Comprehensive practice exam questions

If you are representing a buyer as the buyer's agent and you work in New York, who will likely prepare the sales contracts in your transactions?

You

Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property?

Zero years (personal residences cannot be depreciated)

Which of the following is true of agency agreements?

A listing agreement is an express agreement.

Someone who is "a party to a transaction and the person for whom the agent acts" is the definition of ________.

A principal

Which of the following provides a summary of the title history?

Abstract of title

Eric's residential tenant hasn't paid rent for more than three months, and so Eric went to court to start eviction proceedings. He's now been granted the right to remove the tenant. This is a(n) ______ eviction.

Actual

Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?

Alda tells Marge that she's hired an inspector to perform a property inspection.

FAR, or floor-to-area ratio, includes ______.

All of the habitable structures on a lot; FAR includes all of the habitable structures on a lot, although FAR doesn't typically include uninhabitable square footage within a building, such as stairwells or closets.

With certain exceptions, generally in New York, which properties within an assessing unit must be assessed using the same percentage rate?

All properties

Which of the following questions can an agent in a dual agency transaction answer without breaching her duties to either client?

Are you aware of any structural issues with the property?

Property taxes are calculated using _________.

Assessed value and jurisdiction tax rates

At what point must a licensee provide a consumer with an agency disclosure?

At first substantive contact and prior to signing an agency agreement

When must all New York real property transfers taxes be paid?

At the time that the deed is recorded

Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What's Clark most likely asking you to provide?

BPO

What is the subject of Amanda's Law?

Carbon monoxide; Amanda's Law, which went into effect in 2009, is an addendum to carbon monoxide regulations.

Which of the following prohibits any licensee from soliciting in a specific area in New York state?

Cease and desist zone

What are PCBs?

Chemical compounds used in cooling and insulating, mainly in electrical transformers

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?

Civil Rights Act of 1866

Paul allows his real estate license lapse. One year later, he decides to reactivate his license. To do so, he needs to _________.

Complete all of the requirements for renewal by meeting the CE requirement, submitting the application, and paying a fee; As long the requirements for renewal are met within the renewal period, you're good to go.

In New York, SEQRA is legislation that is capable of ________.

Controlling environmental issues on privately developed land

If this annual tax isn't paid, foreclosure can occur.

Corporate franchise tax

Which of the following valuation approaches is used to assess unique properties?

Cost

What deed warranty guarantees that the seller is the actual owner of the property being conveyed?

Covenant of seisin; The covenant of seisin guarantees that the seller is the rightful owner of the property and has the right to sell it.

Both federal and New York state laws allow a property to pass to surviving spouses without taxation, but this type of lien has to be paid out of the remaining estate proceeds before other heirs may inherit.

Deceased person's debt

Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?"

Demand

Which agency oversees wetlands throughout New York based on Environmental Conservation Law?

Department of Environmental Conservation

Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?

Department of Housing and Urban Development

When a policy negatively impacts a protected class more than it negatively impacts others, this is called what?

Disparate impact

Which one of the following options provides three valid examples of a private land use control?

Easement, lien, deed restriction

Non-lawful possession after the expiration of a lease is called ______.

Estate at sufferance

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

Which structural component is described as "the concrete base that supports the foundation of a building"?

Footing

Katy's home that was listed for sale was destroyed by fire. Under which of these methods will her listing agreement terminate?

Force of law

Which of the following might involve old wiring or plumbing?

Functional obsolescence

Trent works for a well-known motorcycle manufacturer in its powertrain operations facility. He loves being around all of the heavy machinery and seeing the bikes come off of the production line. What type of space does Trent work in?

Heavy industrial

How are real estate transactions affected by the Taxpayer Relief Act of 1997?

Homebuyers may use IRA funds to acquire, build, or improve a residence, or for closing costs, and home sellers may exclude some capital gains from the sale from their income tax.

Which one of these situations represents the illegal practice of redlining?

Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods based on the neighborhood's demographics; Redlining is the practice of selecting geographical areas in which no mortgage loans will be written (based on demographics instead of creditworthiness).

Jan is converting an existing building into a cooperative. She has received a temporary certificate of occupancy. Which of the following is a true statement?

If the temporary certificate of occupancy is not renewed, or a final certificate issued, building residents may be forced to vacate; Temporary certificates of occupancy expire 90 days after issue, and if not renewed, or if a final certificate of occupancy is not issued, building residents may be subject to a notice to vacate.

Larry is assisting a buyer who's making an offer on his client's listing. If Larry is too helpful to the buyer, what might occur?

Implied agency and undisclosed dual agency

Which of the following approaches to value uses a capitalization rate?

Income approach

An installment sales contract may also be known as a _____.

Installment land contract; An installment sales contract, also known as an installment land contract, allows the buyer to pay the seller for the property over time.

Wilma died without a will. How will her heirs be determined?

Intestate succession

The transfer of land through eminent domain or condemnation is known as what?

Involuntary alienation

Which term would you most likely see associated with a lake?

Littoral

Which entity regulates public water?

Local health department

Daniel purchased a home in January of 2010 and then sold the property in October of 2014 for a gain of $5,500. What type of capital gain is this?

Long-term; any capital gain held over one year is a long term capital gain

What's one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties?

Loyalty

You want to become a planned unit development (PUD) property manager. What is an area of responsibility that you will undertake?

Managing maintenance, landscaping, security issues, and concerns, and enforcing the regulations

If a property owner can show that the current zoning restrictions are causing the owner unnecessary hardship, the owner ________.

May request a use variance; The property owner may request a use variance if the current zoning restrictions pose an unnecessary hardship.

Which type of retail space has an anchor store and commonly has approximately three miles of trade space, often has service businesses, such as dry cleaners, hair salons, and convenience stores?

Neighborhood center; Neighborhood centers often include these types of businesses.

Which of the following describes sub-agency?

Norm is a listing agent. He allows Stu, an agent from another firm, to present an offer from an unrepresented buyer; Since Stu doesn't represent the buyer, he's technically the seller's sub-agent.

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?

Not necessarily. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.

An example of this type of leasehold estate is a month-to-month lease.

Periodic estate; A periodic estate automatically renews at the end of its lease term, such as at the end of a given month.

Which type of reassessment occurs on a regular basis established by statutes?

Periodic reassessment

Which of the following is an example of the duty of loyalty?

Putting the client's interest first

What term means a sum of money set aside at closing to be used later for a specific purpose, such as insurance?

Reserve

Which of the following is part of an electrical heating system?

Resister; A resister is part of an electrical heating system.

What type of investment strategy is most similar to a 1031 tax-deferred exchange?

Rolling over funds from one IRA into another

Which part of a homeowners policy covers the property of the insured?

Section I

According to Article 36-B, how long must builders of new construction warranty homeowners against material defects?

Six years

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 __________.

Special warranty deed; A bargain and sale deed with covenants is called a special warranty deed.

Blane owns a barbershop. 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 which type of location?

Strip mall

Sharilyn's business and adjacent businesses are arranged in a neat row. Customers enjoy the open-air walkways when they visit her business and others. In which commercial space is Sharilyn's business likely located?

Strip mall; In strip malls, businesses are often arranged in a row and have access to open air walkways.

Your client, Georgette, wants to buy into a cooperative. What is her first step?

Submit the contract of sale to the seller

In investments, there are two types of depreciation, and each is defined by a particular event. Which of the following most accurately pairs the depreciation type with the event it is tied to?

Tax depreciation and cost recovery

A like-kind exchange, or 1031 exchange, is also referred to as a ______.

Tax-defered exchange

To claim excessive assessment, the taxpayer would have to prove _______.

That the property's assessed value was greater than the property's full value; If taxpayers can prove that the assessed value of their property is greater than the property's full value, they can claim excessive assessment.

Which of the following is TRUE regarding septic tanks in New York?

The Department of Environmental Conservation must approve septic plans for buildings that process more than 1,000 gallons a day.

What's one of the required elements of a valid option contract?

The amount of consideration the optionee is paying the optionor

Who or what entity has legal title to a financed property in a lien theory state?

The borrower; The borrower is the legal owner and has the right to possess and control the property. The lender has the right (after a loan default) to take possession of the property through foreclosure.

What do Internal Revenue Code Section 3508 (a) (b) and 1986 New York Independent Contractor Law specify with regard to a broker's treatment of a licensee?

The broker must not treat the licensee as an employee for federal tax purposes.

Which of the following is a possible outcome if a brokerage is found guilty of violating antitrust law?

The brokerage may have to undergo court-ordered supervision for up to 10 years.

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 ______.

The 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.

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)?

Three years

Under DOS 175.23, how long must brokers retain transactional records?

Three years

Aside from cash flow, appreciation, and earning passive income, what is another reason someone may want to legally invest in real estate?

To hedge against inflation

Regina closed on the sale of her house to Tom on Thursday, then went to a second closing on Friday and sold it to Martin. How could the title company in Martin's transaction have missed the fact that Tom had purchased the property?

Tom's title company didn't have time to record Tom's deed before Regina closed with Martin.

Which system pulls stale air out of the kitchen, bathrooms, and other places where smells and pollutant concentrations occur?

Ventilation

According to Article 9A, how long does a consumer have to cancel a contract on subdivided land?

10 days; Actually, the consumer has 10 days from signing the contract to cancel. The consumer has seven days from receiving the property information from the developer to cancel. If that notice is not received, the consumer can cancel at any time.

Homebuyers who withdraw individual retirement account (IRA) funds under the first-time homebuyer program must use those funds within how long to acquire, build, or improve a residence, or to contribute toward closing costs?

120 days; The buyer has 120 days to use the funds, according to the guidelines of the first-time homebuyer program.

The manufacturer of soundproofing, decorative material, shingles, and siding with asbestos was outlawed in which decade?

1970s

Jose is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of?

A reverse tax-deferred exchange

New York City's Commission on Human Rights prohibits discrimination in housing for additional protected classes not included under federal or New York fair housing laws. What are these additional protected classes?

Alienage or citizenship status, lawful occupation, lawful source of income, partnership status

John sold his single-family home and purchased a new home for his family. Marcus rented his single-family home to a co-worker while he was on an extended two-year military tour overseas. Donald sold an apartment complex and purchased a new complex in a different part of the city. Which of these consumers is most likely to take advantage of a 1031 tax-deferred exchange?

Donald

Which of the following statements about an easement appurtenant is TRUE?

It's a permanent right that runs with the land.

In a title theory state, which of the following is a true statement?

It's generally much easier for a lender to foreclose on a property; In a title theory state, the lender holds the legal title to the property (usually through a third-party trustee) until the loan is paid off. This makes it easier for the lender to foreclose.

Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe?

Prepayment

What is included in most homeowner and tenant policies?

Property, liability, theft, and medical payment coverage

When a lease contains an automatic renewal clause, the landlord must remind the tenant of the right to terminate the lease. Section 5-905 of the General Obligations Law governs leases with automatic renewal clauses and states that a _______.

Reminder to the tenant must be given no more than 30 days nor fewer than 15 days before the period for furnishing the notice of termination begins

Which of the following statements best describes a listing that terminates by performance?

Roberto listed a property for Terrence. After two failed offers, the property made it to a successful closing; The most common termination of agency in this category is by performance. Performance is the completion of the agency's purpose

Mavis is a buyer's agent working with Blaine, an unrepresented seller. Mavis's buyer, Cintra, makes an offer on Blaine's property. Mavis assists Blaine with the paperwork. What's Mavis's relationship to the parties?

She's an agent to Cintra, and the seller is her customer; Assisting with paperwork doesn't create agency.

Which of these statements accurately represents one of the required elements in a deed?

The deed includes an act of conveyance.

Ida and Barry are buying a home. They'll withdraw money from their traditional IRA to help with the down payment and closing costs. What's NOT true about this withdrawal?

They can exclude the amount of the IRA withdrawal when filing their income taxes.

George and June Dobson are a married couple who bought their home three years ago, though they lived in it for only 18 months before traveling abroad and renting it out. Now they've been offered a price that's $300,000 more than they paid for it, so they've decided to sell. What's true about this situation?

They won't be allowed to exclude the capital gains from the sale when they file their income taxes because they lived in the home for fewer than two of the preceding five years.

This Municipal Agency enacts ordinances for the government of the town and the management of its business.

Town council

During the loan application process, which professional requests additional documentation and ensures that the borrower's credit risk complies with the lender's minimum guidelines?

Underwriter

You receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?

Unilateral contract

If a buyer assumes the seller's mortgage, which of the following is a true statement?

Unless the lender releases the seller, the seller remains responsible for the mortgage and note.

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this?

Void

Ken signed a contract to purchase Debra's condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken's birthday. What was the status of the contract when Ken and Debra entered into it?

Voidable