Federal Final Exam Summary

If conditions for purchase are included in a deed and these conditions are violated, what is the penalty? 1. Return of the property to the original owner 2. A fine will be issued 3. The tenant must vacate the property 4. The owner must file a court action

1. Return of the property to the original owner

A buyer's broker has just discovered a material fact about the property that is under contract. The first person the broker should disclose this information to is the? 1. Other broker 2. Seller 3. Buyer 4. Lender

3. Buyer

A seller's counterproposal? 1. Rejects the original offer 2. Has no affect on the original offer 3. Immediately binds the buyer to the contract 4. May not be rescinded once made.

1. Rejects the original offer

'L' rented a cabin for the first two weeks of July. What type of tenancy does 'L' have? 1. Estate for years 2. Estate at will 3. Periodic tenancy 4. Tenancy at sufferance

1. Estate for years Study Hint: An interest for an exact amount of time in property leased for a specified consideration.

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2,300 yearly. Buyer's agent, Daniel Brooks, brings an offer for $267,000, which is accepted and will close on July 30. Buyer Benjamin will be getting a VA loan and will be putting 20% down. How will the Closing Statement reflect the Buyer's tax liability they pay at closing if closing is July 30. 1. $0. The buyer has no tax liability at closing 2. Credit the buyer $2,300 3. Credit the buyer $2,841 4. Credit the buyer $3,641

1. $0. The buyer has no tax liability at closing; Study Hint: The Buyer has no tax liability at the time of closing. He or she will have to pay the full tax amount next year. The seller has to pay the buyer for the time he or she was in the home, (210 days. $2300 / 360 x 210) at closing.

An agency that cannot be terminated by an owner is a(n)? 1. Agency coupled with an interest 2. Power of attorney 3. Express agency 4. Exclusive listing

1. Agency coupled with an interest

Which would have the most leverage? 1. $68,000 purchase with a 80% loan. 2. $83,000 purchase with a 1st mortgage for $30,000, a 2nd mortgage for $10,000, and a personal note for $7,000. 3. $93,000 purchase with a 1st mortgage for $50,000 and a 2nd mortgage for $20,000. 4. $103,000 purchase with cash.

1. $68,000 purchase with a 80% loan. Study Hint: Leverage: The impact of borrowed funds on investment return. It is the employment of a smaller investment to generate a larger rate of return through borrowing. $54,400 loan, $13,600 out of pocket $30,000 + $10,000 + $7,000 = $83000 - $47,000 = $36,000 out of pocket $23,000 out of pocket No leverage

An owner lists his home and agrees to pay a 6% commission provided that he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000? 1. $90,426 2. $91,000 3. $90,100 4. $92,454

1. $90,426 =.06x + 10,000 + 75,000 = x (selling price) =.06x + 85,000 = x -.06x = -.06x 85,000 = .1x - .06x = .94x 85,000 = .94x 85,000/.94 = x 90,425.53 = x (Round to nearest whole dollar) Study Hint: The seller needs $85,000, so divide by 0.94 (sales price minus 6% = 94%), to get $90,426. Then, when you subtract the 6% ($5,426), you end up with $85,000 to the seller.

Which of the following is NOT covered by extended coverage title insurance . 1. Changes in land use brought about by zoning ordinances 2. Examination of survey 3. Unrecorded liens not known by policyholder 4. Property inspection including unrecorded rights of persons in possession

1. Changes in land use brought about by zoning ordinances Study Hint: Extended Coverage: Title insurance policy that covers risks normally excluded by most standard coverage policies such as unrecorded matters, mechanics liens, tax liens, easements, and encroachments

Sellers must all known lead-based paint... 1. Disclose 2. Remove 3. Mitigate 4. Investigate

1. Disclose

Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells the house, a commission will be due. What kind of listing contract do the owners have? 1. Exclusive Agency Listing 2. Exclusive Net listing 3. Open listing 4. No listing agreement

1. Exclusive Agency Listing

A broker suggests that the sellers sign a listing agreement that gives the broker's office sole permission to sell the property for a period of 120 days. Which type of listing agreement allows the sellers to be able to sell the property themselves and pay no commission to the agent, and if the broker finds the buyer, he or she will get paid? 1. Exclusive Agency Listing 2. Open Listing 3. Exclusive Right-to-Sell 4. Exclusive Open Listing

1. Exclusive Agency Listing Study Hint: An exclusive agency listing gives rights to one listing broker to list and market your house. The agency receives a commission on the sale if an agent from any broker sells the property. Agents sometimes do not prefer these listings because the owner may complete the sale, and thus, the agent earns nothing. This can lead to owners attempting to undermine agents or to work around agents with buyers obtained from the agent's marketing efforts.

Which of the following is the first action to take when mold problems are found? 1. Hire a certified mold specialist to test 2. Hire a certified mold specialist to remove the mold 3. Identify and remedy the cause of the problems 4. Termination of the contract

1. Hire a certified mold specialist to test Study Hint: When mold is found, hire a certified mold specialist to test Unit 7

A church that operates housing for the elderly may restrict occupancy to members of the church if? 1. Membership in the church is open to all persons 2. The units are to be rented, but not if they are being offered for sale 3. Both #1 and #2 are correct 4. Neither #1 nor #2 is correct

1. Membership in the church is open to all persons

When can a tax assessor's parcel number be legally used to identify a property? 1. Never 2. On a quit claim deed 3. Only by a surveyor 4. For a refinance

1. Never

Pam entered into a contract for Joe's land, which included a payment. Joe's land was not for sale at the time. Pam changed her mind and will not get her payment back. This type of contact is a(n)? 1. Option contract 2. Land contract 3. Contract for deed 4. Illegal contract

1. Option contract Study Hint: A real estate purchase option is a contract on a specific piece of real estate that allows the buyer the exclusive right to purchase the property, without any obligation to buy.

The note is evidence of the debt and is considered . 1. Personal property 2. An obligation to repay a loan and not a promise to pay 3. Real property 4. Evidence of a lien on the property

1. Personal property Study Hint: Promissory Note: An actual promise to repay a loan. The note is evidence of the debt. The note creates the debt. It is a negotiable instrument and is considered personal property.

A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? 1. Seller 2. The previous owner 3. The buyer 4. The previous owner, the seller and the new owner

1. Seller Study Hint: Under CERCLA, the seller and previous owner are both liable for damages from the dumping prior to the sale of the property. However, because he bought the property without proof that the previous owner was guilty of dumping hazardous waste then the previous owner will not be liable.

Freddie Mac mortgage activities are primarily involved in? 1. The secondary mortgage market 2. RESPA enforcements 3. Direct loans for low-income home buyers 4. Enforcement of the Foreign Investment in Real Property Tax Act

1. The secondary mortgage market Study Hint: Secondary Mortgage Market: A market for the sale and purchase of existing mortgages, designed to provide greater liquidity for mortgages.

Deanne sold her personal residence. Under tax law, she may exclude ____________? 1. Up to $250,000 of capital gains on her home 2. Up to $500,000 of capital gains on her first home, if filing singly 3. The capital gain of up to $500,000 on the home, if filing jointly 4. All the capital gain if she lived in the property for 2 of the last 5 years

1. Up to $250,000 of capital gains on her home

A monument is 1. Used to establish boundaries and lot lines 2. A level surface to which heights and depths are referred 3. Always permanently fixed in place 4. Required by the federal government to determine section corners 5. Always a natural object

1. Used to establish boundaries and lot lines

Regulation Z addresses all of the following issues EXCEPT 1. Usury 2. Written disclosure 3. Inform customers 4. Provide certain rights

1. Usury Study Hint: Regulation Z addresses all of the following issues: Written disclosure, informing customers, and providing certain rights. Regulation Z = Truth in Lending, TILA = Reverse mortgages = GFE still used for reverse mortgages - protects people when they use consumer credit.,

Although states make specific laws governing water rights and the rights for land that borders water, most states generally follow one of two basic doctrines regarding water rights. Under the doctrine of prior appropriation, either riparian and littoral rights are automatically conveyed with property or all water rights are controlled by the state. The doctrine of prior appropriation is MOST likely to be followed in states where? 1. Water is scarce 2. Water is abundant 3. Water rights run with the land 4. Crops are grown

1. Water is scarce

The terms littoral, riparian, and appropriative refer to? 1. Water rights 2. Mineral rights 3. Land rights 4. Property rights

1. Water rights

Which of the following statements about mold is true? 1. When mold is found it's best to hire a certified mold specialist to test 2. All mold must be removed 3. All molds are beneficial 4. Terminate the contract when mold is found

1. When mold is found it's best to hire a certified mold specialist to test

Fiduciary authority of an agent to his or her client is terminated ? 1. When the transaction is completed 2. At the end of the listing period 3. At 6 months 4. One year after the date of engagement

1. When the transaction is completed Study Hint: Fiduciary relationships shall commence at the time that the broker is engaged by a party and shall continue until performance or completion of the agreement by which the broker was engaged. The fiduciary authority of an agent terminates when the transaction is complete. However, the fiduciary duties/obligations of the agent to his or her client, such as accounting, loyalty, and confidentiality, continue after the relationship ends.

A purchased a property for $175,000.00. A wishes to sell the property. If the total selling costs will equal 11% of the sales price, how much will the property have to appreciate in value for A to break even? 1. $ 23,730 2. $ 21,629 3. $ 20,311 4. $ 19,612

2. $ 21,629 Study Hint: $ 175,000. divide by 89. Sales price would be $ 196,629. and subtract purchase price of $175,000. = $21,629.

The last monthly interest payment on a mortgage was $825.77. If the interest rate was 7.2%, what was the balance due on the principal? 1. $158,730 2. $137,628 3. $118,764 4. $131,741

2. $137,628 Study Hint: T-bar question where you have the PART (monthly interest x 12 to get the annual interest), divided by the annual interestRATE (7.2%) to get the TOTAL. $825.77 x 12 = Interest for 1 year. Int for 1 yr. divided by 7.2% = $137,628.

Regulation Z would apply to a(n) ____________. 1. Shopping center 2. $185,000 loan secured by a residence 3. Farm loan of $185,000 4. Non-real estate loan of more than $45,000

2. $185,000 loan secured by a residence Study Hint: Regulation Z prohibits certain practices relating to payments made to compensate mortgage brokers and other loan originators. The goal of the amendments is to protect consumers in the mortgage market from unfair practices involving compensation paid to loan originators. The prohibitions related to mortgage originator compensation and steering apply to closed-end consumer loans secured by a dwelling or real property that includes a dwelling. The rule does not apply to open-end home equity lines of credit (HELOCs) or time-share transactions. It also does not apply to loans secured by real property if the property does not include a dwelling.

Ownership of common stock in a corporation? 1. Gives an interest classified as real property 2. Gives an interest classified as personal property 3. Comes with no voting rights 4. Limits an investor's liability to $100,000

2. Gives an interest classified as personal property

Recording a deed 1. Gives actual notice as public record 2. Gives constructive notice as public record 3. Is required for a valid deed 4. Is required to transfer

2. Gives constructive notice as public record

________ trusts transfer assets into the trust after the trustor dies. 1. Living 2. Testamentary 3. Irrevocable 4. Probate

2. Testamentary

A broker's assistant was filing paperwork for her boss for a transaction. The broker asked the assistant what type of loan the buyer got since the buyer received a Certificate of Reasonable value. The loan type was _______? 1. FHA 2. VA 3. Conventional 4. Private

2. VA Study Hint: The VA issues a Certificate of Reasonable Value (CRV) for property being purchased. The CRV states the current market value based on the VA approved appraisal.

Regarding Surface vs. Subsurface rights, all of the following are true EXCEPT? 1. When a parcel is subdivided, the subsurface interest rights may be excluded 2. When you own a parcel of land, you always own the subsurface rights. 3. When deciding if a parcel may be subdivided, the county commissioners are only making judgments that effect the surface and air rights 4. "Air rights" may be deeded separate from "surface rights

2. When you own a parcel of land, you always own the subsurface rights. Study Hint: When a parcel is subdivided, the subsurface interest rights may be excluded. "Air rights" may be deeded separate from "surface rights".

A Phase I environmental audit? 1. is also referred to as the testing phase 2. assesses whether a property may have been contaminated by current or past uses. 3. is completed if previous results indicate that hazardous substances are present 4. is used to determine the extent and measurement of environmental hazards

2. assesses whether a property may have been contaminated by current or past uses.

On-street parking was made illegal in front and on the side of a small office building complex. Rents declined $1,000.00 per month. Assuming a capitalization rate of 8%, the building suffered a decline in value of? Study Hint: Capitalization Approach: Income / Rate = Value 1. $8,000.00 2. $64,000.00 3. $150,000.00 4. $96,000.00

3. $150,000.00 Study Hint: Capitalization Approach: Income / Rate = Value $1,000 (monthly decline in income) x 12 = $12,000 (annual income) / 0.08 = $150,000

A property valued at $72,000 has an assessed value of 50%. If the mill rate is 6 mills, what is the tax? 1. $1,800 2. $18,000 3. $216 4. $2,160

3. $216; $72,000 x 0.5 =$36,000 x 0.006 = $216

An appraiser must be licensed or certified to handle federally related work on residential property values at more than . 1. $100,000 2. $200,000 3. $250,000 4. $300,000

3. $250,000 Study Hint: An appraiser must be licensed or certified to handle federally related work, on residential property values at more than $250,000. Unit 4

Which if the following is NOT considered an element of value? 1. Demand 2. Scarcity 3. Cost 4. Transferability

3. Cost Study Hint: Cost is NOT considered an element of value.

An interest in real property, limited to the duration of someone's life, is called a? 1. Fee simple 2. Determinable fee 3. Life estate 4. In severalty

3. Life estate

A leased farm is sold. The growing crops belong to the? 1. Seller 2. Buyer 3. Tenant 4. Tenant and buyer

3. Tenant

A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his or her commission when . 1. The buyer makes an offer 2. The inspection is complete 3. The seller accepts the offer 4. The buyer gets the keys to the home

3. The seller accepts the offer Study Hint: A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his or her commission when the seller accepts the offer.

A 17 year old signs a contract. The contract is ________ by the other party? 1. Void 2. Voidable 3. Unenforceable 4. Invalid

3. Unenforceable Study Hint: Unenforceable - A contract which appears to be valid but offers no legal remedies if not fulfilled. The 17 year old holds a voidable contract.

An owner wants to build a 200' x 300' foot addition to his home but the local ordinances restrict him from expanding on the south side. He should apply for a 1. Special use permit 2. Nonconforming use permit 3. Variance 4. Expansion permit

3. Variance Study Hint: a requested deviation from the current land use rules or zoning ordinances, building codes or municipal codes.

When compiling a competitive market analysis, a broker would look for comparable properties that? 1. Were different than the listing 2. Were within sixty (60) miles of the listing 3. Were located near the property being listed 4. Sold within two years of the listing

3. Were located near the property being listed

Zoning that requires that new structures match an existing architectural style is called? 1. Exclusionary zoning 2. Inclusionary zoning 3. Cumulative zoning 4. Aesthetic zoning

4. Aesthetic zoning

When one of the parties to an agreement fails to perform one of its conditions, that contract is? 1. Void 2. Invalid 3. Enforceable 4. Breached

4. Breached

Phil and Ann want Salesperson Dave to list their home and advise Dave that the roof leaks. They do not want to fix the leak, but they also don't want Dave to inform any potential buyers about it. The home sells, but 6 months later, the new owner's attorney calls Dave to say they will sue. Who is liable? 1. Dave's employing broker 2. Salesperson Dave 3. The sellers 4. The sellers and Salesperson Dave

4. The sellers and Salesperson Dave Study Hint: All parties that knew of the condition of the roof may be liable.

A prescriptive easement arises in all of the following EXCEPT 1. In the same manner as adverse possession or "squatters" rightss 2. When the owners of the dominant tenement make a certain use of servant tenement for a long enough period of time 3. Through state law 4. Through the owner transferring title to the tenant

4. Through the owner transferring title to the tenant Study Hint: A prescriptive easement arises in the same manner as adverse possession, or "squatters" rights. It may arise when the owners of the dominant estate make a certain use of servient estate for a long enough period of time and is controlled through state law.

An individual with an undivided interest in a unit coupled with the exclusive right of occupancy for either a designated or floating period each year, along with an interest in common areas such as the use of a pool or tennis court, has a ? 1. Condominium 2. Cooperative 3. Partnership 4. Time-Share

4. Time-Share

1 acre = how many square feet?

43,560 square feet

1 square mile= 1 Section =

640 Acres

area =

Length x Width

Capitalization Approach =

NOI (Income)/Rate = Value Income/Value = Rate

Gross Income Multiplier (GIM)

Value = Gross/Potential Gross Income * Multiplier Multiplier = Avg of Comps' Sales Price / Annual Income

A foreclosed owner's rights after a foreclosure sale relate to? 1. A deficiency judgment 2. Hypothecation 3. Defeasance 4. Redemption

4. Redemption

An ad used a term that triggered full disclosure of loan terms. The ad stated... 1. $10,000 down 2. Payments lesser than rent 3. Low down payment 4. 8% APR

1. $10,000 down Study Hint: Truth-In-Lending Act advertising rules are triggered if the amount or percentage of down payment, number of payments, period of repayment, or finance charges are included in any advertisement.

An ad included a term that triggered full disclosure of loan terms. The ad stated . . $10,000 down 2. 8% APR 3. Low down payment 4. Payments less than rent

1. $10,000 down Study Hint: An ad included a term that triggered full disclosure of loan terms. The ad stated $10,000 down. Truth-in-Lending

A property sold for $125,000, which was 25% more than the purchase price. The original purchase price was? 1. $100,000 2. $93,750 3. $75,000 4. $31,250

1. $100,000 Study Hint: $125,000 / 1.25 = $100,000

Ben is purchasing a home, and the appraiser is trying to come up with an appropriate value. A similar home in the neighborhood sold last month for $138,000. It had a deck but did not have a garage (garages are generally valued at $10,000). Ben's property does not have a deck (most buyers will not pay more than $500 for a deck) and it did have a garage. What should the appraised value be? 1. $138,000 + $10,000 = $148,000 − $500 = $147,500 2. $138,000 − $10,000 = $128,000 − $500 = $127,500 3. $138,000 + $10,000 = $148,000 + $500 = $148,000 4. $138,000 − $10,000 = $128,000 − $500 = $127,500

1. $138,000 + $10,000 = $148,000 − $500 = $147,500 Study Hint: $138,000 (comp sale price) + $10,000 (subject has a garage and comp does not) = $148,000 − $500 (subject does not have a deck and comp does) = $147,500

Buyer X is paying $55,000 for a new house. She is getting an 80% loan, paying 3 discount points, and is paying $2,000 in closing costs in cash. How much will Buyer X need to bring to closing? 1. $14,320 2. $3,320 3. $4,000 4. $11,000

1. $14,320 Study Hint: $55,000 - $44,000 (loan amount) = $11,000 + $1320 (3% of loan) + $2000 = $14,320

Joan and Dave Farson of Springfield sign a listing agreement with broker Ann for a 3-month period. The Avilla's agent presents a contract for $332,000 which is accepted. Closing is scheduled for August 15. The Farsons agree to a nonrefundable escrow of $3,000 for the buyers. If they do not vacate the property by August 15, they agree to pay the buyers $55 for every day after that. Closing is rescheduled for August 18. Use a 365 day calendar, actual days in the month. Seller is responsible for the day of closing. How much do the owners have to pay the Avillas since they did not vacate the home by August 15? 1. $165 debit seller, credit buyer 2. $3,110 debit buyer, credit seller 3. $110 debit seller, credit buyer 4. $110 debit buyer, credit seller

1. $165 debit seller, credit buyer Study Hint: Closing was delayed 3 days, 3 x $55 = $165.

A property has a net operating income of $24,000.00 per year, and 8% is an appropriate capitalization rate. If the value of the land is $115,000.00, how much of the value is attributable to the building? Study Hint: Income Approach: NOI/CAP rate = Value, then subtract the value of the land from the total value to get the value of the building. 1. $185,000.00 2. $415,000.00 3. $230,000.00 4. $205,000.00

1. $185,000.00

A property has a net operating income of $24,000.00 per year, and 8% is an appropriate capitalization rate. If the value of the land is $115,000.00, how much of the value is attributable to the building? 1. $185,000.00 2. $415,000.00 3. $230,000.00 4. $205,000.00

1. $185,000.00 Study Hint: Income Approach: NOI/CAP rate = Value, then subtract the value of the land from the total value to get the value of the building.

If the rent on a property is $1,200, what would be the estimated value of the property using a Gross Income Multiplier of 15? Study Hint: Value of property divided by annual gross income equals Gross Income Multiplier. So to find the value you multiply Monthly Rent x 12 months x 15 GRM 1. $216,000 2. $180,000 3. $240,000 4. None of the above

1. $216,000

A couple bought a rental house for $195,000. It's assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will require for taxes? Round to the nearest cent. 1. $225.00 2. $2,700.00 3. $250.00 4. $3,000.00

1. $225.00 Study Hint: $180,000 / 100 x 1.5 = $2,700 / 12 = $225

Buyer Dan wants to purchase 1695 Argon St. for $230,000 with 15% down and the interest rate is 8%. The lender could reduce the interest rate to 7 ¾% if he paid 3 discount points. If Dan pays the additional amount to reduce his interest rate, much will Dan have to bring to closing? 1. $40,365 2. $195,000 3. $5,865 4. $34,500

1. $40,365 $230,000 − $34,500 (15%) = $195,500 (loan amount) x .03 = $5865 (3%of loan amount). $34,500 + $5865 = $40,365. One point equals one percent of the loan amount. Discount points are used to "buy down" interest rates.

How much is Mr. Xi willing to pay for the following property? The property produces an Annual Gross Income of $52,000 and Net Operating Costs are $6,000. The Capitalization Rate for comparable properties in the area is 8%. Interest on his loan will be 5%. Study Hint: In order to determine the value of a single property, you must determine the NOI and then divide the NOI by the CAP 1. $575,000 2. $650,000 3. $75,000 4. $41,600

1. $575,000 = Rate.$46,000 / 0.08 = (Value) $575,000

Interest on a loan assumed was collected in arrears. The seller paid the July payment. The closing is scheduled for July 15. The seller is debited? 1. 15 days of interest 2. 30 days of interest 3. 16 days of interest 4. 46 days of interest

1. 15 days of interest

A commercial property whose building has been valued at $500,000 is being depreciated over a 39-year life. If the property is 11 years old, the depreciation that has been taken would be? 1. $141,025 2. $158,000 3. $12,820 4. $1,280

1. 500000 / 39 x 11 = $141,025 Study Hint: To get the amount of depreciation for 11 years, divide the original cost of the building by 39. That will give you the annual depreciation. Then multiply that number by the number of years you want to depreciate (in the question it is 11 years)

Dave is purchasing an old gas station which he intends to turn into a flower shop. His lender will most likely ask for _____________? 1. A Phase 1 environmental assessment with a visual inspection and neighbor interviews 2. An Environmental Impact Statement (EIS) 3. A Phase 2 environmental statement with soil testing 4. A CERCLA assessment report issued in the last 2 years

1. A Phase 1 environmental assessment with a visual inspection and neighbor interviews

A major reason for buying and owning a condominium rather than a detached, single-family home would be? 1. A condominium tends to be more affordable 2. Condominium ownership may involve participation in the HOA 3. A condominium usually has neighbors on most sides 4. Condominiums are usually in urban areas

1. A condominium tends to be more affordable

Upon the death of one of the principals to a contract, which type of contract will not terminate? 1. A fully executed Contract to Buy and Sell 2. An Exclusive Right-to-Sell Listing during the listing period 3. An Exclusive Right-to-Buy during the agency period 4. A fully executed Employment Contract with a broker

1. A fully executed Contract to Buy and Sell

Who is more at risk when obtaining an ARM? 1. A gentleman who just retired 2. Borrowers who had their parents pay their down payment 3. A couple who are both working and just had their first child 4. A borrower with a $100,000 loan with a good job

1. A gentleman who just retired Study Hint: SH. The element of unpredictability that comes with an ARM is a problem for many people, especially if they are on a fixed income or don't expect their incomes to rise.

Which of the following would not be covered by a home warranty? 1. A heaving doorstep 2. A leaking toilet 3. Electrical system failure 4. A broken refrigerator

1. A heaving doorstep Study Hint: Home warranties usually cover internal systems and appliances.

A lawsuit for inverse condemnation may be brought by __________. 1. A homeowner 2. The state 3. The tenant 4. All of the above

1. A homeowner

In comparing a mortgage and deed of trust as financing security instruments, which must be foreclosed through the courts? 1. A mortgage 2. A deed of trust 3. Both #1 and #2 are correct 4. Neither #1 and #2 are correct

1. A mortgage Study Hint: A mortgage must be foreclosed through the courts.

State laws differ on whether a buyer is entitled to know about? 1. A suicide that occurred in the house last year 2. The condition of the property 3. The seller's motivation for selling 4. All known material facts regarding the property

1. A suicide that occurred in the house last year

State laws differ on whether a buyer is entitled to know about? 1. A suicide that occurred in the house last year 2. Zoning laws 3. If the property is in a flood zone 4. Radon

1. A suicide that occurred in the house last year

One common method for controlling the problems created by conflict of interest in dual representation is ________________? 1. Allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients 2. Allowing for transaction brokerage 3. Requiring agency 4. Making dual agency legal

1. Allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients Study Hint: One common method for controlling the problems created by conflict of interest in dual representation is allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients.

If you secured your offer to purchase a house with $5,000 earnest money, your fiduciary/broker is legally obliged to place your earnest money in? 1. An escrow 2. An operating account 3. The employing broker's account 4. A brokerage account

1. An escrow Study Hint: If you secured your offer to purchase a house with $5,000 earnest money, your fiduciary/broker is legally obliged to place your earnest money in an escrow account until the transaction is completed or the money is returned to you.

A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase in some future time. This is an example of the principle of? 1. Anticipation 2. Growth 3. Appreciation 4. Speculation

1. Anticipation

A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement 1. Appurtenant 2. In Gross 3. By necessity 4. By prescription

1. Appurtenant Study Hint: A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement appurtenant. Unit 2

John must drive through Andrew's property to get to his own property. Which type of easement allows this? 1. Appurtenant Easement 2. Easement by Prescription 3. Easement in Gross 4. Easement by law

1. Appurtenant Easement

A brother and sister hold land as joint tenants. The sister conveys one-half of her interest to her husband. Ownership would now be held by the . 1. Brother, sister, and her husband as tenants in common 2. Brother and sister are still joint tenants and are tenants in common with the husband 3. Brother, sister, and her husband as joint tenants 4. Brother and sister as joint tenants

1. Brother, sister, and her husband as tenants in common Study Hint: Tenants in Common: Form of ownership between two or more people, each having undivided interest in the property. If one of the co-tenants die, the interest passes to one or more of the surviving heirs, and not to the surviving tenants in common. Since there are only two original joint tenants, selling a partial interest destroys the (four unities of the) joint tenancy. If there were 3 joint tenants and one sold the interest to another, then the original 2 would remain joint tenants, and the new tenant would be a tenant in common.

John and Mary Apton list their home for $152,000. There is an appurtenant easement to access a large lake which is deeded. A coal-fired power plant is slated to open 5 miles from the property next year. An Environmental Impact Statement is due on March 7. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. The offer is contingent on the Environmental Impact results. Closing is for June 1. Taxes are $3,040, commission is 6.5% (buyer's agent commission is 2.8%), taxes and insurance are $675, and the recording fee is $25 The Environmental Impact Statement showed the value of the property would not be impacted. Use a banker's calendar. Seller is responsible for the day of closing. How does the Settlement Statement reflect the buyer's tax liability? Study Hint: The buyer pays no taxes at closing (buyers have no tax liability) but will pay the full years' taxes the following year. The buyer will receive a credit at closing for the time the seller lived in the home. 1. Buyer debit $0 2. Buyer credit $3,040 3. Seller credit $3,040 4. Buyer debit $1,249

1. Buyer debit $0

Joan and Dave Farson of Springfield sign a listing agreement with broker Ann for a 3-month period. Taxes for last year in the amount of $2,656 have been paid on Jan 25. The Avilla's agent presents a contract for $332,000 which is accepted. Closing is scheduled for August 15. The Farsons agree to a nonrefundable escrow of $3,000 for the buyers. If they do not vacate the property by August 15, they agree to pay the buyers $55 for every day after that. Closing is rescheduled for August 18. Use a 365 day calendar, actual days in the month. The Seller is responsible for the day of closing. How does the HUD-1 reflect the buyer's tax liability? 1. Buyer debit $0 2. Buyer credit $2,156 3. Seller credit $2,156 4. Buyer debit $1328

1. Buyer debit $0 Study Hint: The buyer pays no taxes at closing (buyers have no tax liability), but will pay the full years' taxes the following year. The buyer will receive a credit at closing for the time the seller lived in the home.

John and Mary Apton list their home for $152,000. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. Closing is scheduled for June 1. Annual taxes are $3,040, commission is 6.5%, (buyer's agent commission is 2.8%), taxes and insurance are $675, and the recording fee is $25 Use a banker's calendar. Seller is responsible for the day of closing. How does the Closing Statement reflect the buyer's tax liability? 1. Buyer debit $0 2. Buyer credit $3,040 3. Seller credit $3,040 4. Buyer debit $1,249

1. Buyer debit $0; The buyer pays no taxes at closing (buyers have no tax liability), but will pay the full year in the following year. The buyer will receive a credit at closing for the time the seller lived in the home.

Broker Steve can act for his client as a general agent.. 1. By written instruction 2. Automatically when he has a signed listing agreement 3. If he is a relative of the client 4. But he cannot sign documents for the client

1. By written instruction Study Hint: A special agent represents the principal in a particular activity or transaction—this is the relationship that most real estate agents have with their clients. The agents are contracted specifically to buy or sell a particular piece of property.

Which of the following would NOT be classified as real property? 1. Chattels real 2. Water rights 3. Easements 4. Mineral rights

1. Chattels real Study Hint: Personal property: Things that are tangible and movable; not real property.

A new licensee with no background in financing should refrain taking a listing with _____? 1. Commercial property 2. Raw land developer 3. An investor 4. Any buyer

1. Commercial property Study Hint: Article 11 simply states when providing a real estate service, be competent in that field. If you are not familiar with the field (Commercial, land, residential, property management or the location area), disclose it to the client and find a mentor who can help.

Under a fully executed contract, which of the following contracts would be enforceable if one of the principals dies? 1. Contract to Buy and Sell 2. Exclusive Right-to-Sell Contract 3. Exclusive Right-to-Buy Agency Contract 4. Exclusive Right-to-Buy Transaction Broker Contract

1. Contract to Buy and Sell Study Hint: Under a fully executed contract, which of the following contracts would be enforceable if one of the principals dies? Contract to Buy and Sell

The advisability of including a swimming pool with a planned apartment building may be determined by the principle of? 1. Contribution 2. Progression 3. Substitution 4. Change

1. Contribution Study Hint: Principles of Value: Anticipation, change, competition, conformity, contribution, highest and best use, increasing and diminishing returns, pottage, regression and progression, substitution, and supply and demand

Taxes paid in advance would show up on the settlement statement as? 1. Credit seller, debit buyer 2. Credit seller, debit broker 3. Credit buyer, debit seller 4. Credit seller ½, credit buyer ½

1. Credit seller, debit buyer

Appurtenant Easements are not terminated by . 1. Death of one of the owners 2. Mutual agreement 3. Abandonment 4. By one party's default under the easement terms

1. Death of one of the owners Study Hint: The death of one of the owners will not terminate an appurtenant easement.

A life estate is be terminated by the? 1. Death of the life tenant 2. Death of the grantor 3. Sale of the property by the life tenant 4. Both #1 and #2 are correct

1. Death of the life tenant

A monthly property assessment bill for $46.09 was due in advance on the 1st of June and not paid by the seller (seller to pay the day of closing). At the closing on June 11, the proration (using a bankers calendar) would be shown as? 1. Debit the seller $16.90: Debit the buyer $29.19 2. Debit the seller $14.87; Debit the buyer $31.22 3. Debit the seller $15.36; Debit the buyer $30.73 4. Debit the seller the full $46.09 as the bill is delinquent

1. Debit the seller $16.90: Debit the buyer $29.19 Study Hint: (30 days on the general part of exam) Seller owns ON the day of closing, unless problem states otherwise; $46.09 / 30 (days in June) = $1.536 x 11 = $16.89 (debit seller, days he or she owned the home), 1.536 x 19 = 29.19 (debit buyer, days he or she owned the home)

Net loan proceeds will show up on the settlement sheet as? 1. Debit title company (debit broker) 2. Debit seller 3. Debit buyer 4. Debit broker, credit buyer

1. Debit title company (debit broker)

A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to _______________? 1. Demand immediate payment of the entire note 2. Change the interest rate of the loan 3. File foreclosure proceedings 4. Force the owner out of the house

1. Demand immediate payment of the entire note Study Hint: An 'Acceleration Clause' is a contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met.

A transaction broker, working with both the seller and the buyer, would have the easiest time fulfilling which of the following duties? 1. Disclosure 2. Loyalty 3. Care 4. Trust

1. Disclosure Study Hint: A transaction broker, working with both the seller and the buyer would have the easiest time fulfilling the duty of disclosure.

The effect of a lease assignment is that the? 1. Entire lease interest is transferred 2. Assignee makes rent payment to the assignor 3. Assignee is a tenant of the assignor 4. Assignor remains primarily liable on the lease

1. Entire lease interest is transferred

A property owner dies without heirs or a will. The state will take the property under the law of? 1. Escheat 2. Eminent Domain 3. Tenancy 4. Devise

1. Escheat Study Hint: Escheat: The power of a state to acquire title to property for which there is no owner. The most common reason that an escheat takes place is that an individual dies intestate, meaning without a valid will indicating who is to inherit his or her property, and without relatives who are legally entitled to inherit in the absence of a will.

A contract in which all parties have signed but not closed is? 1. Executory 2. Executed 3. Pending 4. Unenforceable

1. Executory

Seller Danny has signed a listing agreement with Broker Adam with a 6% commission. Broker Adam agrees to use diligence in finding a ready, willing and able buyer. This is an example of an ______________? 1. Express bilateral executory agreement 2. Express bilateral executed agreement 3. Express unilateral executory agreement 4. Implied bilateral agreement

1. Express bilateral executory agreement

A broker/salesperson who can work with both the seller and buyer in the same transaction with no fiduciary duties to either is called a ________? 1. Facilitator 2. Dual agent 3. Assistant 4. Seller's agent

1. Facilitator Study Hint: A facilitator works for both the seller and the buyer to complete a transaction, but not in an agency relationship with either party. The facilitator has no fiduciary relationship with either buyer or seller, but must be fair with both parties.

What relationship implies a position of trust and confidence? 1. Fiduciary 2. Transaction-Brokerage 3. Confidential 4. Principal

1. Fiduciary

An adjustable rate loan could include all of the following elements EXCEPT? 1. Fixed rate loan 2. Periodically adjusted 3. Cost of Funds Index 4. Payments made by the borrower may change

1. Fixed rate loan Study Hint: Adjustable-rate mortgages include a loan where the interest rate changes on a periodic basis. The change is usually tied to movement of an outside indicator such as the prime interest rate. They are not designed as negative amortization loans but can become negative amortization loans if interest rates rise rapidly. On an adjustable-rate mortgage, your rate can change on a monthly or annual basis, but these mortgages include payment caps above which your monthly payment cannot rise. When interest rates rise, your payment cap can prevent the lender from increasing your monthly payment so that the amount you pay covers the interest due on the loan. If this happens, the lenders adds the unpaid interest to the principal balance.

Yield means ___________. 1. Future income on property 2. Low equity for seller 3. High equity for seller 4. The equity available to the buyer

1. Future income on property Study Hint: A yield is a measurement of future income on an investment. It is generally calculated annually as a percentage, based on the asset's (or investment's) cost or market value. It has nothing to do with a capital gain on a property.

Which rule of thumb version is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? 1. GRM 2. GIM 3. Cap rate 4. Straight line

1. GRM Study Hint: Find comparable recent sales of rental properties, then divide the sale prices by their respective incomes to get a range of GRM/GIMs. Correlate the most comparable GRM/GIM (not simply the average), then multiply by current or potential rent (or income) for the subject property to get a rough estimate of value. Unit 4

If a client believes that their real estate agent has violated the Fair Housing Act, with whom should they file a discrimination complaint? 1. HUD 2. Real Estate Commission 3. The agent's employing broker 4. The state attorney general

1. HUD Study Hint: The U.S. Department of Housing and Urban Development is responsible for fair housing enforcement.

If Bob is given use of the family house for as long as his mother lives? 1. He has possession of the house per autre vie 2. He is the grantor 3. He has inherited the property 4. He is the remainderman

1. He has possession of the house per autre vie Study Hint: While it is similar to a life estate, per autre vie differs in that a person's life estate will last for the life of another person instead of their own.

The day after a broker's listing on a house expired it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that 1. He is no longer the listing broker 2. He'll contact the client and get back with him 3. The home is no longer listed 4. He'll meet him over there right away

1. He is no longer the listing broker Study Hint: Once a listing is expired, the listing agent is no longer the broker/agent for the seller. Unit 5

An example of a fiduciary relationship is one which exists between the listing broker and? 1. His or her client 2. His or her broker 3. His or her customer 4. His or her seller's potential buyer

1. His or her client

A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid one month's rent and got a receipt. What kind of leasehold does the tenant have? 1. Holdover tenancy 2. Month-to-month 3. Periodic lease 4. Oral lease

1. Holdover tenancy Study Hint: A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid one month's rent and got a receipt. What kind of leasehold does the tenant have? A holdover tenancy

The rescission provisions of the Truth-in- Lending Act apply to what type of a loan? 1. Home equity 2. Construction 3. Business 4. Purchase mortgage

1. Home equity

The escrow officer or closing agent MUST give information regarding the sales price and seller's social security number to the __________? 1. IRS 2. State 3. Public trustee 4. Brokerage firm

1. IRS

Which appraisal method would be used to determine the present value of future income? 1. Income approach 2. Cost approach 3. Sales comparison approach 4. Quantity survey approach

1. Income approach

Capitalization is used to determine the value of ? 1. Income properties 2. Unique properties 3. Land 4. Any property

1. Income properties

In a residential property, lead poisoning would most likely NOT be caused by 1. Insulation 2. Paint chips 3. Ground soil 4. Pipes

1. Insulation Study Hint: In a residential property, lead poisoning would most likely be caused by paint chips, pipes, and ground soil. Environmental Issues; Lead Paint

How does the borrower benefit from paying PMI when getting a loan? 1. It allows him to get a loan with less than 20% down payment 2. It reduces the cost of the loan 3. It increases the points 4. It benefits the lender only

1. It allows him to get a loan with less than 20% down payment

When two (2) brokers from competing brokerage firms get together and set their commissions? 1. It is not legal and in violation of Antitrust Laws 2. This would be a violation of the Fair Housing Law 3. This is a violation of RESPA 4. This is not prohibited

1. It is not legal and in violation of Antitrust Laws Study Hint: Antitrust violations occur when two or more brokerages or license entities (brokerage firm or independent brokers working in their own firm) conspire to set fees. Each firm may allow for independent pricing among the individual licensees within the firm, or may set pricing which all licensees within the firm must abide by.

Which of the following would most likely be covered under a construction warranty? 1. Leaking windows 2. Broken washer 3. Roof shingles blown off by wind 4. Insect damage to foundation

1. Leaking windows Study Hint: Most builder warranties cover a home's materials and workmanship, but do not provide protection from future damage.

Buyer Dave writes a contract on a home, but before the offer is accepted, he finds another house he likes better. He ... 1. Must withdraw the original contract before writing another in order to avoid the purchase of two homes 2. Is obligated to by this home 3. Can write the new contract since the old one has not been accepted yet 4. Will be buying two homes

1. Must withdraw the original contract before writing another in order to avoid the purchase of two homes

Ron wants to purchase a building, and he has outlined his terms for a specific property along with his desired purchase price, inspection period, and financing contingencies and sent it to the listing broker. He has likely sent a 1. Letter of intent 2. Contract to buy 3. Listing agreement 4. Letter of interest

1. Letter of intent Study Hint: Letter of Intent: A preliminary agreement between two parties which outlines the desire of the buyer to purchase a certain property. A letter of intent typically does not bind either party but is an important early step in closing on a property.

Restrictive covenants are all of the following EXCEPT ? 1. Liens on real property 2. Encumbrances on real property 3. Private, voluntary agreements governing land use 4. Typically restrict items like maximum height, minimum house size, etc.

1. Liens on real property Study Hint: Restrictive Covenant: a private agreement usually in the deed or lease that restricts the use and occupancy of real property.

An owner refuses an offer, even though it is exactly in accordance with a valid Exclusive Right-to-Sell listing, the? 1. Listing broker may be entitled to a commission 2. Selling broker is entitled to a commission 3. Seller has breached the offer contract 4. Listing broker will not get paid

1. Listing broker may be entitled to a commission

Meghan's law might affect the value in a neighborhood by ______? 1. Lowering the value in any home due to a sex offender living nearby 2. Requiring sellers to disclose a sex offender living nearby 3. Require a buyer to ask questions about sex offenders 4. Requiring brokers to disclose the existence of a sex offender in the home

1. Lowering the value in any home due to a sex offender living nearby

Which of the following approaches MOST reliably estimates the sales price of a single family residence? 1. Market data 2. Appraisal 3. Cost 4. Income

1. Market data

A city broker who is listing a farm with irrigation rights? 1. May be participating above his level of competency 2. Must take a course in water law 3. Should take the listing but get advice from some one more competent if needed 4. Must terminate the listing

1. May be participating above his level of competency

A broker promises his client that there will be a new highway exit built to help access to a tough location. The buyer's decide to buy, and the highway exit is never built. This is considered? Study Hint: Making a false promise 1. Misrepresentation 2. Failure to disclose 3. Puffing 4. Fraud

1. Misrepresentation

A broker promises his client that there will be a new highway exit built to help access to a tough location. The buyer's decide to buy, and the highway exit is never built. This is considered? 1. Misrepresentation 2. Failure to disclose 3. Puffing 4. Fraud

1. Misrepresentation Study Hint: Making a false promise is considered misrepresentation.

Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of ______________? 1. Misrepresentation 2. Fraud 3. Puffery 4. Legality

1. Misrepresentation Study Hint: A misrepresentation is an assertion that is not in accord with the truth. When a person enters a contract because of his justifiable reliance on a misrepresentation about some important fact, the contract is voidable.

Commingling is . 2. Actual misappropriation of trust funds 3. Diverting the funds of others to personal use 4. The mixing of state or federal withholding funds with personal funds

1. Mixing of trust funds with personal or general business funds Study Hint: Commingling: The illegal act by a real estate broker of placing a client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.

Which is the term used for the person or organization who acts as an intermediary for the purpose of obtaining financing? 1. Mortgage broker 2. Mortgage banker 3. Loan originator 4. Loan officer

1. Mortgage broker Study Hint: Mortgage broker is the term used for the person or organization who acts as an intermediary for the purpose of obtaining financing. Unit 6

HUD and EPA require the disclosure of known information on lead-based paint and lead-based paint hazards before the sale or lease of _____? 1. Most housing built before 1978 2. All housing 3. Any housing built before 1980 4. Only Federal housing

1. Most housing built before 1978 Study Hint: HUD and EPA require the disclosure of known information on lead-based paint and lead-based paint hazards before the sale or lease of most housing built before 1978.

A broker has an exclusive-right-to sell listing. A buyer offers to purchase the listed property. The buyer knows that the broker is an agent of the seller, yet tells the agent in confidence that she may be willing to increase his offer by $10,000 if it is not accepted by the seller. The broker _________________. 1. Must convey this information to the seller 2. Must refer the buyer to a buyer's agent 3. Is not required to convey information received from buyer to seller 4. Is practicing dual agency

1. Must convey this information to the seller

A mother dies and leaves her property to her daughter Mary, and she does so by a will. Before Mary can take possession of the property, title? 1. Must go through probate 2. Need not go through probate 3. Must be conveyed 4. Must be seen by an attorney

1. Must go through probate Study Hint: A mother dies and leaves her property to her daughter Mary, and she does so by a will. Before Mary can take possession of the property, title must go through probate.

The Clean Water Act allows that anyone interested in depositing dredged or fill material into "waters of the Unites States, including wetlands" 1. Must receive authorization for such activities 2. Must receive a license for doing this 3. Will not be allowed to do so 4. Will be fined $10,000 for the first offense

1. Must receive authorization for such activities. These activities are administrated by the U.S. Army Corps of Engineers and the EPA, among other agencies.

An offer is terminated by? 1. Rejection by the offeree 2. Revocation by the offeree 3. Request for an extension by the offeree 4. Rejection by the offeror

1. Rejection by the offeree

Which of the following reports would be the most comprehensive appraisal report? 1. Narrative report 2. Uniform Residential Appraisal Report 3. Certified appraisal report 4. Short-form report

1. Narrative report Study Hint: Narrative Report: A complete and lengthy report where the appraiser presents all information pertinent to the property, and the market for the property including analyses, opinions, and conclusions, which lead to an estimate of value.

Buyer B wants to enter into an open listing with any salesperson that can find him a home, but Buyer B wants to be able to find a home himself. This is an example of a(n) . 1. Open buyer listing 2. Open Agency listing 3. Exclusive buyer listing 4. FSBO

1. Open buyer listing Study Hint: Open Buyer Listing: An open buyer listing provides the buyer with maximum flexibility as to the number of salespersons they chose to work with. However, the level of support may not be effective.

Parcels A, B, and C are located side by side and owned by three different owners. Parcel A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner, they would be worth $22,000 more than their individual values. This demonstrates which principle of value? 1. Plottage 2. Assemblage 3. Regression 4. Progression

1. Plottage Study Hint: Parcels A, B, and C are located side by side and owned by three different owners. Parcel A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner, they would be worth $22,000 more than their individual values. This demonstrates which principle of value? Pottage.

A city can enact ordinances intended to provide for health, safety, morals, and general welfare beneath its . 1. Police power 2. Injunction power 3. Riparian rights 4. Power of eminent domain

1. Police power Study Hint: A city can enact ordinances intended to provide for health, safety, morals, and general welfare beneath it's police power. Health and Safety/Building Codes

Which of the following events would AUTOMATICALLY cancel a listing agreement? 1. Property owner's death 2. Listing agent's death 3. Death in seller's family 4. Property owner is unhappy with agent

1. Property owner's death

Which of the following events would AUTOMATICALLY cancel a listing agreement? 1. Property owner's death 2. Death of the broker 3. Death of the sales agent 4. Death of the employing broker

1. Property owner's death Study Hint: In the case of the listing broker's death, the employing broker will designate a new agent/broker.

An environmental impact statement typically describes the effects of a proposed project on factors such as? 1. Public health and safety 2. Economic growth 3. Financial opportunity 4. Transportation needs

1. Public health and safety Study Hint: An environmental impact statement typically describes the effects of a proposed project on factors such as public health and safety. Unit 7

A ________________ is NOT recorded. 1. Purchase agreement 2. Easement 3. Deed 4. Mortgage

1. Purchase agreement Study Hint: A deed, easement, and mortgage are usually recorded, while a purchase agreement is usually not.

An attorney-in-fact violated fiduciary duty in? 1. Purchasing the principal's property 2. Leasing the principal's property to a 3rd party 3. Selling the principal's property 4. Placing a lien on the principal's property

1. Purchasing the principal's property

A seller cannot get marketable title due to a break in the chain of title. He will need? 1. Quiet title action 2. Title insurance 3. A chain of title 4. A General Warranty Deed

1. Quiet title action

Antitrust laws prohibit competing brokers from all of the following EXCEPT___________? 1. Receiving compensation from both the buyer and the seller 2. Talking about commissions outside the office 3. Artificially raising prices by restriction of trade or supply 4. Boycotting other brokerages

1. Receiving compensation from both the buyer and the seller Study Hint: Sherman Antitrust Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies. The Sherman Act also makes it a crime to monopolize any part of interstate commerce.

Antitrust laws prohibit competing brokers from all of the following EXCEPT 1. Receiving compensation from both the buyer and the seller 2. Preventing competition 3. Creating monopolies 4. Discussing commissions with each other

1. Receiving compensation from both the buyer and the seller Study Hint: Antitrust laws prohibit competing brokers from preventing competition, creating monopolies, and discussing commissions with one another. Sherman Antitrust in MREP

Federal Truth in Lending laws are also known as? 1. Regulation Z 2. Home Mortgage Disclosure Act 3. Consumer Protection Act 4. Fair Housing Act

1. Regulation Z Study Hint: Federal Truth in Lending Laws are also known as Regulation Z. The Truth in Lending Act was originally Title I of the Consumer Credit Protection Act enacted June 29, 1968. The regulations implementing the statute are known as "Regulation Z". Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of TILA usually refers to the requirements contained in Regulation Z, as well as the statute itself. From TILA's inception, the authority to implement the statute by issuing regulations was given to the Federal Reserve Board effective July 21, 2011. Unit 6

Which appraisal method would be used to determine the most likely price a home will sell for? 1. Sales comparison approach 2. Cost approach 3. Income approach 4. Broker price opinion

1. Sales comparison approach Study Hint: The sales comparison approach would be used to determine the most likely price a home will sell for.

A competitive market analysis is MOST often used for? 1. Setting a listing price 2. An appraisal 3. The future value of the property 4. Refinancing

1. Setting a listing price

When a principal authorizes an agent to perform a particular act or transaction, it is an example of a ___________? 1. Special agency 2. Buyer agency 3. Designated agency 4. Subagency

1. Special agency Study Hint: A special agent is one who has limited authority granted to him or her through a principal. The relationship with the principal is not expected to be continuous. The listing contract creates a special agency relationship with the seller. The authority is limited to the duties given in the listing contract, and the relationship ends when the terms have been fulfilled.

Which of the following is NOT usually prorated at closing? 1. Special assessments 2. Taxes 3. HOA dues 4. Interest

1. Special assessments

Subdivision laws come from 1. State law and municipal ordinances 2. Federal laws and regulations 3. U.S. Constitution 4. The planning committee

1. State law and municipal ordinances Study Hint: Subdivision laws come from state law and municipal ordinances.

All of the following are reliable methods to calculate the reproduction or replacement cost of a building EXCEPT ? 1. Straight-line method 2. Square foot method 3. Unit in place method 4. Quantity survey method

1. Straight-line method

A borrower has three business days to rescind a consumer loan. Which law provides for this right of rescission? 1. The Truth-in-Lending Act 2. RESPA 3. The Equal Credit Opportunity Act 4. The Uniform Commercial Code

1. The Truth-in-Lending Act Study Hint: Truth-in-Lending: A body of federal law implemented by the Federal Reserve Board's Regulation Z, the main purpose is to ensure customers are given meaningful information with respect to the cost of credit so they can compare credit terms available to them. The finance charge and annual percentage rate (APR) are the two most important disclosures required.

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul. It is zoned for livestock. Local schools with bus service and daycare for young children are available within the canyon. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2300 yearly. Buyer's agent Daniel Brooks brings an offer for $267,000 which is accepted and will close on July 30th. Buyer Benjamin will be getting a VA loan and will be putting 20% down. Buyer Benjamin has a resale furniture business and he will store some of his saleable items on the property. Additionally, he plans to build a large storage shed for this purpose. The contract is contingent on the buyer's ability to get a building permit so he can build the needed structure on the property. His broker has added a contingency clause to the contract, which states the contract will terminate if the building permit is not granted by the city. The buyer has not heard back from the city about the building permit, and it's now July 29. What is the best action to take? 1. The buyer should request an extension of the contingency deadline and closing to give the city time to respond. 2. Nothing needs to be done at this time. 3. Broker Bonnie should call the city to find out what's going on and extend the contingency deadline. 4. The buyer should terminate the contract.

1. The buyer should request an extension of the contingency deadline and closing to give the city time to respond.

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2,300 yearly. Buyer's agent Daniel Brooks brings an offer for $267,000 which is accepted and will close on July 30. Buyer Benjamin will be getting a VA loan and will be putting 20% down. Buyer Benjamin has a resale furniture business, and he will store some of his saleable items on the property and he plans to build a large storage shed for this purpose. The contract is contingent on the buyer's ability to get a building permit so he can build the needed structure on the property. His broker has added a contingency clause to the contract that states the contract will terminate if the building permit is not granted by the city. The buyer has not heard back from the city about the building permit, and it's now July 29. What is the best action to take? 1. The buyer should request an extension of the contingency deadline and closing to give the city to respond. 2. Nothing needs to be done at this time. 3. Broker Bonnie should call the city to find out what's going on and extend the contingency deadline. 4. The buyer should terminate the contract.

1. The buyer should request an extension of the contingency deadline and closing to give the city to respond.

Whom do restrictive covenants benefit? 1. The current owner 2. The adjacent property owners 3. The current owners and sub-lessors 4. Local governments

1. The current owner Study Hint: Restrictive covenants are usually considered valid if they are reasonable and benefit all property owners in the subdivision i.e. to protect property values or safety.

Joan and Dave Farson of Springfield sign a listing agreement with broker Ann for a 3-month period. They agree to list their home for $335,000. Taxes for last year in the amount of $2,656 have been paid on Jan 25. The Avilla's agent presents a contract for $332,000 which is accepted. Closing is scheduled for August 15. The Farsons agree to a nonrefundable escrow of $3,000 for the buyers. If they do not vacate the property by August 15, they agree to pay the buyers $55 for every day after that. Closing is rescheduled for August 18. The buyer's intention is to operate a day care on the property, and they do not yet know if this will be allowed by local zoning laws. Use a 365 day calendar, actual days in the month. Seller is responsible for the day of closing. The Avillas were denied by the county the right to operate a day care on the property. How does this affect the contract? 1. The issue was not addressed in the contract 2. Avillas will have to renegotiate the contract 3. The Avillas may terminate the contract 4. The contract is terminated

1. The issue was not addressed in the contract

If a broker notices water marks in the basement, the broker should? 1. Wait to talk with the listing broker before disclosing this to the buyer 2. Immediately disclose this to the buyer 3. Speak first with his employing broker to get direction from him or her 4. Do nothing and wait until the seller discloses

2. Immediately disclose this to the buyer

A woman inherited a cabin- the upkeep and remodel was too much so she had her broker list it. She received an offer which was accepted. 10 days before closing, lightening strikes the cabin and it burns to ground. Can she back out of the contract and collect the insurance money so she can build the cabin of her dreams? 1. The seller must move forward with the contract 2. The contract is terminated 3. The buyer must terminate the contract 4. The buyer must close on the house

1. The seller must move forward with the contract Study Hint: When a property is damaged after the signing of the contract and prior to the closing, the buyer (who has received title in equity in the property via the signed contract under the doctrine of Equitable Conversion) is the party who has three options if the seller cannot return the property to its prior condition at or before closing. The buyer's alternatives are; 1. Terminate the contract and get their earnest money back. 2. Allow an extension of time for repairs and closing. 3. Accept the property in the damaged state with an assignment of insurance proceeds, if this is permitted by the seller's insurance company. The seller then credits the amount of the insurance deductible to the buyer at closing. Buyer, like Seller, typically has an insurable interest in the property after signing the contract, and thus can purchase insurance that covers pre-Closing damage to the property.

A valid contract would be unenforceable because of? 1. The statute of limitations 2. The absence of consideration 3. A death 4. Lack of disclosure form

1. The statute of limitations Study Hint: Since the contract is valid, it already has consideration.

A licensee took a listing and saw it was close by a Russian bakery and Russian stores. Instead of listing the property in the local paper, the licensee took a listing out in a Russian website. Have they violated anything? 1. There is no violation 2. Federal Fair Housing Laws 3. MLS Rules and Policies 4. State Agency Relationship Laws

1. There is no violation Study Hint: The fact that the property is advertised in one location or website and not another is not in and of itself enough to indicate a violation of fair housing or state laws. Nothing in the question indicates any entry into a Multiple Listing Service so that answer choice is inapplicable to the question.

Broker James and Broker Laura agree in a phone call to each take listings on their respective sides of a creek that divides the Creekside Neighborhood? 1. This is market or customer-allocation and is a violation of the Sherman Act. 2. This is an example of an acceptable verbal agreement between brokers. 3. The brokers are engaging in bid-rigging and are violating the Clayton Act. 4. As long as no customers price is affected then there is no violation.

1. This is market or customer-allocation and is a violation of the Sherman Act. Study Hint: Brokers should not agree to divide territories (and this is not limited to written agreements). So if there are two major brokerage firms in a smaller town divided by a river, they should not decide between them that one will take properties north of the river, while the other stays to the south. Any such agreement violates the antitrust laws.

A rectangular survey must include which of the following? 1. Township lines 2. Metes and bounds measurements 3. Street addresses 4. Lot and Block numbers

1. Township lines Study Hint: A rectangular survey must include township lines.

Under RESPA, what are the maximum advance insurance and tax reserves that a lender can require at the time of loan? 1. Two months in advance 2. Three months in advance 3. Six months in advance 4. One year in advance

1. Two months in advance Study Hint: Real Estate Settlement Procedures Act: A federal law enacted in 1974 that ensures that the buyer and seller receive information on all settlement costs when the purchase of a 1 to 4-residential unit is financed by a federally related mortgage loan and applies to first mortgage loans only. The maximum advance insurance and tax reserves that a lender can require at the time of loan is two months in advance.

Can the seller offer the listing agent a $500 bonus after closing? 1. Yes, but it has to be made out to the brokerage. 2. No, referral fees are not legal. 3. No, bonuses are not legal. 4. Yes, but it must be less than $500.

1. Yes, but it has to be made out to the brokerage.

A conditional use permit would MOST LIKELY pertain to? 1. Zoning 2. Deed Restrictions 3. Building codes 4. Covenants

1. Zoning (also known as a special use permit) usually granted to a property owner to allow a special use of property that is defined as a non-allowable use within that zone.

A note given with a mortgage would be the ________________. 1. Security for the loan 2. Guarantee of loan payment 3. Primary evidence of the debt 4. Hypothecation agreement

3. Primary evidence of the debt

Kevin is preparing a Comparative Market Analysis (CMA) on a commercial net leased office property that has 100% occupancy and income of $67,000, with expenses of $22,000 and a management fee of 5% of the gross income. The property is assessed by the municipality at $425,000. If Kevin considers a 9% rate of return to be reasonable for this income property, what would Kevin recommend as a listing price? 1. $744,444 2. $462,778 3. $500,000 4. $597,000

2. $462,778 Study Hint: $67,000 - $22,000 - $3,350 (5% management fee) = $41,650 / 09 = $462,778 NOI (effective gross income - operating expenses) /cap rate = sales price $41,650/ .09 = $462,778

If the interest for 4 months on a loan of $80,000 is $3,200, what is the annual interest rate? 1. 11% 2. 12% 3. 13% 4. 14%

2. 12% Study Hint: First you have to set up the equation. Ask your self, 80,000 x what (?) = 9600, then divide both sides of the equation by 80,000. 80,000 x ? = 9600 (3200 x 3), then, 9600/80000 = 12%

Federal tax laws regarding home ownership include all of the following EXCEPT . 1. That they let you pay no tax on up to $250,000 gain ($500,000 for married couples) on the sale of your primary residence 2. A $125,000 exemption for elderly homeowners 3. Tax deductibility of mortgage interest 4. Exchange of like property for like property

2. A $125,000 exemption for elderly homeowners Study Hint: There is no $125,000 exemption for elderly homeowners.

A group of brokers agreed that none of them would advertise in a paper that had run articles critical of the activities of real estate brokers. This agreement would be considered 1. Price-fixing 2. A Sherman Antitrust Act violation 3. Market allocation 4. A tie-in agreement

2. A Sherman Antitrust Act violation Study Hint: A group of brokers agreed that none of them would advertise in a paper that had run articles critical of the activities of real estate brokers. This agreement would be considered a Sherman Antitrust Act violation. Antitrust Laws

New sidewalks installed only on one particular street will probably be paid for by? 1. The HOA 2. A special assessment 3. The buyer 4. The state

2. A special assessment Study Hint: New sidewalks installed only on one particular street will probably be paid for by a special assessment. Unit 2

In order to decrease or stop an activity, an would require removal of a nuisance such as smell or noise? 1. Intervention 2. Abatement action 3. Eviction 4. Interruption action

2. Abatement action Study Hint: In order to decrease, reduce, or stop an activity, an abatement action would require removal of a nuisance (a smell or loud sound); or rent can be abated when a housing unit is uninhabitable.

When advertising in social media all the following are true EXCEPT_______________? 1. Do not advertise in a manner that misleads the public as to the identity of the brokers' licensed brokerage 2. Advertising must include the individual salesperson or associate broker's name ONLY 3. Advertising includes websites, signage, property flyers, mailings, business cards, letterhead, and contracts, social media 4. If the identity of the employing broker or the brokerage firm is difficult for the public or the Commission to ascertain, the team may be in violation of advertising rules

2. Advertising must include the individual salesperson or associate broker's name ONLY Study Hint: The advertising of team names should never give the impression that the team is an entity separate from the licensed real estate brokerage. If the identity of the employing broker or the brokerage firm is difficult for the public or the Commission to ascertain, the team may be in violation.

The amount of commission to be paid is? 1. A standard amount 2. Agreed upon by the seller and the agent in the contract as per commission rules 3. Agree upon by the managing broker and seller 4. Set by the firm

2. Agreed upon by the seller and the agent in the contract as per commission rules

The managing broker can be held responsible for 1. All actions of associated salespersons 2. All real estate activities of salespersons 3. All actions of his/her employees 4. His/her own actions only

2. All real estate activities of salespersons Study Hint: The managing broker can be held responsible for all real estate activities of salespersons.

The managing broker can be held responsible for 1. All actions of associated salespersons 2. All real estate activities of salespersons 3. All actions of his/her employees 4. His/her own actions only

2. All real estate activities of salespersons Study Hint: The managing broker can be held responsible for all real estate activities of salespersons.

Bricks used to build a backyard patio become real property through the process of ? 1. Severance 2. Annexation 3. A Bundle of Rights 4. Progression

2. Annexation Study Hint: Annexation: An addition to property by the act of joining on thing to another, as in attaching personal property to real property and thereby creating a fixture.

The term which most indicates the full bundle of rights that automatically transfer to the new buyer in a real estate transaction is? 1. Emblements 2. Appurtenances 3. Fixtures & trade fixtures 4. Remainder

2. Appurtenances

he term which most indicates the full bundle of rights that automatically transfer to the new buyer in a real estate transaction is . 1. Emblements 2. Appurtenances 3. Fixtures & trade fixtures 4. Remainder

2. Appurtenances Study Hint: The term which most indicates the full bundle of rights that automatically transfer to the new buyer in a real estate transaction is appurtenance.

Who is liable for misinformation given to a client? 1. The broker only 2. Both the broker and salesperson 3. The salesperson only 4. The client

2. Both the broker and salesperson Study Hint: Both the employing broker and salesperson may be liable for any misinformation given to the client.

The owner of an interest in commonly held property wishes to dispose of the property, while the other owners DO NOT want to do so, will probably? 1. Develop an proportionate part of the property 2. Bring a suit to partition the monetary investment 3. Sue to quiet the title 4. Waiting out the death of the obstructing Tenants

2. Bring a suit to partition the monetary investment

Which of the following is NOT a consideration in the definition of market value? 1. Buyer and seller must be unrelated and acting without undue pressure 2. Buyer and seller must agree to appraised value 3. The property must be exposed for sale for a reasonable period of time 4. The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale

2. Buyer and seller must agree to appraised value Study Hint: Market value is the price which a seller of property would receive in an open market by negotiation, as distinguished from a "distress" price on a forced or foreclosure sale, or from an auction. Market value of real property is normally determined by a professional appraiser who makes comparisons to similar property sales in the area, which are often called "comparables."

Why was the Jones vs. Mayer decision of 1968 important? 1. It added discrimination based on gender to the list of prohibited types of discrimination covered by Fair Housing laws 2. By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing 3. It added discrimination based on age to the list of prohibited types of discrimination covered by Fair Housing laws 4. It made discrimination based on sexual orientation a Fair Housing violation

2. By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing

There was no history of the Abstract of Title. What way can you remedy the situation to learn more on the history of the title? 1. Suit to quiet title 2. Chain of title 3. Title search 4. Torrens certificate

2. Chain of title Study Hint: There was no history of the Abstract of Title. The chain of title can help you remedy the situation by allowing you to learn more on the history of the title. Unit 3

Another term for the owner of a property listed with your firm is the? 1. Customer 2. Client 3. Vendee 4. Vendor

2. Client

The state, via eminent domain, wants to take a diagonal strip of land that bisects Farmer Brown's farm. The state can do this by process of ? 1. Escheat 2. Condemnation 3. Just compensation 4. Destruction

2. Condemnation

Tenant obligations under a lease will cease with? 1. Tenant eviction 2. Condemnation of the property 3. Sale of the property 4. Failure of the tenant to exercise a purchase option

2. Condemnation of the property

The terms "good", "valuable", and "legal" refer to? 1. Meeting of the minds 2. Consideration 3. Legal purpose 4. Capacity

2. Consideration

A local builder is restricting the addition of barbed wire fences for new owners. This is part of the? 1. Local zoning law 2. Covenants (CC&Rs) 3. Building code 4. State law

2. Covenants (CC&Rs)

When a buyer assumes a loan, the prorated interest appears on the settlement sheet as a . 1. Debit to the buyer; single-entry 2. Debit to the seller; credit to the buyer 3. Debit to the seller; credit to the broker 4. Debit to the buyer; credit to the seller

2. Debit to the seller; credit to the buyer Study Hint: The buyer will pay the full month of interest at the end of the month (interest is paid in arrears). The seller will credit the buyer for interest accrued for the time the seller was in the home.

Real estate property taxes are based on a banker's year and are payable in arrears. The taxes were $1,214.00 for the year. The closing is on April 1. The seller is? 1. Credited $302.67 2. Debited, and the buyer is credited $306.67 3. Debited, and the buyer is credited $911.33 4. Debited $911.33

2. Debited, and the buyer is credited $306.67 Seller owns closing day 1214/360 = 3.37 x 91 = 306.67

Which is true of BOTH special assessments and ad valorem taxes? 1. The government must benefit from the projects funded by the monies. 2. Delinquent payment is grounds for foreclosure sale of the property. 3. Both are used to fund general or day-to-day government operations. 4. Both are based on the government's right to get money back from a property owner for improvements.

2. Delinquent payment is grounds for foreclosure sale of the property. Study Hint:Special assessments are used to designate a unique charge that government units can assess against real estate parcels for certain public projects. A special assessment may only be levied against parcels of real estate which have been identified as having received a direct and unique "benefit" from the public project. Property ad valorem taxes are the major source of revenue for state and municipal governments.

Used in some states to represent the interest the wife receives in property owned by her husband at the time of death, is called? 1. Courtesy 2. Dower 3. Community property 4. Joint tenancy

2. Dower

A burden, voluntary or involuntary, that reduces a property's value or use is known as an? 1. Easement 2. Encumbrance 3. Attachment 4. Encroachment

2. Encumbrance Study Hint: An encumbrance is a burden, voluntary or involuntary, that reduces a property's value or use.

A broker who manages a large industrial area would MOST LIKELY be concerned with? 1. Zoning restrictions 2. Environmental hazards 3. Eminent domain 4. Deed restrictions

2. Environmental hazards

Upon execution by both parties of a contract to purchase real estate, the buyer's interest is legally considered to be? 1. Exclusive 2. Equitable 3. Expressed 4. Essential

2. Equitable Study Hint: Once the contract is signed by all parties, the buyer is said to have "equitable title", the right to obtain absolute ownership to property when legal title is held in another's name. The buyer can sue in equity for specific performance if the seller refuses to sell once a contract for sale is signed.

A couple listed their home with a broker. After two months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. The listing was MOST likely a(n)? 1. Exclusive Right-to-Sell listing 2. Exclusive Agency Listing 3. Open listing 4. Net listing

2. Exclusive Agency Listing

Which of the following phrases BEST illustrates the concept and intent of a buffer zone? 1. A two-story commercial building in between two high rise buildings 2. Garden apartments between a single-family residential neighborhood and a shopping center 3. A highway between two shopping centers 4. Railroad tracks between two neighborhoods

2. Garden apartments between a single-family residential neighborhood and a shopping center

Salesperson Ron takes a listing, and his broker, Benny, presents Ron with an offer on the same property from a buyer with whom the broker has no agency agreement. Broker Benny 1. Has a responsibility for the buyer 2. Has a responsibility for the seller 3. Represents the buyer 4. Has no responsibility since he has no agency agreement

2. Has a responsibility for the seller Study Hint: A firm's broker is the agent and shares this responsibility with the licensees who work for the firm. Law of Agency

A salesperson may be compensated for real estate services by 1. The seller 2. His or her employing broker 3. A cooperating broker 4. Another broker in the office

2. His or her employing broker Study Hint: Salesperson/Employing Broker Relationship: The salesperson's compensation is specified in the contract with the principal, however, all monies earned must come through the salesperson/broker's employing broker.

When can an agent disobey a principle? 1. Never, due to fiduciary duty 2. If a law would otherwise be broken 3. If the agent feels the principle is wrong 4. If the agent feels uncomfortable

2. If a law would otherwise be broken

A mortgagee will benefit by a blanket mortgage because of? 1. The insurability of the loan 2. Personal liability 3. The loan guarantee 4. Greater security

4. Greater security

Broker Jane is working with Buyer Bob to purchase a home but has no signed agency agreement. Under the general law of agency this is _________? 1. Authorized agency 2. Implied agency 3. Illegal agency 4. Express agency

2. Implied agency Study Hint: To assure that the broker will get paid, a written (express) contract is needed. Payment is not certain, to make it certain a contract should be in place. Express Contract: A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an "implied" contract in which the existence of the contract is assumed by the circumstances.

The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of? 1. Operation of law 2. Impossibility of performance 3. Defeasance clause 4. Incompetent parties

2. Impossibility of performance

The previous tenant of your investment listing died of AIDS. Should you disclose this to potential buyers, and why? 1. Yes, state laws require the disclosure. 2. In most states, Fiduciary Duty of Confidentiality precludes you from disclosing non-material facts (however some states do require disclosure). 3. No, Illegal acts need not be disclosed. 4. Yes, This is a material fact under full disclosure contract requirements.

2. In most states, Fiduciary Duty of Confidentiality precludes you from disclosing non-material facts (however some states do require disclosure)

The previous tenant of your investment listing died of AIDS. Should you disclose this to potential buyers, and why? 1. Yes, state laws require the disclosure 2. In most states, Fiduciary Duty of Confidentiality precludes you from disclosing non-material facts (however some states do require disclosure). 3. No, Illegal acts need not be disclosed. 4. Yes, This is a material fact under full disclosure contract requirements.

2. In most states, Fiduciary Duty of Confidentiality precludes you from disclosing non-material facts (however some states do require disclosure). Study Hint: In most states, Fiduciary Duty of Confidentiality precludes you from disclosing non-material facts (however some states do require disclosure).

A lender would MOST likely rely on which of the following approaches to value when underwriting a mortgage on an apartment complex? 1. Direct sales comparison 2. Income 3. Replacement 4. Investment

2. Income Study Hint: Capitalization Approach − NOI/CAP rate = Value

Of the following, which description BEST summarizes the essential characteristics of condominium ownership? 1. A planned development of low-density housing built near public recreational facilities 2. Individually owned units and jointly owned common areas identified by reference to a declaration 3. A corporate form of ownership where each tenant owns a portion of the stock and each tenant has a lease governed by corporate bylaws 4. A declaration of condominium where each tenant has a lease governed by corporate bylaws and a homeowners association incorporated to manage and govern

2. Individually owned units and jointly owned common areas identified by reference to a declaration Study Hint: Condominium Ownership is best summarized by individually owned units and jointly owned common areas identified by reference to a declaration. Special forms of ownership

The purpose of usury laws is to regulate . 1. Those borrowers who are a greater risk of defaulting 2. Interest rates charged by lenders 3. Loans that are higher than the prime rate 4. Payday loans

2. Interest rates charged by lenders Study Hint: The purpose of usury laws is to regulate interest rates charged by lenders.

Seller Joe has agreed to sell his property to Buyer Don. Joe is providing the financing and Don will make installment payments but will be permitted to move in. After ten years, Don will need to pay the balance on the loan to the seller and will get title. This is known as a . 1. Scam contract 2. Land contract 3. Option contract 4. Illegal contract

2. Land contract Study Hint: A "land contract" (sometimes known as a "contract for deed", "agreement for deed", "land installment contract", or an "installment sale agreement") is a contract between a seller and buyer of real property in which the seller provides financing to the buyer to purchase the property for an agreed-upon purchase price, and the buyer repays the loan in installments. Under a land contract, the seller retains the legal title to the property while permitting the buyer to take possession of it for most purposes other than legal ownership. The sale price is typically paid in periodic installments, often with a balloon payment at the end to make the time length of payments shorter than a corresponding fully amortized loan without a final balloon payment. When the full purchase price has been paid, including any interest, the seller is obligated to convey legal title to the property to the buyer. An initial down payment from the buyer to the seller is usually also required by a land contract. The legal status of land contracts varies from region-to-region.

Without the owner's permission, a seller's agent told a buyer that the seller had been fired from his employment and desperately needed to sell his home as soon as possible. Which fiduciary duty did the agent break? Study Hint: Confidentiality about the principal's personal affairs is a key element. 1. Obedience 2. Loyalty 3. Disclosure 4. Care

2. Loyalty

A tenant on a long-term lease purchased the building from his landlord and resold it to an investor at a profit, making no mention of lease rights. The lease was terminated by? 1. Surrender 2. Merger 3. Recordation 4. Commercial frustration

2. Merger

Which of the following lenders uses his or her own funds to fund loans that will be sold in the secondary mortgage market? 1. Mortgage broker 2. Mortgage banker 3. Department of Veterans Affairs 4. Fannie Mae

2. Mortgage banker Study Hint: A mortgage banker uses his or her own funds to fund loans that will be sold in the secondary mortgage market. Conventional Loans

Broker Steve has a listing agreement with Seller Dave. His office policy does not allow him to represent a seller and buyer in the same transaction. Broker Steve 1. Can work as a dual agent if the seller allows it 2. Must work with the seller as a single agent 3. Cannot work with the buyer as an agent or tb 4. Can work with the buyer as an intermediary

2. Must work with the seller as a single agent

In MOST states, when a first mortgage is foreclosed and the property has been sold, junior liens? 1. May be enforced only during the statutory lien period of redemption 2. No longer have any claim on the property 3. Are extinguished 4. May be sold

2. No longer have any claim on the property

A couple signed a lease on an apartment for a period of 1 year. The lease DOES NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term? 1. 30 days 2. No notice is required 3. 15 days 4. 60 days

2. No notice is required Study Hint: No notice is required (the lease does not have an automatic renewal clause).

Can a title company pay a broker for services? 1. Yes, if the title company and broker disclose this to the client. 2. No, this is against the law. 3. Sometimes 4. Yes, but only if it less than $100 in value.

2. No, this is against the law.

A non-ownership or leasehold estate that a tenant possesses in real property is called? 1. Fee simple 2. Non- freehold estate 3. Life estate 4. In severalty

2. Non-freehold estate

Which is FALSE regarding an Open Listing? 1. The seller may employ any number of brokers 2. Only one broker may act as an agent for the seller 3. The broker is entitled to a commission upon procuring a buyer for the house for the seller 4. The broker's commission is based on the sales price

2. Only one broker may act as an agent for the seller Study Hint: With an Open Listing Agreement, any number of brokers may act as the agent for the seller.

A unilateral contract that becomes bilateral upon being exercised is a(n)? 1. Exclusive listing 2. Option 3. Mortgage 4. Purchase contract

2. Option Study Hint: A unilateral contract in which the optionor (property owner) promises to sell if and when the optionee (prospective buyer) chooses to buy, at a price and before a date set in the contract.

A unilateral contract that becomes bilateral upon being exercised is a(n) 1. Exclusive listing 2. Option 3. Mortgage 4. Purchase contract

2. Option Study Hint: Option Contracts: A unilateral contract in which the optionor (property owner) promises to sell if and when the optionee (prospective buyer) chooses to buy, at a price and before a date set in the option contract.

Compensation to a broker for property management services is normally based on a . 1. Percentage of net income 2. Percentage of gross income 3. Flat fee 4. Minimum fee and kickbacks from suppliers

2. Percentage of gross income Study Hint: Compensation to a broker for property management services is normally based on a percentage of gross income. Property Management

Under the CERCLA (Comprehensive Environmental Response, Compensation and Liability Act), prospective buyers of a property potentially contaminated by hazardous waste would best protect themselves from liability by? 1. Executing a CERCLA affidavit 2. Performing a Phase I Environmental Assessment 3. Requiring the seller to provide a Remediation Affidavit 4. Requesting an audit of the property from the Environmental Protection Agency

2. Performing a Phase I Environmental Assessment

At the time of harvest, crops that require annual planting are generally considered to be? 1. Annual 2. Personal property 3. Owned by the buyer 4. Fixed

2. Personal property

When a property is sold, the fireplace tools are considered 1. Real property 2. Personal property 3. Accessories 4. Fixtures

2. Personal property Study Hint: When a property is sold, the fireplace tools are considered personal property.

A developer who owns property and wishes to subdivide, has gotten a survey of the property. After completing this step, it is time to . 1. Market and sell the lots 2. Plat the property 3. Pull the building permits 4. Subdivide the property

2. Plat the property Study Hint: A developer who owns property and wishes to subdivide, has gotten a survey of the property. After completing this step, it is time to plat the property.

Characteristics of value DO NOT include 1. Demand 2. Plottage 3. Scarcity 4. Transferability

2. Plottage Study Hint: Characteristics of value include scarcity, transferability, and demand. Elements of Value

The increased value resulting from the consolidation of 2 adjacent lots into 1 larger lot is? 1. Substitution 2. Plottage 3. Assemblage 4. Coordination

2. Plottage Study Hint: The combining of two lots to increase the value is known as assemblage. The resulted value added is called plottage value.

What would automatically transfer with a property? 1. Trade fixtures 2. Plumbing fixtures 3. Emblements 4. Appliances

2. Plumbing fixtures

__________ occurs when competing real estate companies agree to set standard sales commissions, fees, or management rates or if they attempt illegal tying arrangements. 1. Bid-Rigging 2. Price-fixing 3. Market Division 4. Redlining

2. Price-fixing

A woman dies testate and leaves a property to her son in a will. The process used to transfer the property is? 1. Escheat 2. Probate 3. Joint Tenancy 4. Tenants in Common

2. Probate

An EIS (Environmental Impact Statement)? 1. Is state funded 2. Projects the impact on the environment of a proposed project 3. Is required for private development 4. Projects the impact on the Federal budget

2. Projects the impact on the environment of a proposed project

Environmental hazards include 1. Paint chips, asbestos, and odors 2. Radon, asbestos, and mold 3. Asbestos, oil, and tar 4. Radon, asbestos, and sun damage

2. Radon, asbestos, and mold Study Hint: Radon, asbestos, and mold are all environmental hazards.

As a part of the contract the seller agrees to provide a home warranty to the buyer. Randi Realtor informs the client that they will need to purchase the warranty coverage from Willies Warranties because that is who the firm uses. 1. The client will need to present a counter offer to the buyer to change warranty companies. 2. Randi is violating the tie-in agreement provisions of antitrust laws. 3. The buyer will be required to pay any overage in fees outside of the contract price. 4. The warranty must cover all fixtures on the property, including appliances.

2. Randi is violating the tie-in agreement provisions of antitrust laws. Study Hint: Agreements to sell one product only if the buyer purchases another product as well is defined as tying. This is a violation of antitrust laws.

In order to transfer a property, the deed MUST 1. Be signed by the grantee 2. Be dated 3. Be recorded 4. Have legal description of the land conveyed

4. Have legal description of the land conveyed Study Hint: In order to transfer a property, the deed MUST have legal description of the land conveyed.

A buyer entered into a contract to purchase a home through a salesperson. Before closing, the buyer asked the salesperson if he could enter the residence and paint as well as fix minor repairs. The salesperson should . 1. Refuse the request 2. Relay the request to the owner 3. Only allow this work if the buyer purchases homeowner's insurance 4. Relay the request to the employing broker

2. Relay the request to the owner Study Hint: Additional Duties of Seller's Agent: If the Seller/Buyer Agency box is checked, Broker is an Agent, with the following additional duties: 6.1. Promoting the interests of Seller with the utmost good faith, loyalty and fidelity; 6.2. Seeking a price and terms that are set forth in this Seller Listing Contract; and 6.3. Counseling Seller as to any material benefits or risks of a transaction that are actually known by Broker.

The Clean Air Act 1. Explicitly defines a national land use policy for protecting air quality. 2. Requires state plans to include land use and other controls necessary to achieve and maintain the federal ambient air quality standards. 3. Requires the Administrator of the US Environmental Protection Agency (EPA) to establish national ambient air quality standards for all air pollutants. 4. Requires review by the Army core of Engineers for any substantive changes to site plans on Commercial land sales.

2. Requires state plans to include land use and other controls necessary to achieve and maintain the federal ambient air quality standards. Study Hint: The Clean Air Act does not explicitly define a national land use policy for protecting air quality; it does require that state plans include land use and other controls necessary to achieve and maintain the federal ambient air quality standards.

Passive investors having no management control describes a? 1. Joint venture 2. Security 3. Common interest subdivision 4. Planned unit development

2. Security Study Hint: Passive investors having no management control describes a security. Forms of Ownership

Joan and Dave Farson of Springfield sign a listing agreement with Broker Ann for a 3-month period. They agree to list their home for $335,000. Taxes for last year in the amount of $2,656 have been paid on January 25. The Avilla's agent presents a contract for $332,000 which is accepted. Closing is scheduled for August 15. The Farsons agree to a nonrefundable escrow of $3,000 for the buyers. Use a 365 day calendar, actual days in the month. Seller is responsible for the day of closing. How does the HUD-1 reflect the Seller's tax liability? 1. Seller Debit $2,656; Buyer Credit $2,656 2. Seller Debit $1,673; Buyer credit $1,673 3. Buyer Debit $2,156; Broker credit $0 4. Buyer Credit $2,656; Broker credit $0

2. Seller Debit $1,673; Buyer credit $1,673 Study Hint: Since the buyer will pay the full year's taxes next year (taxes are paid in arrears), the seller needs to pay the buyer at closing for the time he or she lives in the home (from Jan. 1 - to closing; remember for the National Exam that the seller usually pays the closing day).$2,656 / 365 x 230 days.

When a buyer assumes a loan, the remaining principal balance is a debit to the? 1. Buyer, and a credit to the seller 2. Seller, and a credit to the buyer 3. Closing agent 4. Buyer

2. Seller, and a credit to the buyer Study Hint: Since this is an assumption, the buyer will pay the full loan payment for the next month. The seller has to pay the buyer at closing for the time he or she owned the home, from the first of the month up until closing day. See CREM Settlements

The state, via eminent domain, wants to take a diagonal strip of land that bisects Farmer Brown's farm. The farm value will decrease far more than the per-acre value offered for the land taken. Farmer Brown should seek __________________. 1. An injunction 2. Severance damages 3. Exemplary damages 4. Nominal damages

2. Severance damages

A broker lists a property in which someone had been murdered. The guidance for dealing with disclosure of this information to prospective buyers would come from 1. Multiple listing rules 2. State law 3. Federal fair housing law 4. Instructions from the Seller

2. State law Study Hint: The guidance for dealing with disclosure of a murder on the property to prospective buyers would come from state law. Mandated Disclosures; Stigmatized Property

When someone has living heirs but dies without leaving a will, the estate is distributed according to the 1. Power of escheat 2. Statute of descent 3. The attorneys 4. The court

2. Statute of descent Study Hint: When someone has living heirs but dies without leaving a will, the estate is distributed according to the statute of descent. Unit 3

All of the following are reliable methods to calculate the reproduction or replacement cost of a building EXCEPT ? 1. Quantity survey method 2. Straightline method 3. Square footage method 4. Unit in place method

2. Straightline method

A clause in which the holder of the mortgage permits a subsequent mortgage to take priority is known as a? 1. Novation clause 2. Subordination clause 3. Priority clause 4. Savings clause

2. Subordination clause

A clause in which the holder of the mortgage permits a subsequent mortgage to take priority is known as a 1. Novation clause 2. Subordination clause 3. Priority clause 4. Savings clause

2. Subordination clause Study Hint: A clause in which the holder of the mortgage permits a subsequent mortgage to take priority is known as a subordination clause.

A seller tells the listing agent that her home was treated for termites 10 years ago, so therefore, there are no termites now. Before listing the property, the agent should? 1. Tell the seller there is no need to disclose since it has been completed 2. Tell the seller to disclose the termite treatment on the property disclosure 3. Tell the seller to have the home rechecked 4. Hire a home inspector

2. Tell the seller to disclose the termite treatment on the property disclosure

Depreciation may be applied to a single-family residence on a person's individual federal tax return if the residence is? 1. Owner-occupied for the entire year 2. Tenant-occupied for any period of time 3. Obtained through a tax-free exchange 4. Sold at a depreciated value

2. Tenant-occupied for any period of time

When a partially amortized loan with a 30-year amortization has a provision that at the end of the tenth year all the remaining principal must be paid in one single payment, this is a loan? 1. Straight 2. Term 3. Balloon 4. Fully amortized

3. Balloon Study Hint: Balloon Payment: A partially amortized loan. The repayment schedule of a loan calls for a series of payments followed by a balloon payment at maturity. A lender might agree to a 30-year amortization schedule with a provision that at the end of the tenth year, all the remaining principal be paid in a single balloon payment.

The owner of an apartment building dies and her heirs inherit the property. They want to occupy one of the rented units, which currently has a three-year lease and is in the second year the lease. Which of the following is true? 1. The current tenants must move out. 2. The current tenants can stay until the end of the lease. 3. The new owners can move in since death terminates the lease. 4. The new owners must buy out the old lease.

2. The current tenants can stay until the end of the lease. Study Hint: The owner of an apartment building dies and her heirs inherit the property. They want to occupy one of the rented units which currently has a three-year lease and is in the second year the lease. The current tenants can stay until the end of the lease.

When using a quitclaim deed? 1. Only partial interest is transferred 2. The grantor makes no promise that the property is free of any liens 3. It guarantees that the property is free of debt 4. It guarantees that no one else claims to own the property

2. The grantor makes no promise that the property is free of any liens Study Hint: When using a quitclaim deed the grantor makes no promise that the property is free of any liens. The quitclaim deed would be used to limit claims or liability in the future.

An ordinary life estate ends when 1. The recipient dies 2. The life tenant dies 3. The property is sold 4. The tenant must vacate

2. The life tenant dies Study Hint: An "ordinary life estate" is an estate whose duration is limited to the life of the individual holding the life estate. It is a legal arrangement whereby the "life tenant", during his or her life, retains use (the rights to rents and profits), possession of the property, and costs of maintaining the property. In comparison, per autre vie is where the life estate terminates when someone other than the beneficiary dies.

A property has a first mortgage for $100,000, and the property taxes of $4,500 have NOT been paid. Therefore, which of the following statements is true? 1. The property tax lien will be in second position after IRS taxes. 2. The property tax lien will be in first position 3. The property tax lien will be in second position after mechanic's liens. 4. A deed of trust or mortgage is in first position, then property taxes, then mechanic's lien.

2. The property tax lien will be in first position Study Hint: The property tax lien will be in first position.

In every real estate transaction, a legal description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions? 1. The lot and block numbers that appear in the recorded plat 2. The same one used in prior transfers of the parcel, verified by a surveyor 3. Rectangular survey 4. Metes and bonds

2. The same one used in prior transfers of the parcel, verified by a surveyor

Betty Realtor shows Martha and Ann a home in Delta with an incredible rose garden. They love the home and write a contract that is accepted. Once accepted Ann and Martha want to assign the contract to another buyer and collect $10,000. Can they do this? 1. No, assignment is frowned on 2. The seller may refuse to accept the assignment 3. Yes, they can assign it to anyone 4. No, this is illegal

2. The seller may refuse to accept the assignment Study Hint: The approval of the seller is necessary in order to assign a contract There are honest and ethical reasons for "and/or assigns," when the intention is to move the property into a trust. But the scenario described is basically stealing equity from an uneducated seller, and while the law doesn't protect them, real estate licensees, are obligated to do so - even if they represent the buyer.

Once the funds of a construction loan are disbursed to the contractor, and if the sub-contractor is not paid, 1. The sub-contractor can file a lien against the seller 2. The sub-contractor can file a lien against the home, even if the home is sold, after it closes 3. The lien can't be filed if the home is for sale 4. The lien will stay with the original owner after the home is sold

2. The sub-contractor can file a lien against the home, even if the home is sold, after it closes

A landlord leased land to a tenant farmer and then later sold the property prior to harvest time. Which of the following statements is true? 1. The tenant is not entitled to the crops once his lease ends at closing. 2. The tenant may reenter the land to harvest the crops after the lease has ended. 3. The landlord may not sell the property during the growing season. 4. Crops are not considered emblements.

2. The tenant may reenter the land to harvest the crops after the lease has ended.

When should the closing disclosure for a loan be submitted to the buyer to review the loan? 1. At closing 2. Three days before closing 3. 10 days after loan application 4. 30 days

2. Three days before closing Study Hint: The lender is required to give the borrower the Closing Disclosure at least three business days before closing on the mortgage loan.

A deed of trust moves title and a limited power of sale from the 1. Mortgagor to the mortgagee 2. Trustor to the trustee 3. Trustor to the beneficiary 4. Beneficiary to the trustor

2. Trustor to the trustee Study Hint: Trust Deeds (Deed of Trust): A legal document in which title to property is transferred to a third party trustee as security for an obligation owed by the trustor (borrower) to the beneficiary (lender) (similar to a mortgage but involving three parties). Once the note is paid off, the deed is released back to the borrower.

An oral contract for the sale of real property is . 1. Illegal 2. Unenforceable 3. Enforceable if witnessed 4. Valid under the statute of frauds

2. Unenforceable Study Hint: Statute of frauds requires all real estate contracts to be in writing.

When is earnest money deposited in a trust account? 1. Upon receiving the offer 2. Upon acceptance of the offer 3. Prior to closing 4. After the Inspection Resolution Deadline

2. Upon acceptance of the offer Study Hint: Earnest money is deposited in a trust account upon acceptance of the offer.

The Avillas are purchasing a home and are planning on installing solar panels. The listing in the MLS stated that there will be a special assessment for new power lines in the neighborhood. The Avillas don't want to pay for the special assessment, do they have to? 1. No, the Avillas do not need to pay for the special assessment 2. Yes, the Avillas will pay for the special assessment unless the sellers agree to pay 3. No, the Avillas will not need to pay for the special assessment unless the sellers negotiate that the buyer will pay in the contract 4. Yes, since it's a unique special assessment they will need to pay the assessment and they will not be allowed to install solar panels

2. Yes, the Avillas will pay for the special assessment unless the sellers agree to pay

Your sister signs a contract and gives you $10,000 as earnest money on a home you have listed. It being Saturday, you put the money in your personal account until Monday to cover some unexpected expenses. On Monday, you pick up your commission check from another closing and transfer the full $10,000 into your trust account. Which of the following best describes your situation? 1. Your actions were proper because all the funds were replaced and no one was hurt. 2. Your actions were improper, you commingled funds, and your license can be revoked. 3. Your actions were proper because your sister would not mind as long as the funds were replaced. 4. Your actions were improper, but there is no sanction because all the funds were replaced and no one was hurt.

2. Your actions were improper, you commingled funds, and your license can be revoked.

A Phase I environmental audit 1. is also referred to as the testing phase 2. assesses whether a property may have been contaminated by current or past uses. 3. is completed if previous results indicate that hazardous substances are present 4. is used to determine the extent and measurement of environmental hazards

2. assesses whether a property may have been contaminated by current or past uses. Study Hint: A Phase 1 audit assesses whether a property may have been contaminated by current or past uses.

According to the TruthinLending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the ________? 1. cash price or amount of the loan 2. prepayment penalties and rebates 3. APR 4. True cost of the loan

2. prepayment penalties and rebates Study Hint: Credit literature and advertising must abide by the Truth in Lending Act passed in 1969, which requires that lenders disclose key terms of an agreement, such as how finance charges are computed, when a charge can be imposed and charges computed as an annual percentage rate.

When should the closing disclosure for a loan be submitted to the buyer to review the loan? 1. at closing. 2. three days before closing. 3. ten days after loan application. 4. thirty days after loan application but no less than 10 days prior to closing.

2. three days before closing Study Hint: The primary borrower on purchase money transactions, and each borrower and each party on title on refinance transactions, must receive the Closing Disclosure no later than three (3) Business days before consummation (signing of the loan documents).

A property manager needs to have a bid on floor coverings based on this statement of fact. "The building he manages is 90' by 60'. Sixty percent of the building will be carpeted at a cost of $16.00 per square yard, and the remainder will be tiled at a cost of $8.00 per square yard. Estimate the cost of the floor covering. 1. $2,560 2. $5,760 3. $7,680 4. $23,040

3. $7,680 Study Hint: One square yard equals nine square feet. Divide the number of square feet by nine, and you'll get the number of square yards of floor covering you'll need. (sq. feet / 9 = sq. yards) 90 x 60 = 5,400, 5,400 x 0.6 = 3240 / 9 x $16 per square yard = $5,760; 2,160 / 9 x $8 per square yard = $1,920; $5,769 + $1,920 = $7,680

John and Mary Apton list their home for $152,000. There is an appurtenant easement to access a large lake which is deeded. A coal-fired power plant is slated to open 5 miles from the property next year. An Environmental Impact Statement is due on March 7. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. The offer is contingent on the Environmental Impact results. Closing is for June 1. Taxes are $3,040, commission is 6.5% (buyer's agent commission is 2.8%), taxes and insurance are $675, and the recording fee is $25. The Environmental Impact Statement showed the value of the property would not be impacted. Use a banker's calendar. Seller is responsible for the day of closing. With the information given in the scenario, what amount will the buyer need to bring to closing? 1. $5,951 ($3,040 / 360 x 151= 1,275 + 2.8% x $142,000 = $3,976 + $675 + $25) 2. $4,676 (2.8% x $142,000 + $675 + $25) 3. $700 ($675 + $25) 4. $3,740 ($3,040 + $675 + $25)

3. $700 ($675 + $25) Study Hint: $700 ($675 + $25). The buyer does not pay any taxes until next year and does not pay the agent's commission.

An owner listed the same property with 3 separate agents. The owner gave an Exclusive Right-to-Sell Listing to broker A, an Exclusive Agency/Brokerage Listing to broker B, and an Open Listing to broker C. Broker C sold the house and collected a commission while the other listings were still in effect. What are the rights of 'A' and 'B' as to a commission? 1. 'A' and 'B' both are entitled to a split of the commission from 'C 2. 'A' and 'B' are entitled to a second commission to be split between them 3. 'A' and is entitled to a commission but B is not 4. 'A' and 'B' are not entitled to any commission

3. 'A' and is entitled to a commission but B is not

The exclusion on capital gains taxes can be claimed _____________? 1. 3 transactions over the past 12 months 2. 5 transactions over the past 15 months 3. 1 transaction every 24 months 4. 2 transactions every 18 month

3. 1 transaction every 24 months

On a 70' by 70' square lot, the side yard building setbacks are 10', the front yard setback is 25', and the rear setback is 20'. What is the maximum square footage possible for a one-story structure? 1. 1,000 square feet 2. 1,200 square feet 3. 1,250 square feet 4. 4,900 square feet

3. 1,250 square feet Study Hint: Subtract square footage of side lots from the total and multiply.70' - 20' = 50'.70'- 45' = 25'50' x 25' = 1,250 square feet

The parcel of land you are viewing is 3 acres. The front of the lot is 450 feet wide. What is the depth? 1. 98.6 feet 2. 390.4 feet 3. 290.4 feet 4. 96.8 feet

3. 290.4 feet Study Hint: (Math) Area and Volume: 43,560 ft x 3 (acres) = 130,680 ft / 450 ft = 290.4 feet

A property has a net income of $40,000.00. One appraiser decides to use a 12 % capitalization rate, while a second appraiser uses a 10% rate. Use of the higher rate results in ? 1. A 2% increase in appraised value 2. A $66,667 increase in appraised value 3. A $66,667 decrease in appraised value 4. No change in the appraised value

3. A $66,667 decrease in appraised value Study Hint: The CAP rate measures the risk involved in an investment; thus, the higher the risk, the higher the CAP rate. the lower the risk, the lower the CAP rate. Noi / R = V $40,000/ 12% = $ 333,333 $40,000/ 10% = $400,000 $400,000 - $333,333 = $66,667

Which of the following losses would most likely be covered by a home warranty? 1. Cracks in the driveway 2. A broken window 3. A broken dishwasher 4. Hail damage to the siding

3. A broken dishwasher

A business organizational form in which all general partners actively participate in ownership and management and are liable for all debt and actions is called 1. An LLC 2. A joint venture 3. A general partnership 4. A franchise

3. A general partnership

After closing the client wants to give you a bonus. The following is true: 1. This is illegal 2. Ask for cash, no one will know 3. A gift card to a nice restaurant is within the rules 4. All cash bonuses must be paid to brokerage after closing

3. A gift card to a nice restaurant is within the rules Study Hint: All cash bonuses must be paid to the brokerage at closing (not after). A gift card given at closing is within RESPA rules.

Of the following, which would be considered equivalent to an annuity by an owner? 1. Productive farmland 2. A residence free and clear 3. A long-term ground lease 4. Vacant land in the path of progress

3. A long-term ground lease Study Hint: A long-term lease locks the rent into a stable price. Since rent generally trends upwards, a long-term lease can potentially save money by locking the renter into a set price for years to come. An annuity is a contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years. Both have set payments in which the renter or holder of the annuity can depend on.

John represented Bill as his real estate agent in buying his first home several years ago. John has kept his file for the appropriate amount of time. This illustrates the fiduciary duty of? 1. Loyalty 2. Disclosure 3. Accounting 4. Professionalism

3. Accounting Study Hint: Fiduciary duties include loyalty, obedience, full disclosure, duty to use skill, and duty to account for all monies. An agent is obligated to account for all money or property that belongs to his or her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them, relative to their client's transactions of affairs.

A salesperson working with both the seller and the buyer would deal with the issues of dual agency by? 1. Making sure the buyer understands that he or she can ask for the seller to pay for closing costs 2. Advising one party and not the other 3. Acting as a neutral facilitator for the transaction 4. Making sure the seller understands the contract

3. Acting as a neutral facilitator for the transaction Study Hint: A salesperson working with both the seller and the buyer would deal with the issues of dual agency by acting as a neutral facilitator for the transaction.

The term lis pendent refers to? 1. An executory contract 2. Construction work in progress 3. Advance notice of a lawsuit to be filed 4. A writ of entry

3. Advance notice of a lawsuit to be filed Study Hint: Lis pendent: A recorded legal document that gives constructive notice that an action affecting a piece of property has been filed in a state or federal court.

A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is ________________? 1. an agent to both the broker and the principal 2. an agent to the broker and a subagent to the principal 3. An agent to the principal and a subagent to the managing broker 4. The same as a dual agent

3. An agent to the principal and a subagent to the managing broker Study Hint: An agent of an agent. In the past, in Colorado, MLS participants agreed to be sub-agents of each other, guaranteeing to the seller that all Realtors would be working on the seller's behalf. Today, this practice is basically gone with the advent of buyer agency. Licensees who have their licenses with managing brokers are sub-agents of the broker.

When presenting a comparative market analysis (CMA), the broker must NOT present it as? 1. What the list price might be 2. What the final sales price might be 3. An appraisal 4. A personal estimate of value

3. An appraisal

Under the Truth-in-Lending Act, which of the following items MUST be noted in a disclosure statement? 1. The mortgagee's title insurance fees 2. The mortgage recording fees 3. Any mortgage prepayment penalties 4. Any attorney's fee for mortgage preparation

3. Any mortgage prepayment penalties Study Hint: Truth-in-Lending: A body of federal law implemented by the Federal Reserve Board's Regulation Z, the main purpose is to ensure customers are given meaningful information with respect to the cost of credit so they can compare credit terms available to them. The finance charge and annual percentage rate (APR) are the two most important disclosures required.

A monthly amortized loan payment differs from the prior month's payment in that the prior month's payment 1. Was a greater amount 2. Applied more money to principal 3. Applied more money to interest 4. Was a lesser amount

3. Applied more money to interest

The increased value resulting from the consolidation of 2 adjacent lots into 1 larger lot is 1. Substitution 2. Plottage 3. Assemblage 4. Coordination

3. Assemblage Study Hint: The combining of two lots to increase the value is known as assemblage. The resulted value added is called plottage value.

"The whole is worth more than the sum of its parts" refers to? 1. Depreciation 2. Progression 3. Assemblage 4. Land residual

3. Assemblage Study Hint: The combining of two or more adjoining lots into one large tract, usually done to increase value. The resulting added value is called plottage.

What kind of zoning would require that a developer build 10% of the homes in a subdivision for low-income families? 1. Exclusionary 2. Conservation 3. Inclusionary 4. Cumulative

3. Inclusionary Study Hint: Inclusionary zoning would require that a developer build 10% of the homes in a subdivision for low-income families. Zoning Types

When a partially amortized loan with a 30-year amortization has a provision that at the end of the tenth year all the remaining principal must be paid in one single payment, this is a loan. 1. Straight 2. Term 3. Balloon 4. Fully amortized

3. Balloon Study Hint: The repayment schedule of a loan calls for a series of payments followed by this payment at maturity. A lender might agree to a 30-year amortization schedule with a provision that at the end of the tenth year, all the remaining principal be paid in a single payment.

According to the common laws of agency, broker liability terminates? 1. when the closing is complete 2. 1 year from closing 3. Based on the statute of limitations 4. At listing termination date

3. Based on the statute of limitations Study Hint: Termination of broker liabilities is based on the statute of limitations.

The broker must account for all money belonging to others in the . 1. Ledger 2. Journal 3. Broker's escrow account 4. Broker's operating account

3. Broker's escrow account Study Hint: The broker must account for all money belonging to others in the broker's escrow account.

The listing salesperson requires a phone call prior to setting showings. Unable to contact the listing salesperson, a buyer's agent proceeds to show the property. While in the property, there are fumes that make the buyer ill. Who is responsible for the buyer's illness? 1. Listing Salesperson 2. Seller 3. Buyer's Agent 4. Employing Broker

3. Buyer's Agent Study Hint: The listing salesperson requires a phone call prior to setting showings. Unable to contact the listing salesperson, a buyer's agent proceeds to show the property. While in the property, there are fumes that make the buyer ill. The buyer's agent is responsible for the buyer's illness. Agency: Duties of the Broker/Salesperson

'L' deeds a property to 'M'. After the conveyance, the parties agree to rescind the transaction. How can they accomplish this? 1. By writing "canceled" on the deed and both signing it 2. By 'M's returning the deed to 'L' 3. By 'M' giving a new deed to 'L' 4. By destroying the original deed

3. By 'M' giving a new deed to 'L'

The CERCLA and SARA amendments do all of the following except: 1. CERCLA and SARA amendments were created to clean up existing environmental problems 2. CERCLA and SARA amendments give the EPA the authority to identify contaminated sites for cleanup 3. CERCLA and SARA always allow for government financing to cover cleanup costs 4. CERCLA/SARA identifies cleanup of Superfund sites financed by the government or by other parties

3. CERCLA and SARA always allow for government financing to cover cleanup costs Study Hint: The CERCLA and SARA amendments were created to clean up existing problems. Operating with CERCLA/SARA authority, the EPA can identify contaminated sites for cleanup. Cleanup of Superfund sites is financed by the government or by other parties, as identified by CERCLA/SARA. Government financing is the "last resort" option exercised when liable parties do not have sufficient resources to cover cleanup costs.

The means of a government to take private property for public use is known as? 1. Police power 2. Eminent domain 3. Condemnation 4. Prescription

3. Condemnation Study Hint: Eminent Domain is the power; Condemnation is the process or means by which the power is executed. Public Land Controls; Health and Safety Codes

Depreciation is calculated based on the? 1. Total purchase price 2. Last sold price 3. Cost of the building only 4. Both the land and improvements

3. Cost of the building only

Home Owner Association rules are found in . 1. Bylaws 2. Easements 3. Covenants 4. Deed

3. Covenants Study Hint: Home Owner Association rules are found in covenants.

A buyer is obtaining a new private loan with a principal amount of $250,000.00 at 9%. Closing takes place on April 15. The interest due will appear on the worksheet as? 1. Debit $62.50 to seller, and credit buyer $62.50 2. Debit $937.50 to seller, and credit buyer $937.50 3. Debit $937.50 to buyer, and credit broker $937.50 4. Debit $62.50 to buyer, and credit broker $62.50

3. Debit $937.50 to buyer, and credit broker $937.50

Title is transferred with a ________? 1. Abstract 2. Chain 3. Deed 4. Suit to quiet title

3. Deed Study Hint: To transfer title, you will need to prepare a deed, execute that deed, and record it.

Three essential elements of value are? 1. Scarcity, cost, and demand 2. Location, cost, and transferability 3. Demand, scarcity, and transferability 4. Demand, cost, and utility

3. Demand, scarcity, and transferability

is the theory governing water rights in many states, which holds that the right to divert the un-appropriated waters of any natural stream (surface or underground) to beneficial use shall never be denied. 1. Doctrine of Water Law 2. Doctrine of Acquisition 3. Doctrine of Prior Appropriation 4. Doctrine of Diversion

3. Doctrine of Prior Appropriation Study Hint: Priority is determined by time of claim and follows the order of domestic, agricultural, manufacturing, and recreational.

When working as an independent contractor ________. 1. You may be excluded from withholding taxes if compliant with IRS 2. Requires floor time by the employing broker 3. Earnings are subject to Self-Employment Tax 4. Is an employee of the brokerage firm

3. Earnings are subject to Self-Employment Tax Study Hint: The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax. If you are an independent contractor, you are self-employed.

A new runway at a local airport put a subdivision under the aircraft-landing pattern which resulted in a lowering of values. This is known as? 1. Functional obsolescence 2. Physical depreciation 3. Economic obsolescence 4. Physical deterioration

3. Economic obsolescence Study Hint: A situation, external to the property, that adversely affects the economics of an area and reduces the value of the property.

__________ occurs when two or more businesses conspire against another business, or agree to withhold their patronage, in order to reduce competition. 1. Bid-Rigging 2. Price-fixing 3. Group Boycotting 4. Redlining

3. Group Boycotting

A low loan-to-value ratio usually means? 1. Low equity for the seller 2. A higher risk of foreclosure 3. High equity for the buyer 4. The appraised value is low

3. High equity for the buyer

If you think you smell radon gas in a home 1. You should leave immediately, and call the fire department as radon is potentially explosive. 2. Open the windows and doors to allow the gas to dissipate. 3. Investigate the source, as any gas leak is serious and radon gas is odorless 4. You should leave immediately as radon is a know carcinogen.

3. Investigate the source, as any gas leak is serious and radon gas is odorless

A married couple desire to buy a home and take title so that when one of them dies, the deceased's share will go to the surviving tenant. The form of ownership that would allow for this is? 1. Tenancy in severalty 2. Tenancy in common 3. Joint tenancy 4. Tenancy in partnership

3. Joint tenancy Study Hint: Joint Tenancy: An estate in real estate that is owned by two or more persons allowing equal shares with rights of survivorship. Must have unity of title, time, interest. and possession.

In regulations regarding lead-based paint, HUD requires 1. Homeowners to test for its presence 2. Paint to be removed from surfaces prior to the sale 3. Known paint hazards to be disclosed 4. Only licensed contractors deal with the removal

3. Known paint hazards to be disclosed

Which of the following business forms combines the advantages of single taxation and unlimited membership? 1. General Partnership 2. Cooperative 3. LLC 4. S Corp

3. LLC Study Hint: An LLC combines the advantages of single taxation and unlimited membership. Ownership of real estate by business

An example of constructive eviction would be a . 1. Tenant refusing to pay rent 2. Tenant being served notice to quit or pay rent 3. Landlord cutting off the tenant's heat and water 4. Tenant who remains in possession after termination of the lease

3. Landlord cutting off the tenant's heat and water Study Hint: Constructive Eviction: Conduct by the landlord that impairs a tenants enjoyment of the leased premises to the degree that they are forced to move out and terminate the lease without liability for further rent.

An example of functional obsolescence is a(n) 1. Political change that has reduced the value 2. Wear and tear of a building making it unsuitable for intended use 3. Large commercial structure with inadequate on-site parking 4. The encroachment of a neighboring structure

3. Large commercial structure with inadequate on-site parking Study Hint: Functional Obsolescence: The loss of value due to functional inadequacies, often caused by age or poor design.

In a metes and bounds legal description, monuments are? 1. Real property boundaries 2. Used to establish a datum 3. Measuring markers 4. Buildings

3. Measuring markers

An impound account belongs to the? 1. Trustee 2. Mortgagee 3. Mortgagor 4. Beneficiary

3. Mortgagor

A real estate agent is holding an open house for one of the other brokers at his office. A couple comes in and they have several questions, which he answers, and tells them he will get back with the answers to the questions he did not know? 1. Implied agency was created 2. Express agency was created 3. No agency was created 4. He is now their agent

3. No agency was created

Regarding the Lead-Based Paint Disclosure rule, sellers and lessors must retain a copy of the disclosures for _______ from the date of sale or the date the leasing period begins. 1. 6 Months 2. One year 3. No less than three years 4. No less than five years

3. No less than three years Study Hint: Sellers and lessors must retain a copy of the disclosures for no less than three years from the date of sale or the date the leasing period begins.

Would it be acceptable for a community manager to post a rule that "Children may not ride bikes on the sidewalk"? 1. No, children are not protected by the Fair Housing Act 2. Yes, community rules are not governed by the Fair Housing Act, only leasing and sales activities are 3. No, it would only be permissible for the rule to state that no one could ride on the sidewalk 4. Yes, the Fair Housing Act provides an exception to discrimination requirements when the safety of a child is concerned

3. No, it would only be permissible for the rule to state that no one could ride on the sidewalk

A facilitator-intermediary for a real estate transaction is a? 1. Limited agent 2. Single agent 3. Non-agent 4. Seller's agent

3. Non-agent

An assumable loan, whereby a lender releases the seller and substitutes a buyer as the party liable for the debt, would be known as? 1. Assignment 2. Rescission 3. Novation 4. Waiver

3. Novation

A title insurance policy would include of the ownership records about a piece of real estate. 1. A summary of the links in a chain of title 2. The current status including all past owners 3. Only the current status 4. An abstract

3. Only the current status Study Hint: Chain of title is the progression of ownership; it doesn't refer to an actual document. An "abstract of title" is a written summary of all relevant findings concerning past ownership, encumbrances, liens, etc., based on a records search. A title insurance policy would include only the current status of the ownership records about a piece of real estate.

Under a lease for a commercial property, a tenant agrees to pay $5,000.00 per month plus 4% of the gross monthly sales. This type of lease is called a 1. Triple net 2. Ground 3. Percentage 4. Net

3. Percentage Study Hint: Percentage Lease: A lease whose rental is based on a percentage of the monthly or annual gross sales made on the premises, commonly used with large retail stores, especially shopping centers.

_________are NOT covered by Fair Housing Laws. 1. Pueblo Indians 2. Pregnant women 3. Persons actively using illegal drugs 4. Drug user in rehabilitation

3. Persons actively using illegal drugs Study Hint: Persons actively using illegal drugs are not covered by Fair Housing Laws.

A broker receives an offer on her listing, immediately calls the sellers, and arranges to meet with them at 6 PM. At 3 PM, the broker receives a second offer. What should the broker do? 1. Present the second offer if the seller rejects the first offer. 2. Only present the first offer. 3. Present both offers at the same time. 4. Put the second offer in backup position.

3. Present both offers at the same time. Study Hint: If the Seller/Buyer Agency box is checked, Broker is an Agent, with the following additional duties: 6.1. Promoting the interests of Seller with the utmost good faith, loyalty and fidelity; 6.2. Seeking a price and terms that are set forth in this Seller Listing Contract; and 6.3. Counseling Seller as to any material benefits or risks of a transaction that are actually known by Broker. Additional Duties of Seller's Agent

A title report will NOT show? 1. How title is currently held 2. What kind of exceptions to title are currently of record 3. Prior unrecorded encumbrance on a property 4. Specific exceptions to title

3. Prior unrecorded encumbrance on a property Study Hint: A title report will show how title is currently held, what kind of exceptions to title are currently of record, as well as specific exceptions to title. It will not show prior unrecorded encumbrance on a property.

Deciding to work with veterans ONLY is ___________. 1. Proper since they are most likely guaranteed a VA loan 2. Improper, this is discrimination 3. Proper you may work with anyone of your own choice 4. Improper, you must work with everyone

3. Proper you may work with anyone of your own choice

A court ordered 'J', to pay 'M' $100,000.00 in excess of 'M's out-of-pocket damages that resulted from 'J's breach of a contract with 'M'. What is this $100,000.00 payment called? 1. Liquidated damages 2. Compensatory damages 3. Punitive damages 4. Nominal damages

3. Punitive damages Study Hint: Punitive Damages: Exemplary or vindictive court-awarded damages to an injured party, as opposed to compensatory damages, which are awarded to repay an injured person for actual losses suffered.

A cloud on a title can be rectified by any of the following methods EXCEPT 1. A quitclaim deed from a person who claims to or appears to have an interest to the holder of the paramount title 2. An action to quiet title in which the court determines the rights of the parties and issues a declaratory judgment 3. Purchasing an owner's title insurance policy 4. The recording of an affidavit that clarifies or removes an uncertainty

3. Purchasing an owner's title insurance policy Study Hint: The property owner may initiate a quitclaim deed or a quiet title proceeding to remove the cloud on title from the record.

On an adjustable rate mortgage, a loan can become fixed due to the 1. Index 2. Margin 3. Rate Cap 4. Loan Contract Clause

3. Rate Cap Study Hint: On an adjustable rate mortgage, a loan can become fixed due to the rate cap. CREM Financing

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul, a comfortable and elegant remodeled mountain home. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2,300 yearly. Buyer's agent, Daniel Brooks, brings an offer for $267,000, which is accepted and will close on July 30. Buyer Benjamin will be getting a VA loan and will be putting 20% down. The appraiser noted that an inspection of the property by a certified roofer showed that the roof is severely damaged and needs to be repaired/replaced. Which of the following is not an option for the buyer? 1. Terminate the contract. 2. Ask the seller to replace or repair the roof prior to closing. 3. Reduce the price and close as planned. 4. Pay the full purchase price in cash.

3. Reduce the price and close as planned. Study Hint: Getting a VA loan will require repair or replacement prior to closing. Any appraisal done for VA secured financing will contain required provisions before the loan will be funded.

A' purchased a commercial lot from 'B' based on 'B's fraudulent representation as to lot size, zoning, and water connections. 'A' cannot use the parcel purchased. What remedy should 'A' seek? 1. Specific performance 2. Waiver 3. Rescission 4. Reformation

3. Rescission Study Hint: Rescission: The legal remedy of canceling, terminating, or annulling a contract for breach of contract.

John and Mary Apton list their home for $152,000. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000, with an 8% interest rate due and payable in 10 years. It is accepted. Closing is for June 1. Taxes are $3,040, commission is 6.5%, (buyer's agent commission is 2.8%), taxes and insurance are $675, and the recording fee is $25. Use a banker's calendar. Seller is responsible for the day of closing. How does the Closing Statement reflect the Seller's tax liability? 1. Seller debit $3,040; Buyer credit $3,040 2. Seller debit $1,266; Buyer credit $1,266 3. Seller debit $1,275; Buyer credit $1,275 4. Buyer credit $3,040; Broker credit $0

3. Seller debit $1,275; Buyer credit $1,275 Study Hint: Since the buyer will pay the full year's taxes next year (taxes are paid in arrears), the seller needs to pay the buyer at closing for the time he or she lives in the home (from January 1 through closing). For the National Exam, remember that the seller usually pays the closing day.

John and Mary Apton list their home for $152,000. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. Closing is for June 1. Taxes are $3,040, commission is 6.5% (buyer's agent commission is 2.8%), taxes and insurance are $675, and the recording fee is $25. Use a banker's calendar. Seller is responsible for the day of closing. How does the HUD-1 reflect the seller's tax liability? 1. Seller debit $3,040; Buyer credit $3,040 2. Seller debit $1,266; Buyer credit $1,266 3. Seller debit $1,275; Buyer credit $1,275 4. Buyer Credit $3,040; Broker credit $0

3. Seller debit $1,275; Buyer credit $1,275 Study Hint: Since the buyer will pay the full year's taxes next year (taxes are paid in arrears), the seller needs to pay the buyer at closing for the time he or she lives in the home (from January 1 through closing). For the National Exam, remember that the seller usually pays the closing day. $3,040 / 360 x 151 = $1,275

For a deed to be valid, it needs all the following EXCEPT ? 1. Competent parties (grantor and grantee) 2. Some form of consideration 3. Signature of grantee 4. Legal description of property

3. Signature of grantee Study Hint: the signature of the grantee is required if/when the deed is recorded.

An owner has refinanced his primary residence and decided to take cash out of the loan to buy a fixer upper. If the closing is scheduled for today (Tuesday), how early can the owner close on the fixer upper? 1. Right after the closing if all TRID requirements have been met 2. Since he will need to cash the check, 3 business days after closing 3. Since the right of rescission is 3 days, he will not get the check until 3 business days after closing 4. Since the right of rescission is 5 days, the earliest he can buy is 5 days

3. Since the right of rescission is 3 days, he will not get the check until 3 business days after closing Study Hint: Unless refinancing an investment property, there is a 3 day right of rescission before cash is dispersed

A salesperson working with an Asian couple shows them only homes in predominantly Asian neighborhoods. This is known as 1. Blockbusting 2. Redlining 3. Steering 4. Fiduciary duty

3. Steering Study Hint: A salesperson working with an Asian couple shows them only homes in predominantly Asian neighborhoods. This is known as steering. Fair Housing Prohibitions

At the time of the listing the seller tells the agent they are moving because the neighbors have loud parties every weekend. The agent should? 1. Ask the neighbors the be quiet during showings 2. Suggest talking to the neighbors about being quiet 3. Tell potential buyers about the parties 4. Not tell the anyone about the parties

3. Tell potential buyers about the parties

Lucky Joe lists his $750,000 luxury home with you on Thursday, via a signed listing agreement. You prepare advertising, schedule an open house for the next Sunday, and start contacting potential purchasers. Lucky Joe dies the very next Saturday night. Which of the following most accurately describes your agency? 1. The agency continues because the contract is binding on the heirs of the estate. 2. The agency terminates because the heirs have not had time to ratify the agreement. 3. The agency automatically terminates due to the death of the principal. 4. The agency continues because your actions regarding advertising, the open house, and contacting potential purchasers constitute partial performance of the agreement.

3. The agency automatically terminates due to the death of the principal. Study Hint: An agency agreement between a seller and broker is terminated upon death of the seller.

When a Counterproposal is used _________ 1. The seller should sign both the contract and the counterproposal 2. The contract is signed by the seller 3. The counterproposal must be signed by both the seller and buyer 4. The counterproposal has no time requirements for signing

3. The counterproposal must be signed by both the seller and buyer Study Hint: The original contract is not signed by the seller. The counterproposal must be signed and should be presented (attached) to the original contract. Note that in some states the contract will have a check-box identifying that a counter is being submitted. In this case the seller would sign the contract and the counter offer.

Marie dies intestate, and her property will transfer according to intestate succession. This means 1. The courts will give the property to the state 2. The courts will give the property to the descendent 3. The courts will give the property based on state law 4. The courts will give the property to her siblings

3. The courts will give the property based on state law Study Hint: Intestate Succession (without a will): Each state has a law of intestate succession that designates the persons who are to inherit the decedent's intestate estate. Intestacy or succession laws vary by state.

You and your clients don't get along well, but you are listing their house. You think it's not selling because the price is too high, and they think it is because you don't have enough open houses. How can your agreement terminate other than waiting until the contract termination date? 1. Death of one principle 2. Death of the agent 3. The home burns down 4. The principle is hospitalized

3. The home burns down

Betty Realtor shows Dan and Sue a home in Delta with an incredible rose garden. They love the home and write a contract that is accepted. The owners of the home had specifically noted in the listing agreement that the roses would be removed professionally prior to closing. No mention was made in the MLS of this rose removal. A week before closing Dan and Sue drive by to see a contractor removing the roses with a backhoe, they are angered and call their realtor. Who is responsible? 1. Betty 2. Dan and Sue 3. The listing agent and the sellers share responsibility 4. No one

3. The listing agent and the sellers share responsibility Study Hint: The listing agent and the sellers are all responsible. They had 2 chances to make the buyers aware of their intention to remove the roses. First, it should have been mentioned in the MLS, and again in the response to the contract.

The Uniform Residential Landlord and Tenant Act requires that the landlord inform the tenant about? 1. The basis of any rent increase 2. Any liens against the property 3. The name and addresses where notices should be sent 4. Any pending sale of the premises

3. The name and addresses where notices should be sent

A seller of a property tells their listing agent that they skipped a payment earlier in the year. What should the agent tell the seller? 1. Foreclosure will happen immediately 2. It will take at least 2 missed months to trigger foreclosure so no need to do anything 3. The owner should communicate with the lender immediately 4. Their credit is shot

3. The owner should communicate with the lender immediately Study Hint: Not making one mortgage payment and falling a single month behind will almost certainly not trigger a foreclosure. For that to happen, you will generally have to fall at least two months behind while also failing to communicate with your lender.That does not mean that a single missed payment won't trigger some negative things. In general, not paying your mortgage will be reported by your lender to the three major credit bureaus and they will lower your credit score. In addition, after a grace period (generally a week to 15 days after the payment due date), a late fee will be added on to the payment you failed to make.

RESPA requirements include? 1. A limitation on brokerage fees 2. A prohibition of a broker affiliation with a provider of services for a real estate closing 3. The prohibition of a broker's receiving of a referral fee from a lender 4. Maximum allowable interest

3. The prohibition of a broker's receiving of a referral fee from a lender Study Hint: Real Estate Settlement Procedures Act: Federal law enacted in 1974 that ensures that buyer and seller receive information on all settlement costs when the purchase of a 1 to 4 residential unit is financed by a federally related mortgage loan and applies to first mortgage loans only.

A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a foreclosure to a speculating investor for $88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is FALSE regarding the distribution of funds? 1. The second mortgagee receives $23,500 2. The former owner receives $4,500 3. The second mortgagee receives nothing unless he forced the foreclosure auction 4. None of the above

3. The second mortgagee receives nothing unless he forced the foreclosure auction Study Hint: The priority of liens establishes who gets paid first following a foreclosure. "Senior" liens are paid before "junior" liens (those with lower priority). After the first mortgage lender forecloses, any surplus funds from the foreclosure sale after the foreclosing lender's debt has been paid off will be distributed to creditors holding junior liens, such as a second mortgage lender.

A tenant or purchaser concerned with EMFs (electromagnetic fields) would be interested in knowing about? 1. Underground fuel storage tanks 2. Use of urea formaldehyde foam insulation 3. The presence of radon gas 4. High-tension power lines

4. High-tension power lines

Most states require that all monies received by an attorney or real estate broker acting as a "fiduciary" be deposited in a trust or escrow account ______. 1. Within 24 hours 2. In 3 days 3. Within a specified period, mandated by the state 4. Within a week

3. Within a specified period, mandated by the state Study Hint: Most states require that all monies received by an attorney or real estate broker acting as a "fiduciary" be deposited in a trust or escrow account within a specified period.

May a property manager evict a tenant for hoarding? 1. No, hoarding is a mental disability and the tenant is therefore in a protected class 2. Yes, but only if the lease specifies that the premises be kept clean 3. Yes, unless a reasonable accommodation for the disability is requested 4. Yes, but only if the hoarding causes the entire building to fail to meet sanitation or building codes

3. Yes, unless a reasonable accommodation for the disability is requested Study Hint: A request for a reasonable accommodation must be approved as long as it does not cause an undue administrative and financial burden or change the basic nature of the housing program.

When applying a gross rent multiplier to estimate the value of an income property, you find three comparables: the first has a monthly income of $1,220 and is valued at $122,000; the second grosses $1,510 monthly and has a value of $151,000; the third property brings in $1,380 and is worth $138,000. If your subject property grosses monthly rent of $1,450, what would you estimate as the value of your income property? 1. $137,000 2. $138,000 3. $141,000 4. $145,000

4. $145,000 Study Hint: First you need to determine what the GRM is using the correct formula, which is 8.333 If your subject property grosses monthly rent of $1,450, what would you estimate as the value of your income property? 1450 x 12 = 17400 gross income x 8.333 = $145,000 the first has a monthly income of $1,220 and is valued at $122,000 $122,000 / 14,640 gross income= 8.33 (GRM) the second grosses $1,510 monthly and has a value of $151,000 $151,000 / 18,120 = 8.33 the third property brings in $1,380 and is worth $138,000. $138,000 / 16,560 = 8.33 8.33 x 17,400 = $144,942 rounded to $145,000

The W1/2 of the NW1/4 of the NW1/4 of the SE1/4 of the SW1/4 of a section is to be paved for parking at a cost of 38 cents per square foot. The total paving cost will be . 1. $5,173 2. $10,345. 3. $41,482. 4. $20,691.

4. $20,691. Study Hint: The W1/2 of the NW1/4 of the NW1/4 of the SE1/4 of the SW1/4. (½ x ¼ x ¼ x ¼ x ¼) 2 x 4 x 4 x 4 x 4 = 512 640 acres / 512 acres = 1.25 x 43,560 ( square feet in an acre) = 54,450 x .38 cents per square foot = $ 20,691 See page 4-5 in Land Descriptions and Math: Legal Descriptions

A broker associate is listing a home with 2,000 square feet of living area on an improved building site. The owner insists that the listing price reflect a value of $95.00 per square foot of living area, $54,000.00 for the building site, and include a 5% sales commission. The broker should list the real property for . 1. $270,000.00 2. $237,142.00 3. $256,200.00 4. $256,842.00

4. $256,842.00 Study Hint: Total square feet (2000) x price per square foot ($95) + value of the land / part seller will get (0.95)

A property owner takes a hard money mortgage for $50,000 on the home she owns free and clear. She later borrows $21,000 and another $16,000 for expenses, both of which created liens on the property. $4,500 property taxes are also delinquent. After losing her job, and defaulting on the loans, the foreclosure would be paid out in what order? 1. $21,000, $16,000, $50,000, and $4,500 2. $50,000, $4,500, 21,000, and $16,000 3. $4,500, $21,000, $16,000, and $50,000 4. $4,500, $50,000, $21,000, and $16,000

4. $4,500, $50,000, $21,000, and $16,000 Study Hint: Property tax liens have priority over all other liens, regardless of the filing date.

Which class would not be protected by the Fair Housing Act? 1. A person who uses a seeing eye dog 2. A Native American 3. A person who has been a drug addict 4. A person who has been convicted of selling illegal drugs

4. A person who has been convicted of selling illegal drugs

The loan that would command the highest loan-to-value ratio would be for? 1. Agricultural land 2. A residential lot 3. A commercial property 4. A single-family residence

4. A single-family residence Study Hint: Loan to Value Ratio: The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.

Under the cost approach, an appraiser has calculated the current replacement cost new, of a structure which is 15 years old. The next factor an appraiser will consider in completing this approach is the 1. Land value 2. Capitalization rate 3. Net operating income 4. Accrued depreciation

4. Accrued depreciation Study Hint: Cost Approach: Estimate the land value, estimate the replacement cost of the building new, deduct all accrued depreciation from the replacement cost, and add the estimated land value to the depreciated replacement cost.

A deed restriction is not applicable to the activities of? 1. All owners 2. Present owners 3. Future owners 4. All neighboring properties

4. All neighboring properties Study Hint: A deed restriction is applicable to the activities of all owners, present and future. Unit 3

Private deed restrictions are? 1. Restrictive covenants 2. Restrict the use of the property 3. Encumbrances 4. All of the above

4. All of the above

Salespersons must work under an employing (managing) broker, and? 1. Are employees or independent contractors of the brokerage firm 2. Must pay their own taxes and insurance 3. Report commissions to the IRS 4. All of the above

4. All of the above

Which of the following is NOT required for a deed to be valid? 1. Delivery 2. Acceptance 3. Conveyance 4. Recordation

4. Recordation

Salespersons must work under an employing (managing) broker, and . 1. Are employees or independent contractors of the brokerage firm 2. Must pay their own taxes and insurance 3. Report commissions to the IRS 4. All of the above

4. All of the above Study Hint: Salespersons must work under an employing (managing) broker, are employees or independent contractors of the brokerage firm, must pay their own taxes and insurance, and report commissions to the IRS.

A valid contract could be unenforceable because of? 1. Use of coercion 2. Buyer is a minor 3. Lack of valuable consideration 4. All of the above

4. All of the above coercion, minor buyer, lack of consideration

One common method for controlling the problems created by conflict of interest in dual representation is? 1. Not representing both buyer and seller in the same firm 2. Not allowing the licensee to have an agency relationship with either client 3. Having the employing broker be the agent for one side 4. Allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients

4. Allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients

Common methods for controlling the problems created by conflict of interest in dual representation include all of the following EXCEPT? 1. Allowing designated brokerage 2. Allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients 3. Making dual agency illegal 4. Allowing the salesperson to work with both the buyer and seller as an agent in some circumstances

4. Allowing the salesperson to work with both the buyer and seller as an agent in some circumstances

While an appraisal is an estimate of the value of a property, a CMA is __________? 1. An estimate of the property's highest and best use 2. An estimate of the sold properties in the last 6 months 3. An estimate of the property value 4. An estimate of the most probable sales price in the current market

4. An estimate of the most probable sales price in the current market Study Hint: An appraisal is an estimate of a property's value; the CMA is an estimate of the most probable sales price in the current market.

Functional obsolescence can be caused by 1. Circumstances outside the property 2. A zoning change 3. Toxic mold found within the property 4. An over-improvement of the property

4. An over-improvement of the property Study Hint: Functional obsolescence can be caused by an over-improvement of the property. Depreciation: Loss of value of a propertydue to any cause.

According to the Truth in Lending Act, if a lender discloses in their advertising, these terms will "trigger" additional lender disclosures, most notably the annual percentage rate (APR) will also be required. 1. Down payment 2. Interest Rate 3. Term of loan 4. Any of the above

4. Any of the above Study Hint: if a lender discloses down payment, interest rate, or term of the loan, in their advertising, these terms will "trigger", and most notably the annual percentage rate (APR) will also be required.

A school is planning on a renovation and found that asbestos exists in the ceiling tile. Which of the following statements is NOT CORRECT? 1. Asbestos can pose a hazard to students, teachers, and school employees when it is disturbed 2. Asbestos is a health threat when it becomes airborne and therefore breathable 3. Asbestos is an environmental hazard 4. Asbestos must be removed

4. Asbestos must be removed Study Hint: Asbestos can pose a hazard to students, teachers, and school employees when it is disturbed and becomes airborne and therefore breathable. It has been EPA's long-standing policy that undamaged non-friable asbestos is best left undisturbed and managed in place. Removing asbestos often has the potential to create a greater health risk than leaving it undisturbed.

A broker sent out fliers to a neighborhood stating, "The neighborhood is changing. Sell now! I can find you a home with a low interest rate". This is an example of ? 1. Steering 2. Redlining 3. Legal 4. Blockbusting

4. Blockbusting

A man had his unlicensed son do the electrical work in preparing his home for sale. He did not disclose this information to his broker, and after the sale, the new owner suffered a financial loss because of some faulty wiring. Which of the following statements is true? 1. The broker is responsible for this omission. 2. The broker is innocent of any wrongful act. 3. The broker is not responsible for latent material facts. 4. Both #2 and #3 are correct.

4. Both #2 and #3 are correct. Study Hint: The broker is innocent of any wrongful act. Brokers are not responsible for latent (invisible and unknown) material facts.

Which of the following approaches MOST reliably estimates the sales price of a single-family residence? 1. Market data approach 2. Sales comparison approach 3. Cost approach 4. Both 1 and 2 are correct

4. Both 1 and 2 are correct Study Hint: Which of the following approaches MOST reliably estimates the sales price of a single-family residence? A market data approach, also known as sales comparison approach

IF you list a property "as is" you would disclose ______? 1. Nothing because it is "as is" 2. A roof that leaks due to the stain seen on the ceiling 3. A crack in the foundation 4. Both 2 and 3 are correct

4. Both 2 and 3 are correct

A business organizational form in which limited partner(s)/member(s) are not liable for debts of the organization is called ________. 1. A joint venture 2. A Limited Partnership 3. A Limited Liability Company 4. Both 2 and 3 are correct

4. Both 2 and 3 are correct Study Hint: A business organizational form in which limited partner(s)/member(s) are not liable for debts of their organization is called a Limited Partnership or a Limited Liability Co.

Which of the following statements about both the Mortgage and Deed of Trust is FALSE? 1. Both secure the promissory note with the value of the real estate. 2. Both pledge the property to the lender in case the borrower defaults on the debt 3. Both are considered liens on the property until the loan is paid off 4. Both are held by the lender, with the lender giving most of the property rights to the borrower

4. Both are held by the lender, with the lender giving most of the property rights to the borrower Study Hint: By using a Deed of Trust, the borrower and lender agree that title to the property will be held by a trustee until the loan is paid off. Most of the rights and responsibilities of owning the property are given to the borrower. In a foreclosure, the trustee is allowed to sell the property and give the proceeds to the lender.

A FSBO seller and buyer agree to terms on a contract to purchase. The buyer then finds a structural defect during his inspection, and cancels the contract. The FSBO seller makes cosmetic repairs to cover the damage, and lists the property with Agent M and informs him of the defect. Buyer C buys the home, and does not perform an inspection. Only after closing and moving into the home does buyer C discover the material defect. Who is liable? 1. Agent M is liable to buyer C. 2. Only the seller would be liable to buyer C. 3. Buyer C has no recourse because he did not perform an inspection! 4. Both the FSBO seller and Agent M are liable.

4. Both the FSBO seller and Agent M are liable. Study Hint: Disclosures: Seller and broker must disclose all known material facts

To which of the following does the ADA apply? 1. Detached single-family homes 2. Owner-occupied condominiums 3. Rental apartments 4. Common areas

4. Common areas Study Hint: The ADA only applies to areas of public accommodation.

A gas station was recently changed from R2 to R1 zoning. What options does the seller have? 1. Keep the gas station in working order 2. Add a convenient store 3. Turn the gas station into an office building consisting of six units 4. Conduct whatever was agreed upon in purchase contract

4. Conduct whatever was agreed upon in purchase contract Study Hint: The seller should simply respond to the contract and provide the buyer with any needed documents. The buyer has the responsibility of due diligence.

When placing a value on a church or school which approach is more reliable? 1. Income approach 2. Sales comparison approach 3. Gross multiplier 4. Cost approach

4. Cost approach

Broker Steve has a listing agreement with Seller Dave. Steve's office policy allows for only seller agency. At an open house, a buyer tells Steve she wants to write a contract. Steve can work with the buyer as a(n)? 1. Transaction-Broker 2. Agent 3. Client 4. Customer

4. Customer

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2,300 yearly. Buyer's agent Daniel Brooks brings an offer for $267,000 which is accepted and will close on July 30. Buyer Benjamin will be getting a VA loan and will be putting 20% down. How will the Closing Statement reflect the seller's tax liability if closing is July 30? 1. $0 The seller has no tax liability 2. Credit buyer $2,300 3. Credit seller $1,341 4. Debit seller $3,641

4. Debit seller $3,641 Study Hint: The seller has to pay the buyer for the time he was in the home, 210 days. $2,300 / 360 x 210, at closing. The seller will also need to pay the full last year's amount since it was unpaid. Seller's tax liability at closing = $1341 plus $2300 = $3641. $2300 debit seller, credit broker, $1341 debit seller, credit buyer

Randy and Jeff Minter hire Real Estate Broker Bonnie to list their home in St. Paul. The Minters list the home for $275,000 on June 15, and Broker Bonnie's commission is 6%. Taxes for last year have not been paid and are $2,300 yearly. Buyer's agent, Daniel Brooks, brings an offer for $267,000 which is accepted and will close on July 30. Buyer Benjamin will be getting a VA loan and will be putting 20% down. His broker has added a contingency clause to the contract, which states the contract will terminate if the building permit is not granted by the city. How will the Closing Statement reflect the seller's tax liability if closing is July 30? 1. $0 The seller has no tax liability 2. Credit the buyer $2,300 3. Credit the seller $1,341 4. Debit the seller $3,641

4. Debit the seller $3,641 Study Hint: The seller has to pay the buyer for the time he was in the home, 210 days. $2,300 / 360 x 210, at closing. The seller will also need to pay the full last year's amount since it was unpaid.

A fully rented, ten-unit apartment building has rents of $500.00 per month. A 10% rent increase brings a 10% vacancy factor. The gross income? 1. Remains the same 2. Increases by 1% 3. Increases by 9% 4. Decreases by 1%

4. Decreases by 1% Study Hint: Capitalization approach, 10 x 500 = $5000, 10% increase makes the monthly rent $550 x 10 = $5,500, Minus the vacancy = $550 = $4,950 So the question is, 4960 x [?] percentage = $5,500? Divide 5,500 by 4,950, and the decrease is 1%

A property management agreement normally includes . 1. An agreement that the manager carry liability insurance 2. A list of the property's current tenants 3. A statement of the manager's qualifications 4. Description of the manager's fiscal responsibilities

4. Description of the manager's fiscal responsibilities Study Hint: A property management agreement normally includes description of the manager's fiscal responsibilities. Property Management

When an owner deposits funds with a third party as a prepayment or deposit for a specific purpose, such as payment for mortgage insurance it can be deposited into a(n) __________? 1. Trust account 2. Escrow account 3. Operating account 4. Either 1 or 2

4. Either 1 or 2 (Trust or Escrow) Study Hint: A trust account is identical to an escrow account when an owner deposits funds with a third party as a prepayment or deposit for a specific purpose.

A landlord wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would not be used to obtain permission for this store? 1. Conditional use permit 2. Zoning variance 3. Building permit 4. Eminent Domain

4. Eminent Domain Study Hint: A building permit would also be necessary.

A deed restriction is best described as a(n) 1. General lien 2. Specific lien 3. Constructive lien 4. Encumbrance

4. Encumbrance Study Hint: Deed Restriction: Previsions placed in deeds to control future uses of the property.

Death of a party to an agreement voids the agreement when the agreement is a(n)? 1. Purchase contract 2. Installment land contract 3. Option to purchase 4. Exclusive-Right-to-Sell listing

4. Exclusive-Right-to-Sell listing

Death of a party to an agreement voids the agreement when the agreement is a(n) 1. Purchase contract 2. Installment land contract 3. Option to purchase 4. Exclusive-Right-to-Sell listing

4. Exclusive-Right-to-Sell listing Study Hint: Death of a party to an agreement voids the agreement when the agreement is an Exclusive-Right-to-Sell listing. Termination of the Agency

To perfect a lien against personal property, a creditor would record a(n) ___________. 1. Bill of sale 2. Personal property mortgage 3. Attachment 4. Financing statement

4. Financing statement

A home sells 2 days after your listing contract expires to a buyer to whom you showed the property. You may be able to command a commission under which clause in your listing contract? 1. Extension Clause 2. Uniform Duties 3. In-Company transaction 4. Holdover

4. Holdover Study Hint: Holdover: A clause in the listing contract which allows that the broker earn his or her commission, for a set amount of days after the listing agreement has expired if a buyer hat the broker showed the property to decides to buy the property after the listing agreement has ended, and if there is no other broker currently engaged by the seller.

Under the ECOA (Equal Credit Opportunity Act), a lender MAY NOT ask a borrower about 1. The purpose for the funds 2. The verification of funds 3. Employment status 4. If the borrower is currently a drug addict

4. If the borrower is currently a drug addict Study Hint: ECOA (Equal Credit Opportunity Act): Federal legislation passed in 1974 to extend credit based on the applicant's ability to repay the loan without regard to race, color, religion, natural origin, sex, marital status, age, or receipt of public assistance.

Under the ECOA (The Equal Credit Opportunity Act), when you are applying for a loan, a creditor may ask you? 1. If you are planning a family 2. Whether you are widowed or divorced 3. About your plans for having or raising children 4. If you are married, unmarried, or separated

4. If you are married, unmarried, or separated Study Hint: Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. For more information on what can or cannot be asked by a lender, you can visit The FTC Website.

A tenant vacated premises with nine months remaining on the lease. In order to mitigate damages, the owner should? 1. Improve the premises and advertise at a higher rent 2. Bring legal action as each month's rent becomes due 3. Keep the premises vacant until the lease expires 4. Immediately advertise the premises for rent

4. Immediately advertise the premises for rent Study Hint: Uniform Residential Landlord Tenant Act: A uniform act intended to provide some consistency in regulating the relationship of landlord and tenant in residential leases.

A loan which requires the borrower to pay interest only until the maturity date (or due date) and to pay the entire principal on the maturity date is called a loan? 1. Illegal 2. Term 3. Balloon 4. Interest only

4. Interest only

The Deans had a custom built cabinet made for their family room which was not permanently attached. When they sell their home, 1. They would take it since it was not attached 2. They do not have to list it as an inclusion in the listing contract 3. It becomes an emblement 4. It would stay in the home, since it was built for that space

4. It would stay in the home, since it was built for that space

Two unrelated friends are buying a home together and want the property to pass to the other when one of them dies. What is the best way for them to take title? An estate in real estate that is owned by two or more persons, all owning equal shares with rights of survivorship. 1. Tenants in Common 2. Tenancy in Severalty 3. Tenancy by the Entirety 4. Joint Tenants

4. Joint Tenants

Which material fact about a property need not be disclosed? 1. Property is in a flood zone 2. Remediated meth lab 3. Sump pump replaced 4. Latent radon gas (seller is not aware of)

4. Latent radon gas (seller is not aware of)

The parties to a sales contract have stipulated that a specific sum be paid by any party breaching said contract, this sum is called? 1. Punitive damages 2. Actual damages 3. Compensatory damages 4. Liquidated damages

4. Liquidated damages

A property described as "from the point of beginning, N 90 degrees, 30 minutes; E 500 feet; S 50 degrees; and then W 300 feet...." is using the . 1. Governmental Survey System 2. Recorded Plat System 3. Coordinate System 4. Metes and Bounds Description

4. Metes and Bounds Description Study Hint: A property described as "from the point of beginning, N 90 degrees, 30 minutes; E 500 feet; S 50 degrees; and then W 300 feet...." is using the the metes and bounds description.

One benefit of a VA loan is? 1. There are no discount points 2. A VA loan is fully insured 3. No earnest money required 4. Minimal or no down payment is required

4. Minimal or no down payment is required

A clause in a mortgage that provides for the assignment of rents benefits whom? 1. Tenant 2. Mortgagor 3. Property Manager 4. Mortgagee

4. Mortgagee Study Hint: Loan Provisions: The borrower may provide for rents to be assigned to the lender in the event of the borrower's default.

When filling out a counterproposal form the broker_______? 1. Should write in all the dates from the original offer 2. Must fill out the entire dates and deadlines box, adding N/A if it does not apply 3. Should make sure the seller signed the original offer 4. Must fill in only the dates that have changed

4. Must fill in only the dates that have changed

Listings .... 1. Do not need a specific renewal date 2. Generally have a automatic renewal agreement 3. Must have a specific renewal date 4. Must have a specific termination date

4. Must have a specific termination date

The amount of commission is determined by ? 1. State statute 2. Buyer or Seller 3. The Department of Real Estate 4. Negotiation

4. Negotiation Study Hint: Commission: There is no longer any established commission schedules: in fact , any attempt by a group of brokers to fix brokerage rates would be a violation of antitrust laws.

A 2,000 sq. ft. home has just been built next to a 4,000 sq. ft. home. The owner of the smaller home would consider the principle of 1. Conformity 2. Balance 3. Regression 4. Progression

4. Progression Study Hint: Principles of Appraisal: The worth of a lesser object is increased by being located among better objects.

A broker told a buyer that a home was in a "great neighborhood". After purchasing the home, the buyer found out that there had been several recent crimes in the area. The broker's statement would be regarded as? 1. Misrepresentation 2. Fraud 3. A mutual mistake 4. Puffery

4. Puffery

The use of more than one appraisal method with different weights assigned to each method describes 1. The quantity survey method 2. The development method 3. A certified appraisal 4. Reconciliation

4. Reconciliation

A buyer has terminated the contract and asked for his earnest money back prior to the Inspection Deadline. The listing broker should _______? 1. Inform the buyer that the seller intends to keep the earnest money 2. Refuse to return it since they never had the inspection 3. Release it to seller 4. Release it to the buyer

4. Release it to the buyer Study Hint: An inspection is not necessary for the release of earnest money as long as the buyer finds something he/she is not happy about.

The responsibility for providing lead-based paint disclosure to the buyer rests with the? 1. Seller 2. Seller's broker 3. Buyer broker 4. Seller & both brokers

4. Seller & both brokers Study Hint: Failure to provide lead-based paint disclosures may result in fines of up to $16,000 per omission.

Before ratification of a contract for housing sale or lease, sellers and landlords must do all the following except _______. 1. Give the "Protect Your Family From Lead In Your Home" pamphlet to buyer 2. Disclose any known information concerning lead-based paint or lead-based paint hazards. 3. Provide any records and reports on lead-based paint and/or lead-based paint hazards which are available to the seller or landlord 4. Sellers must provide homebuyers a 30-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards.

4. Sellers must provide homebuyers a 30-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Study Hint: Sellers must provide homebuyers a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for inspection. Homebuyers may waive this inspection opportunity.

State law that requires a contract for real estate to be in writing is the 1. Uniform Commercial Code 2. Parole Evidence Rule 3. Real Property Law 4. Statute of Frauds

4. Statute of Frauds Study Hint: State law that requires a contract for real estate to be in writing is the Statute of Frauds.

A sublessee is a(n) . 1. Assignee 2. Owner 3. Lessor on a sublease 4. Tenant

4. Tenant

One disadvantage of a deed in lieu foreclosure is ________. 1. A longer redemption period for the borrower 2. It does not grant title 3. The deed will now take second priority 4. The Buyer loses the property

4. The Buyer loses the property Study Hint: Primary disadvantage to the borrower is the loss of the property, income from the property and the borrower's investment in the property. Disadvantage to lender - lenders do not usually want to hold property.

Two brokers from different companies have gotten together to discuss what commission they will charge. This is prohibited by 1. RESPA 2. Equal Credit Opportunity Act 3. Truth-In-Lending 4. The Sherman Anti-Trust Act

4. The Sherman Anti-Trust Act Study Hint: Common antitrust violations that are associated with the real estate industry include price fixing, boycotting competitors, and allocating customers or markets. Sherman Anti-Trust

A salesperson would NOT be obligated to inform which of the following individuals of the fiduciary responsibilities of the brokerage firm under the law of agency? 1. Sub-Agents 2. Buyers' agents 3. The salesperson's licensed sales staff 4. The buyer's lender

4. The buyer's lender

John and Mary Apton list their home for $152,000. A coal fired power plant is slated to open 5 miles from the property next year. An environmental impact statement is due on March 7. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. The offer is contingent on the environmental impact results. The environmental impact report showed that the home value would likely decrease due to the opening of the coal fired power plant. How does this affect the contract? 1. The sellers must reduce the offer price. 2. The contract would be void. 3. The contract is automatically terminated. 4. The buyers may proceed.

4. The buyers may proceed. Study Hint: A real estate contingency contract is the addition of language pertaining to the seller's and the buyer's needs in order to complete the sale. Signatures from all parties and real estate agents are required to make the sales and contingency contracts legally binding documents.

John and Mary Apton list their home for $152,000. There is an appurtenant easement to access a large lake which is deeded. A coal fired power plant is slated to open 5 miles from the property next year. An Environmental Impact Statement is due on March 7. Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest rate due and payable in 10 years. It is accepted. The offer is contingent on the environmental impact results. If the Environmental Impact results had showed that the home value would likely decrease due to opening of the coal-fired power plant, how would this have affected the contract? 1. The buyers would reduce the offer price. 2. The contract would be void. 3. The contract would be terminated. 4. The buyers would have to decide whether they wanted to continue with the contract.

4. The buyers would have to decide whether they wanted to continue with the contract.

Which of the following statements about a valid option contract is INCORRECT? 1. An option contract is a legal agreement between the potential buyer of a real estate property and the owner of that property. 2. The real estate option contract gives the potential buyer the exclusive right-to- buy the property at a specific price within a specific time period. 3. The potential buyer must pay the property owner an option fee for the right granted in the option contract. 4. The real estate option contract conveys the right to purchase by imposing an obligation to purchase.

4. The real estate option contract conveys the right to purchase by imposing an obligation to purchase. Study Hint: An option contract is a legal agreement between the potential buyer of a real estate property and the owner of that property. The real estate option contract gives the potential buyer the exclusive-right-to-buy the property at a specific price within a specific time period. The potential buyer must pay the property owner an option fee for the right granted in the option contract. On the other hand, a real estate property owner who signs an option contract is under an enforceable obligation to sell his or her real estate under the terms specified in the real estate option contract. If a property owner fails to perform the sale under the terms of the option contract, the owner risks a lawsuit and a verdict, which might force the sale of the property under the terms of the option contract.

Betty Realtor shows Martha and Ann a home in Delta with an incredible rose garden. They love the home and write a contract that is accepted. The owners of the home had specifically noted in the listing agreement that the roses would be removed professionally prior to closing. No mention was made in the MLS of this rose removal so the buyers had no idea this was happening. A week before closing Ann and Martha drive by to see a contractor removing the roses with a backhoe, they are angered. What should happen now? 1. The roses are emblements, they can be removed by the sellers 2. The roses need to be returned 3. The roses are personal property and the sellers are free to take them 4. The seller and broker must make a monetary payment to the buyers

4. The seller and broker must make a monetary payment to the buyers