. Fixtures D. None of the above

C. Fixtures Prospective buyers should be able to assume that whatever is attached to the property that is essential to its use will be included when property possession is conveyed.

A property may lose its homestead status if the: A. Homestead owner builds another property B. Homestead owner moves out of state C. Homestead owner records another homestead D. Homestead property is destroyed in a flood

C. Homestead owner records another homestead Someone can homestead only one property at a time. Moving from the home or its destruction does not invalidate the homestead.

In regard to tax purposes, the assessor would consider a new well installed at a farm as a(n): A. Maintenance B. Addition C. Improvement D. Personal property

C. Improvement Improvements to real property are developments of land or structures on property that do more than merely replace, repair, or restore the original condition. Improvements are characterized as being permanent and adding to the value of the property. Although the well is underground, the tax assessor will likely still judge it to be an improvement, raising the property's assessed value.

Sellers can extend credit to a buyer through use of a: A. Deed B. Option C. Land contract D. Easement

C. Land contract Under the terms of a land contract, the buyer assumes ownership of the property so long as he meets the terms of the contract. Land contracts provide property buyers with an opportunity to buy a tract of land or a building without having to qualify for a mortgage.

For a lender, a major selling point for making purchase money mortgage loans is that such loans take priority over: A. Federal tax liens B. Seller's liens C. Liens against the purchaser in effect at the time of purchase D. None of the above

C. Liens against the purchaser in effect at the time of purchase If at the time the purchaser obtains a purchase money mortgage there is a judgment recorded against him, then the mortgage will take priority over the judgment if there is a trustee's or foreclosure sale.

The maker of a note could employ which of these legal defenses against a holder in due course: A. Duress influencing note agreement B. Payment to redeem the note C. Material changes D. Either A or C

C. Material changes A holder in due course (HDC) takes a negotiable instrument free of all claims. Defenses to an HDC claim fall into two categories: a "real defense," which would include a material altercation, and could prevail against the HDC; or, a "personal defense," covering the other answer, which do not overcome an HDC claim.

The lease agreement should specify when rent is to be paid. If the lease does not specify a date, then rent is due: A. On the 15th day of the month B. On the first day of the month C. On the last day of the leasing period D. None of the above

C. On the last day of the leasing period Rent collection is usually overseen by the property manager.

If a purchaser with a land contract is paying taxes and insurance premiums into an impound account, those payments cannot be disbursed for a different purpose without the consent of the: A. Seller B. Beneficiary C. Payor D. Tax assessor

C. Payor The person paying those impound amounts--the payor--is the only one who can order a differing use for those funds.

A purchase agreement contract may be amended by a: A. Broker or a principal B. Broker or an escrow agent C. Principal only D. Broker only

C. Principal only Contract revisions can only be made by a principal.

If a purchaser under a land contract makes deposits into an impound account designated to cover taxes and insurance, those funds cannot be used for any other reason without consent by the: A. Beneficiary B. Seller C. Purchaser D. Impound accountant

C. Purchaser The purchaser paying the impound amounts--the payor--is the only person authorized to spend those funds on a different purpose.

The opposite of "commingling of trust funds" by a real estate licensee would be: A. Losing trust funds B. Investing trust funds C. Segregating trust funds D. Conveying trust funds to a trustor

C. Segregating trust funds The definition of commingling is mixing. Funds belonging to a licensee may not be commingled with trust funds, it is a violation of Real Estate Law and the Regulations of the Real Estate Commissioner to do so. Segregate means to keep separate.

An escrow agent is empowered to: A. Alter the escrow terms when asked to do so by one of the parties B. Determine which financing offers the best terms to the buyer C. Select which security system is to be installed at the property D. Call for the loan to be funded by the purchaser

D. Call for the loan to be funded by the purchaser An escrow agent, or officer, is a neutral third party, whose role is to carry out the escrow instruction agreed to by the parties. Such instructions usually authorize the agent to call for the funding of the purchaser's loan. Escrow agents cannot make any changes to the escrow instructions or demonstrate any bias toward one party over the other.

If a lessee assigns their lease to another party, the lessee: A. Is relieved of all responsibilities under the lease B. Could still be responsible for just rent payments C. Could still be responsible for just maintenance charges D. Could still be responsible for both rent payments and maintenance charges

D. Could still be responsible for both rent payments and maintenance charges The assignment of a lease does not relieve the lessee of responsibilities under the lease terms (only an assumption of the lease frees the lessee of agreed-to obligations).

Jonah sells his partnership interest in a general partnership in order to pay his largest creditor, Whale Enterprises. Jonah's sale of his partnership interest to Whale will: A. Dissolve the partnership B. Make the creditor a new partner C. Either A or B D. Have no effect on the partnership

D. Have no effect on the partnership Since the partnership interest is the sole property of the partner, transferring it to another party has no impact on the partnership. So, any partner can transfer his interest freely without destroying or otherwise changing the partnership; the creditor has no rights in the partnership at all.

The kind of loan usually made by a private lender, with a high rate of interest and backed by the value of the property, not the borrower's credit score, is a: A. Soft money mortgage B. Hard money mortgage C. Construction mortgage D. Package mortgage

B. Hard money mortgage This "hard loan" is a cash loan earmarked for a property purchase.

All of the following are encumbrances, except: A. Lease B. Homestead exemption C. Mechanic's lien D. Easement

B. Homestead exemption An encumbrance is any legal interest held by someone other than the owner of real estate.

Sale or rental transactions of properties built before __________ require a lead-based paint disclosure. A. 1998 B. 1988 C. 1978 D. 1968

C. 1978 Buyers of these houses must be allotted a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards.

When a new party is substituted for an existing party in an agreement, it is called a(n): A. Assignment B. Novation C. Liquidation D. Contract dischargement

A. Assignment Unlike assignment, novation cannot be performed without the consent of all the parties.

Once a listing agreement is signed, a fiduciary relationship exists between the: A. Broker and seller B. Broker and buyer C. Broker, buyer, and seller D. No fiduciary relationship exists

A. Broker and seller The broker and seller are the two parties to a listing agreement. The listing creates an agency relationship, which places the agent (the broker) in a position of trust--owing a fiduciary duty--to the principal (the seller).

A deed restriction would be enforced by a: A. Court injunction B. Zoning official C. District Attorney D. The Bureau of Real Estate

A. Court injunction Deed restrictions limit an aspect of a property's use. When a restriction on a deed is not followed, a court injunction blocking the violation from recurring would be the most appropriate legal action to pursue.

A real property lease creates a(n): A. Estate for years B. Attachment lien C. Freehold estate D. An estate at will

A. Estate for years Leases require a definite termination date, which applies to none of the other options.

Surveys show that classified ads are most commonly used by people __________ as their primary method for finding real estate properties. A. In their 50s B. In their 30-40s C. In their 20s D. In all age groups

A. In their 50s Those under 50 are more likely to rely primarily on the internet in search of properties.

Which kind of estate provides the right of survivorship? A. Joint tenant B. Tenant in severalty C. Life estate D. Tenant in common

A. Joint tenant Joint tenancy describes the ownership of a property interest by two or more parties, each of whom has an undivided interest with the right of survivorship (sharing equally in the interest of a deceased joint tenant with the surviving tenants).

A 50-year-old residential property and a new residence are on comparable lots. The cost approach would be more efficient in appraising the: A. New residence B. Old residence C. Either residence D. The cost approach cannot be used for residential properties

A. New residence The cost approach is more efficient for the new residence than the 50-year-old one because of having to calculate the depreciation for the older property.

An interested buyer makes an offer to a broker of $900,000 on a property that is listed for $1 million. The seller responds with a counteroffer of $950,000 communicated by the broker to the prospective buyer who makes no response. A week later, the seller instructs the listing broker that he is accepting the buyer's first offer of $900,000. At this point, the parties have: A. No agreement B. A valid agreement C. An agreement that can be modified as to the asking price by the buyer D. A conditional agreement with a fee simple defeasible

A. No agreement The original offer was terminated when the seller submitted a counteroffer. No contract will be formed between the parties unless and until the potential buyer accepts the counteroffer.

Escrow services are normally provided by title companies in: A. Northern California B. Southern California C. Los Angeles County only D. Title companies are not authorized to serve as escrow agents

A. Northern California In Northern California, title companies are generally the escrow agents; in Southern California, independent escrow agents normally close most transactions. Many institutional lenders have their own escrow departments.

Sondra owned a lot with an appurtenant easement across Jerry's property. If Sondra sells her property to Ellen, without mentioning the easement in the deed of conveyance, the easement: A. Passed to Ellen, the new owner B. Went with Sondra, the old owner C. Reverted to Jerry, owner of the servient tenement D. Either A or C, at the discretion of the county recorder

A. Passed to Ellen, the new owner An easement appurtenant runs with the land, and so would automatically pass to the new owner of the dominant tenement enjoying the benefit of the easement.

"Time is of the essence" is wording most likely to be found in a(n): A. Purchase agreement B. Listing agreement C. Gift deed D. Option agreement

A. Purchase agreement "Time is of the essence" refers to the failure to meet deadlines being a material breach of contract, and is usually placed in contracts transferring real property, such as a purchase agreement.

Which of the following statements is true regarding straight notes, a kind of promissory note: A. Require interest payments only until a balloon payment on the balance is made at the end of the term B. Require payments for a portion of the principal along with interest payments throughout the term of the note C. Cannot be used as security for a mortgage D. The lender of a straight note cannot assign it to someone else

A. Require interest payments only until a balloon payment on the balance is made at the end of the term Straight notes require only interest payments during the term of the loan, while installment notes involve making payments on the principal amount as well as interest. Promissory notes are secured by a mortgage or deed of trust. Unless specifically prohibited in the language of the note, a promissory note is assignable by the lender.

All of the following are included in the bundle of legal rights, except: A. Right of survivorship B. Right of exclusion C. Right of exclusion D. Right of enjoyment

A. Right of survivorship The right of survivorship is found in joint tenancy and tenancy by the entirety, but not a part of the bundle of legal rights.

__________ is personal property, not real property. A. Stock in a corporation B. Airspace over an airport C. Apple orchard D. Mineral rights

A. Stock in a corporation Personal property may also be called chattels or personalty. Stock in a corporation is movable, and so, it is personal property.

A promissory note that requires interest payments only through the note's term is called a(n): A. Straight note B. Amortized note C. Short-term note D. Adjustable rate mortgage

A. Straight note With just interest payments being made throughout the term, this results in the principal being paid in a lump sum upon the loan's maturity.

The substitution of one party in place of another is termed: A. Subrogation B. Substitution C. Party replacement D. Reliction

A. Subrogation Subrogation is the substitution of one creditor for another; the substituted person succeeds to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire the rights to sue from the injured party in order to recover any claims they have paid.

Elaine, George, and Owen are siblings who own a home as joint tenants. George sells his share to Jerry. Jerry is now a: A. Tenant in common with Elain and Owen B. Tenant in the entirety with Elain and Owen C. Tenant at will with Elain and Owen D. Joint tenant, with the same property interest possessed by George

A. Tenant in common with Elaine and Owen The unities of time, title, interest, and possession are required for a joint tenancy to be established and maintained. When George sold his property share to Jerry, the unity of time and title was broker. While Elaine and Owen remain joint tenants, Jerry becomes a tenant in common with the two of them.

If a salesperson resigns or is discharged by his broker, the broker must return the license certificate of the salesperson within: A. Three business days B. 10 business days C. One month D. A calendar year

A. Three business days When a salesperson becomes employed by a broker, the Commissioner must be notified within five days.

The following statements regarding a broker's trust account are true, except: A. Trust funds received by a broker must be deposited in a trust account B. Trust funds cannot be deposited into an interest-bearing account C. A minimum balance is not mandatory D. Trust funds cannot be deposited into an account also containing rental income and security deposits from broker-owned properties

A. Trust funds received by a broker must be deposited in a trust account Trust fund amounts do not have to be deposited into a trust account, they may also be paid directly to the seller or deposited into escrow or another neutral account. The buyer and seller together may also provide alternate instructions for deposit.

A transaction involving the sale of a property is considered a transfer of title by: A. Voluntary alienation B. Involuntary alienation C. Eminent domain D. Bequest

A. Voluntary alienation Voluntary alienation is an act committed by the party; involuntary is by act of law, as is a property transfer via eminent domain. A bequest by will is not a sale.

According to the terms of an agreement, a broker is to receive a commission of 7% of the sales price of a particular property that eventually sells for $300,000. How much commission will the broker receive? A. $50,000 B. $21,000 C. $2,100 D. $1,000

B. $21,000

RESPA (Real Estate Settlement Procedures Act) applies to lenders who make federally-related loans to: A. Properties valued at $250,000 or more B. 1-4 family unit residential dwellings C. Subdivisions D. Commercial buildings

B. 1-4 family unit residential dwellings RESPA mandates that lenders of federally-related mortgage loans make all necessary disclosures to loan recipients.

If a borrower makes full payment on a note secured by trust deed on his property, the trust deed beneficiary must arrange for the reconveyance within: A. Five days of the payment B. 30 days of the payment C. Six weeks of the payment D. There is no time deadline to make the reconveyance

B. 30 days of the payment The trust deed beneficiary must arrange for the reconveyance within 30 days of the payment.

A written summary of the Chain of Title for a parcel of real property taken from public records is called a(n): A. Abridged Chain of Title B. Abstract of Title C. Title Update D. Link of Title

B. Abstract of Title An Abstract of Title, or Title Abstract, summarizes the various activities affecting ownership of a piece of land.

The income approach to appraisal is based on all the following principles, except: A. Substitution B. Addition C. Comparison D. Anticipation

B. Addition The income approach evaluates the current value of the future benefits derived from ownership of the property. The property's value is mainly based on its potential to continue producing income.

Back-end debt describes the borrower's debt obligations for: A. Mortgage payments only B. All monthly debt payments combined C. Escrow payments before the property sale closes D. Agency fees

B. All monthly debt payments combined Back-end debt includes the mortgage payments and all the borrower's other regular credit card payments, auto loans, credit card bills, etc. It is also called the total debt-to-income ratio, which lenders use to calculate if a borrower will be able to meet the obligations of a loan.

A broker's classified advertisement for a home he has a listing for includes the following information--"3 bedroom, 2 bathroom home, fireplace, patio, hot tube. Price is $350,000. Call 555-385-8764." This is an example of a: A. Display ad B. Blind ad C. Specific ad D. California Realtors Association ad

B. Blind ad Failing to show the name of the broker in an advertisement is called a blind ad, a violation of the Real Estate Law.

The duties of an industrial property manager likely do NOT include the following: A. Verifying the operation of the fire-alarm system B. Composing the lease agreements C. Hiring security guards D. Maintaining the building's landscaping

B. Composing the lease agreements Leasing agreements are usually written by the leasing agent or another real estate agent or broker.

The land description method that refers to the terms townships, sections, and ranges is: A. Leaps and bounds method B. Government survey method C. Rectangular circumscribing method D. Land analysis system

B. Government survey method The government survey method specifies the location of property through its location in a particular township, section, or range.

A lease where the tenant pays $500 per month for five years, with the landlord paying taxes and fees, is called a: A. Net lease B. Gross lease C. Percentage lease D. Month-to-month lease

B. Gross lease In a gross lease, the tenant pays a flat rental amount, and the landlord pays for all property charges regularly incurred by the ownership. Most apartment leases are gross leases.

Which of the following is not a tool used by the Fed to regulate the economy? A. Manipulating interest rates B. Regulation of the secondary mortgage market C. Open market operations D. Reserve requirements

B. Regulation of the secondary mortgage market The Fed has no power to regulate the secondary mortgage market. However, by raising or lowering interest rates, the Fed can slow or stimulate economic activity and control inflation. Open market operations relate to the Fed buying or selling Treasury bonds to increase or decrease the total supply of money and also affect interest rates. Reserve requirements determine the level of reserves a bank must hold in comparison to deposit liabilities; this affects how banks make loans, a key element of the economy.

Generally, all modern building foundations are made with: A. Wood sheathing B. Reinforced concrete C. Insulated copper D. Drywall

B. Reinforced concrete The reinforcement is usually with steel reinforcing bars (rebar) embedded in the concrete before it sets.

Among the following choices, the beneficiary of a trust deed would most probably be the: A. Borrower B. Savings & Loan C. Trustee D. Seller

B. Savings & Loan The beneficiary of a trust deed is the lender

If a deposit receipt states that a property is sold "as is," then the: A. Seller has no obligation to disclose material defects to the buyer B. Seller still has an obligation to disclose material defects to the buyer C. Clause does not apply if defects are not immediately apparent D. "As is" clauses are illegal in California

B. Seller still has an obligation to disclose material defects to the buyer Although a seller is still obligated to disclose material defects, "as is" denotes that the buyer is accepting a property with all its faults, even if such faults are not immediately apparent. A prudent buyer will consult an expert to inspect the property for flaws before agreeing to a contract containing such a clause.

In Southern California, most escrows are performed by: A. Attorneys B. Separate escrow and title companies C. Property managers D. None of the above

B. Separate escrow and title companies In Southern California, there is usually a separate escrow and title company involved.

Borrower Barry did not repay a secured loan as agreed, and Lender Lawrence foreclosed by filing a lawsuit against Barry in the county court where the property was located. The court found in Lawrence's favor, issued a decree of foreclosure, and ordered a sale of the property to be held to satisfy the debt. This is called a: A. Fire sale B. Sheriff's sale C. Foreclosure sale D. Deed sale

B. Sheriff's sale While the foreclosure is still pending, the borrower can still cure the default by paying the past due amount, plus legal fees, and regain the property. This is called reinstatement.

For real estate professionals, "farming" refers to: A. Dividing work time into seasons: seeking listings in the summer, selling in the fall, conducting open houses and going door-to-door in the spring B. Targeting prospects in a specific geographical area C. Both A & B D. Selling property in a rural area

B. Targeting prospects in a specific geographical area Farming is an expression used to illustrate the process of targeting a specific geographical area or interest group to generate a list of potential buyers and sellers.

Buyer Brian makes an offer to purchase real property from Seller Sandy and provides a deposit. If Brian subsequently withdraws his offer before Sandy accepts it, then: A. The seller can successfully sue the buyer for specific performance B. The buyer can recover his deposit C. The broker can successfully sue the buyer for specific performance D. The seller can keep the earnest money deposit

B. The buyer can recover his deposit Since no contract has been formed, the buyer can recover his deposit. An offeror may withdraw or cancel an offer if the offer has not yet been accepted.

Agency is referred to as the relationship between the agent and his principal. All of the following statements are correct about agency, except: A. Agency may be an expressed contract B. The principal must pay money to the agent to create an agency relationship C. Agency may be an implied contract D. An agreement that may be in writing or verbal

B. The principal must pay money to the agent to create an agency relationship Answers (a), (c), and (d) are correct statements applicable to an agency relationship. Answer (b) is false. An agency relationship does not require the payment of money.

Which of the following most resembles the relationship between a broker and a seller? A, Broker and salesperson B. Trustee and beneficiary C. Mortgagor and mortgagee D. Vendor and vendee

B. Trustee and beneficiary A broker is like an agent, while the seller is like the principal to whom the agent owes a duty. In the closest comparison, a trustee is like an agent working for a beneficiary, or the principal. The other relationships: broker-salesperson/employer-employee; mortgagor-mortgagee/borrower-lender; and, vendor-vendee/seller-buyer.

The Real Estate Law designates a duty upon a real estate agent to his principal of undivided interest and loyalty. This relationship can be compared to the one between a: A. Renter to his landlord B. Trustee to his beneficiary C. Teacher to her student D. None of the above

B. Trustee to his beneficiary A trustee is an agent and the beneficiary is his principal, establishing a fiduciary relationship.

In order to authorize a conventional loan, many lenders require an applicant to have: A. Financing assistance from a friend or a relative for a down payment B. Two months or more of mortgage payments in reserve C. A steady job with the possibility of advancement D. Three or more previously paid-in-full mortgage loans

B. Two months or more of mortgage payments in reserve Lenders refer to the money which is still available to a borrower after making a home purchase as "reserves." Borrowers with a higher amount of reserves are viewed as lower risks; two months of payments is considered the minimum amount of reserves needed, with the funds usually in the form of bank accounts, stocks, IRAs, etc.

The body of laws created in 1952 by a national commission and the American Law Institute to help regularize the law of sales across the nation is called the: A. Library of Sales Codes B. Uniform Commercial Code (UCC) C. National Sales Standardization Protocol D. None of the above

B. Uniform Commercial Code (UCC) States periodically change the way they apply the various UCC provisions, as California did most recently in 2014 when it amended how individual debtors are identified in UCC financing statements.

The conforming loan limit for California counties is: A. $33,000 B. $100,000 C. $417,000 D. There are no limits on conforming loans

C. $417,000 Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the conforming loan limit. Loans above this limit are known as jumbo loans.

If the value of the land is $350,000; the cost of building a home on the land is $300,000; and, the accrued depreciation is $45,000, how much is the property worth using the cost approach to appraising? A. $500,000 B. $45,000 C. $605,000 D. $5000

C. $605,000 Accrued depreciation is the difference in cost accumulating over time between the replacement value of a new building and its current appraised value. The formula for the cost approach is: land value + new building cost - accrued depreciation = property value $350,000 + $300,000 - $45,000 = $605,000

A real estate brokerage firm was paid $40,000 in total commission for the sale of a property. Payments to the firm included 8% on the first $200,000, 6% on the next $200,000 and 5% on the remainder. The property's sales price was: A. $400,000 B. $550,000 C. $640,000 D. $750,000

C. $640,000 $200,000 * 8% = $16,000 $200,000 * 6% = $12,000 $16,000 + $12,000 = $28,000 $40,000 - $28,000 = $12,000 $12,000 / 5% = $240,000 $240,000 + $200,000 + $200,000 = $640,000

Prepaid rental listing agents are required to do the following, except: A. Return the client fee if no referrals are submitted within five days of the agreement's execution B. Provide a contract and receipt for every potential tenant, promising the return of their fee if certain circumstances are met C. Submit an account statement to the Real Estate Commissioner on a quarterly basis D. Refund any funds over $25 if a rental is not procured

C. Submit an account statement to the Real Estate Commissioner on a quarterly basis A prepaid rental listing agent is required to keep records available for the Real Estate Commissioner's inspection at any time. Agents should be prepared to submit quarterly reports to principals regarding how the funds are used.

Presented with two differing pest control reports for a property in escrow, the escrow officer should: A. Submit the report to the parties that shows the least amount of damage B. Submit the report to the parties that shows the greatest amount of damage C. Submit both reports to the parties for them to decide which one to use D. Submit the reports to the broker and ask her which report to submit to the parties

C. Submit both reports to the parties for them to decide which one to use. As a neutral third party acting on behalf of both buyer and seller, an escrow officer does not decide which report to use, or consult a broker; rather, the officer submits both reports to the parties.

A provision in a security instrument stating that the instrument will have a lower lien priority than another mortgage or deed of trust is called a: A. Acceleration clause B. Secondary lien position clause C. Subordination clause D. Priority positioning clause

C. Subordination clause This clause makes it possible for a later-recorded security instrument to assume a higher priority lien position. Usually, subordination clauses are used in mortgages securing purchase loans for unimproved land, when the borrower is planning to obtain a construction loan later from a lender who will demand the superior lien priority.

Information from a Chapter 7 bankruptcy are kept on credit records for __________. A. Five years B. Seven years C. Ten years D. Forever

C. Ten years Chapter 7 bankruptcy information remains on credit reports for ten years.

The contract of sale is also called each of the following, except: A. An agreement of sale B. Installment sales contract C. Unconditional sales contract D. Conditional sales contract

C. Unconditional sales contract Like the contract of sale, the other answers refer to conditional sales contracts through which a seller holds the title until the contractual obligations have been fulfilled; title is then transferred.

The unities of title needed to create a concurrent estate--joint tenancy, tenancy by the entirety, tenancy in common--are: A. Unity of time, unity of place, unity of estate, unity of interest, unity of space B. Unity of possession, unity of property, unity of interest, unity of estate C. Unity of time, unity of title, unity of interest, unity of possession D. Unity of purpose, unity of possession, unity of title

C. Unity of time, unity of title, unity of interest, unity of possession There are four unities of title, grouped under the acronym of T-TIP. Unity of time (property interests must vest at same time), unity of title (grant must be on same deed), unity of interest (all tenants must take same kind and amount of property interest), unity of possession (all tenants must have the same rights of possession).

The following are ways that staging is used to improve the desirability of a home being shown to potential buyers, except: A. Removing clutter B. Replacing window shades C. Upgrading earthquake insurance D. Eliminating food odors

C. Upgrading earthquake insurance While confirming the adequacy of home insurance for a house on the market is advisable, staging is concerned with highlighting a home's strengths and downplaying its weaknesses in ways that are visible to visitors.

The most commonly-used type of home construction material is: A. Corrugated metal B. Stucco C. Wood frame D. Granite

C. Wood frame Wood is preferred due to its low cost, ease of construction, and design flexibility.

An ALTA policy of title insurance does not insure against: A. Forgery B. Defects in the chain of title C. Zoning changes D. Parties in possession

C. Zoning changes Neither ALTA or the CLTA policy safeguards against zoning rules.

When a real estate agent acts exclusively as a buyer's agent, he can do all of the following except: A. Present offers directly to the seller B. Present offers to the seller and seller's agent C. Withhold confidential information about the buyer from the seller D. Act as an exclusive agent of the seller

D. Act as an exclusive agent of the seller When the licensee is the exclusive agent for the buyer, he may not be the exclusive agent for the seller.

An appraiser would use which of the following for a Comparative Market Analysis (CMA): A. Current listings B. Homes recently sold C. Listings recently expired D. All of the above

D. All of the above Also called a Comparative Market Analysis, the CMA is prepared by agents for home sellers to help establish the fair market sales price of a property. It takes into account recent property sales, currently listed properties, and properties that have gone off the market--all within the same neighborhood, with similar characteristics to the client's property.

Private restrictions imposed on property can be conveyed by: A. Contract B. Deed C. General plan descriptions D. All of the above

D. All of the above Limitations on the use of a property by the previous owner--private restrictions--can be transferred by deed, written agreements such as contracts, or general plan restrictions (called the "Declaration of Restrictions" by the developer in subdivisions) including the sub-divider/developer, and may be conveyed (i.e. transferred by deed, by written agreement (i.e. contract), or included in the general plan restrictions, or developer's "Declaration of Restrictions" in subdivisions.

Which of these real estate transactions are exempt from the disclosure requirements in the California Civil Code that apply to conveyances of 1-4 unit dwellings? A. New homes sold in a subdivision where a public report is not required B. Foreclosure sales C. Transfers from one spouse to the other D. All of the above

D. All of the above Other exemptions to certain disclosure requirements in the California Civil Code include transfers by a fiduciary in the administration of a decedent's estate and transfers resulting from failure to pay taxes.

A title insurance company can insure the following: A. Lack of capacity to transfer title B. Defective delivery of title C. Whether the tenant's lease is free from encumbrances D. All of the above

D. All of the above Other potential problem areas regarding a title, such as the validity of an easement, forgery, and impersonation, are also covered under an extended title insurance policy.

A real estate broker CAN obtain a real estate license under a fictitious name, if: A. It is not misleading or would amount to false advertising B. The name does not imply a non-existent corporation or partnership C. It is not a name previously used by a licensee whose license was revoked D. All of the above

D. All of the above The license name can also not include the word "escrow," or imply that the licensee is offering escrow services.

Express conditions include condition(s) such as: A. Condition subsequent B. Full performance C. Condition precedent D. Both A & C

D. Both A & C A condition precedent must be met before the performing party has a duty to perform. Then, once the condition is met, the duty to perform is triggered. A condition subsequent arises after the duty to perform has begun and, if satisfied, releases the performing party from the duty of performance.

The way(s) in which the government acquires title to real estate include: A. Escheat B. Municipal acquisition C. Eminent domain D. Both A & C

D. Both A & C Escheat - Describes what occurs when a person dies without a will--intestate--with no heirs to take ownership of his property which is then acquired by the government. Eminent domain (more frequently used method) - Refers to the right of the government to take private property for public use. Usually, property acquired by eminent domain is used for needed government buildings, public utilities, or highways.

The type(s) of consent that can be given are: A. Express B. Statutory C. Implied D. Both A & C

D. Both A & C Express consent - When one party actually states he will willingly submit to another party's actions. Implied consent - Inferred from a party's conduct.

Regulation Z __________. A. Is also known as the Truth in Lending Act B. Governs the "zoom rate," the interest rates for high-yield bonds C. Requires that borrowers be informed of the true costs of credit D. Both A & C

D. Both A & C The Truth in Lending Act (TILA), Title I of the Consumer Credit Protection Act--also known as Regulation Z--promotes the informed use of consumer credit by requiring disclosures about its costs and terms.

Broker Gary arranged a second trust deed amounting to $9,000 for Raul, and asked Raul for a commission of $1,200. Gary's commission charge is: A. Legal, because Gary can charge whatever commission he chooses B. Illegal, because it is over the amount allowed by law C. Invalid, because the California Association of Realtors does not allow commissions for second trust deeds D. Legal, because it complies with allowable commission percentages for second trust deeds.

D. Legal, because it complies with allowable commission percentages for second trust deeds According to the Real Estate Law, a loan of less than $20,000 for a 3-year term or more can result in a commission up to 15% of the loan amount. 15% of $9,000 is $1,350, so the $1,200 commission charge is permissible.

Broker Gary arranged a second trust deed amounting to $9,000 for Raul, and asked Raul, and asked Raul for a commission of $1,200. Gary's commission charge is: A. Legal, because Gary can charge whatever commission he chooses B. Illegal, because it is over the amount allowed by law C. Invalid, because the California Association of Realtors does not allow commissions for second trust deeds D. Legal, because it complies with allowable commission percentages for second trust deeds

D. Legal, because it complies with allowable commission percentages for second trust deeds According to the Real Estate Law, a loan of less than $20,000 for a 3-year term or more can result in a commission up to 15% of the loan amount. 15% of $9,000 is $1,350, so the $1,200 commission charge is permissible.

The provision stating, a "Realtor shall not publicly disparage the business practice of a competitor" appears in the: A. Commissioner's Rules and Regulations B. California Business and Professions code C. County ordinances D. NAR Code of Ethics

D. NAR Code of Ethics This provision is included in the National Association of Realtor's (NAR) Code of Ethics. Although it does not have the force of law, NAR--the real estate industry trade group--can enforce its own sanctions on violators.

Ronald presented an offer to Joan to purchase her house, with the provision that Joan respond within a week of getting the offer. Joan was considering two other offers to buy her house, but ultimately decided to accept Ronald's offer; nine days after she received it, Joan asked her broker to communicate her acceptance of Ronald's offer to him. In this situation: A. Ronald is obligated to go ahead with the purchase B. Ronald is under no obligation to go ahead with the purchase because Joan did not personally tender her acceptance to Ronald C. Ronald is obligated to present a counter offer that provides another opportunity for Joan to accept it in a timely manner D. Ronald is under no obligation because Joan's manner of acceptance did not match a term of the offer

D. Ronald is under no obligation because Joan's manner of acceptance did not match a term of the offer The "meeting of the minds" that is a necessary element of a binding contract did not occur when Joan failed to meet the window of acceptance specified by Ronald.