Hot ?'s Broker Exam ?'s

A power granted by an " Enabling Act" is:

Zoning

When preparing a feasibility report for a proposed residential development, and desiring to write the report in view of national economic factors, all of the following should be included, except:

Zoning ordinancesZoning ordinances are not national economic factors.

Turner deeded his farm to his sons, "A", "B'', and "C" as joint tenants. Shortly thereafter, "B" sold his interest to "W". Son "A" died and had willed his interest to his heir "S". Son "C" retained his inheritance. Ownership of the property would be:

"C" and "W" as tenants in common, "C" holding 2/3 interest and "W" 1/3 interest;A joint tenancy may be sold during the life of the joint tenant. When "B" sold to "W," "W" became a tenant in common with "A" and "C", who remained joint tenants. A joint tenancy may not be willed. When a joint dies, his interest automatically vests in the surviving joint tenants. When "A" died, his interest automatically vested in "C".

Mr. Ramirez paid an owner $10 for an option containing this clause:

"Option to be for 60 days from June 1, 1967. Upon exercise of option, holder is to purchase within 30 days thereafter for all cash consideration." On July 10, Mr. Ramirez sold and assigned this option for $2,000. On July 28, the new holder notified the owner that he would purchase on August 15. The owner claimed the option was void. The option was: Valid, and assignee would purchase on August 15.In order for an option to be assigned, consideration must have been paid to the optionor by the optionee. In this case, $10 was paid by Ramirez. He was, therefore, able to assign the option. As long as the new optionee exercises the option on time, the owner must sell the property. August 15 was within the specified parameters of the option.

Which of the following types of transactions would most frequently allow the real estate agent to collect a commission from more than one party:

"Tax-free" exchangesIn a "tax-free" exchange the broker can collect a commission from both parties.

A tenant signs a lease that includes the following clause:

"The stated rent under this agreement will be increased or decreased every three months based on the percentage increase in the consumer price index (CPI) for that period." What kind of lease has this tenant signed Index. A lease with an escalator clause which is tied to an index, such as the Consumer Price Index, is called an index lease.

Closing is on June 15, and rent of $2,400 has been paid for the entire month. What amount will the seller be debited at closing if the buyer receives credit for the day of closing?

$1,280The seller should be debited for 16 days. The wording is tricky. It says the buyer receives "credit" for the day of closing. $2,400 I 30 days = $80 per day 16 x $80 = $1,280

The local mortgage company has loaned a buyer 80% of the appraised value of a single-family residence. Interest for the first year amounts to $8,100, and is calculated at 9% per annum. The appraised value of the property would most nearly be:

$112,500$8, 100 interest / 9% interest rate = 90,000 loan amount $90,000 loan amount/ 80% = $112,500 value of the house

Richard owned a vacant lot free and clear. He decided to build a home on the lot. On May 1, lumber was delivered to the lot at a cost of $8,000. On May 2, a first trust deed $150,000 was recorded against the property to finance the construction. On September 15, painters started work on the property with their bill totaling $3,000. The project was completed and Joe did not pay the bills for the lumber and the painting. Two mechanic's liens were filed for $8,000 and $3,000. The property went into foreclosure and sold for $150,000. Ignoring the expenses of sale, approximately how much did the lender on the first trust deed receive as a result of the sale?

$139,000;Mechanic liens gain priority according to the beginning of any work or material being delivered to the job. The lumber was delivered May 1, the trust deed was recorded on May 2. That would mean that any mechanic lien filed on the property would date back to May 1, and would have priority over the trust deed. Since the foreclosure brought $150,000 and the total of the liens was $11,000, the lender received the.difference of $139,000.

A duplex property worth $20,000, with a loan of $12,000, is exchanged for an apartment worth $35,000 and a loan of $18,000, and each new owner assumes the existing loan. What amount would be given in the form of cash or a note:

$15,000Boot is the amount given by one party to the other in the exchange. It is given by the one "trading up" (going from the lower priced property to the higher priced property). Boot always equals the difference between the prices of the two properties. $35,000 - 20,000 = $15,000 boot.

Mr. Long purchased a brand new piece of income property for $180,000 ..The listed price was $220,000. Mr. Long considered this a good deal on his part, since he only put $10,000 down and acquired a new first trust deed for the balance. The tax assessed value was indicated at $150,000. Mr. Long's cost basis for income tax purposes would be:

$180,000;Cost basis equals the amount paid for the property by the buyer. These other figures are simply distracters.

If both brokers agree to split 50/50 on a 4 1/2 commission on a $178,000 purchase price, how much would the listing salesperson receive after his 50/50 split with his broker?

$2,002.50$178,000 x 4.5% = $8,010 total commission $8,010 I 2 = 4,005 to each office $4,4,005 I 2 = $2,002.50 to each salesperson

In 1975, Real Estate Broker Daniels was the agent in the sale of 3 separate high-rise apartments to 3 separate purchasers. Later that year, each of these purchasers obtained separate but concurrent final court judgments for $10,000, $15,000, and $25,000 respectively, against Daniels upon grounds of misrepresentations made by Daniels in each individual transaction. Daniels is bankrupt and without funds to pay any portion of the valid claims. The maximum sum lawfully payable from the real estate recovery fund account to the owner with the $25,000 claim is:

$20,000. The maximum the recovery account would pay to any individual, regardless of the judgment amount, is $20,000.

Buyer Frank sued broker Sam for a misrepresentation in the sale of a single family home. He was awarded a judgment in the amount of $40,000. Broker Sam was bankrupt and unable to pay the judgment. Buyer Frank appealed to the Real Estate Recovery Account. Assuming the Recovery Account agrees to pay Frank, he will receive a maximum of:

$20,000The maximum amount of $20,000 is payable to a single litigant up to a maximum of $100,000 for a single licensee (this would require five judgments against the licensee).

Broker Jones had three outstanding judgments against him for fraud. Each judgment was from a different transaction. The judgments were $10,000, $15,000 and $25,000 respectively. If the Real Estate Recovery Account agreed to pay the claims, how much would the fund pay to the $25,000 claimant?

$20,000This question is asking for the maximum amount that may be recovered for any one transaction. The maximum amount for any one transaction is $20,000, but $100,000 (5 transactions) for any one licensee.

Mr. Nguyen owned an apartment building with an adjusted cost basis of $220,000 and a fair market value of $330,000. He exchanged the property for an apartment house which had a fair market value of $365,000. Both properties were free and clear and no adjustment was made for the difference in value. For federal income tax purposes, the new property will have a basis of:

$220,000Since Mr. Nguyen paid no boot, his basis remains $220,000.

A fire insurance policy for $4,000 was issued March 1, 1981, for three years at a premium of $316.80. What is the prorated value of the unused portion on November 16, 1981:

$242;This is a 3 year policy. 316.80 premium/ 36 months= 8.80 insurance per month. From 1/3/81 to 11/16/81 = 8.5 months $8.80 ins. per month x 8.5 months= $74.80 used portion of insurance $316.80 - $74.80 = $242.00 refund on insurance policy

A man is appraising a property by using the gross rent multiplier. He located a comparable property renting for $150 per month which sold recently for $24,000. The property which is being appraised will rent for $165 per month. The value of the property is most nearly:

$26,400;The Gross Rent Multiplier is determined by dividing the Sales Price by the Gross Monthly Rent. $24,000 sales price I $150 gross monthly rent= 160 gross rent multiplier $165 new gross monthly rent x 160 = $26,400 Sales Price

Joe owns three sections of land. He sells eight 80 acre lots for $160,000 each. He sold the remaining land in 160 acre lots for $400,000 each. what was the total selling price?

$4,480,0008 x $160,000 - $1,280,000 8 x 80 acres= 640 acres= 1 section, which leaves two sections remaining to be sold. 2 x 640 acres in a section = 1,280 acres 1,280 acres / 160 = 8 lots 8 lot x $400,000 per lot= $3,200,000 $1,280,000 + $3,200,000 = $4,480,000

Michaels owns 80 acres of land. It is 1/2 mile long by 1/4 wide. He wants to determine the topography of the land and so he asks Jones to clear 4 strips, each one 50 fe t wide. One strip will run the length of the land and 3 strips will run the width of the land. If Jones charges $60 per acre of cleared land, he will receive:

$444;One strip is 2,640 (1/ 2 mile) x 50 ft. = 132,000 square feet 3 strips are 1,320 - 50 = 1,270 x 50 = 63,500 square feet x 3 = 190,500 132,000 + 190,500 = 322,500 square feet 322,500 / 43,560 = 7.4 acres x $60 = 444.21

A man bought an on-sale general liquor license two years ago from the state. Now he wants to sell it. What is the maximum he can charge for the license:

$6,000;Liquor licenses originally cost $6,000. The cost of a resale of that license may not exceed $6,000 for the first five years.

Definitions:

(1) A sudden and dramatic loss of land by the action of water; (2) The addition of soil, by gradual deposit, through natural causes; (3) The gradual loss of land by the operation of water or wind; (4) Soil deposited on the shore or bank of a river or ocean by action of water. Choose the answer which arranges the words in the same order as the definitions: Avulsion, accretion, erosion, alluvion,This is the choice in which the words match the definitions.

Which of the following is one board foot:

(A) 2" x 12" x 6"; (B) 12" x 12" x l"; (C) 2" x 24" x 3"; (D) All of the above(D) All of the above A board foot is any cubic measurement that equals 144 cubic inches. All of these equations equal 144 cubic inches.

A township is:

(A) 6 miles square; (B) 24 miles around; (C) 36 square miles; (D) All of the above. Miles square means miles on each side. Read this carefully. 6 miles are each side equals 36 square miles. A township is 6 miles on each side, so it is 24 miles around the whole thing. A township is also 36 square miles.

The Uniform Building Code applies to:

(A) Alterations of an existing structure; (B) Demolition or moving of a building; (C) The power of eminent domain; (D) "A" and "B" above(D) "A" and "B" above. Uniform Building Code is an example of police power. Police power regulates land use. Eminent Domain takes title. Alterations of an existing structure and Demolition or moving of a building are examples of such regulations.

As owner of a condominium unit, what do you not own in common:

(A) Bearing wall; (B) Central heating unit; (C) An elevator four stories high; (D) None of the aboveNone of the above. All of these would be considered part of the common area.

In estimating the value of a parcel of real property, an appraiser considers the value of which of the following?

(A) Bundle of rights; (B) Utility; (C) Physical land and improvements thereon; (D) All of the aboveThe value of Bundle of rights, Utility; Physical land and improvements thereon, are considered by an appraiser.

The consent of the trust deed beneficiary should be obtained for:

(A) Consolidation agreements; (B) Boundary line adjustment agreements; (C) Restriction agreements; (D) All of the aboveA change in any of these would affect the security on which the trust deed is based. The consent of the beneficiary would be required whenever a change occurs which effects the security of the lender.

An appraiser is appraising the value of an older apartment building using the replacement cost approach. He would include all of the following items, except:

(A) Cost of improvements new; (B) An appropriate capitalization rate; (C) A separate appraisal of the land; (D) DepreciationThe capitalization rate is only used in the Income Approach. Apparisal of an old Apt. Building includes: Cost of improvements new; A separate appraisal of the land; & Depreciation.

Mr. Jacobs purchased a property for $300,000 with a downpayment of $60,000 cash. He gave a trust deed and note in favor of the seller for of the purchase price. Such a note and deed of trust would be considered purchase money:

(A) If it were used to buy a four unit apartment building; (B) Since the seller extended credit to the buyer; (C) Even if the loan were made by an institutional lender; (D) All of the aboveAll of these situations describe a purchase money loan. Any loan which facilitates the purchase of a one-to-four unit dwelling would be considered purchase money.

Glen Johnson has worked as a journeyman in the general construction field for five years. He decides to start his own home improvement business. Under which of the following circumstances would he not need to be licensed, according the State Contractor's License Law:

(A) If the total cost of each of the projects he completes is under $500; . A Under California law, any business or individual who constructs or alters any building, highway, road, parking facility, excavation, or other structure in California must be licensed if the total cost (labor and materials) of one or more contracts on the project is $500 or more.

It is important to establish the agency relationships so that each party knows who is working for whom. The reason is:

(A) Imputed notice; (B) Professional and ethical responsibilities; (C) Legal effect; (D) All of the aboveThese are the reasons for agency disclosure. Impute means to charge with fault or responsibility.

Which of the following defines the term "equity":

(A) The owner's interest in real property, over and above all liens against it; (B) The difference between the loan amount and the value or price of the property; (C) The initial down payment on the property; (D) Any of the above Equity is the difference between the value and the liens. All of these choices describe equity.

Actual fraud has been described as:

(A) The suppression of that which is true by a person who has knowledge or belief of the fact; (B) The intentional and successful circumventing or cheating of another person; (C) A promise which has been made without any intention of performing; (D) All of the aboveAll of these are examples of Actual Fraud.

When a blanket mortgage is placed upon a property and a "release schedule" is put into the mortgage showing the amount of the loan that must be paid off for each of the lots, those individual amounts would likely be proportionately larger for the first lots that are sold. The reason for this practice is:

(A) To increase the security value of the remaining lots; (B) To compensate for the loss of security as the lots under the blanket encumbrance are removed; (C) To compensate for the loss of security due to the best lots being sold first; (D) All of the aboveThese are exactly the reasons the lender makes the schedule the way he does. He knows the subdvider will sell the most desirable lots first. He wants the borrower to have so much equity in the last lots, that it makes no sense to default.

When an agent is accused of "puffing," the agent might be guilty of which of the following:

(A) Trying to convince a potential seller of his wide popularity among local people; (B) Convincing the appraiser to assign a higher value to the property than is justified by the comparable recent sales in the area; (C) Exaggerating the features of the property or neighborhood when showing property to prospective buyers; (D) Convincing a seller to offer a higher commission than is customary for that type of property (C) This is a good example of "puffing".

A legal description using sections, townships and ranges:

(A) U.S. Government Survey;

A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter, who is also a broker, takes over for him. What should she do about the current listings?

(B) She must attempt to renegotiate all of the listings; Listings are personal service contracts and terminate with the death of either party. The listing agreement is between the seller and the broker. When the broker dies, the listing terminates. The new broker must attempt to renegotiate the listing with the sellers.

A seller asks a broker about the race of an offeror. Which of the following is true?

(B) The broker may answer the question but must advise the seller that he is not allowed to discriminate based on that information; Yz mile by Yz mile is Y4 of a section. Each section contains 640 acres. Y4 of640 = 160 acres

The difference between riparian rights and littoral rights:

(C) Riparian rights refer to right to use water from adjacent rivers and streams, littoral is right to use water from lakes and oceans; Riparian rights refer to the right of landowners to use from adjacent rivers and streams. If land is adjacent to water which is deep enough and wide enough to be "navigable," the water and the land under it belong to the state. Littoral rights refer to the right of a landowner to use water from adjacent lakes or oceans granted to the land?wner by the state.

The listing agent would have to reveal a relationship to the:

(C) Seller; The listing agent represents the seller. Any relationship to the seller would have to be disclosed. It is highly unlikely the listing agent would be related to the buyer. The answers B and D would be the same.

A tenant may be justified in abandoning a leased property if the landlord has constructively evicted the tenant. Which of the following acts would be an example of constructive eviction? (A) The landlord has shown the property to a new prospective tenant and has entered into lease negotiations with the new tenant; (B) The landlord has failed to make necessary repairs to the premises; (C) The landlord has made extensive and unwarranted alterations to the premises, making it no longer usable for its original purpose;

(D) All of the above These are all examples of constructive eviction. The tenant is justified in abandoning the leased premises without giving notice.

When the Federal Reserve Board wants to tighten the money supply, it would: (A) Raise the amount of reserves required for member banks; (B) Raise the discount rate for member banks; (C) Sell government bonds or treasury bills; (D) All of the above

(D) All of the above These are the powers of the Federal Reserve Board. When the raise the reserve requirement, discount rate and sell government bonds (treasury bills), it reduces the available money in the economy.

Insulation materials are rated by their effectiveness according to their "R-value". The rating system is used to rate the material's: (A) Heat replacement rate; (B) Resistance to flow of heat; (C) Energy efficiency; (D) Resistance to moisture

.C Infill is developing on empty lots of land within an urban area rather than on new undeveloped land outside the city or town.

When the transfer of title and transfer of possession happen at different times, what document should be agent have both buyer and seller sign: (A) A stay-over agreement; (B) A short term mortgage; (C) A lease; (D) A month-to-month rental agreement.

.D These are the reasons for agency disclosure. Impute means to charge with fault or responsibility.

Which of the following is the largest parcel of land:

1 acre1 acre= 43,560 square feet 4070 square yards x 9 square feet per square yard= 36,630 square feet. 202 ft x 202 ft= 40,809 square feet

When real property is sold, property taxes are set at:

1% of full cash value plus an amount for existing bonded indebtedness;This is exactly how the assessor would assess property after a sale for property tax purposes.

Rental property was improved with a building that cost $240,000. The annual net income from the property is $19,200, which represents a return of 6% on the total investment of the property. From these facts, an appraiser would logically conclude that the value of the land is:

1/3 the cost of the building;$19,200 net income/ 6% cap rate= $320,000 total property value $320,000 total value - 240,000 improvement value= 80,000 land value 80,000 land value/ 240,000 improvement value= 33 1/3

On official maps, the State Geologist delineates earthquake fault zones around traces of potentially active faults. The width of these zones are usually:

1/4 mile

When a real estate licensee handles the sale of a personal property mobile home, the agent must give written notice to the Department of Housing and Community Development within how many days?

10 calendar days;A real estate broker engaging in used mobile home sales must, not later than the end of the tenth calendar day after the sale of a mobile home that is subject to registration (personal property), give written notice of the transfer to the headquarters office of Department of Housing and Community Development (HCD) on a form prescribed by that department.

A real estate licensee sells a used mobile home. How much time does the licensee have to submit a contract of sale to the Department of Housing and Community Development (HCD)?

10 calendar days;A real estate licensee must give written notice to HCD of the transfer on an HCD form not later than the end of the 1 oth calendar day after the sale. (Real Estate Commissioner's Regulation 2861.)

As for "advance fee", how many days prior to accepting the fee must you report to DRE so that you can use the fee?

10 day.B&P Code 10085: The commissioner may require that any or all materials used in obtaining advance fee agreements, including but not limited to the contract forms, letters or cards used to solicit prospective sellers, and radio and television advertising be submitted to him or her at least 10 calendar days before they are used.

Unless instructed otherwise, a broker who is involved in the creation of a promissory note secured by a trust deed on real property shall see that the trust deed is recorded or deliver a written recommendation to record within:

10 days;Statement of fact.

Real property in California is assessed at:

100% of the taxable valuesStatement of fact. Property taxes are levied on 100% of the assessed value.

%Property taxes are assessed on what percentage of the assessed value?

100%Property taxes are based on 100% of the assessed value. Under proposition 13, the maximum tax rate is 1 % of the assessed value.

Which of the following is the largest parcel of land: (A) 1 acre; (B) 41,000 square feet; (C) 202 ft. x 202 ft; (D) 4,070 square yards

101.C If the buyer moves into the house before the close of escrow or the seller is going to stay in the house after the close of escrow, a lease should be written to defme the terms of the agreement and rent. The official name of the lease would be an Interim Occupancy Agreement.

The purpose of the assessment roll, as compiled by the assessor's office is: (A) Determination of the actual tax; (B) The equalization of the assessments among the various properties; (C) The setting of the tax rates; (D) The establishment of the tax base

102.A 1 acre= 43,560 square feet 4070 square yards x 9 square feet per square yard= 36,630 square feet 202 ft x 202 ft = 40,809 square feet

Salesperson Kim has several listings and is the agent of Broker Ling. These listings are: (A) Void if Salesperson Kim changes brokers; (B) The property of Salesperson Kim; (C) The property of Broker Ling; (D) The property of Salesperson Kim and Broker Ling

103.D The assessment roll serves as the tax base

.A broker communicates information given to him by the seller to the buyer in full faith that the seller's information is true. It is later proven that the information was false and the buyer rescinds the contract. The broker is subject to: (A) Discipline by the licensing authority; (B) Civil action; (C) Criminal action; (D) All of the above

104.C The listing agreement is a contract between the broker and the seller. It remains the property of Broker Ling if Salesperson Kim changes brokers and the listing remains valid.

Bailey, an unlicensed man, bought 10 acres of land from Sugihara for $500 per acre. While under contract with Sugihara, Bailey was offered $2,000 per acre from another party and entered into a contract to sell as soon as the escrow closed. Sugihara found out and contacted an attorney. He was told: (A) Bailey could not have entered into the second contract because he did not own the property; (B) Sugihara may be able to collect from Bailey if it was found that Bailey knew something about the property and did not inform Sugihara; (C) What Bailey did was legal and Sugihara has no recourse; (D) Sugihara may void the contract based on misrepresentation

105.B The broker may be sued by the buyer and may be held liable, but would be able to collect from the seller. There would be no grounds for discipline or criminal action.

When a broker keeps records electronically the program he would use for record retrieval is: (A) RAM; (B) SCORE; (C) WORM; (D) DOS

106.C This is a legal transaction and Sugihara has no recourse. Neither of the parties is licensed.

.A borrower is declined for a loan based on his credit report. The lender refuses to let the borrower see the credit report: (A) Lender would have to clear the borrower's credit report; (B) Borrower would receive a $5,000 award; (C) Borrower may request a free copy of the report from the credit company and dispute the accuracy or completeness of any information; (D) Borrower may receive damages up to the loan amount

107.C WORM is the program used to retrieve records. It stands for: Write once, read many.

Which of the following is used by a lender as the basis for determining points: (A) Loan amount; (B) Selling price; (C) Selling price less commission; (D) Loan amount less closing costs

108.C Statement of fact

.A salesperson gets a buyer to make an offer with a deposit, which the seller accepts. The buyer and seller mutually agree to fire the broker. The seller fires his broker. (A) The seller's broker may keep of the deposit; (B) The seller's broker may keep the entire deposit; (C) The seller's broker may sue the seller for damages; (D) The seller's broker may do nothing

109.A Loan points are 1% of the loan amount

When the first party agrees to pay for a fmancialloss arising from a specific event, and the second party agrees to make periodic payments to the first party, the agreement is known as: (A) A fidelity bond; (B) A surety bond; (C) An insurance policy; (D) A mortgage

111.A The seller's portion of the Transfer Disclosure Statement must be filled out by the seller. The broker may never fill out this part.

When a frre insurance claim is filed, which of the following is true? The claimant would: (A) Neither gain nor lose fmancially; (B) Gain financially, but lose value on the property; (C) Lose financially, but not lose value on the property; (D) Lose fmancially and lose on the value of the property

112.C This is a good defmition of an insurance policy.

Closing is on June 15, and rent of $2,400 has been paid for the entire month. What amount will the seller be debited at closing if the buyer receives credit for the day of closing? (A) $1,200; (B) $1,280; (C) $1,350; (D) $2,200

113.A There should be no gain or loss with an insurance claim. Insurance should only replace what is lost- put the claimant back in the same position as before the claim.

The term "infill" is most closely defined as: (A) An old building tom down and rebuilt; (B) A building renovated for recreational facilities; (C) A commercial building built ori an empty lot in a commercially developed area; (D) Excavation of property for a new housing development

114.B The seller should be debited for 16 days. The wording is tricky. It says the buyer receives "credit" for the day of closing. $2,400 /30 days = $80 per day 16 X $80 = $1,280

When a deed contains discriminatory language or clauses: (A) The deed must be rewritten by the owner before the property may be sold; (B) The title company must re-write the deed; (C) The discriminatory words or clauses are unenforceable; (D) The clauses may be enforced, since they would be considered "grandfathered" into law

116.B The "R" in "R-value" stands for Resistance. R-value measures a material's resistance to heat flow

Why was HUD, Section 8, created? (A) For minorities to obtain housing; (B) For Federal employees to obtain housing; (C) To create government jobs; (D) Allow affordable housing for all United States citizens

117.C Clauses which were written into deeds or CC&R's which allow discrimination are unenforceable. There is no legal requirement that the deeds or CC&R's must be rewritten.

Castillo owns land given to him by the government. It has been in his family for three generations. The land contains a goldmine which his family has been mining since they acquired the property. The only way to get to his property is through land owned by Johnson. Castillo has been using Johnson's land to get to his the entire time. Johnson sells to Nguyen. Nguyen constructs a fence with a lock to block Castillo from using Nguyen's land. Which of the following is true? Castillo: (A) May go to court to get the matter resolved and remove any cloud on the easement; (B) Order Nguyen to cut the lock; (C) Ignore Nguyen and cut the lock himself; (D) Not use the land

118.0 This is the purpose of Section 8.

.A township is: (A) 6 miles square; (B) 24 miles around; (C) 36 square miles; (D) All of the above

119.A This is an easement by Prescription. However, the easement must be perfected by court action. This action is a Quiet Title Action.

.Which of the following statements concerning riparian rights is false: (A) If a riparian owner conveys part of his property which does not abut the river, it will not transfer riparian rights; (B) Riparian rights cannot be severed from the property by prescription or condemnation; (C) The owner of adjacent land may not use all of the water and thereby deprive a riparian owner of water; (D) A riparian owner may transfer any part of his land which is not abutting the river

120.0 Miles square means miles on each side. Read this carefully. 6 miles are each side equals 36 square miles. A township is 6 miles on each side, so it is 24 miles around the whole thing. A township is also 36 square miles.

Which of the following can be used in an advertisement to show that the ad is being run by an agent, and not the owner: (A) Bro. (B) Agt. (C) Neither.; (D) Both

122.B Statement of fact.

Regarding Environmental Standards, Federal Law would require a seller of a new home to disclose to the buyer which of the following: (A) Type of windows; (B) Thickness of the walls; (C) R rating; (D) Lead based paint

123.0 The law does not require that the actual name of the real estate finn or broker be used. However, if the property is listed by a Realtor, as opposed to a non-Realtor, ethically the Association of Realtors requires the broker's name appear in the ad.

Which ofthe following types of misrepresentations occur least often in the practice ofreal estate: (A) Innocent misrepresentation; (B) Fraudulent misrepresentation; (C) Negligent misrepresentation; (D) Malicious misrepresentation

124.C Federal law requires that a "new home" seller (including a subdivider) disclose in every sales contract the type, thickness, and R-value of the insulation which has been or will be installed.

.A real estate licensee procures an $8,000 first trust loan for a period of two years for a borrower. He can charge the borrower: (A) 3%; (B) 5%; (C) 10%; (D) Unlimited

125.D Real estate agents are rarely malicious in their misrepresentations although they are sometimes negligent, innocent and fraudulent

.Property taxes are assessed on what percentage of the assessed value? (A) 1%; (B) 2%; (C) 25%; (D) 100%

126.B A first trust deed for less than $30,000 falls under the Mortgage Loan Law. This is the only place in real estate where commissions are regulated. A first trust deed for less than 3 years allows the broker to charge 5%. If the loan is for 3 years or longer, the broker may charge 10%

The following are not discharged in a bankruptcy, except: (A) Unpaid child support; (B) Property tax liens; (C) Debts not scheduled by the debtor; (D) Gambling debts

129.B Statement of fact.

The best way to discover an encroachment is: (A) Standard policy of title insurance; (B) Onsite inspection;; (C) County recorder; (D) California department of surveys

12l.B Riparian rights can be severed from the property by prescription or by condemnation. The government may do so for the public good.

Gonzales gives his neighbor Smith an easement for ingress and egress, but the easement is undefined. (A) It is valid; (B) It is valid if the easement is an easement in gross for utilities; (C) It is valid because it is recorded; (D) It is illegal because it is undefined

130.D The unpaid child support, tax liens and debts not scheduled in the bankruptcy are not dischargeable in a bankruptcy court proceeding. Gamblers can discharge gambling credit card.debts and gain a "fresh start" in life by seeking Chapter 7 bankruptcy relief.

Condominiums can be commercial, residential and industrial. Which of the following would be part of the condominium: (A) Heating unit; (B) Bearing wall; (C) Elevator; (D) None of the above

132.D Statement of fact.

When a broker has a trust account, the name on the account must: (A) Name broker as trustee; (B) Name an independent trustee; (C) Name each person who has money in the account as trustee; (D) Name the broker's accountant as trustee

133.A Heating units are inside the condo and separate from the other condo heating units. A bearing wall and elevator are part of the common area.

The Real Estate Commissioner's Public Report on a California subdivision does not provide the buyer with: (A) Pertinent information about services included in the subdivision; (B) Assurance that the developer followed recommendations of the Subdivided Lands Act; (C) Assurance that the properties are not offered for more than the fair market value; (D) Assurance that the subdivider has appropriate financial arrangements made to pay for the warranties included in the public report

135.B B&P Code 10085: The commissioner may require that any or all materials used in obtaining advance fee agreements, including but not limited to the contract forms, letters or cards used to solicit prospective sellers, and radio and television advertising be submitted to him or her at least 10 calendar days before they are used.

In which of the following is property distributed according to the Statute of Succession: (A) Joint tenancy; (B) Tenants in common; (C) Community property; (D) All of the above

136.C The Public Report states that the commissioner sees no signs of fraud. Trying to sell property for more than the fair market value is not :fraud.

The Irwin's made an offer to purchase the Grey's property. As partofthe offer, the Irwin's agreed to take title "subject to" an existing VA loan which the Grey's obtained when they purchased the property in the approximate amount of $39,000. If the Grey's sell to the Irwins under these conditions, which of the following is true concerning liability for a loss suffered by the government after a foreclosure on the VA loan: (A) The Irwins will be primarily liable; (B) The Greys and Irwins will be equally liable; (C) The Greys will be primarily liable; (D) Neither couple is liable because the Irwins took title "subject to" the existing loan

137.B Title held as tenancy in common may be willed. If a person died intestate (without a will) the Statute of Succession would apply. Joint tenancy property passes immediately to the surviving joint tenants. Community property of a person who dies intestate automatically vests in the surviving spouse.

Which one will be considered the most liquid asset when compared to real estate? (A) Annuities; (B) Tax shelter; (C) Stocks and bonds; (D) None ofthe above

138.C The Grey's will be primarily liable since VA did not approve an "assumption" of the loan. If there is a deficiency in a foreclosure, the government may get a deficiency judgment against the Greys.

Which ofthe following cannot obtain a broker's license? (A) A corporation; (B) Partnership; (C) Foreign Corporation; (D) Individual with no salesperson experience

139.C Liquidity is measured by the time it takes to turn an investment into cash. Cash, itself, is the most liquid investment. Stocks and bonds can be converted to cash within days. Annuities can take years. Tax shelter refers to savings on income taxes.

The state of California has authority over and takes fmancial responsibility for: (A) Flood zones; (B) Earthquake zones; (C) Lead based paint; (D) Preventing and fighting forest fires in national parks

13l.A Agreements between parties can be considered in determining whether an easement is legal. An easement does not have to be recorded to be valid.

When interest rates go up, the capitalized value of homes: (A) Decrease; (B) Increase; (C) Are unaffected in the Short term; (D) Are unaffected

140.B Statement of fact.

A broker may not: (A) Delegate his duties; (B) Remain silent on a material fact; (C) Refuse a listing in the area which he is doing business; (D) All of the above

143.B A broker may not conceal a material fact. A broker may delegate his authority to a salesperson who has been active in the business 2 years out of the last 5 years. He is not required to accept a listing.

0wner Bob owns an apartment complex which is managed by Broker X. Owner Bob wants to sell his apartments and Broker X is the listing agent. Who distributes the security deposits? (A) The seller; (B) The broker; (C) The escrow company; (D) The Title company

14l.A Interest rates work in a manner similar to capitalization rates. When rates increase, the value decreases.

Broker Smith arranged a $7,000, 5-year second trust deed loan for Bates. The maximum percentage of the loan amount that Smith may charge Bates as a commission for negotiating the loan is:

15%The Loan Broker Law regulates commission rates charged on first trust deeds under $30,000 and junior loans under $20,000. A $7,000 second trust deed is under this law. The broker may charged 15% if the loan is to run more than 3 years

How many acres are contained a parcel of land measuring 1/2 mile by 1/2 mile:

160 acres.1/2 mile by 1/2 mile is 1/4 of a section. Each section contains 640 acres. 1/4 of 640 = 160 acres

Winston paid $4,500 cash for a promissory note secured by a second trust deed in the amount of $5,000. The note contained an interest rate of 6% per annul, requiring payment of the principal one year from date of the note. Assuming the principal and interest were paid when due, the effective interest rate was most nearly:

17.8%;$5,000 + 6% = $5,300 borrower will pay $5,300 - 4,500 = $800 investor made $800 / 4,500 = 17.78

The seller is required to deliver the "Homeowner's Guide to Earthquake Safety" to the buyer of one-to-four unit dwelling property built prior to:

1960.Sellers of one-to-four unit dwellings built before 1960 must deliver to the buyer, "as soon as practicable before transfer," a copy of the "Homeowner's Guide to Earthquake Safety'', and disclose certain earthquake deficiencies. The booklet contains a reporting form that may be used for this disclosure. The seller's real estate agent is to provide the seller a copy of the booklet to the seller for delivery to the buyer.

The definition of a mobile home park is:

2 or more lots offered for rent or lease for a mobile home.By definition, a mobile home park is 2 or more parcels on a single tract of land offered for lease or rent as a mobile home site now or anytime in the past.

The definition of a mobile home park is:

2 or more lots offered for rent or lease for a mobile home; a mobile home park is 2 or more parcels on a single tract of land offered for lease or rent as a mobile home site now or anytime in the past.

A real estate licensee did not use diligence in researching problems with a home he had listed and failed to disclose certain problems to the buyer. How long does the buyer have to bring a lawsuit against the agent?

2 years.A lawsuit alleging a breach of a licensee's duty under this law must be filed within 2 years from the date of occupancy, the date of occupancy, the date of recordation of the deed to the buyer or the date of close of escrow, whichever occurs first.

Which of the following is most nearly the side of an acre:

209 ft.An acre is 43,560 sq. ft. The side of a acre is most nearly 209 ft.

21. As it relates to the field of real estate, the legal term "theft" would include all of the following except:

21. C The word "theft" is a broad term that basically means the improper taking and carrying away of the personal property of another person and would apply to Answers (A), (B) and (D). Answer (C) is forgery which is committed by altering a written document by signing someone else's name to an instrument.

22. A real estate licensee, who negotiates a loan secured by a trust deed on real property, must see that the trust deed is recorded in the name of the lender/beneficiary:

22. D Section 10234 of the Business and Professions Codes states that, "Every real estate licensee who negotiates a loan secured by a trust deed on real property shall cause such trust deed to be recorded naming the lender as the beneficiary with the county recorder of the county in which the property is located prior to the time any funds are disbursed." The exception is when the lender has given written authorization for a prior release of the funds. If the funds are released on the lender's written authorization, the licensee shall see that the trust deed be recorded, or delivered to the lender with a written recommendation that it be recorded immediately within ten (10) days following the release of the funds. This question applies more to hard money loans arranged by mortgage brokers who conduct their own escrows. In actual practice, if the escrow is handled by an escrow company, the disbursing of the funds and the recording of the trust deed occur when escrow closes.

When a real estates broker is servicing a loan by collecting payments for the lender, how long may the real estate broker keep the payments in the trust account before dispersing the money to the lender:

25 days;A real estate broker who is servicing a loan by collecting payments for the lender may not retain the funds for more than 25 days without the written permission of the lender.

An easement for a road of uniform width occupies 3 acres of land along the south side of a section. The width of the easement is most nearly:

25 feet;43,560 square feet in 1 acre x 3 = 130,680 total square feet for road. 130,680 / 5,280 number of feet on side of a section = 24.75 or 25 feet.

A cubic yard of concrete contains how many cubic feet:

27 cubic feet;3 x 3 x 3 = 27 cubic feet.

A surveyor is asked to survey land and determine its legal description. His legal description begins with the phrase, "Beginning at a point on the northerly edge of M Street 100 feet easterly of the NE comer of the intersection of M and Seventh Street, and running thence ...," which of the following methods of land description is being used:

28. D Whenever a description uses distance and direction, it is a metes and bounds description.

A broker takes a deposit check from a buyer and deposits it in his trust account. After the offer was accepted, the broker wrote a check from the trust account in the amount of the deposit and brought it to escrow. With regard to the broker's duty to maintain proper trust account records, the records must be retained:

3 years from the day escrow closes;A licensed real estate broker shall retain for 3 years copies of all listings, deposit receipts, cancelled checks, trust records and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required. The retention period shall run from the date of the closing of the transaction or from the date of the listing if the transaction is not consummated.

How many years is an attachment lien good for:

3 years;Statement of fact.

When a broker keeps records electronically, how long must he keep the records?

3 yearsNo matter how the broker keeps records, they must be kept 3 years.

Henry purchased a $4,500 promissory note secured by a second trust deed at a 20% discount. The note was repaid in 12 monthly installments of $393 each including interest at 9% per annum. Henry's return on the original investment is most nearly:

31%$4,500 - 20% = $3,600 $393 x 12 months = $4, 716 $4,716 - $3,600 = $1,116 $1,116 / $3,600 = 31

32. For which of the following is a Quiet Title Action used:

32. B When a land contract is recorded, it creates a cloud on the seller's title. If the buyer defaults, a quiet title action would remove that cloud and give the seller a marketable title.

33. The agency relationship can be terminated by:

33. D An agency relationship is established by an express agreement (usually the listing agreement). It can also be terminated by an express agreement between the parties (broker and principal).

34. Which of the following best describes a counter-offer?

34. A In an offer, the offeror is the buyer (the one who makes the offer) and the seller is the offeree (the one to whom the offer is made). In a counter-offer the positions change. The seller becomes the offeror and the buyer becomes the offeree.

35. Under which type of listing might a broker get no commission even though he fads a buyer and handles the entire transaction?

35. A A net listing is one in which the commission will be any amount over and above the "net" required by the seller. If a broker produces an offer from a buyer which is exactly what the seller requires as his "net" the broker will earn nothing. The broker will still be required to handle the escrow.

36. The purchasing power of a dollar is measured:

36. A The purchasing power of a dollar is measured by changes in the Consumer Price Index.

37. Which of the following is not included in the Hazard Disclosure Statement:

37. D Weather conditions are not considered a natural hazard.

38. Broker Rice forced the buyer to make a promise during the sale. This is:

38. C Forcing a party to a contract to make a promise is considered duress. Duress would render the contract voidable by the injured party.

When real property used for commercial purposes is depreciated for income tax purposes, the minimum anticipated life is:

39 years;Under present federal tax law, the depreciation life for commercial property is 39 years.

39. Soon after you list a property for a seller, an agent comes in with a full price offer which your seller accepts. At the close of escrow, you find out that the buyer of the property is the brother of the agent representing the buyer.

39. C The fact that an agent is representing a blood relative is considered a material fact and must be disclosed.

After the notice of probate is published, how long do creditors have to file a claim;

4 months

Four months ago, a seller accepted a proper offer to purchase his real property. The contract was in writing. Later, the seller refused to complete the transaction, since he felt the value of the property would increase in the near future. Under these circumstances, the Statute of Limitations could affect the rights of the buyer to prevail in a civil action due to a breach of a written contract, within:

4 years.The Statute of Limitations is four years on a written contract and two years on an oral contract.

An acre would be equal to which of the following:

4,840 square yards;An acre equals 43,560 square feet. There are nine square feet in one square yard. 43,560 / 9 = 4,840 square yards.

Supplemental assessments are levied to adjust for any increase in tax liability to:

40. A Statement of fact.

Which of the following is one board foot:

41. D A board foot is any cubic measurement that equals 144 cubic inches. All of these equations equal 144 cubic inches.

A deed has a provision regarding racial and religious discrimination. The deed may be changed:

44. A Effective January, 2000, a county recorder, title insurance company, escrow company, or real estate licensee who provides a declaration, governing documents or deed to any person must provide a specified statement about the illegality of discriminatory restrictions and the right of homeowners to have such language removed. The statement must be contained in either a cover page placed over the document or a stamp on the first page.

If a broker takes an exclusive listing to negotiate a loan secured by a lien on real property, that listing is limited to a term of not more than:

45 days; 45 days is the maximum term allowed.

. Mr. Kwan has a $30,000 loss on the operation of his rental property. This is his only rental property. With respect to his income tax, he may do which of the following?

46. C The $30,000 can be used to offset capital gains from other investments. IfKwan has no other capital gains, he may use a maximum of $25,000 as a deduction against his ordinary income and use the rest as a "carryover" loss against future gains.

A real estate licensee did not use diligence in researching problems with a home he had listed and failed to disclose certain problems to the buyer. How long does the buyer have to bring a lawsuit against the agent?

47. B A lawsuit alleging a breach of a licensee's duty under this law must be filed within 2 years from the date of occupancy, the date of occupancy, the date of recordation of the deed to the buyer or the date of close of escrow, whichever occurs first.

A listing broker wants to give $50 to a buyer and a $50 credit against his commission to a buyer or seller who either lists with him or purchases one of his listings. With regard to his actions:

48. C As long as proper disclosures are made to all parties.

It is unethical for a broker to solicit a listing from a seller, if the seller has already listed the property with another broker. Which of the following would be ethical behavior:

49. D The ethical way to handle this situation is to wait until the listing has expired, and then contact the seller.

According to federal laws, the interest rate on a renegotiable rate mortgage can fluctuate a maximum of:

5%; Statement of fact.

A real estate licensee procures an $8,000 first trust loan for a period of two years for a borrower. He can charge the borrower:

5%;A first trust deed for less than $30,000 falls under the Mortgage Loan Law. This is the only place in real estate where commissions are regulated. A first trust deed for less than 3 years allows the broker to charge 5%. If the loan is for 3 years or longer, the broker may charge 10

The Gonzales family wanted to purchase a property and wanted to assume the seller's VA loan, "subject to." Which of the following is correct:

50. C If the VA does not approve the assumption, the loan is taken "subject to" the existing loan. This means the original borrower will remain liable for the loan.. If there is a foreclosure it will be against the original borrower, the seller.

A document which details the responsibilities of a property manager would be called:

51. C A percentage lease is usually used in retail space rental. The lease calls for rent to be determined by a percentage of the gross sales of the business occupying the space.

A man bought a mobile home 2 months ago and moved it to a mobile home park. He then wanted to list it for sale. Which of the following is true?

52. B The Management Agreement would delineate the duties and responsibilities of the property manager. This contract creates an agency relationship with the owner of the property.

In making adjustments to effective gross income for management expenses, for which of the following would an adjustment be made?

53. D Since the owner owned the mobile home two months, it is used. An agent can take a listing on a mobile home along as the mobile home is "used."

An unlicensed person could receive a finder's fee from a broker:

54. C Since the tenant receiving his rent-free, the amount of rent which should be paid by the tenant would be the management fee and can be deducted by the landlord as an operating expense. The owner may not charge for managing the property himself. If an on-site manager receives no compensation, there would be nothing for the owner to deduct. A manager's salary of another building owned by the same owner would be deducted as an expense against the income from the building he manages.

Which of the following must be disclosed to the buyer of a home in a new subdivision:

55. A A broker may pay a finder's to an unlicensed person for recommending the broker to the buyer or seller, providing the unlicensed person does nothing which would require a real estate license.

Which of these pairs of terms have the closest relationship to each other:

56. B Statement of fact.

What does the term "turn-key" refer to:

57. B Interim loan is another name for a construction loan.

How many acres are contained a parcel of land measuring liz mile by liz mile:

58. A "Turn key" properties are completely finished and ready for occupancy.

Complaints of discrimination under the Rumford Act must be filed with the Department of Fair Employment and Housing within:

60 days of the alleged violation;Statement of fact.

Which of the following would be considered a violation of the Fair Employment and Housing Act? (A) An owner of a single family residence who refuses to rent a room in his home for religious reasons; (B) Failure to include accommodations for handicapped people when constructing a new building; (C) An advertisement in a newspaper which states, "Catholic roommate wanted:" (D) All of the above

60. A The broker is not allowed to answer this question. The race of a buyer is not a material fact.

Which of the following is most nearly the side of an acre: (A) 203ft.; (B) 209ft.; (C) 200ft. (D) 210ft.

61. B Under the Fair Employment and Housing Act, failure to design or build a multi-family dwelling offour or more units in a manner that allows disabled persons access and use, is considered discrimination.

Most real estate contracts contain preprinted clauses and spaces for information to be added in written form. In the interpretation of such contracts: (A) Printed parts take precedence over the written parts; (B) The written parts and the printed parts are given equal consideration; (C) The written parts take precedence over the printed parts; (D) No changes or amendments to the printed clauses are permitted by law

7. D All of these are true statements. 88. C Written parts always take precedence over the preprinted parts.

What does the 60 - 90 day broker protection clause mean: (A) Seller must commission within 60 days; (B) Broker cannot cancel the listing before 60 days; (C) Broker may collect a commission after the listing expires; (D) Seller cannot cancel the listing within 60 - 90 days.

73. C Interest rates are set to stimulate the economy. When interest rates are low, businesses and consumers are willing and able to borrow and the economy grows. When interest rates are high, the opposite is true.

On official maps, the State Geologist delineates earthquake fault zones around traces of potentially active faults. The width of these zones are usually: (A) Y4 mile; (B) Y:z mile; (C) %mile; (D) 1 mile

74. C This is another name for the Safety Clause which is found in the listing agreement. It allows the broker to collect a commission after the listing expires, provided the broker gives the seller written notice of the buyer's name within 3 days of the expiration of the listing.

!he final step in an appraisal is: (A) Reconciliation; (B) Balancing; (C) Equalizing; (D) Averaging

75. A Statement of fact.

When an appraiser makes adjustments using the sales comparison approach, he: (A) Adjusts the subject property to the comparables; (B) Adjusts the comparables to the subject property; (C) Always deducts from the comparables; (D) Always deducts from the subject property

76. A. An appraiser reconciles the 3 methods of appraising putting the most emphasis on the approach most likely to be the most accurate. He uses the other 2 primarily as backup data.

If you were granted the right to purchase a business with ready product, business plans, development plans and marketing plans; this would be a(n): (A) Business Opportunity; (B) Franchise; (C) Grant Deed; (D) Estate for Years

77. B No adjustments can ever be made to the subject property. The appraiser must adjust the comparables to make them "equal" to the subject property.

If you went to the city/county and wanted to change the electrical requirements, specific to the structure, from the standard normal requirements, this would be a(n): (A) Variance; (B) Exception; (C) Estoppel; (D) Emblement

78. B A franchise agreement is an agreement between a franchisor and franchisee whereby the franchisee is given the right to distribute goods and services under a marketing plan prescribed by the franchisor.

. The metal used on a roof to keep out the rain is called a: (A) Roof guard; (B) Flashing; (C) Gutter; (D) Slider

79. A If the city or county allow you to do something on your property which differs from the building codes, it is called a variance.

A brother and a sister own property as joint tenants. They both borrow $50,000 against their interest, but before the sister makes any payments, she dies. Which of the following statements is correct? (A) The brother is always responsible for the sister's debts; (B) The brother remains a joint tenant but is not responsible for the sister's debts; (C) The brother owns the property in severalty without responsibility for the sister's debts; (D) None of the above

82. B

Backfill is mostly used for: (A) Compaction; (B) Erosion; (C) Earth movement; (D) Footings

83. C Each owner in a joint tenancy has the right to encumber his own interest. One of the advantages of holding title in joint tenancy is that when a joint tenant dies, the joint tenancy property automatically vests in the remaining joint tenants, free of the debts of the deceased. This is true even if the debt is an unforeclosed mortgage. Since there are only two joint tenants, the survivor would hold title in severalty.

When the Federal Reserve Board wants to tighten the money supply, it would: (A) Raise the amount of reserves required for member banks; (B) Raise the discount rate for member banks; (C) Sell government bonds or treasury bills; (D) All of the above

84. A Statement of fact.

A broker is representing the seller and also the buyer in the same transaction. The sale went through at full price but the broker failed to mention to the seller that the buyer was his brother. Did the broker violate any real estate law? (A) This is unethical, but not illegal; (B) Since the sale went through at full price, not mentioning that the buyer was his brother did not matter; (C) This is a violation of real estate law; (D) Since it is the buyer who is related to the broker, it does not need to be disclosed

85. D These are the powers of the Federal Reserve Board. When the raise the reserve requirement, discount rate and sell government bonds (treasury bills), it reduces the available money in the economy.

When there is a counter offer, a new "Counter Offer" form must be filled out. The reason for this is: (A) It is a new offer; (B) It requires signatures to become a contract; (C) It is a rejection of the original offer; (D) All of the above

86. C This is a dual agency. The fact that the buyer was the broker's brother must be disclosed. If this was a single agency, only the buyer's agent would need to make this disclosure.

A broker negotiated a loan for a buyer. He will need to prepare a: (A) Mortgage Loan Disclosure Statement; (B) Real Estate Transfer Disclosure Statement; (C) Good Faith Estimate; (D) Natural Hazard Disclosure Statement

88. C Written parts always take precedence over the preprinted parts.

A power granted by an " Enabling Act" is: (A) Eminent domain; (B) Zoning; (C) Fair housing laws; (D) All of the above

95. B Legally, the name of the employing broker must appear in the ad. The salesperson may also place his name in the ad, but it is not a legal requirement.

.It is important to establish the agency relationships so that each party knows who is working for whom. The reason is: (A) Imputed notice; (B) Professional and ethical responsibilities; (C) Legal effect; (D) All of the above

A "Contract of sale" is another name for a land contract. The buyer (vendee) in a land contract has equitable title. Legal title remains with the seller (vendor).

Usually a broker has a right to a commission only on the basis of negotiations which he completes during the term of the listing agreement, unless:

A "protection period" clause is contained in the listing agreement;A "protection period" allows the broker to collect a commission from the seller, if the seller sells the property to someone on a list supplied to the seller within the time period specified in the listing contract.

If both brokers agree to split 50/50 on a 4 Yz% commission on a $178,000 purchase price, how much would the listing salesperson receive after his 50/50 split with his broker? (A) $10,680; (B) $8,010; (C) $4,005; (D) $2,002.50

A A Mortgage Loan Disclosure Statement is required whenever a broker negotiates a loan for a buyer. A "Good Faith Estimate" is required when the loan falls under the Real Estate Settlement Procedures Act. - 1 to 4 unit dwellings. The other two disclosures relate to sale and would apply to the broker representing the buyer or seller in the actual sale.

In the event a salesperson wishes to spend his or her own money on advertising a home for sale that was listed by the salesperson on behalf of the employing broker, the advertisement must include the: (A) Name of the salesperson; (B) Name of the employing broker; (C) Name and address of the employing broker; (D) Name of the salesperson and the name of the employing broker

A An easement in gross is the limited right of one person to use another's land. When such a right is not created for the benefit of an adjacent landowner (non-land owner), there is no dominant tenement- only a servient tenement. The easement attaches personally to the easement owner, not the land.

Authorization to collect a deposit from the buyer on behalf of the seller is provided for in the: (A) Purchase Agreement; (B) Listing Agreement; (C) Deposit Receipt; (D) Option Agreement

A Insurance is paid by the seller and is in effect for a specified period of time, ie. three years. If the buyer wants to assume the insurance policy, it would have been prepaid by the seller. It wquld be a debit to the buyer and a credit to the seller

A real estate broker licensed by the state of California is entitled to advertise himself as:

A Real Estate Broker;Statement of fact.

Turner deeded his farm to his sons, "A", "B", and "C" as joint tenants. Shortly thereafter, "B" sold his interest to "W''. Son "A" died and had willed his interest to his heir "S". Son "C" retained his inheritance. Ownership of the property would be: (A) "W'' and "C" as joint tenants; (B) "C" and "W" as tenants in common, "C" holding 2/3 interest and "W" 1/3 interest; (C) Undecided until the probate of "A's" estate is concluded; (D) "S", "W" and "C" as tenants in common, each with a 1/3 interest

A Statement offact.

Parsons wants to buy a property for sale at $289,000. He does not have the money, so he persuades Jones to buy the property and immediately sell it to Parsons on a land contract for $330,000. This is a(n): (A) Voidable transaction; (B) Valid purchase and resale transaction; (C) Void transaction; (D) Illegal transaction

A The vendor (seller) is required by law to apply the payment received from the vendee (buyer) to the amount due on the existing trust deed.

To determine ownership, what is the court action taken: (A) Partition action; (B) Quiet title action; (C) Declaratory relief; (D) Writ of execution 99.

A This is a Graduated Payment Adjustable Mortgage. This plan combines elements of a Graduated Payment Mortgage and an Adjustable Rate Mortgage. It starts like a GPM with lower principal payments that increase in fixed steps until they level off, after which the interest rate may vary. This loan may produce negative amortization.

When a business opportunity is sold, the instrument that is similar to a deed used in a real property transaction is:

A bill of sale;A bill of sale transfers title to personal property. A deed transfers title to real property

A homeowner needed $9,000 to pay for a child's college education. A Loan broker arranged a home equity loan for $9,600. The broker must provide the borrower with which of the following:

A broker closing statement;Whenever a broker arranges a junior loan the agent must provide a broker closing statement.

Concerning a subagency relationship, which of the following is most nearly correct:

A broker is not required to accept an offer of subagencyBroker may or may not choose to accept the role of subagent.

Of the following real estate loans, which one would not have to comply with the federal Truth-in Lending Law:

A business loan;Business loans are exempt from the Truth-in-Lending Act.

What appraisal license is required to appraise a strip mall valued at $500,000?

A certified general real estate appraiser;Only a Certified General Real Estate Appraiser is allowed to appraise income property commercial income property.

In which of the following transactions would a Real Property Transfer Disclosure Statement be required:

A city official is selling his residence;City officials are sellers and must fill out the Seller Transfer Disclosure Statement. The others are statutorily exempt.

Generally, in the practice of real estate, a seller, when dealing with the listing broker, is known as:

A client;Client is another name for a principal.

The term "infill" is most closely defined as:

A commercial building built on an empty lot in a commercially developed area.Infill is developing on empty lots of land within an urban area rather than on new undeveloped land outside the city or town.

A "standby loan commitment'' refers to:

A commitment by the lender to make a permanent takeout loan upon the borrower's demand;When construction is complete, the owner would want a take-out loan at competitive rates. Construction lenders usually require the borrower to have "standby loan commitment" for the takeout financing before agreeing to the construction.

What does the term "turn-key" refer to:

A construction project which has finished all tasks required prior to move-inA "Turn-key" properties are completely finished and ready for occupancy.

Martin gave Carter an option for the purchase of Martin's ranch. In law, such an option is regarded as:

A contract to keep the offer openAn option keeps the offer open for the optionee for the time period negotiated in the option. Seller cannot sell to anyone else during the option period and must sell if the option is exercised.

Recorded title to a parcel of real property was vested in Mary Smith, a single woman. After her marriage to Roger Hewlette, she executed a deed to the property only in the name Mary Smith, a married woman. The discrepancy in the grantor's name is:

A defect which may cause a cloud on the title;Mary Smith, a married woman, would imply community property. Although this could be successfully challenged, it would create a Cloud on the title.

An important difference between an option payment and a deposit is that:

A deposit is applied to the purchase price or may be refundable, whereas an option payment is not refundable, even if the option is not exercised;The option payment is made to the optionor (seller). The payment is made to entice the seller to agree to hold the property available for the optionor to purchase within the option period. This payment is not refundable. A deposit that is applied to the purchase price may or may not be refundable.

When a salesperson takes a listing which does not authorize the listing broker to accept a deposit from an offeror toward the purchase price of the property, the broker should advise his salesperson that:

A deposit will be accepted and retained by the broker from the offeror, but only as agent for the offeror;Broker is acting in excess of his authority and will be directly liable to the buyer for the deposit only.

An appraiser who does not use generally accepted appraisal methods in order to influence and FSLIC or FDIC insured lender may be guilty of:

A felonyAlthough appraisers are licensed state by state, the Federal Government has set strict guidelines for appraisers. Any appraiser who uses methods which are considered unacceptable in order to influence a lender, is guilty of a felony.

According to California Real Estate Law, an unlicensed person may be paid a finder's fee:

A finder's fee is allowed to be paid to an unlicensed person to influence them to do something. Ex: To refer potential sellers or buyers to a real estate broker. The broker may not pay an unlicensed person to perform an act which would require a license.

The real estate law provides which of the following penalties for a person acting as a real estate broker or salesperson without a license:

A fine up to $20,000 and/or imprisonment up to six months.Statement of fact.

Under which of the following loan transactions would the lender have the best opportunity to secure a deficiency judgment in the event of a default and foreclosure:

A first trust deed and note executed in favor of a private lender to secure a loan, the proceeds of which were used to purchase an 18-unit apartment building;The loan described is a hard money loan or a cash loan. Deficiency judgments may only be obtained in California on a hard money loan and only when there is a court foreclosure.

The real estate law provides which of the following penalties for a person acting as a real estate broker or salesperson without a license:

A fme up to $20,000 and/or imprisonment up to six months;

A broker was able to make a sale to an interested buyer based on false information the seller had provided to the broker. The broker acted in good faith and in a reasonable manner in relying on the false information. Thereafter, the buyer rescinded the contract because of the fraud. Given these circumstances, the broker is normally entitled to:

A full commission and indemnity for any loss caused by related legal action by the defrauded buyer against the broker;Since the broker acted in good faith and the seller was the cause of the fraud, the broker would be entitled to his full commission and indemnity for any loss caused by related litigation.

Parson, Inc., a closely-held corporation, owns an apartment house, but fails to declare the income from the rental payments collected. The US government tax lien, which is filed because of the dereliction, would be regarded as:

A general lien;U.S. tax liens are general liens.

Which of the following is usually received by a veteran using the Cal Vet program when he completes making payments on his Cal Vet loan:

A grant deed;Title is held by the Department of Veterans Affairs during the' term of the land contract. When the veteran has completely paid off the land contract, he would receive a grant deed from the Department of Veterans Affairs. transferring title to the veteran.

Which of the following statements is true about an attachment lien and a judgment lien:

A judgment lien is recorded after a court decision;A judgment lien is recorded after a court decision. An attachment lien is recorded before court action and only affects the property which is the subject of the law suit.

"IF YOU ENTER INTO AN AGREEMENT TO PURCHASE OR LEASE AN INTEREST IN THE LAND COVERED BY THE PUBLIC REPORT TO WHICH THIS NOTICE IS ATTACHED, YOU HAVE A LEGAL RIGHT TO RESCIND (CANCEL) THE AGREEMENT AND HAVE THE RETURN OF ANY MONEY OR OTHER CONSIDERATION THAT YOU HAVE GIVEN TOWARD THE PURCHASE OR LEASE UNTIL MIDNIGHT OF THE FOURTEENTH CALENDAR DAY FOLLOWING THE DAY YOU EXECUTED THE CONTRACT TO PURCHASE OR LEASE. YOU MAY EXERCISE THIS RIGHT WITHOUT GIVING ANY REASON FOR YOUR ACTION AND WITHOUT INCURRING ANY PENALTY OR OBLIGATION BY NOTIFYING _ The preceding statement refers to the rescission rights of purchasers in:

A land project;This statement appears on the Final Public Report of a Land Project. It provides a 14 day right of rescission.

Compliance with the agency relationship law enacted as part of the civil code would be required in which of the following transactions:

A lease for a period of longer than one year.When an agent negotiates a lease for longer than one year, he is acting as a property manager. His agency relationship with the owner of the property would have to be disclosed.

When the transfer of title and transfer of possession happen at different times, what document should be agent have both buyer and seller sign:

A lease.If the buyer moves into the house before the close of escrow or the seller is going to stay in the house after the close of escrow, a lease should be written to define the terms of the agreement and rent. The official name of the lease would be an Interim Occupancy Agreement.

When a borrower signs a promissory note for a purchase-money trust deed loan, he creates:

A legally enforceable evidence of debt;The note is the evidence of the debt. The security would be the trust deed.

Jones and Hansen own adjacent parcel of real estate. Jones tells Hansen, "You may cross my property until I say you must stop." What type of interest does Hansen have in Jones' property:

A license;A license is the personal, revocable and non-assignable permission to enter the land of another with being considered a trespasser.

All of the following are correct statements about life estates except:

A life estate may not extend beyond the life of the life tenant.A life estate can be based on the life of someone other than the life tenant. If the life tenant dies first, the life estate would pass to the heirs of the life tenant. The following are correct regarding life estates: A contract creating a life estate must be in writing to be enforceable; A life tenant does not hold fee title; A life estate is a freehold estate;

In applying the principles of the Easton vs. Strassburger case, real estate licensees are obligated to give prospective purchasers of certain real estate:

A list of known defects and those that should be known;As a result of the Easton v. Strassburger court case, brokers must make a diligent, competent visual inspection of the accessible areas and reveal all material facts which may affect the desirably or value of the property.

In applying the principles of the. Easton vs. Strassburger case, real estate licensees are obligated to give prospective buyers of certain real estate:

A list of known defects and those that should be known;The case cited gave rise to the Real Property Disclosure Statement, which lists defects and those which can be discovered by a reasonably diligent investigation of the accessible areas of the property.

Which of the following defines a "mortgage loan"?

A loan col!ateralized with real estate.Statement of fact.

"The acquisition or resale to the public, not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year or..." The previous statement is an excerpt from the Real Estate Law. Of the following, which best illustrates the meaning of being secured collaterally by a lien on real property:

A loan is being made on the security of another loan;Statement of fact.

When lenders used the term "debt-income ratio" they are referring to:

A loan qualifying tool;These are the ratios lenders use to qualify borrowers.

The Federal Truth-in-Lending Law (Regulation Z) gives the borrower a 3-day right of rescission when the loan is:

A loan secured by a second deed of trust on owner occupied single-family residence when the money is borrowed subsequent to the purchase;The three day right of rescission applies only to non-purchase money loans and only on a refinance of the borrower residence.

When comparing an FHA loan and a conventional loan, Mr. Jones discovered that the conventional loan usually offered the borrower:

A lower loan-to-value ratio;FHA generally would have a higher loan-to-value ratio than a conventional loan.

The owner's contract with another person for the inspection of the building and the planning and scheduling of specific maintenance tasks is best known as:

A management agreement;The duties mentioned in the question describe the duties of the property manager.

Roberto owns an apartment building and wants to exchange his property in a 1031 tax deferred exchange in order to defer paying taxes in the year of the exchange. He could exchange his apartment building for:

A more valuable apartment building, exchanging loans and paying money to the other property to equalize the values;In order to have the benefits of a tax deferred exchange the owner must be exchanging like kind property (income property for income property). He must also be the one who is exchanging a lower price property for a higher price property. He would be exchanging loans and paying money (boot) to the owner of the higher price property.

Of the following lenders dealing with real estate finance, which would be most interested in establishing a good line of credit at a commercial bank:

A mortgage broker;A mortgage banker needs a line of credit with a commercial bank to finance loans prior to selling them on the secondary market.

If there has not been an agreement to the contrary, all of the following would qualify as a negotiable instrument, except:

A mortgage securing a promissory note;A mortgage is the security for the debt. It is not negotiable. The mortgage note is negotiable, the security is incidental to the debt.

A lien may be created by recording:

A mortgage;A lien relates to money and uses the property as security for payment of a debt. Of the choices, only a mortgage relates to money.

A fourplex was built before a new zoning ordinance was passed which prohibits multi-family units. This situation is best described as:

A non-conforming use;This is an example of what happens when zoning is changed. The original uses become nonconforming uses (not conforming to the new zoning).

Which of the following would be an example of functional obsolescence:

A one-car garage. Functional obsolescence occurs inside the property lines; usually as a result of poor design. Today, a one-car garage would be considered an example of functional obsolescence. (A) and (B) are examples of economic obsolescence. (C) is an example of physical deterioration or deferred maintenance.

James bought a home and assumed an assessment bond of $2,000 for the construction of streets and sewers in the subdivision where the property was located. The bond would be considered:

A part of the cost of the property to James;Assessment bonds are considered capital improvements and are added to basis. They would become part of the cost of the property.

When rent is computed on the gross sales of a business occupying real property, the lease is correctly termed:

A percentage leaseStatement of fact.

Roberts, the holder of a $70,000 first trust deed note, desires to borrow $25,000 to build a house. If the note is used as security for that loan, the arrangement would be. regarded as:

A pledge;This is a pledge agreement. Roberts is pledging his $70,000 as security for payment on the $25,000 note. This means the holder of the $25,000 will hold the $70,000 until the $25,000 is fully paid.

When a broker sells a property on which he holds an option, he must inform the buyer that he is acting as:

A principal.The broker is acting both as an agent and principal. This must be disclosed to a potential buyer.

Broker Amos is selling a property on which he holds an option. Broker Amos is under a legal obligation to inform the buyer that the broker is acting as:

A principalThe broker is a principal in this transactions as well as an agent. This must be revealed to the potential buyers.

Which of the following could not obtain an on-sale liquor license:

A private club, in operation for only six months;A private club would need to be operating at least one year before it could be granted a liquor license.

A bilateral listing contract would be enforceable by the broker against the owner of the property only if it included:

A promise by the owner in return for a promise by the broker;A promise for a promise is the consideration which binds the listing contract.

The buyer's earnest money deposit may be:

A promissory note; A post-dated check; Anything the seller considers valuable;Any of the above. Earnest money deposits can be anything of value which would induce a seller to accept the offer.

The Federal Fair Housing Law contains which of the following provisions:

A provision which allows all prospective buyers to be given the same opportunity to select among available houses without restriction because of race, color religion or national origin;Statement of fact.

The real estate financing instrument which transfers equitable title to real property, but retains legal title in the seller, is called:

A real property conditional installment sales contract;Real property conditional installment contract is still another name for a land contract.

If an owner wanted to sell his property, extending credit himself, and retain legal title, the instrument used would be:

A real property installment/conditional sales contract;This is a name for a land contract. In this financing instrument, the seller retains legal title.

A real estate transfer disclosure statement would be required when property was transferred by which of the following methods:

A sale transaction involving one to four units;The Real Estate Transfer Disclosure Statement is required on the sale of one-to-four residential units.

Which of the following best describes the action of an agent under single agency:

A single agency broker is client oriented;Single agency means an agent represents only one principal. The licensee has a fiduciary relationship with only one principal.

Which of the following would not be considered a prime tenant in a shopping center:

A specialty shop;The rest of the stores would be considered anchor tenants. (A) A chain 5 & 10 store; (C) A grocery store; (D) A department store

Mr. and Mrs. Richards hired the Best Construction Company to install a swimming pool in their residential premises. In the event the construction company was not paid and it was necessary for them to file a lien for payment of the contract, the encumbrance created would be:

A specific lien;This is a mechanic lien. Mechanic liens are specific liens.

Radon gas is considered an environmental hazard. Buyer's must be warned of the presence of such a hazard. An environmental engineer would probably test for the presence of such gas using a:

A spectrometer;A spectrometer is the instrument which best detects the presence of radon gas.

A builder is seeking an agreement from a lender for a loan at an agreed-upon price for funds to be used for development of a parcel many months in the future. Such an agreement would best be described as:

A stand-by commitmentStand-by commitments are made by lenders to be used by the borrower at a future time which is to be determined by the borrower.

According to the Uniform Commercial Code, a "bulk transfer" is a transfer which is:

A substantial part of the inventory of a business and not in the ordinary course of business;This is the definition of a "bulk transfer."

When a lease is terminated by the mutual agreement of the lessor and the lessee, the lease is said to be:

A surrender;Statement of fact.

When leasing a commercial property that is merely a "shell" space, the landlord often agrees to spend a specific amount for a qualified tenant. This amount is properly designated as:

A tenant improvement allowance;Statement of fact.

A sublease is:

A transfer of less than the entire leasehold;A sublease is one where the original lessee maintains an interest in the lease.

The legal meaning of the word "waiver," as it is applied to real estate transactions, most nearly means:

A unilateral act and its legal consequences;This is the definition of waiver.

Hawkins wanted to purchase 200 acres of !and for future subdivision, but did not have the necessary $65,000 cash. He persuaded his friend, Warner, to pay the $65,000 and purchase the land, and Warner immediately signed a land contract for sale of the property to Hawkins for $88,000. This transaction would be:

A valid purchase and resaleStatement of fact. Remember, in this question, no one is licensed.

Broker Rice forced the buyer to make a promise during the sale. This is:

A voidable contract.Forcing a party to a contract to make a promise is considered duress. Duress would render the contract voidable by the injured party.

Susan owns a property valued at $80,000 and owes $49,000 to Beneficial Savings and Loan on a first trust deed and note on the property. She has agreed to sell the property to her nephew for $1,000 cash, loaning the nephew $79,000 on a new trust deed, which includes the amount due Beneficial. Susan has agreed in the loan documents to make the payments on the existing trust deed to Beneficial as they become due. The new trust deed Susan is to receive is properly termed:

A) An all-inclusive trust deed; (B) A wrap-around trust deed; (C) An over-riding trust deed; (D) Any of the above Any of the above This is a good example of a "Wrap-around Loan" also called an All Inclusive Deed of Trust (AITD).

When an unincorporated non-profit organization wishes to sell property that it owns, the one(s) who signs the grant deed would be:

A) The president and recording secretary;

Thompson, a 16-year old divorcee, went to Broker Amos trying to list Thompson's portion of the community real property. Broker Amos can legally:

Accept the listing and agree to sell according to the instructions of Thompson;A person who is married prior to the age of 18 has legal capacity. The fact that a divorce occurs before the person reaches the age of 18 is irrelevant. Once Tom has legal capacity, he does not lose it.

A broker acting as agent in the offering of property, may, without further authority from his principal:

Accept the signature of the buyer on an offer to purchase which would be binding on the parties if the seller accepts.(D) This is what the listing authorizes the agent to do - find a buyer and accept a deposit. If the seller accepts the offer, it will become a binding contract.

When real property is being escrowed, the escrow holder may do which of the following:

Accept written instructions from the seller and buyer to change the price and terms without approval of any agents;The two parties to an escrow are the buyer and seller. Escrow is the agent of both buyer and seller and must obey all lawful instructions from both.

The basic difference between the approaches of accountants and appraisers in the interpretation and application of accrued and accrual depreciation is:

Accountants are generally concerned with book depreciation; whereas, appraisers are generally concerned with actual depreciation.Accountants are concerned with depreciation as it relates to tax benefits. This usually does not reflect actual loss in value. They are concerned with book value. The appraiser is concerned with actual loss (real world) in value over time.

When appraising real property by the income approach, the capital invested in the improvements is recaptured by:

Accruals for depreciation;Statement of fact.

The one particular area that appraisers find most difficult to measure accurately is:

Accrued depreciation;Depreciation is always the most difficult for the appraiser to determine.

If a broker delegates specific authority by means of a written agreement to a salesperson to review and initial real estate agreements prepared by other salespersons, the delegated salesperson must have:

Accumulated at least 2 years full-time experience as a real estate salesperson during the preceding 5 years;(B) Statement of Fact

Which of the following would be least necessary for a valid deed:

Acknowledgment;A deed does not need to be acknowledged to be valid. It needs to be acknowledged to be recorded.

A broker who solicits and accepts a deposit on the purchase price of a parcel of real property without express written authorization from the owner to sell the property, is:

Acting as agent for the buyer and not the seller.The agent of the buyer does not have authority directly from the seller. The agent is working for and liable to the buyer only.

A prospective buyer would be entitled to damages from a real estate broker in the event the broker:

Acts in excess of the authority given the broker by the seller;As long as the agent is acting under the authority conferred in the listing agreement the seller is liable for the agent's words and actions. If the agent acts in excess of that authority, the agent is directly liable to the buyer.

Market price is defined as the amount in dollars:

Actually paid for the property;This is again the "willing buyer, willing seller'' concept. Market price is the price actually paid by the buyer to the seller.

For federal income tax purposes, capital expenditures for improvements are:

Added to the "cost basis" of the property and depreciated;Capital improvements are those which last longer than one year and add value to the property. Capital improvements must be added to basis and depreciated

The existence of an easement appurtenant requires all of the following except:

Adjoinment of their respective borders by the dominant tenement and servient tenement;The borders could be separated by a lot, which is probably also encumbered by the easement.

When an appraiser makes adjustments using the sales comparison approach, he:

Adjusts the comparables to the subject propertyNo adjustments can ever be made to the subject property. The appraiser must adjust the comparables to make them "equal" to the subject property.

An easement may be by acquired prescription in a manner similar to acquisition of land by:

Adverse possession;Adverse possession is similar to an easement by prescription, except that the one attempting to acquire title by adverse possession must pay property taxes for a period of five years. Adverse possession could result in the acquisition of title, whereas, prescription would result in obtaining an easement.

The real estate disclosure law that became effective on January 1, 1988, refers to:

Agency relationships;The Agency Disclosure Law went into effect January 1, 1988.

A broker who is hired by an owner to sell his property must reveal all significant and material information to the principal. Which of the following would be considered material information and must be revealed:

Agent's knowledge that a better offer to purchase is imminent;This information would effect the seller's decision to accept the offer. It is in the best interests of the seller to be told of a better offer, therefore, it would be considered a material fact.

Usually the relationship of an escrow holder to the parties in a real estate transaction is which of the following:

Agent;Escrow is an agent for both buyer and seller during the escrow period. Escrow owes a fiduciary relationship to both.

Which of the following is not essential to the creation of an agency relationship:

Agreement to pay a consideration;An agreement to pay consideration is not essential to establish an agency relationship. Many times the agent of the buyer will be paid by sharing the commission paid by the seller. The buyer does not have to promise to pay the agent in order for an agency to exist. The agent is still working for compensation.

The Principle of Integration and Disintegration affirms that:

All existence is characterized by three states: development, equilibrium or static condition and decline and decay;Statement of fact.

An appraiser would use which of the following when determining the economic life of a building: (A) The condition and age of the building; (B) The use to which the building will be put; (C) The repair policy of the owner; (D) All of the above

All of the above All of these would be factors when setting the economic life.

Broker Smith received a written offer on Burns' property from buyer Taylor. The offer stated that upon acceptance, Taylor would deposit $1,500. Burns made some amendments by underlining changes, but did not change the amount of the deposit. Taylor agreed to all of the changes except Taylor changed the amount of the deposit to $1;000. Broker Smith should be aware that: (A) Taylor has created a counter-offer; (B) Because of the changed deposit, Smith must get Burns acceptance of the counter-offer; (C) No contract has yet been formed; (D) All of the above

All of the above. Any change in an offer becomes a counter-offer and must be accepted by the buyer. Until the buyer accepts, there is no contract.

Generally, as the employment rate and the GNP (Gross National Product) both rise:

All of the aboveAll of the above , Gross National Product is the measure of goods and services produced in one calendar year. When the GNP rises, we would see all of these things happen. The level of personal income rises; New residential developments will increase in number; & Sales of existing home will remain level or increase;

When there is a counter offer, a new "Counter Offer" form must be filled out. The reason for this is: (A) It is a new offer; (B) It requires signatures to become a contract; (C) It is a rejection of the original offer; (D) All of the above

All of these are true statements.

Why was HUD, Section 8, created?

Allow affordable housing for all United States citizens.This is the purpose of Section 8.

Installment notes often include an "or more" clause. Such a clause would:

Allow an accelerated payoff;This clause indicates there will be no prepayment penalty in the event of an early payoff of the note.

A release clause in a mortgage:

Allows portions of the property, given as security, to be released from the mortgage lien upon performance of specified acts.A release clause would generally be found in a blanket loan.

"Zero interest mortgages" are loans where the borrower makes a large cash down payment and the balance is paid off in equal monthly payments over a short period of time, usually five years with no interest. This type of loan can be handled by the borrower in which of the follow ways for federal income tax purposes:

Although no interest is paid, a portion of each payment can be treated as deductible as interest under the imputed rule of interest;Statement of fact.

If an owner of income-producing property uses a declining balance method of depreciation, the:

Amount of depreciation decreases from year to year;When we use accelerated depreciation, we get the most depreciation in the first year. The amount applied to depreciation declines in each remaining year.

The Federal Equal Credit Opportunity Act allows lenders to discriminate against potential borrower's on the basis of:

Amount of incomeAmount of income is a justifiable criteria for a lender to use in qualifying a potential buyer for a loan.

A contract which authorizes a real estate agent to sell a property during a specified time and allows that person to collect a commission if the sale is made by anyone, including the owner, is:

An Exclusive Right to Sell Listing;This is a good definition of the Exclusive Authorization and Right to Sell Listing.

Property is being sold whereby the purchaser is to continue the payments of an existing amortized loan secured by a first trust deed. In order for the buyer to assume the axis.ting trust deed without penalty, the real estate agent should check to be sure the trust deed does not include:

An acceleration clause;The clause the agent would be concerned with is the alienation clause (due-on-sale). It is an acceleration clause.

When a subdivider is concerned with creating lots which can be sold at a profit, the most crucial factor in planning that subdivision is usually considered to be:

An accurate market analysis;A market analysis would tell the subdivider how feasible his plans are and warn him of potential pitfalls before the subdivider invests.

When a listing agreement includes a provision to extend the agreement "by any period of time in which the property in escrow or taken off the market," the agent needs to also include:

An additional provision that establishes an alternate termination date which is certain.Listing agreements must have a definite termination date.

The solicitation of a fee from an owner to promote the sale or rental of any property by any means other than advertising in a newspaper of general circulation is called:

An advance fee;Statement of fact.

Broker Michael lists a particular property. Later, that property was sold by Broker Robert. Broker Robert would be:

An agent of the seller;Broker Michael has a fiduciary relationship to the seller.

When Salesperson Miller shows a residence owned by Owens and listed by his employing Broker Park, Salesperson Miller is related to seller Owens as:

An agent of the sellerBroker Park is the agent of the seller Owens. Salesperson Miller works for Broker Park and also is an agent of the seller.

According to the Statute of Frauds, which one of the following must be in writing:

An agreement by a purchaser to pay an indebtedness secured by a deed of trust upon the property purchased;Statement of fact.

If each of the following would otherwise normally require compliance with the Federal Truth-in Lending Act, which one would be exempt on the basis of the type of loan itself:

An agricultural loan by a bank;Agricultural loans are exempt from Truth-in-Lending.

Under the Federal Truth-in-Lending Law, the cost of credit on certain loans is expressed as:

An annual percentage rate;Statement of fact.

In making adjustments to effective gross income for management expenses, for which of the following would an adjustment be made?

An apartment which is occupied by an on-site manager who lives in his apartment rent-free in return for his services.Since the tenant receiving his rent-free, .the amount of rent which should be paid by the tenant would be the management fee and can be deducted by the landlord as an operating expense. The owner may not charge for managing the property himself. If an on-site manager receives no compensation, there would be nothing for the owner to deduct. A manager's salary of another building owned by the same owner would be deducted as an expense against the income from the building he manages.

A young married couple purchased a lot and planned to build a home on it. They wanted someone to supervise and make sure their home was constructed according to plans and specifications. They should contact:

An architect;An architect would be the most qualified to supervise the construction according to plans and specifications.

An acquired legal privilege for the right of use or enjoyment, short of an estate, which one may have in the land of another is known as:

An easement;An easement is the right to use another's land. It is not an estate.

The right granted by an owner of real property to a telephone company for the purpose of erecting poles to support telephone wires over the property creates:

An encumbrance;This is an easement in gross, which is an encumbrance.

The person named in a will to carry out its provisions is known as:

An executorAn executor is named in the will. An administrator is appointed by court. A trustee is related to a trust.

The commission paid to a real estate licensee for the sale of a home can be deducted on the seller's federal income tax as:

An expense of sale;The commission is an expense of sale and may be deducted as such.

The available supply of real estate loan funds tends to be increased by all of the following, except:

An increased demand for a more liquid type of assets;Real estate loans are long term. Liquid assets are short term; such as stock. All of the following tend to increase funds: A rise in the national income; An increase in savings by individuals; An increased desire to provide for old age

In designing an ad offering an 80% loan-to-value mortgage at a specific interest rate fixed for 30 years, which of the following is not required to be included in the ad:

An indication that the loan can or will be approved over the phone.The correct annual percentage rate, disclosure of whether the loans are offered for first, second, or third trust deed loans, statement disclosing the method of determining the market value of the property, must be made part of the ad. Lenders cannot advertise that loans will be approved over the phone when this is clearly untrue.

The customary procedure used to enforce private property restrictions on real property is:

An injunction;Statement of fact.

When the first party agrees to pay for a financial loss arising from a specific event, and the second party agrees to make periodic payments to the first party, the agreement is known as:

An insurance policy.This is a good definition of an insurance policy.

When the first party agrees to pay for a financial loss arising from a specific event, and the second party agrees to make periodic payments to the first party, the agreement is known as:

An insurance policy;This is a good example of insurance and the way in which it works.

Which of the following statements is true with respect to options:

An option is: Valid if consideration is delivered, even if it is less than $10;An option is valid when consideration, no matter how small, is delivered to the optionor.

In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time?

An option;This is a description of an option agreement.

When considering the acquisition of a business opportunity, a prospective buyer would usually give the most attention to the future growth potential and the:

Annual net profitThe present annual net profit is the best predictor of future net profit. Therefore, it would be of most interest to a buyer of a business opportunity.

In order to accurately calculate a gross rent multiplier, the appraiser would obtain from comparable properties the:

Annual rent and the selling price.The gross rent multiplier is arrived at by dividing the monthly or annual gross rent into the selling price of the property.

24. In order to accurately calculate a gross rent multiplier, the appraiser would obtain from comparable properties the:

Annual rent and the selling price; The gross rent multiplier is arrived at by dividing the monthly or annual gross rent into the selling price of the property.

When a contract has been rescinded, it means it has been:

AnnulledWhen a contract has been rescinded, both parties go back . to where they were before the contract. This is also what annulled means. It is as if the contract was never in effect.

Which of the following would be classified as "boot" in a tax free exchange:

Another property that is unlike; Mortgage relief; and or Cash;In a 1031 "tax free exchange," you must be exchanging "like for like." Unlike property, such as money, is boot. Mortgage relief and or cash are the two major components of boot.

Commission rate price fixing is a violation of:

Anti-trust lawsPrice Fixing is illegal. It is a form of monopoly which is forbidden by anti-trust laws.

The best definition of depreciation would be loss in utility, and, thus loss in value, from:

Any cause;In appraisal, depreciation is loss in value from any cause.

If a condominium owner lives in his condominium and pays all of the following, which of the following would be deductible for federal income tax purposes?

Any interest that he pays on a mortgage for his share of the common areas;The condominium is a principal place of residence. The owner may deduct interest on the mortgage and property taxes.

Which of the following, when authorized by the broker, could make a withdrawal from the broker's trust account:

Any unlicensed employee provided that the employee is covered by a surety bond protecting the broker;A broker can authorize any employee to withdraw from the trust account. If that employee is unlicensed, the broker must carry a surety bond on the unlicensed person in an amount equal to the maximum amount of money which will be in the account.

Which of the following best describes who may be authorized to withdraw funds from a broker's trust account:

Anyone who is officially authorized by the broker in writing.To be authorized to withdraw from the broker trust account, a person must be employed by the broker. If the person is unlicensed, the broker must carry a fiduciary bond on that person in an amount equal to the maximum amount that would ever be in the trust account. In any event, that person must be authorized by the broker.

Which of the following would be the best and most complete definition of the term "encumbrance":

Anything which affects or limits fe simple title to property.Statement of fact.

A real estate broker negotiated the exchange of real property and represented both parties with their knowledge and consent. The principals agreed that the broker's commission would be a 30-acre parcel of land valued by an independent appraiser at $200 per acre. Two days after the escrow closed, the broker received an offer of $500 per acre for that land from a person with whom the broker had not previously dealt. The broker accepted the offer and sold the land for $25,000. Under these circumstances, the broker has:

Apparently violated no moral or legal duty.The broker did nothing wrong in this situation. There is no indication the broker knew the property would bring a higher price than the professional appraiser stated.

In order to secure an FHA loan, a new buyer would normally do all of the following, except:

Apply to the nearest office of the FHA for an appraisal;FHA only insures loans. An approved lender does all the rest of the qualifying, including ordering an appraisal. A new buyer would just find a lender who will be willing to grant him the loan; Agree to pay for mortgage insurance protection;. Buy a home which meets the FHA requirements and restrictions.

Which of the following would not be included in the Federal Truth-in-Lending Disclosure:

Appraisal fee and Credit report fee;Appraisal fees and credit report fees are not considered part of the cost of credit.

All of the following items are included as a finance charge required by the Federal Truth-in-Lending Law (Regulation Z), except:

Appraisal fee;An appraisal fee is not considered part of the finance fee and therefore, is not disclosed under Truth-in-Lending. Finance charged required by Reg Z include: Loan points; Time price differential; Finder's fee or similar charge.

The State Board of Equalization:

Appraises all public utility properties for tax assessment;This is one of the duties of the State Board of Equalization.

When the value of property increases over time, the result is most accurately termed:

Appreciation;Statement of fact.

When the state has given permission to a non riparian owner of a farm to use a nearby lake, the owner has received permission by:

Appropriation Statement of fact.

Anderson sold a farm to Barnes on May 1, 1986. The real property taxes for the 1986-1987 tax year:

Are a lien on the property.The real property taxes became a lien on the property, March 1. 1986.

When an owner of an apartment house makes capital improvements to the property that prolong its life, such expenditures:

Are added to the cost basis of the property.These are considered capital improvements and cannot be deducted in the year of the expenditure. They must be added to the basis of the property arid depreciated.

In regard to the capitalization rate:

As it increases, value of the property decreases;As the capitalization rate increases, the value of the property decreases.

Acquisition of property by its incorporation with other property is known as:

Assemblage. Statement of fact.

Supplemental assessments are levied to adjust for any increase in tax liability to:

Assess the exact amount of property tax;Statement of fact.

The annual property taxes an owner of a home must pay are determined by:

Assessing the land and improvements separately, then multiplying the total by one tax rate;Statement of fact.

The Real Estate Commissioner's Public Report on a California subdivision does not provide the buyer with:

Assurance that the properties are not offered for more than the fair market value;The Public Report states that the commissioner sees no signs of fraud. Trying to sell property for more than the fair market value is not fraud.

The purpose of the Truth-in-Lending Act is to:

Assure a meaningful disclosure of credit terms;Statement of fact.

How frequently must a broker's separate beneficiary or transaction ledgers be reconciled with the trust account record of funds deposited or paid out:

At least once a month;The broker must reconcile the trust account monthly.

%A licensee should clarify the seller's preferred terms of payment:

At the time the listing contract is filled out.The listing should clearly state the terms and conditions of the seller, including the preferred payment.

Baker sells a property to Davis and executes a grant deed in favor of Davis. Davis then takes the deed and places it is a safety deposit box. Baker then sells the same property to Charles who subsequently records it. Which of the following is correct: (A) Davis can sue Baker for fraud; (B) Charles is the legal owner of the property; (C) Davis is the legal owner of the property; (D) Any loan on the property would be void

B A joint tenancy may be sold during the life of the joint tenant. When "B" sold to "W," "W" became a tenant in common with "A" and "C", who remained joint tenants. A joint tenancy may not be willed. When a joint dies, his interest automatically vests in the surviving joint tenants. When "A" died, his interest automatically vested in "C".

Acquisition of property by its incorporation with other property is known as: (A) Accession; (B) Succession; (C) Recession; (D) Commingling

B An acre is 43,560 sq. ft. The side of a acre is most nearly 209ft.

Commission rate price fixing is a violation of: (A) Truth-in-Lending Act; (B) Real Estate Settlement Procedures Act; (C) Anti-trust laws; (D) California Fair Employment and Housing Act

B Flashing is sheet metal which is molded around a chimney or vent pipe in a roof and then spread out before the roofing material is applied. The purpose of flashing is to prevent water seepage when it rains.

title; (B) Pending title; (C) Sole title; (D) Fee title

B Quiet Title is a court action to clear a cloud from a title. It would establish ownership or marketable title.

Gregorian owns an easement in Duran's property. Gregorian is not a property owner. What kind of easement does Gregorian have? (A) Easement in gross; (B) Appurtenant easement; (C) Restricted easement; (D) A dominant easement

B Sellers of one-to-four unit dwellings built before 1960 must deliver to the buyer, "as soon as practicable before transfer," a copy of the "Homeowner's Guide to Earthquake Safety", and disclose certain earthquake deficiencies. The booklet contains a reporting form that may be used for this disclosure. The seller's real estate agent is to provide the seller a copy of the booklet to the seller for delivery to the buyer.

GPAM is a mortgage loan that provides for: (A) Partially deferred payments of principal at the start of the loan; (B) Adjustable rate as the rate changes; (C) Long term mortgage loan split into smaller loans; (D) Renegotiation of the interest rate at some given point in time

B Statement of fact.

Broker A meets the Brown family and the Browns make an offer on a house on Elm Street which is owned by Jones. The offer is contingent on the sale of the Brown's house on Main Street which is several counties away. Seller Jones accepted the offer. Broker A refers the Browns to Broker R for the sale of their Main Street home. A written compensation referral form is executed. According to Article 7 of the Code of Ethics, Broker A must disclose: (A) The compensation on Elm St. to both Brown and Jones; (B) The compensation on Main St. to Brown only; (C) Both the compensation on Elm St. and Main St. to Brown; (D) Both the compensation on Elm Street and Main Street to Brown and Jones

B Such a sequence of events would be a valid procedure when one is not able to immediately pay cash for the property.

In applying the principles of the Easton vs. Strassburger case, real estate licensees are obligated to give prospective buyers of certain real estate:

B The case cited gave rise to the Real Property Disclosure Statement, which lists defects and those which can be discovered by a reasonably diligent investigation of the accessible areas of the property.

Broker Jones had three outstanding judgments against him for fraud. Each judgment was from a different transaction. The judgments were $10,000, $15,000 and $25,0"00 respectively. If the Real Estate Recovery Account agreed to pay the claims, how much would the fund pay to the $25,000 claimant? (A) $10,000; (B) $15,000; (C) $20,000; (D) $25,000

B The depreciated book value of the old owner does not affect a new owner. The new owner would establish his own basis based on the purchase price of the property.

The purchaser in a sale-leaseback transaction would be least concerned with: (A) Location of the property; (B) Depreciated book value of the building; (C) Condition of the property; (D) General credit of the lessee

B The depreciated book value of the old owner does not affect a new owner. The new owner would establish his own basis based on the purchase price of the property.

If a broker computerized his entire office: (A) He must retain both the electronic image and the original for a period of one year; (B) If the Department of Real Estate requests a paper document, the broker must produce the original; (C) The broker must back up the system once every 3 months; (D) If the Department of Real Estate requests a paper document, the broker must be able to reproduce it

B The first to record is the legal owner. The only exceptions to the recording statute would involve possession or actual notice. Neither of these would apply in the example. Davis had the right to record and failed to do so.

Vendee B has purchased under a contract of sale from Vendor A. Vendor A is one month behind in his mortgage payments on the property, which is the same amount that B pays each month to A. With regard to the current payment B makes to A: (A) It must be immediately applied to A's mortgage; (B) It need not be applied unless A is three months delinquent; (C) A should not have sold his property with an outstanding loan balance; (D) A vendee on a land contract should check on encumbrances before entering into a contract of sale

B The listing agreement authorizes the broker to accept a deposit along with an offer to purchase on behalf of the seller.

The total amount due to all of the beneficiaries of a trust account must by law, at all times, be at least equal to the trust fund bank account:

BalanceThe broker has a duty to make sure his trust fund records are accurate. The balance of the account must at least equal the total amount of client's money (trust funds) he has. He may have up to $200 of his own in the account as well.

To qualify a real property sales contract for recordation, it must:

Be signed by both buyer and seller and be acknowledged.This is another name for a land contract. Both the buyer and seller would have to sign the loan and both signatures would have to be acknowledged in order to be recorded.

An agent sells a piece of property and negotiates a first loan from a bank and a second loan by the seller. The agent has been asked to record a "Request for Notice of Default." This is usually done for the protection of the:

Beneficiary of the second loan.The "Request for Notice of Default" is filed for the protection of the beneficiary of the second trust deed. It requires the County Recorder to notify the beneficiary of the second when a "Notice of Default" is filed by the trustee on the first trust deed.

Mr. and Mrs. Juan Perez sold their home to Jack Smith, using an agreement of sale contract. From a financing point of view, the Perez's relationship to Smith most closely resembles that of:

Beneficiary to trustor;A contract of sale is another name for a land contract. The Perez's are the lenders and Smith is a borrower, similar to Beneficiary to Trustor.

An "open-end" provision in a mortgage would benefit the borrower the most if he:

Borrowed additional moneyAn open end provision allows a borrower to borrow more money and add the additional money to the original loan. The borrower would continue paying at the same rate and terms.

A borrower is declined for a loan based on his credit report. The lender refuses to let the borrower see the credit report:

Borrower may request a free copy of the report from the credit company and dispute the accuracy or completeness of any informationStatement of fact

Broker A meets the Brown family and the Browns make an offer on a house on Elm Street which is owned by Jones. The offer is contingent on the sale of the Brown's house on Main Street which is several counties away. Seller Jones accepted the offer. Broker A refers the Browns to Broker R for the sale of their Main Street home. A written compensation referral form is executed. According to Article 7 of the Code of Ethics, Broker A must disclose:

Both the compensation on Elm Street and Main Street to Brown and Jones.According to Aiticle 7 of the Code of Ethics, all compensation must be revealed to all principals in the transaction.

Which of the following can be used in an advertisement to show that the ad is being run by an agent, and not the owner:

Bro. & Agt.(D) Both The law does not require that the actual name of the real estate firm or broker be used. However, if the property is listed by a Realtor, as opposed to a non-Realtor, ethically the Association of Realtors requires the broker's name appear in the ad.

What does the 60 - 90 day broker protection clause mean:

Broker may collect a commission after the listing expiresThis is another name for the Safety Clause which is found in the listing agreement. It allows the broker to collect a commission after the listing expires, provided the broker gives the seller written notice of the buyer's name within 3 days of the expiration of the listing.

Which of the following is least correct about in-house sales:

Brokers cannot.sell their own in-house listings;Brokers may work as dual agents in the handling of listings.

An easement in gross:

Burdens servient land;An easement in gross is not created for the benefit of adjacent land. A good example is a utility easement. There is no dominant tenement, but there is a servient tenement. The servient tenement is burdened by the easement.

The tax which the city may levy against a real estate brokerage firm based on its gross receipts would be a:

Business license tax.Statement of fact.

A buyer made an offer on a property but refused to give a $500 deposit to the broker, as specified in the listing. He agreed to give the broker $500 as a deposit as soon as the seller accepted the offer. Which of the following should be written in the form:

Buyer agrees to deposit $500 cash with broker immediately upon seller's acceptance;This wording correctly describes• buyer and brokers responsibilities.

A real estate agent wrote up an offer for a buyer. The buyer was primarily interested in this particular home because it was located in a very good school district. The deposit receipt did not make the offer contingent upon the school district. The offer was accepted and escrow opened. During escrow, the buyer discovers the school district had just been changed and now the home is located in a poor school district. Which of the following is true:

Buyer is bound to the contract;Buyer did not make the school district a contingency of the sale, therefore, the contract is binding.

When a business opportunity is sold, the notice of sale was not published or recorded. The person with the primary responsibility for the debts of the business would therefore be the:

Buyer;

In which of the following ways can a joint tenancy be created?

By deed from: (A) Joint tenants to themselves and others as joint tenants; (B) Tenants in common to themselves as joint tenants; (C) A husband to himself and his wife as joint tenants; (D) All of the aboveThese are all ways in which a joint tenancy may be created.

Private restrictions on land can be created:

By deed or by written agreement;Private restrictions are created by individuals, either by deed or by written agreement. Zoning is an example of police power. This is governmental power.

A sales tax permit must be secured from the State Board of Equalization:

By persons engaged in the wholesale or retail selling business;Statement of fact.

The purchasing power of a dollar is measured:

By reference to price indexes.The purchasing power of a dollar is measured by changes in the Consumer Price Index.

When the term "beneficiary statement" is used by those in real estate finance, it identifies a statement made:

By the lender, as to the current balance due to pay off the real estate loan;Statement of fact.

15. According to California Real Estate Law, an unlicensed person may be paid a finder's fee:

C A finder's fee is allowed to be paid to an unlicensed person to influence them to do something - for example: to refer potential sellers or buyers to a real estate broker. The broker may not pay an unlicensed person to perform an act which would require a license.

14. A flood hazard exists when an area floods:

C A flood hazard is an area which floods twice in ten years.

13. According to real estate law, a definition of a broker is:

C A trustee selling property under a trust deed is foreclosing. He does not have a license. Buying and selling property for oneself does not require a license whether it is a corporation or not. Property managers collect rent and are required to have a broker license.

When a broker keeps records on a computer, how often does he have to back the records up:

C Broker must backup his records daily.

Which of the following is not a poisonous gas? (A) Radon; (B) Carbon dioxide; (C) Carbon monoxide; (D) Formaldehyde

C Price Fixing is illegal. It is a form of monopoly which is forbidden by anti-trust laws.

Which of these would not be a credit to the buyer: (A) Prorated insurance; (B) Prorated taxes; (C) Prorated rental receipts; (D) An assumed loan

C The "Terms of the Sale" section in a listing agreement lists the price and how the price is to be paid. It also discusses any personal property which is included in the purchase price.

The term "Housing Accommodation" refers to real property of how many units when occupied by the owner?

C The phrase "Housing Accommodations" is defined as improved or unimproved real property used or intended to be used as a residence by the owner and which consists of not more than four dwelling units.

Broker Jones had three outstanding judgments against him for fraud. Each judgment was from a different transaction. The judgments were $10,000, $15,000 and $25,0"00 respectively. If the Real Estate Recovery Account agreed to pay the claims, how much would the fund pay to the $25,000 claimant? (A) $10,000; (B) $15,000; (C) $20,000; (D) $25,000

C This question is asking for the maximum amount that may be recovered for any one transaction. The maximum amount for any one transaction is $20,000, but $100,000 (5 transactions) for any one licensee. 20

The seller is required to deliver the "Homeowner's Guide to Earthquake Safety" to the buyer of one-to-four unit dwelling property built prior to: (A) 1953; (B) 1960; (C) 1968; (D) 1975

C When offering prizes or gifts, all requirements to be eligible to win must be stated in the advertisement.

According to generally accepted practices, an escrow agent is authorized to:

Call for funding of the buyer's loan;Escrow must remain neutral and can't make many decisions. Escrow can, however, call for the funding of the buyer's loan when all the terms and conditions have been met.

Broker Bob, who has an unrestricted license, negotiated the sale of a property, and in the process, defrauded the buyer. The buyer obtained a final judgment against the broker upon the grounds of fraud in a civil suit. The real estate commissioner:

Can hold a hearing but cannot suspend or revoke the license until after the hearing;The commissioner must investigate, by holding a hearing before suspending or revoking a license.

During an escrow, the seller found out that the buyer was the broker's brother-in-law. The seller could:

Cancel the transaction;The owner could cancel the transaction because the broker failed to disclose a material fact. The fact that the broker is related to the buyer is considered a material fact which must be revealed to the seller.

Which of the following items would not be deducted when computing net operating income for appraisal purposes:

Capital expenditures;Capital expenditures are not operating expenses. Only operating expenses, fixed expenses, vacancies, and reserves may be deducted.

The income approach to value, uses:

CapitalizationIn the income approach, income is converted to value by dividing the net income by the capitalization rate.

Which of the following is not a poisonous gas?

Carbon dioxide

Castillo owns land given to him by the government. It has been in his family for three generations. The land contains a goldmine which his family has been mining since they acquired the property. The only way to get to his property is through land owned by Johnson. Castillo has been using Johnson's land to get to his the entire time. Johnson sells to Nguyen. Nguyen constructs a fence with a lock to block Castillo from using Nguyen's land. Which of the following is true?

Castillo: May go to court to get the matter resolved and remove any cloud on the easement;This is an easement by Prescription. However, the easement must be perfected by court action. This action is a Quiet Title Action.

When an appraiser is appraising a single-family residence, he uses the listing price of other comparable homes. These prices would tend to establish the:

Ceiling on market value;The listing prices tend to be higher than the prices actually achieved in the market place. They could be used by an appraiser to set the "ceiling on market value" or the high end.

None of the following is false concerning appraisal reports, except:

Certified appraisers charge standardized fees for all appraisal reports;Appraisal fees are determined through negotiation between the appraiser and the one who hires the appraiser. They are not set by law.

In the appraisal of a single-family residence, the appraiser takes into account the evolutionary stages of the life cycles of a neighborhood. This concept is most related to which of the following appraisal principles:

Change;Neighborhoods have cycles: Growth, Stability, Decline and Renewal. The average cycle is 25 years.

Baker sells a property to Davis and executes a grant deed in favor of Davis. Davis then takes the deed and places it is a safety deposit box. Baker then sells the same property to Charles who subsequently records it. Which of the following is correct:

Charles is the legal owner of the property. The first to record is the legal owner. The only exceptions to the recording statute would involve possession or actual notice. Neither of these would apply in the example. Davis had the right to record and failed to do so.

A broker communicates information given to him by the seller to the buyer in full faith that the seller's information is true. It is later proven that the information was false and the buyer rescinds the contract. The broker is subject to:

Civil action.The broker may be sued by the buyer and may be held liable, but would be able to collect from the seller. There would be no grounds for discipline or criminal action.

One who is licensed as a real estate broker or salesperson in California may legally do all of the following, except:

Claim a commission on an exclusive listing which does not include a specific termination dateAll exclusive listings must have a definite termination date.

Sometimes a quiet title action is used to:

Clear the title of the seller under a recorded contract of sale that is in default;The purpose of a Quiet Title Action is to clear a cloud from a title. Choice B is an example of a cloud on the title.

In the sale of a business opportunity, the buyer will not be liable for sales taxes not remitted by the seller, provided the buyer receives a:

Clearance ReceiptWhen Business Opportunities are sold, it is important to have a Clearance Receipt issued by the Board of Equalization showing the seller has paid all of the sales tax due while he owned the business.

Lenders charge points in connection with FHA insured loans in order to:

Close the gap between the market rate and fixed rates; Increase the effective yield; and to Obtain the market yield.Discount points on FHA does all of these things.

23. One might normally expect to find reference to the CPI (Consumer Price Index) in which of the following?

Commercial leases; Changes in the Consumer Price Index often result in adjustments to the rent charged in commercial leases.

One might normally expect to find reference to the CPI (Consumer Price Index) in which of the following:

Commercial leases;Commercial leases are usually tied to an index (CPI). Rent rises as the Consumer Price Index rises. These are called Index Leases.

One might normally expect to find reference to the CPI (Consumer Price Index) in which of the following?

Commercial leasesChanges in the Consumer Price Index often result in adjustments to the rent charged in commercial leases.

The broker who most qualifies for a commission is the broker who:

Communicates acceptance to the buyer.Neither broker may earn a commission until there is a valid contract between the seller and buyer. A contract is only created between seller and buyer when the buyer receives proper communication of the seller's acceptance. Therefore, the broker who has most likely earned the commission is the one who communicates acceptance to the buyer.

Backfill is mostly used for:

Compaction.

The fastest and easiest method of arriving at building cost estimates is the:

Comparative methodComparative method when using the cost approach usually means the comparative cost per square foot to replace the improvement new today. This is a much easier method than the other two mentioned.

30. Which of the following would be the best way to appraise a land site?

Comparison The comparative method is best for determining the value of land. Allocation may be used but is not as common and harder to use.

Which of the following would be the best way to appraise a land site?

Comparison.The comparative method is best for determining the value of land. Allocation may be used but is not as common and harder to use.

A commercial bank agreed to loan George $180,000 for a one year term, but required George to maintain a savings account of $18,000 at all time during the term of the loan. This provision is known as:

Compensating balance;Compensating balance describes a provision in a loan that requires the borrower to keep a certain amount of money on deposit with the lender in return for getting the loan. Lender can use this account if buyer defaults.

When leasing industrial space, the landlord and/or the property manager is required to make sure the property:

Complies with all applicable building codes;The landlord has a legal duty to maintain the property and keep it up to the present building codes.

When an owner acquires land which includes riparian rights appurtenant thereto, such riparian rights:

Concern the use of moving water such as a stream within the watershedThe region draining into a river, river system or body of water is called a watershed. Riparian rights of those of a landowner whose land is adjacent to the stream or river and in the watershed.

Which of the following government actions in relation to private property would not be an example of police power:

Condemnation;Police power regulates land use. Condemnation is the process used in Eminent Domain, which takes title away. It requires payment of compensation of the owner of the property. Examples of Police power are Subdivision regulations; Zoning of commercial properties; and Building regulations .

Which of the following factors contributes most to the maintenance of value in a well-planned residential community:

Conformity to property land use objectives;Conformity is necessary to obtain optimum maintenance of values and appreciation. When we violate the principle of conformity, we see values become unstable in residential areas.

Which of the following are necessary for a real property conditional installment sales contract to be valid?

Consideration, offer and acceptance, lawful object, competent parties, legally sufficient writing. This choice has all the required elements for a contract to be valid: Competent parties, mutual consent, consideration, lawful object and writing. Remember any contract for the sale, purchase, or leasing of real property for more than one year falls under the Statute of Frauds and must be in writing to be enforceable.

Federal, state and local levels of government have formulated public controls concerning the various facets of housing. City building codes are designed primarily to establish minimum:

Construction standards for buildings within the cityThis is the purpose of city and county building codes.

Which of these pairs of terms have the closest relationship to each other:

Construction/interim loans.Interim loan is another name for a construction loan.

When a judgment is duly recorded, subsequent buyers and innocent purchasers who are ignorant of the recording have received:

Constructive notice;Recording gives constructive notice.

It is unethical for a broker to solicit a listing from a seller, if the seller has already listed the property with another broker. Which of the following would be ethical behavior:

Contact the client after the listing has expiredThe ethical way to handle this situation is to wait until the listing has expired, and then contact the seller.

The customary, valid exclusive right to sell listing agreement:

Contains a meeting of the minds;B) All contracts require mutual consent. This means agreement between the parties or a "meeting of the minds."

A licensee who speaks of a "grandfather" clause is probably referring to:

Continuation of a non-conforming use.Non-conforming uses occur after a zoning change. Since the original use was legal at the time it was placed into service, it will remain. legal .: it is "grandfathered" in.

When a buyer initially purchases a home with Cal Vet financing, the buyer receives a:

Contract of sale;Cal Vet financing is a land contract. Another name for a for land contract is a contract of sale.

When ordinary repairs are made to broken equipment in a building, such repairs are appropriately classified as:

Corrective maintenance;Statement of fact.

Which of the following is not deducted from gross income to determine annual net income when using the capitalization approach to appraisal to appraise an income producing property?

Cost of Capital;Cost of capital would be the interest rate on the owner's trust deeds. Financing is not considered when appraising property.

Mr. Peter Rogers is seeking and FHA loan. Mr. Rogers will be evaluated in relation to:

Credit characteristics;FHA evaluates potential borrowers according to their credit characteristics, just as any other lender would. Note: FHA does not lend money. The borrower qualifies according to lender standards and FHA insures the loan.

The Uniform Commercial Code, Division 6, which pertains to bulk sale transfers of business goods, exists primarily for the protection of:

Creditors;This law requires creditors be notified of a bulk transfer. It gives the creditor a chance to make sure he will be paid.

In attempting to determine the liquidity of a business venture, which of the following ratios would give the most accurate information?

Current assets to current liabilitiesLiquidity is measured by how long it takes to convert assets to cash. The measure of liquidity in a business opportunity is the difference between current assets and current liabilities.

Which of the following is a lessor not allowed to deduct from a security deposit? (A) Unpaid rent; (B) Reasonable cleaning; (C) Damage beyond normal wear and tear; (D) Rent expenses for storage of personal property left on the premises

D $178,000 x 4.5% = $8,010 total commission $8,010 I 2 = 4,005 to each office $4,4,005 I 2 = $2,002.50 to each salesperson

Which of the following has the strongest effect on the state of the economy: (A) Price Index; (B) Cost of funds; (C) Loan interest rates; (D) Cost of housing

D According to Article 7 of the Code of Ethics, all compensation must be revealed to all principals in the transaction.

On a listing agreement, what is included under the section, "Terms of Sale?" (A) Terms of sale, personal property, and additional terms; (B) Loan amount, personal property and compensation to broker; (C) Price, method of payment and personal property included in the sale price; (D) Price, compensation to broker and deposit

D If a broker chooses to keep records electronically, and those documents can be accurately reproduced, the original may be destroyed in the regular course of business unless its preservation is required by law. Such reproduction, when satisfactorily identified, is as admissible in evidence as the original itself in any judicial or administrative proceeding whether the original is in existence or not.

An agent becomes the agent of the seller when both the seller and the agent sign:

D The Listing Agreement creates the agency relationship between the seller and the listing agent.

A broker is representing a developer who has completed his project in a subdivision called "Ridgeway." The broker's advertisement states that people have "already won a free gift", but in reality, they must attend a sales seminar to receive the gift. This type of advertising is: (A) Legal, without disclosure of the sales seminar attendance requirement; (B) Legal, because all ofthe "winners" purchased units anyway; (C) Legal, if the ad states they must sit through a sales seminar in order to collect the gift; (D) Illegal

D The landlord may deduct the frrst three choices. Rental on storage units for a tenant's personal property left in the unit will be paid by the tenant when he takes the property out of storage. If the tenant fails to redeem the property within 90 days, it maybe sold.

A buyer walks into a broker's office and asks for information on a property the broker's office has listed. The agent gives the buyer some information and the buyer asks the agent to mail more information to him. An agency relationship has been created when:

D There is no agency relationship. An agency relationship would need a contract between agent and buyer. There is no such contract.

A landlord is trying to evict a tenant and serves an eviction notice. Under what circumstances could a tenant remain in the property.

D These are all examples of constructive eviction. When the landlord (lessor) engages in constructive eviction, the tenant may move without giving the thirty day notice or may correct the situation by paying for the repair and deducting the bill from the rent. This is called "rental offset" and the tenant may do this twice in one twelve month period. The lessor may not evict a tenant if the problem is the lessor's fault.

When a broker keeps records on a computer, how often does he have to back the records up:

Daily.Broker must backup his records daily.

In income-producing property valued by the capitalization approach, if the property taxes increase and all else remains equal, the property will:

Decrease more than the amount of the annual tax increase;The value will increase by a multiple of the capitalization rate. For example, if taxes went up $360 and the capitalization rate is 10%, the loss in value is $3,600.

When interest rates go up, the capitalized value of homes:

Decrease.Interest rates work in a manner similar to capitalization rates. When rates increase, the value decreases.

The activities and direction of the money market are extremely important in real estate. As interest rates increase, the capitalized value of income property subject to a long-term lease:

Decreases;As capitalization rates increase, value decreases.

A seller paid 7 points to enable the buyer to secure new financing. For income tax purposes, the seller would:

Deduct it as a selling expenseThis would be a selling expense and could be deducted as such by the seller.

The deed restrictions on a subdivision said that the lots must contain a minimum of 15,000 square feet. The zoning restrictions said that the lots must contain a minimum of 10,000 square feet. Which of would prevail:

Deed restrictions;When there is a conflict between private deed restrictions and zoning, the one which is the most strict prevails. In this case, the private restrictions are more strict than zoning and would prevail.

As it relates to the field of real estate, the legal term "theft" would include all of the following except:

Defrauding lenders by signing another person's name on loan documents.The word "theft" is a broad term that basically means the improper taking and carrying away of the personal property of another person and would apply to Answers (A), (B) and (D). Answer (C) is forgery which is committed by altering a written document by signing someone else's name to an instrument.

When selling a parcel of real property subject to a trust deed, it is always necessary, in order to transfer fee title legally, to:

Deliver a deed from the granterTo transfer title a grant deed is required to be delivered by the granter to the grantee.

George executes a deed to James and records it. Later, George seeks to set aside the conveyance, claiming that there had been no delivery to James. Why will he probably be unsuccessful in his effort:

Delivery is presumed with recording; Statement of fact.

Assume that a man made out a grant deed naming his son as grantee for all of his real property. He gave the grant deed to a friend with the instructions to record it upon his death. Which of the following would probably defeat the deed:

Delivery;Deeds must be delivered during the grantor's lifetime.

Interest rates on trust deed loans are primarily determined by which of the following:

Demand for supply of money;Interest rates are low when the supply of money is plentiful. Interest rates increase when the supply of money decreases.

Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, sex, national origin, or ancestry:

Department of Fair Employment and Housing;Complaints are filed with the Department of Fair Employment and Housing on the state level. They are filed with HUD on federal level.

The purchaser in a sale-leaseback transaction would be least concerned with:

Depreciated book value of the building.The depreciated book value of the old owner does not affect a new owner. The new owner would establish his own basis based on the purchase price of the property.

The owner of an income-producing property, who occupies the property to run his own business venture, sold the property under an agreement to lease the property from the new owner. The buyer of the property would be benefited by:

Depreciation allowable on the improvements.Depreciation is a major tax benefit for owners of income producing property.

Real estate investments have which of the following advantages when compared with an investment in securities:

Depreciation;Securities such as stock cannot be depreciated for income tax purposes.

Lacking any information to the contrary, the holder of a life estate, based on the holder's life, may do any of the following, except:

Devise the propertyDevise means to will. A life estate terminates at the death of the life tenant. It cannot be willed.

When a lender on a graduated payment mortgage is making disclosures that are required under the Truth-in-Lending law, concerning advertising, he must disclose the:

Different monthly payments.This is a requirement of the Truth-in-Advertising Act.

Most real estate offices will spend money for advertising. In budgeting the advertising dollar, little money would be spent on:

Display advertising in the local newspaper concerning open listings;A broker would not usually spend money advertising an open listing because the chance of collecting a commission is not good.

A buyer and seller initial the liquidated damages clause in a real estate purchase contract and then the buyer defaults. The deposit is:

Divided equally between the seller and the listing agent;This is exactly what the liquidated damages clause states.

An acceleration clause is in a note that is otherwise negotiable. The addition of this clause:

Does not reduce the negotiability of the note;An acceleration clause does not affect the note's negotiability and could enhance its desirability.

Following proper action by the local authorities, the zoning on a vacant lot was changed from "commercial" to "residential." Such an action is called:

Down zoning;Down zoning occurs when land use is changed from a higher to a lower use. Usually residential is considered the lowest. Going from commercial to residential would be down zoning.

When two or more parties own property together as tenants in common:

Each owner's interest may be conveyed separatelyThis is one of the characteristics of a tenancy in common. Each owner may transfer their interest separately. Their interest may also be willed. The owners do not have to have equal shares of interest

Gregorian owns an easement in Duran's property. Gregorian is not a property owner. What kind of easement does Gregorian have?

Easement in gross.An easement in gross is the limited right of one person to use another's land. When such a right is not created for the benefit of an adjacent landowner (non-land owner), there is no dominant tenement - only a servient tenement. The easement attaches personally to the easement owner, not the land.

The California court case which held that the seller and agent must disclose to the buyer all facts materially affecting the value or desirability of the property, is named:

Easton v. StrassburgerStatement of Fact

The time period during which a building earns sufficient income to justify its continued operation is a definition for:

Economic life.

According to appraisal theory, depreciation is measured in proportion to the expired:

Economic life;Economic life is the period of time an improvement can produce enough income to justify it's existence. Economic life is used for depreciation.

An appraiser, when using the cost approach method to obtain the correct depreciation factor, would use:

Effective age of the property;Effective age reflects the condition of the property. This is more accurate than the chronological age.

Carr purchased an income property. After taking possession of the property, Carr discovered that the seller and the broker had misrepresented the net income from the property. Car may take which of the following actions:

Either Sue for rescission of the purchase; or Sue for damages;Net income is a material fact. Seller and broker made a deliberate misrepresentation and the buyer could sue for damages and/or rescission of the contract. In addition, the broker could be disciplined.

In the event of a default, legal enforcement of the terms of a trust deed may be done by:

Either a Trustee's sale or a Judicial foreclosure;In the event of a default on a trust deed, the beneficiary may choose between a trustee's sale or judicial foreclosure.

A broker advertises properties through the World Wide Web. Rules exist making it mandatory for the broker to do which of the following things:

Employ only real estate licensees to respond to queries;Answering queries regarding ads requires a license.

Under California law, a trust deed:

Encumbers the real property designated in the deed of trust;A trust deed is a security device which uses the real property as collateral for payment. It creates a lien which is an encumbrance.

Mr. Cain homesteaded his residence on which there was a $105,000 first trust deed. Mrs. Cain did not sign the declaration of homestead. The value of the property was $150,000. Robert Burns filed a mechanic's lien after the homestead was recorded. The lien was:

Enforceable because mechanic's liens take priority over homestead exemptions.A homestead exemption only protects the owner from judgment liens; not mechanic liens.

An owner of a parcel of real property gave his neighbor a deed conveying an easement for ingress and egress. The easement was not specifically located in the deed. The neighbor's right to use the easement is:

Enforceable because the location of an easement need not be specified;An easement does not have to be specifically located in order to be valid.

If a person enters into a binding contract of sale, what type of title does he hold:

Equitable title."Contract of sale" is another name for a land contract. The buyer ( vendee) in a land contract has equitable title. Legal title remains with the seller (vendor).

Cassidy purchased one of 30 lots in a subdivision and signed a sales contract which stated, "No purchaser of a lot in this subdivision shall erect a 'for sale' sign on his lot until all of the lots owned by the subdivider are sold." If Cassidy wants to sell his lot before the subdivider has sold all of his lots, he may:

Erect a 'for sale' sign of reasonable dimensions because the statement in the sales contract is declared by law to be void;This statement has been declared void because it is deemed to be restraint of trade.

An interest in real property can be acquired by an individual by all of the following methods, except:

EscheatWhen a person dies intestate and has no heirs, his property will escheat to the state of California. The state may acquire title through escheat, and individual may not. Interest in real property can be acquired by; Patent; Prescription; and or Succession;

The assessment roll for real property taxes is the listing of all taxable properties in the assessor's jurisdiction with the assigned assessed value for the properties. The purpose of the assessment roll is for:

Establishment of the tax base;The assessment roll does establish the property tax base.

The main purpose of a deed is to:

Evidence the change in title or transfer of an interest in real property;This is the legal purpose of a deed.

When an agent is accused of "puffing," the agent might be guilty of which of the following:

Exaggerating the features of the property or neighborhood when showing property to prospective buyers;This is a good example of "puffing'.

All of the following are adequate methods of transferring property except:

Executive sale;There is no such thing as "executive sale."

The agency relationship can be terminated by:

Express agreement.An agency relationship is established by an express agreement (usually the listing agreement). It can also be terminated by an express agreement between the parties (broker and principal).

Which of the following would be considered a violation of the Fair Employment and Housing Act?

Failure to include accommodations for handicapped people when constructing a new building;Under the Fair Employment and Housing Act, failure to design or build a multi-family dwelling of four or more units in a manner that allows disabled persons access and use, is considered discrimination.

In a tax-free exchange, the properties are valued at:

Fair market value;Both properties are valued at the present fair market value.

The purpose of a "hold harmless" clause in a listing contract is to protect the agent from liability for:

False information given by the seller concerning the condition of the property;The "hold harmless" clause found in the listing contract protects the agent from liability for material facts known by seller, which the seller fails to disclose.

Which of the following does not buy loans in the secondary mortgage market:

Federal Housing Administration. The Federal Housing Administration insures FHA loans. It does not buy on the secondary market.

Which of the following would not be considered a demand source for mortgage money:

Federal National Mortgage Association;A demand source would be the end user of the trust deed. These would include the other three choices. The Federal National Mortgage Association is a secondary market for existing mortgages - not a demand source for mortgages.

When a broker decides to use a fictitious business name, before soliciting business using that fictitious business name the broker must:

File a fictitious business name statement with the city in which the broker's main office will be located;Broker must file a fictitious name in the city in which he has his main office.

The Real Estate Commissioner has primary regulatory authority over subdivision matters involving:

Financial arrangements to assure completion of community facilities;The Subdivided Lands Act gives the real estate commissioner the authority to approve subdivisions. The commissioner is concerned with fraud - the financial aspects of the subdivision.

When appraising an apartment building, all of the following are deducted, except:

Financing cost;Financing is not used when appraising. Deduction when appraising an apartment building are:@ Electricity expense; Management expense; and Replacement expense.

The usual listing contract authorizes a broker to:

Find a purchaser and accept a deposit with an offer to purchase;These are the two primary authorities granted in the listing agreement.

Joe Brown is the duly appointed attorney-in-fact of Bob Anderson. When executing a deed conveying an interest in real property owned by Anderson, Brown would:

First write his principal's name followed by his signature.This is the proper procedure when an attorney-in-fact signs for his principal.

Community apartment projects and condominiums comes with the subdivision provisions of the California Real Estate Law when they contain how many units:

Five or more;The California Real Estate law defines common interest developments as 5 or more.

The Commissioner's final public report expires:

Five years from the date of issuance; Statement of fact.

In an income and expense statement for an apartment complex, expenses for real estate taxes and fire insurance would most accurately by listed as:

Fixed expenses;Since these expenses remain relatively unchanged year to year, they are considered fixed expenses.

The metal used on a roof to keep out the rain is called a:

Flashing;Flashing is sheet metal which is molded around a chimney or vent pipe in a roof and then spread out before the roofing material is applied. The purpose of flashing is to prevent water seepage when it rains.

When legal title is transferred as the result of the sale of real estate encumbered by a deed of trust, it is always necessary:

For the grantor to deliver a deed;Any sale requires the grantor to deliver a grant deed to the grantee.

Jack Robbins sold his home for $21,000 and took back a $15,000 note with interest at 10% per annum. The note was secured by a first mortgage. The home had a fair market value of $20,000. Later, he decided to sell the mortgage and note and discounted by note to $13,500. He sold them to Candy Lane. On the back of the note, he wrote, "I hereby assign the within note to Candy Lane without recourse." If the maker of the note defaults before any principal payments are made, Lane's best legal remedy is to:

Foreclose to enforce payment of the $15,000.The face amount of the note is $15,000, which is amount for which she would foreclose. "Without recourse" means the original beneficiary has no responsibility for the note or for collection on the note.

When a title company issues a California standard policy of title insurance, the policyholder is insured against loss which occurs because of:

Forgery in the chain of title;Forgery is one of the protections offered by the standard policy of title insurance.

Which of the following falls under state law governing disclosure of and negotiability of real estate commissions:

Four units or less or a mobile home; This is a disclosure. All disclosures apply to the sale and purchase of 4 or less dwelling units.

Which of the following falls under state law governing disclosure of and negotiability of real estate commissions:

Four units or less or a mobile homeThis is a disclosure. All disclosures apply to the sale and purchase of 4 or less dwelling units.

If you were granted the right to purchase a business with ready product, business plans, development plans and marketing plans; this would be a(n):

FranchiseA franchise agreement is an agreement between a franchisor and franchisee whereby the franchisee is given the right to distribute goods and services under a marketing plan prescribed by the franchisor.

If a business is sold, but the statutory recording and publication requirements of the Uniform Commercial Code are not met, the sale is:

Fraudulent and void as against the creditors of the transferor;The sale would be fraudulent and void as against the creditors of the transferor. This means the buyer would be liable for payment to creditors of any debts.

In computing the unspecified maturity date on a construction loan, the time for repayment of the loan starts running:

From the date of the note;Statement of fact.

The measure of the distance where a parcel of property abuts on a street is called the:

Frontage of the lot;Statement of fact. Front foot is a method of valuing or pricing retail space.

Real estate licensees should know that pest control operators are required by law to:

Furnish a copy of any inspection report to the owner of the property;An owner of the property must receive a copy of the structural pest control report. The buyer would receive a copy if it was a condition of the escrow.

A real estate broker charges owners of businesses a fee for advertising their businesses for sale in a special pamphlet he publishes. He does not take a listing to sell or lease the business. He is required to do which of the following:

Furnish an accounting to the owner of the business of the use of the fee charged;When advance fees are collected by a broker, the broker must provide the payer with an accounting of the use of the fee.

The following are not discharged in a bankruptcy, except:

Gambling debtsThe unpaid child support, tax liens and debts not scheduled in the bankruptcy are not dischargeable in a bankruptcy court proceeding. Gamblers can discharge gambling credit card debts and gain a "fresh start" in life by seeking Chapter 7 bankruptcy relief.

When an abstract of judgment for money is duly recorded, it creates which of the following types of liens:

General lien;Judgments are general liens. A judgment affects all property owned by the judgment debtor in the county in which the judgment is recorded.

If a licensee who is filling out a purchase agreement identifying the buyers, designates how title will be vested without proper instructions he might be:

Giving legal advice; giving tax advice; and giving potential evidence of discrimination.(D) All of the above. This is definitely legal advice and tax advice. It may also be discrimination in terms of gender.

A tenant signs a lease that includes a schedule of rent increases on specific dates over the course of the lease term. What kind of lease has this tenant signed?

Graduated;Statement of fact.

If residential property is purchased with a Cal-Vet loan, which of the following documents is used to transfer the title to the property:

Grant deed;The seller would use a grant deed to transfer title from himself to Cal Vet. The veteran buys the property on a land contract from Cal Vet.

Broker Green obtained a listing from Brown to sell his home. Brown told Green the sewers were in and connected and signed a listing to that effect. Green was of the opinion that there were no sewers installed in that street, so he checked with the city and found he was correct. Green showed the house to Jones, who did not ask about the sewers, and Green made the sale without any comment. Later, Jones found that the sewers were not in. Which of the following is true:

Green has a duty to tell Jones, even though he did not ask;Although broker Green is an agent of the seller, he owes the buyer "honest and fair dealings." Revealing material facts is regarded as honest and fair. Broker Green is obligated to reveal the information about the sewers, even if the buyer does not ask about it.

A real estate salesman went to a neighborhood to obtain listings of residential property. He made representations that because of the entry into the neighborhood of minority groups, property values would be reduced by a decline in the quality of schools and an increase in the crime rate. These practices by the salesman are:

Grounds for disciplinary action;This is panic peddling. Violations of the anti-discrimination laws can result in discipline by the real estate commissioner.

The Government National Mortgage Association (GNMA) issues pass through securities. The phrase "pass through" means that all interest and principal payments pass through Ginnie Mae to the investors. Ginnie Mae's role in this market is to:

Guarantee timely payment of interest on the mortgages; Statement of fact.

An "advance fee" contract must be approved in advance by the Department of Real Estate and must include all of the following, except:

Guarantees that the sale, lease or exchange will be completed;The Department of Real Estate regulations forbid a broker who uses advanced fee contracts to guarantee results.

The owner of a single-family residence plans to sell, and wants to obtain an FHA appraisal to permit a sale with FHA financing. He should:

Have a lender apply for a conditional commitment;FHA does not lend money, it insures mortgages. A lender will only give a conditional commitment until all the terms are met.

A person sold his home and took back a note secured by a purchase-money deed of trust. He selected a real estate broker from the telephone book and asked him to service this loan. If the broker takes on this duty, state law requires him to:

Have a written authorization from the holder of the note;A broker must have a written agreement with a principal regardless of which part of the business is the broker's specialty.

If a deed has a restrictive covenant which prohibits the sale of the property to persons of a particular race, that covenant will:

Have no effect on the conveyance, but the covenant will be unenforceable;Statement of fact.

An owner of a single-family residence is planning to sell the residence and wishes to obtain an FHA appraisal to permit selling with FHA financing. In order to do this, the owner should go through the process of:

Having a lender apply for a conditional commitment;FHA does not lend money, it insures mortgages. A lender will only give a conditional commitment until all the terms are met.

Broker Jones receives a 3% deposit from a buyer for the purchase of a house. He also receives appraisal and credit report fees for another client. In addition, he receives rent money on an apartment building which he manages for a client. With regard to these funds:

He can put everything in one trust account; A It is legal for a broker to operate a property management company, a real estate sales office, and/or mortgage loan brokerage office. It is legal for him to place all trust funds received into one trust account as long as he keeps accurate records of beneficiary transactions.

Broker Jones receives a 3% deposit from a buyer for the purchase of a house. He also receives appraisal and credit report fees for another client. In addition, he receives rent money on an apartment building which he manages for a client. With regard to these funds:

He can put everything in one trust account;A It is legal for a broker to operate a property management company, a real estate sales office, and/or mortgage loan brokerage office. It is legal for him to place all trust funds received into one trust account as long as he keeps accurate records of beneficiary transactions.

A real estate agent may legally represent all principals in the same transaction if:

He has informed all principals that is the agent for each principal; obtained consent of all of this agency relationship; and is collecting commission from each principal with the knowledge of the others.All of the above. All principals must be informed and give consent for a dual agency. Both must also be informed and consent to the agent collecting commissions from each.

An out-of-state broker refers a buyer to a California real estate broker, and a sale is consummated. If the California broker wishes to share the commission with the out-of-state broker:

He may divide the commission with the out-of-state broker in any manner acceptable to them.Statement of fact.

Condominiums can be commercial, residential and industrial. Which of the following would be part of the condominium:

Heating unit.Heating units are inside the condo and separate from the other condo heating units. A bearing wall and elevator are part of the common area.

When the letters "HVAC" appears in a commercial or industrial lease, it normally refers to:

Heating, Ventilating; and Air Conditioning Statement of fact.

Inasmuch as real property requires more time to market than listed securities, requires more care, and comes in larger denominations, its return should be:

Higher than that of bonds or first mortgages.

An easement would be terminated by merger when the:

Holder of the easement becomes the owner of the land subject to the easement;When the holder of the easement also owns the land subject to the easement, the easement ceases to exist. One does not need an easement over his own property.

Among the grounds for denial, suspension, or revocation of licenses is the practice of discrimination. Discrimination includes:

I. Blockbusting, II. Hiring sales personnel only from a specific ethnic group; (A) I only; (B) II only; (C) Both I and II; (D) Neither I nor IIBlockbusting & Hiring sales personnel only from a specific ethnic group are both examples of discrimination.

Able is leasing Blackacre for a ten year term. Gentry owns Brownacre which is adjacent to Blackacre. Gentry asks Able to grant him an easement over Blackacre. In these circumstances, which would be true: (A) This would be illegal as only the lessor can grant such a use; (B) This would be legal for the term of the lease; (C) This would be illegal since the owner must join in such a grant with the lessee; (D) The tenant can legally grant such a right for an indefinite period

I27.D Property taxes are based on I 00% of the assessed value. Under proposition 13, the maximum tax rate is I% of the assessed value.

After the notice of probate is published, how long do creditors have to file a claim: (A) 1 month; (B) 4 months; (C) 6 months; (D) 1 year

I28.B He may grant an easement for the lease period only. The easement would not be binding on the lessor when the lease expires.

As for "advance fee", how many days prior to accepting the fee must you report to DRE so that you can use the fee? (A) 5 days; (B) 10 days; (C) 20 days; (D) 30 days

I34.A The name on a broker trust account must say, "Broker trust account, name broker as trustee".

A licensed real estate salesperson placed a "blind ad" in a local newspaper. A "blind ad" does not properly:

Identify the broker;Statement of fact.

If the trust account contains trust funds belonging to more than one beneficiary, the broker may not disburse any funds without the prior written consent of every principal who has funds in the account:

If such disbursal will reduce the balance of the total funds in the account to an amount less than the various owners have on deposit;This is true. When the account goes below the total of all beneficiarie.s' money, the broker is using one beneficiary's money to pay another.

If a broker computerized his entire office:

If the Department of Real Estate requests a paper document, the broker must be able to reproduce it.If a broker chooses to keep records electronically, and those documents can be accurately reproduced, the original may be destroyed in the regular course of business unless its preservation is required by law. Such reproduction, when satisfactorily identified, is as admissible in evidence as the original itself in any judicial or administrative proceeding whether the original is in existence or not.

An unlicensed person could receive a finder's fee from a broker:

If the action constituted no more than an introduction of a potential buyer to the brokerA broker may pay a finder's to an unlicensed person for recommending the broker to the buyer or seller, providing the unlicensed person does nothing which would require a real estate license.

A 60 day safety clause in a listing contract provides that:

If the broker has shown the property to a specific buyer during the term of the listing, and that buyer buys the property within 60 days of the expiration of the listing, the broker has earned the commission;This is the "safety clause" or broker's protection clause in the listing. It allows the broker to claim a commission after the listing expires, if the seller sells the property to someone with whom the broker has had negotiations prior to the termination of the listing agreement.

%A trust deed note taken by a state savings and loan association on single-family owner-occupied residences could be prepaid without penalty:

If the loan is more than 7 years old;Trust deeds on owner occupied single family dwellings are only enforceable for five years. 7 years is clearly more than 5.

Concerning option contracts, which of the following statements is most incorrect:

If the optionee decides to buy the property, it will be necessary to enter into a separate sales contract before the expiration of the option in order for the two parties to be legally bound;The option agreement states the terms and conditions of a potential sale. If the optionee decides to exercise the option, the option contract would bind the buyer and seller.

A deed has a provision regarding racial and religious discrimination. The deed may be changed:

If the restrictions are discriminatory or offensive.Effective January, 2000, a county recorder, title insurance company, escrow company, or real estate licensee who provides a declaration, governing documents or deed to any person must provide a specified statement about the illegality of discriminatory restrictions and the right of homeowners to have such language removed. The statement must be contained in either a cover page placed over the document or a stamp on the first page.

Cook gave Ford a power of attorney to sell his home. Which of the following statements is false:

If the selling price is equal to or exceeds the fair market value, Ford may legally deed the property to himselfAn attorney-in-fact may not deed the property to himself. This is a conflict of interest and illegal.

Glen Johnson has worked as a journeyman in the general construction field for five years. He decides to start his own home improvement business. Under which of the following circumstances would he not need to be licensed, according the State Contractor's License Law:

If the total cost of each of the projects he completes is under $500.Under California law, any business or individual who constructs or alters any building, highway, road, parking facility, excavation, or other structure in California must be licensed if the total cost (labor and materials) of one or more contracts on the project is $500 or more.

The presence of a corporate seal on a deed:

Implies that the proper or authorized person signed the deed;The corporate seal indicates the corporation has authorized these individuals to sign for the corporation. It is not the same as acknowledgment.

In May 1976, Mr. Marks leased a unit in his apartment building to a tenant for a two-year term. The tenant prepaid the last two months rent at the time he entered into the lease agreement. For federal income tax purposes, that amount will be considered as income for Mr. Marks:

In May, 1976;Rent is taxable when received by the landlord.

Which of the following is true concerning a "buyer agency?"

In a "buyer agency" the agents represents buyers only;In a "Buyer Agency" the agents do not take listings on property. The buyer's agent represents buyers only.

Under which of the following situations is the market data comparison method relatively unreliable:

In an inactive market;In an inactive market, comparables are not reliable because they do not sell fast enough. Lack of demand can have a negative effect on values which must be accounted for by the appraiser.

In appraising real property, a separate valuation for the site is considered least important:

In applying gross rent multipliers;When rent multipliers are used, we are multiplying the gross rent, which is the result of both the land and the improvement, by the gross rent multiplier. We would not use a separate value for the land.

The cost approach is more difficult to use on old structures than on relatively new ones because of the greater difficulty:

In estimating depreciation in the replacement cost approach;Estimating depreciation on older buildings is always the most difficult part of this approach to value.

In appraising, which method places the greatest emphasis on the present worth of future benefits to be received by the owner:

IncomeThe present worth of future benefits refers to income

A building that is an improper improvement to its site exemplifies:

Incurable functional obsolescence;Since the cost to tear down and rebuild the improvement is prohibitive, it would be incurable. It is functional obsolescence because it occurs inside the property lines.

Which of the following is responsible to his employer for his results only:

Independent contractorAn independent contractor is responsible to his employer only for results.

Assume that you are a real estate licensee who has just shown several houses to a young married couple. Together you find "just the right place for them." However, even with the best loan available, the down payment seems to be beyond their means. Conversing between themselves, the young couple speculate that they could obtain a loan on various personal items including their car and in this way, be able to come up with the down payment. They seek your advice. Which of the following would probably be a synopsis of a proper response:

Indicate that the decision is up to them but point out the pitfalls of their proposed financing;This is the best advice the agent can give this couple. The final decision would be up to them.

When appraising a property using the market data approach, the value of the property is:

Inferred from sales of comparable properties;The market data approach to appraising is another name for the comparison approach. Value of the subject property is determined by comparing it with others in the same area that sold recently.

Barker, finding a cabin in the mountains that has been abandoned, has met all of the legal requirements for adverse possession. In order to perfect his title to the property, Barker will find he can do so by:

Initiating and completing a quiet title action;Meeting the requirements for adverse possession does not create a change in title. It would require a quiet title action.

The Federal Housing Administration (FHA) was created primarily to provide:

Insurance for home loans by approved lenders.FHA was created to provide insurance for lenders willing to make FHA loans. FHA loans have very low downpayments and it is the insurance that entices lenders to make these loans.

Davidson is subdividing, creating single-family residential lots which he intends to sell for cash. He needs maximum financing for the public improvements (streets, curbs, sidewalks, etc.) and wishes to pass the cost of these improvements on to the lot purchasers, but wants no assessment liens to appear in title insurance policies. The best source of financing will probably be:

Interim loans from institutional lenders; Interim loans can be paid off as the lots are sold.

If a private property owner's property was damaged by public works in the area, in order to recover any financial loss, he might initiate an action called:

Inverse condemnation would involve a suit to compel the government to purchase the property; it travels "inversely" to the normal process, where the government sues to require the private individual to convey title to the government.

If a private property owner's property was damaged by public works in the area, in order to recover any financial loss, he might initiate an action called:

Inverse condemnation.Inverse condemnation would involve a suit to compel the government to purchase the property; it travels "inversely" to the normal process, where the government sues to require the private individual to convey title to the government.

An owner of property which was located near an airport was constantly bothered by the noise of low flying aircraft. He wanted to bring a court suit and force the city to condemn the property because of the noise. This would be an example of:

Inverse condemnation; When the government exercises their power to take property for a public use, this process is called condemnation. When an individual brings action against the city for condemnation, this is known as inverse condemnation.

A straight note, same term and interest rate, would:

Involve more interest than an installment note;There is no reduction in the loan amount with a straight note. It is interest only. It would involve more interest than an installment note. The installment note is being reduced each time a payment is made. Interest is only charged on the unpaid balance

When using the market data approach to value, the adjusted sales price of a comparable property:

Is an estimate of the probable selling price when adjusted by the characteristics of the subject property;In the market data method, adjustments must be made to make the comparables equal to the subject property.

%If a real estate broker, as an agent, does not follow the lawful instructions of his principal he:

Is liable to his principal for damages;Broker would be liable to the seller for any damages incurred since he has a duty to follow the principal's lawful instructions.

The protection which is given by an ALTA policy of title insurance:

Is limited to the stated condition in ownership of title as of the date of the policy;Title insurance protects the owner as of the date of the policy - not for future events.

A voidable contract is a contract that:

Is valid and enforceable on its face, but may be rejected by one of the parties.This is a good definition of a voidable contract.

When a business opportunity involving a liquor license is transferred, the Department of Alcoholic Beverage Control may:

Issue an on-sale license to premises located in areas doing a seasonal business;

The inability of a corporation to qualify as a joint tenant in the ownership of real property is due to the fact that:

It has perpetual existence;Corporations have the potential for perpetual existence, whereas human beings do not. For this reason, corporations may not be joint tenants

A broker advertises the sale of "Mega Bucks Trust Deeds" in a newspaper. In the advertisement he offers a specific yield which he arrives at by looking at his yield for the past year. Which of the following is true concerning this advertisement:

It is legal if he also gives the actual interest rate specified in the note and the discount from the outstanding principal balance;This ad would be regulated by the Truth-in-Advertising Act. All relevant information must be disclosed.

A listing broker wants to give $50 to a buyer and a $50 credit against his commission to a buyer or seller who either lists with him or purchases one of his listings. With regard to his actions:

It is permissible to give $50 to the buyer and credit his commission with the seller;As long as proper disclosures are made to all parties.

Which of the following would usually be true concerning a hard money second trust deed:

It is secured by real estate and given to a third party to obtain a cash loan;Hard money loans are cash loans.

Gonzales gives his neighbor Smith an easement for ingress and egress, but the easement is undefined.

It is valid;Agreements between parties can be considered in determining whether an easement is legal. An easement does not have to be recorded to be valid.

Which of the following would be true about a lis pendens:

It may affect title to real property based on the results of a lawsuit;A lis pendens is filed to warn any party interested in the property that it is the subject of a law suit. If someone buys the property with a lis pendens filed, the sale can be set aside and the property sold to pay the judgment.

When a lender charges interest for a real estate loan:

It may be augmented by a mortgage discount to increase the effective yield.Lenders frequently charge mortgage discount points to raise the effective yield.

Which of the following would be regarded as a disadvantage of a joint tenancy?

It may be severed by a voluntary transfer or by operation of law;Joint tenancy can be severed by one of the joint tenants without the permission of the other.

Which of the following is not essential to a valid deed?

It must be acknowledgedAcknowledgment is not required for a deed to be valid and to transfer title. It is required in order to get the deed recorded. Essential elements to a Deed include: Parties competent to convey and capable of receiving the property; A granting clause; It must be in writing.

Vendee B has purchased under a contract of sale from Vendor A. Vendor A is one month behind in his mortgage payments on the property, which is the same amount that B pays each month to A. With regard to the current payment B makes to A:

It must be immediately applied to A's mortgage;The vendor (seller) is required by law to apply the payment received from the vendee (buyer) to the amount due on the existing trust deed.

When appraising a portion of an income producing property, the value of the portion is measured by:

Its contribution to the net return of the project;This is the principal of contribution.

Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describes the rights of the parties:

Jackson must sell because the doctrine of estoppel will apply in this case;Jackson allowed Sullivan to rely on verbal promises to his detriment. The court would apply the doctrine of estoppel and stop Jackson from denying the sale.

Real property taxes for the tax year 1997-1998 become a lien upon the real property as of:

January 1, 1997;Property taxes become a lien January 1 of each year.

The parallel timbers which support the load of the ceiling and floors of a frame house are called:

Joists;Statement of fact. The key word is parallel. Joists are parallel.

Which of the following would not be legally proper for a licensee to do?

Keep the client's secret that the roof leaks.Although offers should be in writing, if there is a serious verbal offer and the agent refuses to deliver it to the seller, it would not be legally proper.

A standard policy of title insurance protects the insured against:

Lack of capacity of a party to any transaction involving title to the land;The only one who could sign a document involving title other than the designated person would be someone with a power of attorney. The power of attorney would have been recorded.

Which of the following best identifies the three steps or phases involved in building a single family dwelling?

Land acquisition, development and construction; The three phases involved in building a single family dwelling are Land acquisition, Development and Construction.

Which of the following answers best identifies the three phases normally involved in a single-family dwelling:

Land acquisition, development and construction; The three phases involved in single dwelling construction are land acquisition, development and construction.

Appraiser Comstock employed the land residual technique. The unknown factor and desired result would be:

Land value;Land residual method would be used to determine the value of the land.

When considering the income derived from income property, which of the following is the last to be satisfied:

Land;Income is assigned first to capital, second to labor, third to coordination (management) and last to the land.

A broker is representing a developer who has completed his project in a subdivision called "Ridgeway." The broker's advertisement states that people have "already won a free gift", but in reality, they must attend a sales seminar to receive the gift. This type of advertising is:

Legal, if the ad states they must sit through a sales seminar in order to collect the gift.When offering prizes or gifts, all requirements to be eligible to win must be stated in the advertisement.

Broker Keller advertised in the newspaper that anyone who bought a property listed with the broker would receive a free microwave oven valued at $500. Such action is:

Legal, provided full disclosure is made to all interested parties;This ad states exactly what a person has to do to get the microwave oven. This ad is legal.

Loans from some lenders must comply with the Real Estate Settlement Procedures Act. When the loan is secured by residential real property, and contains 1-to-4 residential units , the loan must comply with the RESPA regulations if the loan is made by:

Lenders whose deposits are insured by an agency of the federal government;Funds insured by a federal agency is the criteria for RESPA.

The Truth-in-Lending Law allows certain borrowers a limited right of rescission if each of the following events occurs in sequence, even if on different days. The time which is allowed for rescission begins when the:

Lending instrument is signed by the borrower;Statement of fact.

In financing for a new construction, the lender will usually release the final payment to the builder when the:

Lien period has expired;The lender will release the last payment after the mechanic lien filing period has expired.

Interim construction loans are rarely made by:

Life insurance companies.Life insurance companies will invest in real estate loans on existing properties; usually working through mortgage companies. They do not make construction loans. These are made primarily by commercial banks.

A builder needs a long-term loan of $3,000,000 to develop a new shopping center. Which of the following would usually be the best source of such funds:

Life insurance companies;Insurance companies make large long term loans to individuals. The key words are long term. Most borrowers do not want to commit to a long term.

Authorization to collect a deposit from the buyer on behalf of the seller is provided for in the:

Listing Agreement.The listing agreement authorizes the broker to accept a deposit along with an offer to purchase on behalf of the seller.

Which of the following is used by a lender as the basis for determining points:

Loan amount.A Loan points are 1 % of the loan amount

Which of the following has the strongest effect on the state of the economy:

Loan interest rates.Interest rates are set to stimulate the economy. When interest rates are low, businesses and consumers are willing and able to borrow and the economy grows. When interest rates are high, the opposite is true.

When an appraiser uses a short-form appraisal report (like those used by FNMA and FHLMC), the information usually includes all of the following except:

Loans and financing terms;Financing is not part of an appraisal.

When unimproved real estate is held for investment, which of the following items is deductible for income tax purposes:

Losses on sale of property;Unimproved property is vacant land. Losses on vacant land held as an investment may be deducted for federal income tax purposes.

20. Local governments are authorized to create Community Redevelopment Agencies (CRA's) for the purpose of correcting blighted conditions and to expand the supply of low and moderate income housing within their jurisdiction. By law, CRA's must set aside a portion of the tax revenue increases generated by the higher valuation created by their development projects in a special fund. The name of this fund is:

Low and Moderate Income Housing Fund; The bonds issued by a redevelopment agency are secured by future, anticipated property tax revenues. This procedure, which is called tax incremental financing, allows the CRA to receive increases in project area property taxes that are a direct result ofthe CRA's development activities. The monies that must be set aside, however, to retire these bonds must be placed in a legally required Low and Moderate Income Housing Fund.

Local governments are authorized to create Community Redevelopment Agencies (CRA's) for the purpose of correcting blighted conditions and to expand the supply of low and moderate income housing within their jurisdiction. By law, CRA's must set aside a portion of the tax revenue increases generated by the higher valuation created by their development projects in a special fund. The name of this fund is:

Low and Moderate Income Housing FundThe bonds issued by a redevelopment agency are secured by future, anticipated property tax revenues. This procedure, which is called tax incremental financing, allows the CRA to receive increases in project area property taxes that are a direct result of the CRA's development activities. The monies that must be set aside,however, to retire these bonds must be placed in a legally required Low and Moderate Income Housing Fund.

Two buildings are leased on a long-term basis, one for a post office and the other for a hardware store. Using the capitalization approach to appraise the properties, the post office would demand:

Lower capitalization rate;Risk is the primary factor in determining a capitalization rate. There would be a much lower risk with a post office, since the government is the tenant. That means the capitalization rate would be low. A hardware store is a higher risk investment, therefore, would command a higher capitalization rate.

The monetary tools used by the Federal Reserve System (The FED) to control the supply of money within the United States would include all of the following except:

Lowering or raising interest rates on government insured mortgages; A FED has three powers:1. Adjusting the Discount Rate, 2. Setting the Reserve requirements and 3.Open Market Operations. The Federal Reserve does not have the power to set interest rates on insured mortgages (FHA).

Madison is a mortgage loan broker. When setting up a loan, Madison differs from Carter, a mortgage banker, in which of the following ways?

Madison does not normally use his own funds in arranging a loan;Madision arranges loans as a .correspondent. He brings the borrower ahd the lender together as a "middleman." A mortgage loan banker lends his own money.

While reconciling the trust account, the broker finds an unexplained overage in the account and is unable to identify the owner of the funds. In this scenario the broker should:

Maintain the funds in the existing trust account, but keep a separate record of the overage funds and include them in the monthly reconciliationThis is exactly what the broker should do if he discovers an overage.

When a trust deed is sold, the parties often use an escrow in order to:

Make sure the conditions and terms are met prior to the closing of the transaction;This is the purpose of any escrow.

Which of the following types of misrepresentations occur least often in the practice of real estate:

Malicious misrepresentationReal estate agents are rarely malicious in their misrepresentations although they are sometimes negligent, innocent and fraudulent

Which of the following types of misrepresentation occur least often in the practice of real estate:

Malicious misrepresentationThere is no category of fraud called malicious.

A document which details the responsibilities of a property manager would be called:

Management Agreement.The Management Agreement would delineate the duties and responsibilities of the property manager. This contract creates an agency relationship with the owner of the property.

An appraiser's primary concern when analyzing residential property is:

Marketability and acceptability;Marketability and acceptability will determine whether the property will sell for the same or perhaps slightly more than comparable properties in the area.

Mary listed her farm with broker Bob. In the listing Mary said she would not consider any offer with a down payment over 23%. Broker presented a full price, all cash offer which Mary turned down. Which of the following is true:

Mary can turn down the offer without liability, because this offer did not fully meet the terms of the listing.The offer did not meet the terms of the listing, therefore, no commission is owed.

Which of the following might contribute to functional obsolescence:

Massive cornices;Massive cornices are inside the property line and are an example of functional obsolescence.

Jack Kaiser sued his former tenant, Robert Matthews, for one month's rent claiming that Matthews left without giving the 30-day notice as required by law. Matthews asserted that he had notified Kaiser to repair a broken water pipe, but the request had been ignored, and therefore he did not need to give the 30-day notice. Assuming only these facts, the court will probably decide:

Matthews is not liable for the 30 days rent, since Kaiser's failure to make necessary repairs is sufficient grounds for termination of the tenancy without notice;This is a good example of Constructive Eviction. If landlord fails to make repairs that affect healthy and safety, the tenant is justified in moving out without giving 30 days notice. He could also use the rental offset rules.

The National Housing Act which was passed in 1934 basically insures loans. It also had some secondary results. Which of the following is not one of these secondary results.

Maximum construction standards;The National Housing Act set up FHA FHA set minimum housing standards, not maximum.

An easement differs from a license in that a license:

May be revoked.A license is the personal, revocable, and non-assignable permission to enter the land of another, without being considered a trespasser. It can be revoked.

A straight note:

May be used in a real estate transaction; Is a note providing that the principal owing is to be paid at one time; and may be secured by a mortgage;A straight note is interest only. All three choices are correct.

When a business is sold, if a "notice of intent to sell" is not published before the sale, the sale:

May be void as against the existing creditors;Buyer may be liable for payments to creditors.

If a real estate broker is operating as a property management company and a real estate office, client's trust funds:

May place client's funds from both activities in one trust account;Placing property management trust funds in the same account as the brokerage trust funds is legal.

A surveyor is asked to survey land and determine its legal description. His legal description begins with the phrase, "Beginning at a point on the northerly edge of M Street I 00 feet easterly of the NE comer of the intersection of M and Seventh Street, and running thence ... ," which of the following methods of land description is being used:

Metes and bounds.Whenever a description uses distance and direction, it is a metes and bounds description.

Personal property is easily distinguished from real property by its:

Mobility;Personal property is moveable; real property is immovable.

A person buys a house and cuts down a tree on his property. It becomes personal property by:

MobilityThe difference between real and personal property is that real property is immovable and personal property is movable.

Among the choices available to an investor, stocks and bonds, when compared with real property, are usually thought to be:

More liquid in the marketplace.Liquidity is measured by the time it takes to turn an investment into cash. Stocks are definitely more liquid than real estate since they can be turned into cash within days.

Many costs must be paid in the building of any improvements on real property. In comparing these costs per unit (per square foot or cubic foot) in structures of differing size, the unit cost of a small residential home would be:

More than a larger structure;The most expensive elements of a home would be present in both a large home and a small home, such as the kitchen and bathrooms. This would make the cost per square foot higher in a small house than in a large home.

A broker negotiated a loan for a buyer. He will need to prepare a:

Mortgage Loan Disclosure Statement A Mortgage Loan Disclosure Statement is required whenever a broker negotiates a loan for a: buyer. A "Good Faith Estimate" is required when the loan falls under the Real Estate Settlement Procedures Act. - I to 4 unit dwellings. The other two disclosures relate to sale and would apply to the broker representing the buyer or seller in the actual sale.

Potential Buyer Potter seeks to purchase a home in a new subdivision. A licensee assists Potter in securing a loan for such purpose from a savings and loan association, explaining to Potter the loan processing costs that will be involved at the closing. Under these conditions, when the loan is arranged, a copy of HUD Booklet, "Settlement Costs and You":

Must be provided to Potter by the lender within three days of the loan applicationRegardless of how much information was imparted by the agent, the lender must follow the Real Estate Settlement Procedures Act. This would require the lender to provide the potential borrower with both a Good Faith Estimate and the booklet by HUD.

When a broker has a trust account, the name on the account must:

Name broker as trustee.The name on a broker trust account must say, "Broker trust account, name broker as trustee".

In the event a salesperson wishes to spend his or her own money on advertising a home for sale that was listed by the salesperson on behalf of the employing broker, the advertisement must include the:

Name of the employing broker;Legally, the name of the employing broker must appear in the ad. The salesperson may also place his name in the ad, but it is not a legal requirement.

In the transfer of a business opportunity, in order for a bill of sale to be valid, it must contain all of the following, except:

Names and addresses of creditors;The names of creditors do not appear on the bill of sale. Valid Bill of Sale contains: Name of transferor and transferee; Location of the business; & Description of property

An appraisal report has the three major subheadings of (I) Introduction, (II) Description of the area, neighborhood, and property, and (III) Analysis, conclusion and opinions of value. This appraisal report is most likely a:

Narrative report;These are the steps in a Narrative Report; it is the most complete form of appraisal.

A developer used the same plans to build houses on several different lots throughout a large subdivision. Each house is priced the same. If only the information given below were available, the purchaser who is well informed about real estate matters would prefer a home located:

Near the center of the subdivision;In the center of the subdivision would be best. The key lot is the worst in the subdivision as it is bordered by several other lots. Streets near an access road or across the street from a shopping center would be crowded and noisy.

Under which type of listing might a broker get no commission even though he finds a buyer and handles the entire transaction?

Net Listing.A net listing is one in which the commission will be any amount over and above the "net" required by the seller. If a broker produces an offer from a buyer which is exactly what the seller requires as his "net" the broker will earn nothing. The broker will still be required to handle the escrow.

For a profit and loss statement used for the purposes of obtaining a loan, the most desirable statistic would be the amount of the:

Net income;Net income is found. at the bottom of the profit and loss statement. This would be most important to a lender inasmuch as loan payments would come from the net income.

In the definition of highest and best use, you would most likely find the phrase:

Net return;Highest and best use is that use which produces the greatest net return to the land over a period of time.

When may a broker fill out the entire Seller's Transfer Disclosure Statement?

Never.The seller's portion of the Transfer Disclosure Statement must be filled out by the seller. The broker may never fill out this part.

The right to foreclose a trust deed, under a trustee's power of sale, outlaws:

NeverThe right to foreclose on a mortgage outlaws in four years. It is a written contract and written contracts must be enforced within four years, according to the Statute of Limitations. A deed never outlaws (runs the Statute of Limitations). A trust deed is a deed.

Depreciation in real property can result from all of the following, except:

New homes built with 5 bedrooms, 2 baths, and 2-car garages;This is an example of a modern design which would be marketable and acceptable in the market place. Depreciation in real property can result from Special partitioning in a warehouse; Out-of-date store fronts; & Excessively wide hallways in an office building

Broker James has an exclusive agency listing with Brown to sell his home for $65,000. During the listing period Brown sold the property to his friend Greene without the help of Broker James. Brown refused to pay a commission to Broker James. Broker James is legally entitled to:

No commission;An exclusive agency listing allows the seller to sell the property himself and not pay a commission.

Smith listed a vacant lot with Broker Ferris at $11,400. Prospective buyer Carter submitted an offer at the purchase price of $11,000, the offer to expire in three days. The next day, Smith made a counteroffer changing only the sales price to $11,200. When Carter did not respond within the three-day period, Smith signed an acceptance of Carter's $11,000 purchase offer and instructed the broker to deliver it to Carter. Carter told the broker he had decided not to purchase the property. Based on the foregoing, there is:

No contract;When the seller changed the price, it became a counter-offer. The buyer is under no obligation to continue negotiations. The counter-offer rejects the original offer, therefore, the original offer could no longer be accepted by the seller.

When a broker keeps records electronically, how long must he keep the records?

No matter how the broker keeps records, they must be kept 3 years.

The term "Housing Accommodation" refers to real property of how many units when occupied by the owner?

No more than 4.The phrase "Housing Accommodations" is defined as improved or unimproved real property used or intended to be used as a residence by the owner and which consists of not more than four dwelling units.

Who pays the points on a Cal-Vet loan:

No one.There are no points on a Cal-Vet loan.

Which of the following statements about personal property is most nearly correct:

No personal property that has been affixed should be removed without the written consent of all parties as specified in the purchase agreement;Personal property that has been affixed may be fixtures and would require agreement between seller and buyer.

Smith conveyed his ranch to Brown using a land contract. The ranch was serviced by a mutual water company, and Smith was a stockholder in the company. The stock which Smith owned was appurtenant to the land. Does Brown have to enter into a separate contract for the stock. of the mutual water company:

No, because the stock was appurtenant to the land and therefore part of the real property.The stock was appurtenant to the land, therefore it is part of the land being transferred and would transfer automatically whether it is mentioned in the deed or not.

What type of background check does the Real Estate Commissioner and Appraisal Commissioner use:

Non-payment of child support;If the potential licensee is delinquent in child support payments, but otherwise qualified for the license, the Department of Real Estate will issue a temporary license for 150 days. If the licensee has not removed the delinquency within that time frame, the license will be suspended.

Certain sides of business streets are usually not preferred by merchants because pedestrian traffic seeks the shady side of the street, and because merchandise displayed in windows is more apt to be damaged. The less desirable sides are the:

North and east;North and east are in the sun more than the others.

If a seller refuses to state on a real estate transfer disclosure statement that his property is in a slide area, when it is, the real estate agent should:

Not accept the listing;Refusing this listing is the lawful and ethical thing to do. A broker cannot take a listing in which the seller has instructed him to violate the law.

Sanderson purchased a home in which he expects to live. As a part of the purchase price, he contracted for a first mortgage with a federal savings and loan association. Under the provisions of the Federal Truth-in-Lending Act, he may:

Not cancel because a first mortgage to finance the purchase of his home carries no right to cancel.There is no right under Truth-in-Lending to cancel when the loan is being originated for the purchase of the home. A right to cancel would exist when the loan is a refinance of the owner occupied residence.

Under the Real Estate Settlement Procedures Act, the fee that the lender can charge the borrower for the preparation of the Disclosure/Settlement Statement is:

Nothing;Lenders may not charge for disclosures required under the Real Estate Settlement Procedures Act.

Where a broker shows a client's property to a prospective buyer that is listed with the broker under an open listing, the broker should:

Notify the seller as to the prospect's identity;With an open listing, the broker may have to prove that he is the "procuring cause" of the sale. This would be easier if the seller was notified each time the broker shows the property to a prospective buyer.

When one party is substituted for another party in a contract, the process is appropriately called a:

Novation. Statement of fact.

Subjective value is often contrasted with:

Objective value;Objective value is the value set by a "willing buyer and willing seller" in the open market place, neither being under undo pressure to either sell or buy and both being knowledgeable about the property.

When used in an offer to buy residential property, the phrase "as is" applies to:

Observable defects"As is" relates to observable defects only. Any other defects must be revealed by the seller and seller's agent.

A man is buying a residence. After signing a valid agreement for sale, he asks the broker for permission to move into the property before the sale closes. The broker should:

Obtain written permission from the owner.Of these choices, Obtain written permission from the owner is the best. The escrow instructions should also be amended to reflect this agreement.

Sellers are understandably reluctant to cancel an existing fire insurance policy at the time of a cash sale of real property because:

Of the higher short-term cancellation rate;When insurance is canceled early, the refund is not a direct proration. There is a penalty charged by the insurer for the early cancellation

Which of the following is the best indication that the parties have mutually agreed to a contract:

Offer and acceptance;Offer and acceptance means we have a meeting of the minds agreement. This is an essential element of a contract.

Which of the following best describes a counter-offer?

Offeree becomes the offeror.In an offer, the offeror is the buyer (the one who makes the offer) and the seller is the offeree (the one to whom the offer is made). In a counter-offer the positions change. The seller becomes the offeror and the buyer becomes the offeree.

Mr. Kwan has a $30,000 loss on the operation of his rental property. This is his only rental property. With respect to his income tax, he may do which of the following?

Offset this loss against capital gainsThe $30,000 can be used to offset capital gains from other investments. If Kwan has no other capital gains,he may use a maximum of $25,000 as a deduction against his ordinary income and use the rest as a "carryover" loss against future gains.

A broker, under the authority of an exclusive authorization and right to sell listing collected a $10,000 cash deposit on a selling price of $120,000. Through no fault of the seller, the purchaser failed to complete the transaction, and the owner declared that the deposit was to be forfeited. The purchaser agreed to the forfeiture of the deposit. Under these conditions, the broker:

On a residential property, could retain no more than 3% of the selling price as liquidated damagesThis wording appears as part of our liquidated damages clause

According to the bankruptcy code, the debts that are discharged are those that exist:

On the day when the bankruptcy petition was filed;Statement of fact.

It is generally felt that the successful real estate licensee possesses certain characteristics such as honesty, sincerity and a compelling desire to serve people. Which of the following attitudes should the licensee possess in dealing with clients:

One that is "color blind" or absolutely free from bias.Statement of fact.

According to real estate law, a definition of a broker is:

One who collects rents.A trustee selling property under a trust deed is foreclosing. He does not have a license. Buying and selling property for oneself does not require a license whether it is a corporation or not. Property managers collect rent and are required to have a broker license.

A husband, who owns separate property, dies without a will. Concerning that separate property, it would be distributed in which of the following ways:

One-third to wife and two-thirds to more than one child;According to the laws of Intestate Succession, separate property is divided one third to the wife and the remaining two thirds would be divided evenly among the children.

RESPA (the Real Estate Settlement Procedures Act) regulates which of the following?

One-to-four family residential dwellings;RESPA is a disclosure law. All disclosure laws relate to the sale or purchase of one-to-four dwelling units only.

The provisions of the Real Estate Settlement Procedures Act (RESPA) apply only to transactions involving certain types of property. Of the following which types of property must comply with RESPA:

One-to-four family residential dwellingsStatement of fact.

By law and regulation, a real estate agent is obligated to communicate any offer to the principal:

Only if it is in writing;All real estate contracts must be in writing per the Statute of Frauds.

The best way to discover an encroachment is:

Onsite inspection. Statement of fact.

When the term involuntary alienation" is used, it most likely means that title to the property was moved by:

Operation of lawInvoluntary alienation indicates the owner did not willing part with the title. This usually means title was transferred by Operation of Law, i.e. Law Suit.

An unearned increment to the value of real property does not result from:

Over-improvement to real estate by the owner;An unearned increment is an increase in value due to causes over which the owner had no control, such as an increase in population.

Which of the following would least influence a lender in establishing the eligibility of a borrower:

Overtime earnings of husband;Since overtime can be temporary, it does not play a significant roll in qualifying borrowers for trust deeds.

Mike Coogan, a new real estate salesperson, made strong efforts to obtain listings in a non integrated community. He found success by insinuating to property owners that should minorities move into the area, the value of their homes would decrease. Which of the following terms best describes the activities of Salesperson Coogan:

Panic peddling & Blockbusting;Panic peddling and blockbusting are inter-changeable terms.

Which of the following statements is false concerning equal opportunity housing:

Panic selling can occur only when the buyer is also a seller;Panic peddling occurs when a real estate broker convinces a seller that he should sell as a result of minorities buying property in the area in.which the seller owns property.

GPAM is a mortgage loan that provides for:

Partially deferred payments of principal at the start of the loan.This is a Graduated Payment Adjustable Mortgage. This plan combines elements of a Graduated Payment Mortgage and an Adjustable Rate Mortgage. It starts like a GPM with lower principal payments that increase in fixed steps until they level off, after which the interest rate may vary. This loan may produce negative amortization.

The function of mortgage companies, which play an important role in present-day real estate financing, could best be described as:

Participating in the money market basically as correspondents for other lenders, originating and servicing loans but not intending to hold them in their own portfolio;Mortgage brokers are basically loan correspondents. They arrange loans between buyer and other lenders. Usually these loans are sold on the secondary market, and therefore would not be serviced by the mortgage broker.

The function of mortgage companies, which play an important role in present day real estate financing, could best be described as:

Participating in the money market basically as correspondents for other lenders, originating and servicing loans but not intending to hold them in their own portfolio;This is the exact function of mortgage brokers.

Which of the following cannot obtain a broker's license?

Partnership. Statement of fact.

When determining effective gross income of an apartment building, an appraiser should deduct all of the following from gross income, except:

Past contractual income.Past contractual rent is simply a record of past rents and their collections. It would have nothing to do with predicting th.e effective gross income. Effective gross income is the amount we expect the owner to actually collect in a given year. It is determined by taking the gross scheduled income and deducting vacancies and bad debts (rent concessions and collection losses).

When a purchaser under a land contract is paying the seller impounds for taxes and insurance, those payments may not be disbursed for any other purpose without the consent of the:

PayerImpounds are trust funds and must be used only for the intended purpose. To use impounds for any other reason would require the written permission of the borrower.

A real estate salesperson's license has been suspended because money was paid out of the Recovery Account to a person who had a judgment against the salesperson. His license will not be reinstated until he:

Pays the Recovery Account for the money paid plus interest;Statement of fact.

A lease based on a percentage of gross sales would be:

Percentage lease.A percentage lease is usually used in retail space rental. The lease calls for rent to be determined by a percentage of the gross sales of the business occupying the space.

Waters which are below the ground but are not restricted to a bed or well-defined channel would be known as:

Percolating waters; This the definition of percolating waters.

Appraiser Smith is a qualified expert witness and has been asked to appraise a particular property. Appraiser Smith decides to use the observed condition method of determining depreciation. Appraiser Smith will consider:

Physical deterioration; functional obsolescence; and economic obsolescence.Observed condition method is a way of determining depreciation. The appraiser would be concerned with all types of depreciation in his valuation.

The provisions of the Subdivision Map Act are enforced by the:

Planning Commission;The purpose of the Subdivision Map Act is to give the local governing authorities control over development within their jurisdiction. This law is enforced by the Planning Commission.

Government land use, planning and zoning are important examples of:

Police power;Police power regulates land use. Eminent domain takes title away. These are both governmental powers, but they are different.

The main duty of the county assessor is to determine the:

Portion of tax to be paid by the property owner;The county assessor assesses properties to determine the county property tax basis. He then determines the portion of said tax to be paid by each property owner.

Mr. Roberts sold his home under a land contract and, while driving by the house one day, noticed that a contractor was installing a swimming pool. To protect himself, the Mr. Roberts should:

Post and record a notice of non-responsibility within ten days.A notice of non-responsibility must be posted on the property and filed with the county recorder within 10 days of the owner finding out the work has been done. This will protect the owner from a mechanic's lien by warning the mechanic that the tenant is responsible for payment, not the owner of the property.

An Environmental Engineer is testing water to determine if it is drinkable. Assuming the engineer determines that the water is drinkable, it would be called:

Potable Water;

Companies that issue private mortgage insurance normally secure a majority of their financial resources from:

Premiums earned on pooled insurance policies and stock or debt issues;This is exactly the way in which insurance works.

An easement on real property that can be more easily terminated by non-use is called:

Prescription.Only an easement created by use, can be terminated by non-use. The easement created by use is created by prescription.

31. An easement on real property that can be more easily terminated by non-use is called:

Prescription; A Only an easement created by use, can be terminated by non-use. The easement created by use is created by prescription.

When acquiring an easement, which of the following methods would create an easement that could be most easily terminated for non-use:

Prescription;Only an easement acquired by use (prescriptive) can be terminated by non-use.

When a real estate licensee acts exclusively as a buyer's agent, he can:

Present offers to seller and seller's agent;Buyer's agents should present offers to the seller and the seller's agent. Buyer's agent is a fiduciary for the buyer. The seller should also have his agent there when the offer is presented.

The state of California has authority over and takes financial responsibility for:

Preventing and fighting forest fires in national parks.Statement of fact.

On a listing agreement, what is included under the section, "Terms of Sale?"

Price, method of payment and personal property included in the sale price;The "Terms of the Sale" section in a listing agreement lists the price and how the price is to be paid. It also discusses any personal property which is included in the purchase price.

The expansion and contraction of available rental space to meet demand is stimulated most by the market fluctuation of:

Prices and rent;When demand is high and supply is low, rents increase. When rents increase investors are willing to help increase supply, because rents will cover prices paid for the investments and give a reasonable return on the investment.

A real estate licensee, who negotiates a loan secured by a trust deed on real property, must see that the trust deed is recorded in the name of the lender/beneficiary:

Prior to the time that any funds are disbursed; and within 10 days if the lender has given written authorization to release the funds prior to recording. Section 10234 of the Business and Professions Codes states that, "Every real estate licensee who negotiates a loan secured by a trust deed on real property shall cause such trust deed to be recorded naming the lender as the beneficiary with the county recorder of the county in which the property is located prior to the time any funds are disbursed." The exception is when the lender has given written authorization for a prior release of the funds. If the funds are released on the lender's written authorization, the licensee shall see that the trust deed be recorded, or delivered to the lender with a written recommendation that it be recorded immediately within 10 days following the release of the funds. This question applies more to hard money loans arranged by mortgage brokers who conduct their own escrows. In actual practice, if the escrow is handled by an escrow company, the disbursing of the funds and the recording of the trust deed occur when escrow closes.

Which of the following would not be considered one of the great special forces influencing value:

Private restrictions;The special forces influencing value are: Social, Physical, Economic and Political.

As defined by California law, an advance fee includes money collected or demanded from an owner of a business opportunity to pay for:

Promotional services performed by advertising in a publication primarily directed to this type of properties available for sale or lease.This is considered an advance fee and must be treated that way by the broker.

Which of these would not be a credit to the buyer:

Prorated insurance.Insurance is paid by the seller and is in effect for a specified period of time, ie. three years. If the buyer wants to assume the insurance policy, it would have been prepaid by the seller. It would be a debit to the buyer and a credit to the seller.

The Federal Real Estate Settlement Procedures Act of 1974 (RESPA) requires lenders to do, or cause to be done, all of the following except; Charge no more than $10.00 per document for preparation and delivery of the good faith estimate and the uniform settlement statementRESPA forbids the lender to charge for disclosures. (RESPA) does requires lenders to do:

Provide loan applicants with a good faith estimate of closing costs on a HUD-prescribed form; Where the lender is also the closing agent, to furnish a uniform settlement statement to the borrower and seller; & Furnish all applicants for loans with a copy of a specific information pamphlet no later than three business days following the time of loan application.

The Real Estate Settlement Procedures Act covers a federally-regulated loan which is a first loan where the proceeds are used to finance the:

Purchase of a lot upon which a mobile home is located.The Real Estate Settlement Procedures Act applies to the purchase of one-to-four dwelling units. The lot on which a buyer intends to place a mobile home would fall into this category.

A federal RESPA booklet and disclosures must be given to a borrower by a real estate licensee when the federally-related loan is a first lien and the money is used to:

Purchase one-to-four residential units;Statement of fact.

When a new subdivision is sold to the public, the Commissioner's public report often requires that purchase monies be impounded, because the subdivision is subject to a blanket encumbrance which does not contain an unconditional release clause. The impounding provisions, under these circumstances, are primarily for the benefit of the:

Purchaser of a lot in the subdivision;This would protect the buyer.

If a real estate broker received a $400 check as a deposit with an offer on a Tuesday, and the seller is going to be out of town for the next week, the broker should:

Put the deposit in his trust account by Friday;A broker must deposit the check in the trust account within 3 business days unless he has written authorization from buyer and seller as to alternate disposition.

The three methods which are used by appraisers, architects, and builders for estimating the cost of construction are:

Quantity survey, unit-in-place, and comparative square or cubic footStatement of fact.

To determine ownership, what is the court action taken:

Quiet title action.Quiet Title is a court action to clear a cloud from a title. It would establish ownership or marketable title.

Regarding Environmental Standards, Federal Law would require a seller of a new home to disclose to the buyer which of the following:

R rating.Federal law requires that a "new home" seller (including a subdivider) disclose in every sales contract the type, thickness, and R-value of the insulation which has been or will be installed.

The most effective way for the Federal Reserve to create a tight money market would be to:

Raise the discount rate and sell government bonds;Raising the discount rate and sell government bonds are two powers of the Federal Reserve System. When the FED uses these powers as described it makes less money available.

Wong acted as an agent for Jackson without having the authority (or the appearance of authority) to do so. Jackson later chose to accept Wong's unauthorized acts. This is an example of:

Ratification;This is a good example of ratification. Ratification occurs when a principal accepts an agent's authorized act.

When a California real estate broker advertises for loan business, the ad must include which of the following:

Real Estate Broker, California Department of Real Estate. Statement of Fact

A prospective purchaser is interested in buying a lot in the mountains from a subdivider who is not a real estate licensee. The buyer wishes to know about sewer assessments, liens, and utilities to his lot, blanket encumbrances, and maintenance of streets. The source that would provide all of this information is the:

Real estate Commissioner;This information would be part of the Commissioner's Final Public Report.

Two or more people can own as joint tenants:

Real or personal propertyJoint tenancy is a method of taking title which can be used for either real or personal property.

It is proper business practice for a real property manager to be compensated in all of the following ways, except:

Receipt of discounts on purchases or suppliesThis would be considered a secret profit. Property managers must pass along to the owners any discounts on purchases or supplies. Property Managers can be compensated by Percentage of gross receipts; Commission on new leases; and by Commission on major repairs or alterations.

Sometimes an appraiser estimates the value of a property using three approaches. After he had done this, his next step would be to:

Reconcile the value indications;He must reconcile the values. This is done by correlation.

The final step in an appraisal is:

Reconciliation.An appraiser reconciles the 3 methods of appraising putting the most emphasis on the approach most likely to be the most accurate. He uses the other 2 primarily as backup data.

Mr. Albertson purchases a property from Mr. Chavez for $12,000. The property is encumbered by a first trust deed of $7,000 and a second trust deed of $2,000. Mr. Albertson pays $5,000 cash and agrees to assume the first trust deed. The documents that will be recorded, and the order of their recordation, are:

Reconveyance of the second trust deed and then the grant deed;The first step would be to file the reconveyance deed. This clears title of the lien. Then we would record the grant deed transferring title from the seller to the buyer.

A lender who refers to a loan as "seasoned" is referring to the:

Record of consistent payments on the loan.A seasoned loan is one on which the payments have been made consistently over a reasonable period of time - usually 3 years.

When a vendee is buying a home with a land sales contract, what should he do to protect his interests?

Record the land sales contract at the county recorder's office;Recording the land contract will provide the vendee (buyer) with the greatest protection as it gives constructive notice of his interest in the property.

A construction lender wants to make sure that his loan is adequately secured as a primary lien. When a loan for the purchase of the land is already an encumbrance against it, a construction lender would be least protected by which of the following:

Recording, publishing and posting a notice of nonresponsibility;A Notice of Nonresponsibility would be filed by an owner of rental property when the owner discovers the tenant has ordered work done to the property which the owner did not authorize. This notice warns a contractor that the owner will not be responsible for paying the contractor. This notice would offer no protection to a construction lender.

Seller Horton listed a parcel of vacant land with Broker Jolly, who placed the listing in the local Multiple Listing Service. The property was shown by Salesperson Carson of Red Maple Realty to prospective buyer Baron. Salesperson Carson is directly responsible to:

Red Maple Realty;Salesperson Carson is a subagent of Broker Jolly and is directly responsible to his employing broker.

You, as a salesperson, have a listing on a home for $31,000. The seller is willing to carry back a note and second trust deed. You find a buyer who has $4,000 cash and wants an FHA loan. You obtain a $24,000 FHA loan commitment. You should:

Refuse to arrange a second trust deed over the FHA insured loan.FHA loans do not permit second trust deeds on the original purchase. You must refuse to arrange this loan.

Uhanda applied for a real estate loan. The loan application requested her to disclose her race and marital status. What can she do?

Refuse to fill out that portion of the loan application;That portion of the loan application is optional. She can refuse to fill it out.

The Federal Truth-in-Lending Law defines the annual percentage rate which is charged on a real estate loan. It is the:

Relative cost of credit expressed in percentage terms;

When dealing with the public, a broker may not:

Remain silent concerning material facts about a property known only to himself;Statement of fact. All material facts must be disclosed.

A broker may not:

Remain silent on a material fact.A broker may not conceal a material fact. A broker may delegate his authority to a salesperson who has been active in the business 2 years out of the last 5 years. He is not required to accept a listing.

When appraising real property by the replacement cost approach, which of the following would be least important:

Rent cost per square foot;Rent is used in the Income or Capitalization approach, not the replacement approach.

When a buyer signs an exclusive authorization to acquire a property there is usually a clause in the form which allows the broker to:

Represent other buyers during the time limits of the agreement.Agents who work strictly with buyers may be working for more than one buyer at the same time. The contract must inform buyers of that possibility.

When a buyer signs an exclusive authorization to acquire a property there is usually a clause in the form which allows the broker to:

Represent other buyers during the time limits of the agreementThis clause is a standard clause in the contract. Buyer's agents may be working for more than one buyer.

A subdivider has a blanket encumbrance on many lots. The blanket encumbrance includes a release clause which states that when a certain amount is paid for each lot, it will be released from the blanket encumbrance. When the price of each lot is paid, the beneficiary will execute a:

Request for partial reconveyance;The Beneficiary instructs the trustee to issue a partial reconveyance. Only the trustee can issue a reconveyance deed.

In the field of real estate, a "prepayment penalty" is sometimes:

Required from a trustor who makes advance payments on his home loan;A "prepayment penalty" is charged by lenders to borrowers who pay off their loan before the end of the loan term.

When it is necessary to amend a Real Property Transfer Disclosure Statement, the buyer, upon receipt of the amendment, has a right to:

Rescind the offer to purchase;Since an amendment to the Transfer Disclosure Statement means the property bargained for has changed, the buyer has a right to rescind the contract.

Insulation materials are rated by their effectiveness according to their "R-value". The rating system is used to rate the material's:

Resistance to flow of heat;The "R" in "R-value" stands for Resistance. R-value measures a material's resistance to heat flow

The effectiveness of insulation is referred to as its "R-value." The R stands for:

Resistance to heat flow;Statement of fact.

When McMahon conveys to Anderson a portion of his fee estate for a term less than his own, McMahon's interest would be identified as:

Reversion;McMahon has a lease with Anderson. Anderson has a leasehold estate and McMahon has a reversion. When the lease expires, the "leasehold" reverts to McMahon.

Assume that a lawsuit has been filed under the 1968 Fair Housing Act or the 1866 Fair. Housing Act. Which of the following remedies is not available to the person who has. been denied equal housing opportunities:

Revocation or suspension of the license of the agent who was involved in the discrimination;Only the Department of Real Estate can suspend or revoke a real estate license.

If a principal no longer desires the broker to act for him during the period of an exclusive right to sell listing, he may:

Revoke the agency created by the listing contract but may be liable for damages;Principal may revoke the contract, but would be liable for the commission.

The sale of real property by a conditional installment contract of sale gives the buyer:

Right of possession;This is another name for a land contract. The buyer gets possession of the property and equitable title. Legal title is retained by the seller.

A homeowner failed to make payments on his trust deed loan for two successive months and a notice of default has been filed. He has:

Rights of reinstatement;The trustor has a right of reinstatement up to 5 business days prior to the Trustee Sale.

Legally and technically, property is defined as:

Rights or interests which a person has in the thing owned;

Which of the following statements concerning riparian rights is false:

Riparian rights cannot be severed from the property by prescription or condemnation;Riparian rights can be severed from the property by prescription or by condemnation. The government may do so for the public good.

The difference between riparian rights and littoral rights:

Riparian rights refer to right to use water from adjacent rivers and streams, littoral is right to use water from lakes and oceans;Landowners right to use from adjacent rivers and streams. If land is adjacent to water which is deep enough and wide enough to be "navigable," the water and the land under it belong to the state. Littoral rights refer to the right of a landowner to use water from adjacent lakes or oceans granted to the landowner by the state.

If a man has a freehold estate, which of the following would result in his having a less-than-freehold estate:

Sale and leaseback;When an owner sells property and then leases it back, he has a leasehold estate. A leasehold estate is a Less-than-Freehold Estate.

Sam is the lessee in a lease for a unit "purchased" in a cooperative apartment building. Sam makes monthly rent payments under the lease which include his proportionate share of the mortgage payments, property taxes and insurance. Concerning this, which of the following is most correct:

Sam's equity could be lost if other lessees in the building default in their monthly payments under their leases;Cooperative Apartment (stock cooperative, co-op, stock co-op) - An apartment building owned by a corporation and in which tenancy in an apartment unit obtained by purchase of shares of the stock in the corporation and where the owner (called tenant or lessee) of such shares is entitled to occupy a specific apartment in the building. Since there is only one owner (the Corporation), there will only be one mortgage, property tax bill or insurance bill. Unless the other owners "chip in" and pay for the lessee who is not paying his share, the entire property will go to foreclosure. Sam will, therefore, lose his equity.

Which of the following would be considered economic characteristics of land which affect it's value as a product in the marketplace:

Scarcity; Permanence of investment; and Improvements;All are considered economic characteristics of land affecting its value. Statement of fact.

Of the following, which term correctly identifies preliminary architectural drawings and sketches such as elevations, plot plans, etc.:

SchematicsStatement of fact.

Under the Uniform Commercial Code, the proper document to use in mortgaging articles of personal property is a:

Security agreement;The Security Agreement creates a security interest in the personal property. It would allow the seller to repossess the property for non-payment.

A joint tenant may not do any of the following, except:

Sell his interest in the property;A joint tenant may sell his interest. In a joint tenancy, interests must be equal and there is an equal right of possession. Joint tenancy interests may not be willed.

The court case "Easton v. Strassburger" held that the seller and agent must disclose to the buyer all facts materially affecting the value or desirability of the property. This decision led to the passage of the:

Seller Transfer Disclosure Law;It was as a result of the Easton v Strassburger court case that the Seller's Transfer Disclosure Law was enacted.

City law requires that when property is sold it must comply with minimum energy conservation standards. If, during escrow, an inspector found that the roof insulation was not sufficient, the cost to bring the insulation up to the proper rating would be paid by the:

Seller, no matter who wants the work done;Seller is responsible for bringing insulation up to code.

The listing agent would have to reveal a relationship to the:

Seller;The listing agent represents the seller. Any relationship to the seller would have to be disclosed. It is highly unlikely the listing agent would be related to the buyer.

It is illegal in California to violate anti-trust laws. In the field of real estate, which of the following would be such a violation:

Setting and enforcing a specific commission rateThis is an example of price fixing. Price fixing violates the anti-trust laws.

A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter, who is also a broker, takes over for him. What should she do about the current listings?

She must attempt to renegotiate all of the listings;Listings are personal service contracts and terminate with the death of either party. The listing agreement is between the seller and the broker. When the broker dies, the listing terminates. The new broker must attempt to renegotiate the listing with the sellers.

When using a purchase money trust deed, the trustor:

Signs the trust deed which is used as security for the loan.Although the trustor also signs the promissory note, the note is the evidence of the debt. It is not a trust deed until the truster signs the trust deed.

Which of the following would not be a factor determining whether an item is real or personal property:

Size;Whether or not personal property is determined to be a fixture depends on 5 legal tests. In addition to those in the question, the others would be:@ Method of attachment and intention of the parties, Agreement of parties; adaptability of item; intention of parties.

In conventional construction, the studs of an interior wall are supported by and rest on the:

Soleplate Statement of fact.

According to the California Recordation Act, what is the definition of an "instrument"?

Some paper signed and delivered by one person to another, transferring title to, or giving a lien on real property;Statement of fact.

According to the California Recordation Act, what is the definition of an "instrument"?

Some paper signedband delivered by one person to another, transferring title to, or giving a lien on real property;

If a contract for the purchase of real estate is to be enforceable, the consideration must be sufficient relative to value in order to enforce a suit for:

Specific performance;In order to enforce a suit for specific performance, the consideration must be sufficient relative to the value of the property.

The easiest method of calculating reproduction cost of improvements is:

Square foot method;Unit-in-place and Quantity Survey require an expertise that the square foot method does not. Cubic foot is seldom used.

Which of the following would be considered real property:

Stock in a mutual water company;Stock in a mutual water company is appurtenant to the land. It is part of the real property.

Which one will be considered the most liquid asset when compared to real estate?

Stocks and bonds;Liquidity is measured by the time it takes to turn an investment into cash. Cash, itself, is the most liquid investment. Stocks and bonds can be converted to cash within days. Annuities can take years. Tax shelter refers to savings on income taxes.

An object's value is sometimes created in the mind's eye of the beholder. This is referred to as:

Subjective value;Subjective value is the value assigned by the user of the property. It is usually higher than the value set by the market.

A broker sells a house advertised "as is". There are no obvious defects that would be evident to a prudent buyer on inspection. The sellers and broker, however, know that the plumbing is very defective. Neither the broker nor the sellers disclose this to the buyer. The buyer moves in and discovers the defects. He/she sues the broker and sellers. The suit will probably be the following:

Successful, because the "as is" clause does not override the sellers' and brokers' duty to fill out a Transfer Disclosure Statement revealing all known material facts whether the defects are evident or not;Since it addresses the "as is" clause. Brokers and sellers must reveal material facts, period. The most "as is" can mean is that the sellers refuse to fix the problem. It does not mitigate the duty to disclose.

When a business opportunity is sold, a clearance receipt protects a purchaser from:

Successor's liability.Successor's liability would be the duty of the buyer to pay any unpaid sales tax owed by the seller. This is the reason we should get a clearance receipt from the Board of Equalization showing the seller has paid all sales tax owed.

Mr. Townsend bought a parcel of land and built a 20-unit apartment building on it. In order to do so, he borrowed 80% of the construction cost using a trust deed to obtain a conventional loan from a state charted savings and loan association. The apartment building has been completed and Townsend is getting ready to lease the units. He has created an application form for prospective tenants. One of the questions concerns race, since Townsend wants to rent only to Caucasians. Under these circumstances, which of the following is correct:

Such a question in the application would be a violation of Part 5, Discrimination in Housing of the Health and Safety Code;Statement of fact.

The words "time, title, interest and possession" are most closely related to which of the following concepts:

Survivorship;Time, Title, Interest and Possession are the four unities required for a joint tenancy. A joint tenancy has a right of survivorship.

In which of the following is property distributed according to the Statute of Succession:

Tenants in common;Title held as tenancy in common may be willed. If a person died intestate (without a will) the Statute of Succession would apply. Joint tenancy property passes immediately to the surviving joint tenants. Community property of a person who dies intestate automatically vests in the surviving spouse.

Sampson offered to fully perform his part of a purchase contract. This would be described as:

Tender;"Tender'' is (means) an offer to perform or pay consideration.

When buying his home, a purchaser was given a grant deed and a standard policy of title insurance. Which of the following items would be warranted by the seller but not covered by the policy of title insurance?

That there are no undisclosed liens against the property placed there by the granter;There are two implied warranties in a grant deed: That the grantor has not already granted the property to someone else and that the grantor has revealed all encumbrances placed on the title by the grantor.

Which of the following must be disclosed to the buyer of a home in a new subdivision:

The "R-rating" of the insulation.Statement of fact.

Market value is based primarily on:

The "willing buyer, willing seller" concept;The "willing buyer and willing seller'' set the fair market value through negotiations.

The Irwin's made an offer to purchase the Grey's property. As part of the offer, the Irwin's agreed to take title "subject to" an existing VA loan which the Grey's obtained when they purchased the property in the approximate amount of $39,000. If the Grey's sell to the Irwins under these conditions, which of the following is true concerning liability for a loss suffered by the government after a foreclosure on the VA loan:

The Greys will be primarily liable;The Grey's will be primarily liable since VA did not approve an "assumption" of the loan. If there is a deficiency in a foreclosure, the government may get a deficiency judgment against the Greys.

An agent becomes the agent of the seller when both the seller and the agent sign:

The Listing AgreementThe Listing Agreement creates the agency relationship between the seller and the listing agent.

The most comprehensive appraisal report would be:

The Narrative Report requires the appraiser to use all three approaches to value on a single subject property. It also entails a discussion of the physical, social, economic and political forces affecting value in the region, city and neighborhood in which the subject property is located.

The purchaser of a retail business may have "successor's liability" to:

The State Board of Equalization;Successor's Liability refers to the liability of a buyer to pay sales tax which is still owed by the seller to the Board of Equalization.

Inspection reports and notices relating to wood-destroying organisms are filed with:

The Structural Pest Control Board;The Structural Pest Control Board in Sacramento receives all pest control reports and maintains these records for a period of two years.

The acts and representations of all of the following are binding on a seller of real property except:

The acts and representations of the buyer's broker;The seller is only responsible for the actions of the seller's broker and any sub-agents of that broker. The seller would not be responsible for the actions or representations of the buyer's agent. The buyer would be responsible for representations and actions, of the buyer's agent.

In 1973, a broker was appraising a house built in 1948. Which of the following statements is correct:

The actual age was 25 years;The only certainty is that the house is 25 years old. 1973 - 1948 = 25 years. We have no information concerning the economic life, effective age and therefore, cannot determine the remaining life.

When a loan broker advertising for investors who wish to invest in "secured" loan on real property, such advertising would be regarded as misleading unless:

The advertising fully explained the extent to which such funds would be securedA buyer would have the right to know to what extent the loan is secured. If the loan is not fully secured by one property, the holder-in-due course would not have foreclosure rights.

Of the following, which best characterizes the term "single agency":

The agent represents one client in dealing with third parties;A single agency means the agent is representing only party in a transaction; either the buyer or the seller, but not both.

When depreciation is taken on real property:

The basis is reduced;Depreciation lowers basis by the amount taken each year.

The federal right-to-cancel notice must be given to a borrower by the agent if:

The borrowers residence is the security for the loan;The Federal Right to Cancel Notice (3 day right of rescission) only applies to owner occupied residences and only on a refinance.

An offer on a listed property was accepted and the acceptance was communicated to the buyer. However, before going to escrow, the seller found a buyer who was willing to pay all cash and notified the broker that the original deal was rescinded:

The broker has good legal basis for a commission claim;Once the seller accepted the offer, the seller owed the broker the commission. The broker did what he was hired to do.

A seller asks a broker about the race of an offerer. Which of the following is true?

The broker may not answer the question;The broker is not allowed to answer this question. The race of a buyer is not a material fact.

Assume that a broker had assured an owner that he was signing an exclusive agency listing, when in fact he was signing and exclusive right to sell listing. Which of the following is true:

The broker would be subject to disciplinary action because he misrepresented a material fact;Statement of fact.

A brother and a sister own property as joint tenants. They both borrow $50,000 against their interest, but before the sister makes any payments, she dies. Which of the following statements is correct?

The brother owns the property in severalty without responsibility for the sister's debtsEach owner in a joint tenancy has the right to encumber his own interest. One of the advantages of holding title in joint tenancy is that when a joint tenant dies, the joint tenancy property automatically vests in the remaining joint tenants, free of the debts of the deceased. This is true even if the debt is an unforeclosed mortgage. Since there are only two joint tenants, the survivor would hold title in severalty.

When a pest control company discovers no evidence of infestation of termites but discovers conditions which may lead to such infestation, the cost of correcting such conditions is paid by:

The buyer only is he chooses to have the condition corrected.The seller must pay to correct any damage caused by present infestation. Correcting possible future infestation is not the responsibility of the seller and would be paid by the buyer only if he chooses to have the work done.

According to a certain contract, the buyer will be taking the property subject to the existing loan. "Subject to" most nearly means:

The buyer will not be personally liable for the loan.The lender did not approve this buyer taking over the loan and will hold the seller liable in case of a foreclosure.

Which of the following statements is most nearly correct concerning buyer's agency:

The buyer's broker has no agency relationship with the seller or the listing broker, and is therefore not liable for their actionsThe buyer's broker has an agency relationship with the buyer only and is liable to the buyer. He is not liable for the actions or statement of the seller or seller's agent.

When real property is sold, a copy of the structural pest control report must be given, if requested, to:

The buyer;

For the appraisal purpose of an income property, the recapture of capital investments and improvements would be included in:

The capitalization rate;The capitalization rate applied to the improvement is higher than that applied to the land. The rate is then combined into one overall rate. This allows for recapture of capital investments.

Steve has an old building where he runs his business. The city has just condemned the property through eminent domain.

The city pays only just compensation; A When a city condemns a property by means of eminent domain, it is required to pay just compensation for the property only. "Just compensation" is usually the fair market value of the property.

Steve has an old building where he runs his business. The city has just condemned the property through eminent domain.

The city pays only just compensation;A When a city condemns a property by means of eminent domain, it is required to pay just compensation for the property only. "Just compensation" is usually the fair market value of the property.

When a fire insurance claim is filed, which of the following is true?

The claimant would: Neither gain nor lose financiallyThere should be no gain or loss with an insurance claim. Insurance should only replace what is lost - put the claimant back in the same position as before the claim.

The method which is used most often to value land or sites is:

The comparative method.The best way to determine the value of land is through comparison.

Mr. Smith died in an accident on January 15, 1999. The broker insisted that a son, who inherited the property, sell to a buyer who had made an offer that Mr. Smith had been considering. Under these circumstance:

The contract was terminated by the death of the seller, and the son has no obligation to sell, or to pay a commission;Death cancels a listing agreement. Mr. Smith had not accepted an offer, so there is no obligation on the part of the son to continue with any sale.

Under the Federal Truth-in-Lending Law, which of the following need not be included in the total "finance charge" required as part of the disclosure statement:

The cost of a credit report and appraisal fee necessary to make the loan;The appraisal and credit report fees are not considered part of the cost of credit.

In complying with RESPA, a lender must furnish the prospective borrower an information booklet prepared by HUD no later than the third business day from which of the following dates?

The date the lender receives the borrower's loan application;Statement of fact.

A seller sued a broker for failing to disclose a material fact to him. In defense, the broker proved that his listing contract with the seller was oral. Under these circumstances:

The defense is not a bar to the lawsuit because it is not applicable to the issue of the case;A material fact must be disclosed, period. The fact that the contract was oral and not written, is not a defense for failure to disclose a material fact.

.A person buys a house and cuts down a tree on his property. It becomes personal property by: (A) Severance; (B) Annexation; (C) Fixation; (D) Mobility

The difference between real and personal property is that real property is immoveable and personal property is movable.

When homesteaded property is being sold under the direction of the court, the money is divided. Which of the following would have first priority:

The discharge of prior encumbrances.All encumbrances filed before the homestead would be satisfied before the homestead exemption. Remember, the homestead protects the owner only against judgment liens filed after the homestead

When a deed contains discriminatory language or clauses:

The discriminatory words or clauses are unenforceable;Clauses which were written into deeds or CC&R's which allow discrimination are unenforceable. There is no legal requirement that the deeds or CC&R's must be rewritten.

Which of the following statements, if any, is correct concerning the relationship between an effective interest rate and a nominal interest rate:

The effective interest rate is the rate actually paid by the borrower for the use of the money; the nominal rate is the rate specified in the note;The effective rate is the annual percentage rate. It includes all the fees that must be paid by the borrower in order to obtain the loan. This is the cost of credit. The nominal rate is named in the note.

The term used by lenders, "mortgage yield" best describes:

The effective interest return obtained from a first trust deed by an investor;Statement of fact.

When a title insurance company issues an ALTA policy, it generally extends the risks which are insured against by a standard policy to include all of the following except:

The effects of a zoning change;No policy of title insurance will protect against police power. Zoning changes would be an example of police power. ALTA policy coverage includes: Unrecorded mechanic liens; Parties in possession; & Unrecorded easements

Owner Bob owns an apartment complex which is managed by Broker X. Owner Bob wants to sell his apartments and Broker Xis the listing agent. Who distributes the security deposits?

The escrow companyAll money is disbursed through escrow.

The legitimacy of zoning laws rest upon:

The established right of police power of government;Statement of fact.

All of the following would be considered examples of the use of police power by the government except:

The establishment of taxation rights.Police power is the right of a governmental body to regulate land use. Taxation does not regulate how land is used.

The purpose of the assessment roll, as compiled by the assessor's office is:

The establishment of the tax base.The assessment roll serves as the tax base.

In an exclusive authorization to sell listing, the terms of the sale specify:

The exact requirements that the seller has for selling the property;Statement of fact.

When a business is sold, sales tax must be paid on which of the following items:

The furniture and fixtures of the business;California is a sales and use tax state. This means that even if the original purchaser paid sales tax at the time of purchase, sales tax must be paid again on resale.

One advantage of an installment sale for federal income tax purposes, is that:

The gain realized will be taxed in the year it was received.D) When using an installment sale for federal income tax purposes, the gain is spread over many years. The taxes are due as the gain is received, not all in the year of the sale. The tax rate may or may not be the same each year.

When escrowing a business opportunity transaction, the escrow agent is careful to record the notice of the transfer in the county where:

The goods are located;The Notice to Creditors of a Bulk Transfer must be filed in the county where the goods are located at least 12 days prior to sale.

In a California county community, which of the following would have the least effect on the real property tax burden:

The homestead exemption;The homestead exemption protects the owner's residence if a lawsuit produces a judgment against the owner and the owner's equity does not exceed the homestead exemption amount. This has nothing to do with real property taxes.

When budgeting for a real estate office, the phrase "company dollar" means:

The income of an office after all commissions are subtracted;Statement of fact.

The term "reversion" in a real estate transaction would most nearly mean:

The interest of a lessor in a leased property;The lessor gives up the right to use and possession of the property for a specified period of time in return for rent. When the lease period ends, the property and all rights in the property revert to the lessor. During the lease term, the lessor has a "reversion."

If the current highest and best use of a property is expected to change, the current use is referred to as:

The interim useStatement of fact.

Under ordinary circumstances, a broker with a valid listing contract has earned the commission when:

The land contract is signed by buyer and seller.A land contract is the final statement of understanding between the vendor and vendee. When this contract is signed, the vendee receives "equitable" title and possession of the property. Legal title will remain with the vendor.

Which of the following statements is true concerning a trust deed and note:

The lien of the trust deed is merely incidental to the debt;The trust note is evidence of the debt. It is the loan and when the trustor signs the note, he owes the money. The trust deed is the security and is incidental to the debt.

All of the following statements are true concerning an "in-house sale," except: (A) The listing broker can buy the property himself; (B) The listing broker can act as an agent for the seller only; (C) The listing broker can act as an agent for the buyer only; (D) The listing broker can act as a dual agent for seller and buyer

The listing broker can act as an agent for the buyer only; An 'in-house sale" is a transaction in which both the buyer and seller are represented by agents working for one broker. When a brokerage has listed a property for sale, no agent in the brokerage may be the agent for the buyer only, because the brokerage already has an agency relationship with the seller.

Usually points which are paid by a buyer and which qualify as interest are not deductible in the .year paid. Instead thew are considered prepaid interest and must de deduct d over the term of the loan. The exception to this rule that the IRS has, is when points are charged on a loan for the purchaser's principal residence, then they are deductible provided all but which of the following are true:

The loan is made by a federally chartered lender;The loan does not have to be made by a federally chartered lender. The IRS rule would apply to any lender.

Subdivisions are controlled by which of the following under the Subdivision Map Act:

The local city or county;The purpose of the Subdivision Map Act is to give local governing authorities control of development within their jurisdiction.

In appraising real property by the market data approach, the appraiser often takes into account certain non-property characteristics of the two properties. All of the following would be considered a non-property characteristic, except:

The location and size of the parcel;The location and size of the parcel relate directly to the property. The following are non-property characteristics: "distress" sale; economic viability of the neighborhood; and presence of seller financing

Which of the following economic characteristics is the best expression of why real estate has value:

The maximum utilization of available resources.The amount of land is a limited resource. The maximum utilization of available resources would play into the economic theory of supply and demand.

Most lenders who make construction loans will release the final payment to the general contractor when:

The mechanic's lien period has expired.Lenders withhold final payment until the mechanic lien filing time has passed. This protects both the lender and the borrower.

A man bought a mobile home 2 months ago and moved it to a mobile home park. He then wanted to list it for sale. Which of the following is true?

The mobile home may be listed for sale.Since the owner owned the mobile home two months, it is used. An agent can take a listing on a mobile home along as the mobile home is "used."

The most comprehensive appraisal report would be:

The narrative report.The Narrative Report requires the appraiser to use all three approaches to value on a single subject property. It also entails a discussion of the physical, social, economic and political forces affecting value in the region, city and neighborhood in which the subject property is located.

When a seller makes a counter-offer, the:

The offeree becomes the new offeror;In a counter-offer, the seller makes an offer to the buyer. Seller is the offeror; buyer would be the offeree.

If the parties to the document have no other agreement, which of the following trust deeds would normally have priority:

The one recorded first.Priority is determined by the date and time of recording. The first trust deed is recorded first, the second trust deed is recorded second, etc.

Which of the following statements regarding options is false:

The option binds the optionee to performance;The option binds the optionor, it does not bind the optionee.

A prospective purchaser obtained a four-month option on a parcel of real property by paying $200 to the owner. All of the following are true except:

The optionee has created a legal interest in the property;The optionee has the right to purchase the property within four months. Until he exercises he option and title transfers, he has no legal interest in the property.

When an unincorporated non-profit organization wishes to sell property that it owns, the one(s) who signs the grant deed would be:

The president and recording secretary;

In advertising a mortgage loan which bears a fixed rate of interest and is fully amortized by means of monthly payments, if a specific monthly payment is included in the ad, it must also contain:

The principal loan amount, the annual percentage rate, the amount, number and period of payments scheduled to the date of maturity;These disclosures are required under the Truth-in-Advertising Act.

Of the following, primary accountability for periodic inspections of the property lies with:

The property manager;This is definitely a major responsibility of the property manager.

Salesperson Kim has several listings and is the agent of Broker Ling. These listings are:

The property of Broker Ling.The listing agreement is a contract between the broker and the seller. It remains the property of Broker Ling if Salesperson Kim changes brokers and the listing remains valid.

When a appraiser compares the land residual technique and the property residual technique, he knows that:

The property residual technique uses an overall capitalization rate which is applied to the net incomeProperty residual uses only one capitalization rate which is applied to the net income. The result is the value of the entire property.

Under federal income tax regulations, an individual may not deduct a loss on the sale of residential property unless:

The property was bought as investment and was rented or leased out as such.Losses on the sale of an owner occupied residence would not be tax deductible, however, losses on the sale of a rental would be.

Of the following items, which one would normally appear on the seller's closing statement as a credit to the seller:

The proration of prepaid taxes;Prepaid taxes would result in the buyer being debited and the seller being credited for the taxes.

In order for a transaction to be subject to the Federal Truth-in-Lending Law, it must meet all of the following criteria except:

The purpose of the credit is for the purchase of personal property only; C) Offered credit can be either on real or personal property. Must meet all below: - Credit is offered or extended to consumers; - Credit is offered or extended regularly; - A charge is levied against the borrower for the extension of credit, or the debt is to be repaid in more than four installments

When the value of a property is estimated by analyzing the income from the property, the appraiser would be careful to give proper attention to:

The quantity of income; quality of income; and durability of the income.Statement of fact.

Which of the following would not terminate a two-party joint tenancy estate:

The recording of a trust deed or mortgage on the interest of one of the joint tenantsThe other choices involve alienation of title. Recording a trust deed creates a security interest in the property for the lender, but does not transfer title.

Of the following, which is the best definition of a balloon payment:

The required payment of the entire Balance due;A balloon payment is the unpaid balance due at the end of the loan term.

For a lender, which of the following is a disadvantage of a second trust deed:

The risk of the junior lien holder is higher;The risk is always higher on a second trust deed. Remember, the holder of the first is paid first in a foreclosure. What is left is applied to the junior liens, based on their priority.

In which of the following transactions is the agent required to disclose his or her agency relationship:

The sale of a residential triplex;Agency relationships must be disclosed in any transaction involving the sale or purchase of one-to-four dwelling units.

A Real Property Transfer Disclosure Statement would be required in all of the following transactions, except:

The sale of a single-family residence by the administrator of the estate of a deceased owner;When an administrator of an estate sells a property for the benefit of the estate, the administrator is exempt from the duty to fill out a Transfer Disclosure Statement.

An individual may not report as loss on his federal income tax return a loss from:

The sale of his personal residence;Although gains from the sale of a personal residence could be taxable, losses from the sale of a personal residence are not deductible. They are just sad.

The Gonzales family wanted to purchase a property and wanted to assume the seller's VA loan, "subject to." Which of the following is correct:

The seller will remain liable for the loan.If the VA does not approve the assumption, the loan is taken "subject to" the existing loan. This means the original borrower will remain liable for the loan.. If there is a foreclosure it will be against the original borrower, the seller.

A salesperson gets a buyer to make an offer with a deposit, which the seller accepts. The buyer and seller mutually agree to fire the broker. The seller fires his broker.

The seller's broker may sue the seller for damages.The seller's broker may sue for the commission.

When auctioning real property, the auctioneer is essentially offering the property on behalf of:

The seller;The auctioneer is representing the seller of the property - the beneficiary on the defaulted loan.

If a tenant moved out of a rented store building because access to the building was blocked as a result of the landlord's negligence:

The tenant would be entitled to recover damages from the landlord.This is an example of "constructive eviction." The owner has made the premises unusable by tenant. The owner would be liable for damages.

Which of the following is not a test for a fixture:

The time of attachmentThe test is "method of attachment," not time of attachment.

Which of the following would impair the security of a trust deed recorded on real property:

The trust deed is recorded after a work of improvement was commenced and a mechanic's lien is recorded on the work;Mechanic liens date back to the beginning of any work on the project. In this case, work started before the trust deed was recorded, so all mechanic liens would have priority over the trust deed.

The value of improved land is:

The value of the land and improvements . A By defmition.

The value of improved land is:

The value of the land and improvements. By definition.

It is generally recognized that as the depth of a parcel increases beyond the depth of a typical lot, what happens?

The value per front foot increases;Land which is to be used for retail purposes is generally more valuable when it the lot is wide. This kind of land is valued using the 40-30-20-1 O method. This means the front quarter of the lot is 40% of the total value. The second quarter is 30% of the value. The third quarter is 20% of the total value. The last quarter is 10%. While the last quarter is worth proportionately less than the rest, it does add value. So when the total value is divided by the number of front feet, the value per front foot increases.

In which of the following transactions would the taxpayer's capital gain be reported as income on his income tax return:

The voluntary sale of investment property with repurchase of another investment property within one year;The sale of one investment property and the purchase of another would result in tax consequences, assuming the owner made a profit on the sale of the first property. This is not a "tax fee exchange."

Most real estate contracts contain preprinted clauses and spaces for information to be added in written form. In the interpretation of such contracts:

The written parts take precedence over the printed parts.Written parts always take precedence over the preprinted parts.

A buyer walks into a broker's office and asks for information on a property the broker's office has listed. The agent gives the buyer some information and the buyer asks the agent to mail more information to him. An agency relationship has been created when:

There is no agency relationshipThere is no agency relationship. An agency relationship would need a contract between agent and buyer. There is no such contract.

A landlord is trying to evict a tenant and serves an eviction notice. Under what circumstances could a tenant remain in the property. (A) The tenant has not had hot water for months; (B) Unlawful entry by the landlord; (C) The lessor failed to repair a weak staircase; (D) All of the above.

These are all examples of constructive eviction. When the landlord (lessor) engages in constructive eviction, the tenant may move without giving the thirty day notice or may correct the situation by paying for the repair and deducting the bill from the rent. This is called "rental offset" and the tenant may do this twice in one twelve month period. The lessor may not evict a tenant if the problem is the lessor's fault.

Which of the following is true concerning promissory notes:

They are the evidence of the debt.Statement of fact.

According to economic theory, during inflationary periods, investors usually do not take long-term positions because:

They fear erosion of capital from escalating interest rates and short-term investments usually provide a higher yield;When inflation occurs, interest rates as well as prices rise. This creates a desire for short term investments.

Under the provisions of the Federal Fair Housing Law (Title VIII of the Civil Rights Act of 1968), persons complaining of discrimination in housing are permitted an election of which of the following acts?

They may file: (A) A civil action in federal courts; (B) A civil action in state or local courts; (C) A complaint with HUD; (D) Any of the aboveAny of the above Statement of fact.

A broker is representing the seller and also the buyer in the same transaction. The sale went through at full price but the broker failed to mention to the seller that the buyer was his brother. Did the broker violate any real estate law?

This is a violation of real estate law.This is a dual agency. The fact that the buyer was the broker's brother must be disclosed. If this was a single agency, only the buyer's agent would need to make this disclosure.

Without charging a separate fee, an agent of the buyer of a house arranged for a private party to lend the buyer 15% of the down payment. This loan will be secured by a second trust deed on the property. What is the maximum interest rate the lender can charge on this loan:

This loan would be unregulated as to the maximum interest rate;Loans carried back by the seller are not regulated in terms of interest rate.

Soon after you list a property for a seller, an agent comes in with a full price offer which your seller accepts. At the close of escrow, you find out that the buyer of the property is the brother of the agent representing the buyer.

This should be disclosed. The fact that an agent is representing a blood relative is considered a material fact and must be disclosed.

Able is leasing Blackacre for a ten year term. Gentry owns Brownacre which is adjacent to Blackacre. Gentry asks Able to grant him an easement over Blackacre. In these circumstances, which would be true:

This would be legal for the term of the lease;He may grant an easement for the lease period only. The easement would not be binding on the lessor when the lease expires.

Of the following, which statements explains why warranty deeds are rarely used in California, although they are common in other parts of the country:

Title insurance, with its recourse against the title company, has largely supplanted the warranty deed with its recourse against the grantor;Title companies usually have greater resources than individuals. Statement of fact.

Which of the following is the purpose of the Federal Truth-in-Lending Act:

To provide consumers information concerning the cost of credit;Statement of fact.

One of the principal purposes of "RESPA" (Real Estate Settlement Procedures Act) is:

To provide the prospective buyer the opportunity to shop for settlement services;The purpose of both the Federal Truth-in-Lending Act and The Real Estate Settlement Procedures Act is to provide the potential borrower with the ability to shop for the best terms.

For which of the following is a Quiet Title Action used:

To provide the seller with title regarding a forfeited land contract.When a land contract is recorded, it creates a cloud on the seller's title. If the buyer defaults, a quiet title action would remove that cloud and give the seller a marketable title.

If an appraiser was appraising a residence built in 1910, which of the following would be used:

Today's cost of reproduction less depreciation.When using the Cost Approach we must determine the cost to replace the improvement new today. Then we determine depreciation, etc.

The total funds held for the benefit of all of the beneficiaries of a real estate broker's trust fund account is called the:

Total aggregate trust fund liability;Statement of fact.

Typically, when leasing real property, the commission of the leasing agent is based upon a percentage of:

Total rent collected over the term of the lease;Statement of fact.

A lessee renting a business office often attaches certain items to the real property. These items may, prior to expiration of the lease, be removed provided no substantial damage to the property results. Of the following, which best exemplifies such items:

Trade fixtures; Fixtures for manufacturing purposes; & Articles affixed for domestic use;Any of these may be removed. Business fixtures are always personal property.

A property would be reassessed for property tax purposes in each of the following cases except:

Transfers from one joint tenant to another;Transfers from one joint tenant to another does not change the ownership of the property and would not cause a reassessment. Reassessment would result from: Inheritance of property by someone other than a spouse; property leased for 35 years or more; and or transfer to an unrelated third party.

A broker has a fiduciary obligation to his principal (usually the seller). This obligation can be compared to that which exists between:

Trustee and beneficiary;A trustee has a fiduciary responsibility to the beneficiary. He is working for the best interests of the beneficiary

Which of the following is not a fiduciary relationship:

Trustor to beneficiaryA trustor is not a fiduciary of the lender (beneficiary). Examples of Fiduciary Relationships are: Listing broker to seller; Attorney in fact to principal; & Attorney to client;

The right or power to sell a property in the event of a default under the terms of a trust deed is given by:

Trustor to trustee.The trustor grants the trustee his naked legal title to be held in trust for the benefit of the beneficiary. This allows the trustee to exercise the "power of sale" in the event the trustor defaults.

A flood hazard exists when an area floods:

Twice in ten years.A flood hazard is an area which floods twice in ten years.

An unlicensed assistant in a broker's office may:

Type up broker's instructions;Unlicensed assistants may answer phones, take messages and type for the broker.

A legal description using sections, townships and ranges:

U.S. Government SurveyStatement of fact.

If the frequency of the business cycle increases with an accompanying rapid change in business and money conditions, the environment for long-term investments is:

UnattractiveWhen the business cycle and money conditions are rapidly changing, long term investments would not allow the investor to respond to the changing environment and therefore, could result in lost opportunities.

When a property is financed through the use of an all-inclusive note and deed of trust, which of the following statements would be correct:

Under the terms of the note and trust deed, the beneficiary agrees to make payments to the creditor on any senior obligation as they fall due;This is a "wrap around loan." The seller (beneficiary of the "Wrap") must agree to make the payments on the underlying note. If the seller does not make these payments, the loan will go into default.

Agent Joanne, in showing a home to prospective buyers, assures them that the bedroom remodeling was done With the proper building permits, and that the entire rood was 'replaced at that time. The buyers believe her, and therefore make a full-price offer, which was accepted. When Joanne reads the Transfer Disclosure Statement, she discovers that the remodeling job was done without a permit, and only the roof over the new area is new. She does not give the buyers the Transfer Disclosure Statement, or tell them of the new information. Her conduct would best be described as:

Unlawful conduct;Failure to disclose a material fact is unlawful conduct.

When Broker Bill solicits lenders to fund second trust deeds, he often says "if the borrower defaults, you can always recover your money from the property." He is currently trying to arrange a loan for his son-in-law, John, who is about to default on a loan on highly-leveraged commercial property. He has assured the potential lender that the property is worth 20% more than John paid for it one year ago, although the property has not appreciated in that time. His actions in this matter probably constitute:

Unlawful conduct;The broker is misrepresenting the situation to the potential lender. This is unlawful conduct.

Jose is an unlicensed employee of a real estate broker. He was hired to hand out door hangers and fliers in the neighborhood near the office and to make sales solicitation telephone calls to potential sellers and buyers. This is:

Unlawful for both the broker and the unlicensed assistant.It is illegal for a real estate licensee to hire an unlicensed assistant to make telephone "solicitation" calls, soliciting sellers, buyers and/or borrowers.

Which of the following is a lessor not allowed to deduct from a security deposit?

Unpaid Rent; Reasonable cleaning, Damage beyond normal wear and tear, Rent expenses for storage of personal property.The landlord may deduct the first three choices. Rental on storage units for a tenant's personal property left in the unit will be paid by the tenant when he takes the property out of storage. If the tenant fails to redeem the property within 90 days, it may be sold.

Of the following types of funds, which one does not have to be placed in the broker's trust fund account:

Unpaid commissions owed to salespersons;Unpaid commissions, while owed to salesperson, would not be considered trust funds.

The conscious charging by a private lender of more than the maximum amount of interest allowed by law is known as:

Usury;Statement of fact.

In arriving at the effective gross income of an apartment building, an appraiser of income property makes a deduction for:

Vacancies;Effective income = Gross Scheduled Income minus vacancies and bad debts.

When appraising a furnished apartment building, what would be deducted from gross income to arrive at the effective gross income:

Vacancy and credit losses;Effective Gross Income = Gross Scheduled Income minus vacancies and bad debts.

To determine the net income for appraisal purposes, one would deduct which of the following from the scheduled gross income of the property:

Vacancy charge, fixed expenses, operating expenses, and reserve charges;Remember, debt service is not used when appraising property.

Mr. and Mrs. Jones recorded a declaration of homestead on their California home. The following week, Mr. Jones' employer transferred him to another state, and they both left the state. The declaration of homestead is:

Valid because the Jones occupied the premises at the time they recorded the declaration;The owner must live in the property at the time of recording a homestead. Moving out of the property does not abandon the homestead.

Parsons wants to buy a property for sale at $289,000. He does not have the money, so he persuades Jones to buy the property and immediately sell it to Parsons on a land contract for $330,000. This is a(n):

Valid purchase and resale transaction.Such a sequence of events would be a valid procedure when one is not able to immediately pay cash for the property.

Which of the following is the best term to substitute for the term "market value":

Value in exchange or most probable selling price;Market value is based on the "willing buyer, willing seller" concept. Value in exchange reflects that concept. Value in exchange = Money for property.

Which of the following would not appear on a profit and loss statement:

Value of the goodwill;A profit and loss statement shows the total sales, less the cost of goods sold and the expense of sale. Goodwill is not on a profit and loss statement. It could appear on the balance sheet.

According to economic theory, if interest rates increase and rents are stable, what is the effect on the value of rental properties:

Values will decrease;An increase in the interest rates without a corresponding rise in rent would force the capitalization rate to rise. When capitalization rates increase, value decreases.

If you went to the city/county and wanted to change the electrical requirements, specific to the structure, from the standard normal requirements, this would be a(n):

VarianceIf the city or county allow you to do something on your property which differs from the building codes, it is called a variance.

Under a land contract for the sale of real property, legal title is held by the:

VendorThe vendor is the seller. In a land contract, equitable title is transferred to the vendee, legal title is retained by the vendor.

According to the Seller Transfer Disclosure Act, a broker can:

Visually inspect the property and reveal pertinent information;Statement of fact.

Mr. Ryan sold a home to Mrs. Michaels, not knowing that she had been judicially determined to be incompetent. In such a situation, the contract would be:

Void;One of the elements of a valid contract is the legal competence of the parties to the contract. Since Mrs. Michaels was incompetent the contract was void at its inception

In which of the following ways could an agency relationship not be created?

Voluntary offer by the agentIf there is no consideration, there is no agency relationship created ("voluntary" indicates no consideration).

When a broker keeps records electronically the program he would use for record retrieval is:

WORMWORM is the program used to retrieve records. It stands for:@ Write once, read many.

Which of the following is not included in the Hazard Disclosure Statement:

Weather Conditions.Weather conditions are not considered a natural hazard.

Bailey, an unlicensed man, bought 10 acres of land from Sugihara for $500 per acre. While under contract with Sugihara, Bailey was offered $2,000 per acre from another party and entered into a contract to sell as soon as the escrow closed. Sugihara found out and contacted an attorney. He was told:

What Bailey did was legal and Sugihara has no recourse.This is a legal transaction and Sugihara has no recourse. Neither of the parties is licensed.

A lender would most likely not enforce the "Due On Sale Clause" in a promissory note under which of the following circumstances?

When a new loan could be made at a higher interest rate;Lenders will usually waive the prepayment penalty if a new loan can be made at a higher interest rate.

A lender would likely not enforce the due on sale clause in a promissory note under which of the following circumstances:

When a new loan could be made at a higher rate of interest than the existing loan;Lenders will usually waive the prepayment penalty if a new loan can be made at a higher interest rate.

Which of the following statements is false:

When an owner of land tears down a fence with the intent that it will be permanently removed, and then piles the material on the land, such material is real property;Once the lumber becomes moveable - stacked or piled up - it is personal property.

In the parts of California where wood destroying pests are found, a structural pest control report is required:

When buying residences financed by FHA or VA loans;FHA and VA lenders would always require a pest control inspection and clearance.

When may a real estate broker, serving as agent of the seller, refuse to transmit an offer to the principal?

When the broker is acting on the express instructions of the principal in his refusal;An Offer to Purchase is considered a material fact and must be disclosed to the seller. The only exceptions would be if the offer is patently frivolous or the broker has written instructions from the principal.

Which of the following statements is true concerning escrow procedures:

When the escrow requirements have been met, the escrow agency changes from a dual agency to a separate agency;Escrow is a dual agency during the escrow. When escrow closes, the need for neutrality ends. Escrow then becomes a single-agency.

An owner of property which was located near an airport was constantly bothered by the noise of low flying aircraft. He wanted to bring a court suit and force the city to condemn the property because of the noise. This would be an example of:

When the government exercises their power to take property for a public use, this process is called condemnation. When an individual brings action against the city for condemnation, this is known as inverse condemnation.

Which of the following statements is true:

Whether or not points are deductible as interest depends upon what the charge covers.Statement of fact.

In the City of San Diego the local building code conflicts with the uniform building code. Which code would take precedence and for what reason:

Whichever code imposes the higher standard of safety;The code which has the highest standard of safety would be the one enforced.

If a lender accepts a deed in lieu of foreclosure from a trustor, the lender:

Will assume any junior loansJunior liens may be cancelled in a foreclosure. If the lender agrees to the Deed in Lieu of Foreclosure he must assume the junior liens.

An owner purchased his residence several years ago, using a conventional loan, and now desires to refinance using the VA guaranteed loan program. The lender who will make the loan will requires the veteran to pay loan discount points. In such a case, the VA:

Will guarantee the loan and the veteran may pay reasonable discount points.The owner would have to pay any points required by the VA loan arid VA will guarantee the loan.

A "negative declaration" in a discussion of environmental impact means that the proposed subdivision:

Will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental impact report; Under the Environmental Quality Act, a negative declaration indicates that the subdivision does not harm the environment; therefore, a negative declaration is good. The Environmental Quality Act also allows the conversion of existing rental units to condominiums.

When comparing a straight note with an installment note, the straight note:

Will have no principal payments during the term of the loan except on the last payment;Straight note is interest only. There are no principal payments until the final payment.

Johnson is buying a new house and wants to obtain an FHA loan. Johnson has a good credit history but an irregular income. According to FHA, the payments:

Will have to be monthly;Statement of fact.

It is often easier to schedule maintenance work for a new property than for an older one because:

With a new property, owner's manuals are usually available, with recommended schedules of maintenance procedures;Statement of fact.

When a deed of trust is foreclosed by court sale, the action:

Would allow the trustor a redemption period;When a trust deed is foreclosed by court action, the trustor has a one year redemption period.

According to the Real Estate Law, real estate brokers may service a promissory note secured directly or collaterally by a lien on real property. In order to perform this service, the broker must have:

Written authorization from the borrower or lender;Statement of fact.

According to the principle of equal dignities, if a contract is required by law to be in writing, the authority to enter into a contract must be:

Written; Statement of fact.

Hayes is a tenant farmer with a 10-year lease on a farm known as Wildacre. Jones is the owner of the adjacent farm,. Redacre. Jones has asked Hayes to grant him a right-of-way easement in writing. Can Hayes legally grant Jones the requested easement?

Yes, but the easement so granted may not extend beyond the term of the lease;Hayes may grant an easement but only for the length of the lease. The easement would not be binding on the owner when the lease expires.

A state wants to build a publicly owned convention center to attract private development in its largest city. Can the state use eminent domain to acquire the land?

Yes, if just compensation is paid to the owners of the land;This is a good example of Eminent Domain. The state wants to acquire title to land which will enhance the "public good." The state must pay compensation in the amount of the fair market value of the condemned land.

.When may a broker fill out the entire Seller's Transfer Disclosure Statement? (A) Never; (B) When the broker has the written instructions from the seller; (C) When the buyer signs a waiver; (D) Always

llO.C The seller's broker may sue for the commission.

The purchase agreement between a buyer and seller resulted in a disagreement between them about the refund of the deposit. The broker had placed the deposit in his trust account. Since the broker was unable to resolve the dispute between the buyer and seller, he brought the deposit to court. He relinquished any claim to the deposit, thereby forcing the parties to settle the matter without involving the broker. This act is called:

lnterpleader action;An interpleader action is a court action to settle a dispute over money between the buyer and seller. This action is usually initiated by escrow, but could certainly be used in the circumstances described in this question.