National Practice Exam
A purchaser agrees to buy a house for $47,000, obtaining a 90% loan. The buyer makes an earnest money deposit of $2,500. If the closing costs are $225, how much will the buyer need to bring to the closing? Select one: A. $2,425 B. $4,700 C. $44,550 D. $47,000
A. $2,425
Which of the following is true of a contract under novation? Select one: A. A new contract replaces the old one B. The old contract is void C. A new party is assigned the rights and obligations of an old party D. Both A and B
A. A new contract replaces the old one
In Fair Housing discrimination cases, the burden of proof is on the complainant. The complainant must be able to prove: Select one: A. Discrimination occurred B. The act of discrimination was not provoked by the complainant C. Only that the accused party intended to discriminate D. Actual damages resulted from the acts of accused
A. Discrimination occurred
The legal process to remove a tenant from property is: Select one: A. Eviction B. Ejection C. Quitting D. Constructive notice
A. Eviction
What are fees charged for the privilege of buying or selling property in a particular jurisdiction? Select one: A. Excise taxes B. Ad valorem taxes C. Special assessments D. None of the above
A. Excise taxes
The original owner of a condominium unit holds which of the following interests? Select one: A. Fee simple absolute in the unit B. Joint tenancy in the common areas C. Joint tenancy in the common walls D. All of the above
A. Fee simple absolute in the unit
A salesperson took a listing on a property that had a foundation crack due to water seepage. Although the owner told him that the water problem was fixed, it's obvious that the owner only filled in and painted over the crack. If the salesperson shows the property without advising potential buyers of the issue, the salesperson would be guilty of: Select one: A. Fraud B. Misrepresentation C. Puffery D. Nothing
A. Fraud
A property owner tells the broker that his property is structurally sound, but the broker later discovers that there are termites on the property. The broker must: Select one: A. Inform the seller and all prospective buyers B. Contact a pest control company C. Encourage the seller to remedy the problem D. All of the above
A. Inform the seller and all prospective buyers
A lease where the tenant pays taxes and maintenance costs is a: Select one: A. Net lease B. Percentage lease C. Ground lease D. Gross lease
A. Net lease
In the capitalization approach, the appraiser considers all of the following factors, EXCEPT: Select one: A. Price of the subject property B. Rate of return on the investment C. Amount of return on the investment D. Estimated future net income
A. Price of the subject property
The covenant in a deed where the grantor guarantees that she owns the property and has the right to sell it is known as: Select one: A. Seisin B. Against encumbrances C. Warranty forever D. Quiet enjoyment
A. Seisin- A covenant of seisin is a promise by the grantor (seller) to the grantee (buyer) that the grantor actually has the degree of ownership that she's claiming to convey.
Which of the following items is a broker NOT required to disclose to a prospective purchaser? Select one: A. The property is haunted B. The state plans to construct a new highway near the property C. The property is subject to seasonal flooding D. The monthly fee charged by the homeowners' associaton
A. The property is haunted
A broker lists a property. A buyer makes an offer for less than the listed price. The seller makes a counteroffer, which the buyer rejects. Later, the seller informs the buyer that he will accept the buyer's original offer. Which of the following statements is CORRECT? Select one: A. The seller's proposal to accept the buyer's original offer is an new offer B. The buyer is obligated to perform C. The seller is obligated to perform D. The seller must pay a commission to the broker
A. The seller's proposal to accept the buyer's original offer is an new offer
A listing broker receives an offer, which he presents to his client/seller. The two are elated when they read that the seller has a full 6 days to accept! However, despite this provision, the buyer withdraws her offer at the end of the 3rd day. The buyer is: Select one: A. Within her rights to withdraw the offer B. Liable for beaching the option C. Liable to the broker for a commission D. Liable at the discretion of the seller
A. Within her rights to withdraw the offer
A homeowner is having carpeting installed in his home. The area to be carpeted is 16'6" x 15'. The cost of the carpet is $19.95 per square yard and the pad is an additional $5.00 per square yard. How much will it cost to install the carpeting? Select one: A. $548.63 B. $686.13 C. $2,058.39 D. $6,175.13
B. $686.13- Your answer is incorrect. (general math concepts) First, we need to find the amount of carpet that needs to be installed: Area = 16.5ft x 15 ft.= 247.5 sq. ft Next, we need to convert this information into square yards: 1 yard = 3 ft. 1 sq. yard = 3ft. x 3 ft. = 9 sq. ft Area = 247.5 sq ft. / 9 sq. ft. = 27.5 sq. yards Now, we can determine the amount that it will cost to install the carpet. Price = $19.95 + $5 per sq. yard = $24.95 per sq. yard Price = $24.95 x 27.5 = $686.125 Rounded to the nearest amount, this it will cost $686.13 to install the carpeting. The correct answer is: $686.13
Each floor of a two-story office building is 10.5 feet high, 18 feet wide, and 54 feet long. How many cubic yards is in the entire building? Select one: A. 378 B. 756 C. 10,206 D. 20,412
B. 756
According to the 1988 Fair Housing Law, which of the following persons would NOT be considered as handicapped? Select one: A. A person addicted to alcohol B. A person addicted to an illegal drug C. A person who, by their actions, is believed to be insane D. Both A and B
B. A person addicted to an illegal drug
What does a person have if contracted for the opportunity to purchase property at a specified price and within a specified time? Select one: A. A right of first refusal B. An option C. A sales contract D. Both A and B
B. An option
In a residential subdivision, the developer establishes a central playground that uses four feet from each owner's backyard. Brynes wants to put an organic garden in his backyard, but a central playground swing set sits in that location. In response, Brynes plans to remove the swing set to make room for his garden. His neighbor objects. What can the neighbor do? Select one: A. Nothing, so long as Brynes owns the property in question B. Ask a court for help C. Nothing, if the statutory period for adverse possession has run D. Seek a lis pendens
B. Ask a court for help
Smith and Brown own abutting property that borders a river. Over the years, soil from Smith's riverbank is washed onto Brown's riverbank. Who owns the soil that was washed from Smith's riverbank to Brown's? Select one: A. Smith B. Brown C. The state D. None of the above, because all river bank owners have riparian rights
B. Brown
What is an invitation to enter into a contract? Select one: A. Acceptance B. Counteroffer C. Contract D. All of the above
B. Counteroffer
Zoning appeals boards are intended to satisfy: Select one: A. Equal protection B. Due process C. Takings clause D. Master plans
B. Due process
The difference between the property value and its debts is known as: Select one: A. Ownership B. Equity C. Collateral D. Novation
B. Equity
Which of the following groups was NOT protected by Title VIII of the 1968 Federal Fair Housing Law? Select one: A. National origin B. Handicapped C. Religion D. Race
B. Handicapped
The three approaches to appraisal are: Select one: A. Replacement; Market data; Cost B. Income; Cost; Market data C. Capitalization; Replacement; Market data D. Reproduction; Market data; Income
B. Income; Cost; Market data
Which of the following listing agreements is LEAST likely to specify a commission rate? Select one: A. Open listing B. Net listing C. Exclusive agency D. Exclusive right-to-sell
B. Net listing
Agency relationships include all of the following duties, EXCEPT: Select one: A. Obedience B. Notice C. Confidentiality D. Accounting
B. Notice
Sarah wants to purchase Rico's home and assume his mortgage. Rico's mortgage contract allows for an assumption. However, Rico does not want to be liable. In this situation, the parties should sign a(n): Select one: A. Assignment B. Novation C. Sublease D. Cancellation
B. Novation- occurs when contracting parties agree to substitute one agreement in part or in full for another agreement.
If an owner gives a listing to more than one broker, it would most likely be which type of listing? Select one: A. Net listing B. Open listing C. Exclusive agency D. Exclusive right-to-sell listing
B. Open listing
The Federal Fair Housing Law is intended to protect the public from all of the following actions, EXCEPT: Select one: A. Blockbusting B. Price fixing C. Steering D. Redlining
B. Price fixing
The final step in appraising an apartment building is: Select one: A. Capitalization B. Reconciliation C. Re-capitalization D. Re-capitalization
B. Reconciliation
A landlord's right to re-enter or regain possession of the premises upon expiration of a lease is known as: Select one: A. Redemption B. Reversion C. Remainder D. Recovery
B. Reversion
Jon is purchasing a home from Sally. Jon wants to assume the FHA loan that Sally currently has on the property. Jon has the best chance to assume the loan if which of the following is true? Select one: A. Sally originated the loan between 1986 and 1989 B. Sally originated the loan prior to December 1986 C. Sally originated the loan after 1989 D. Sally's loan is at least 50% paid in full
B. Sally originated the loan prior to December 1986- Note that the FHA does not restrict a buyer's ability to assume a loan originated prior to December 1986. For loans originated between 1986 and 1989, buyers must satisfy a credit worthiness review. For loans originated after December 1989, buyers must be completely qualified before assuming a loan. The correct answer is: Sally originated the loan prior to December 1986
The difference between a first and second mortgage must depend upon: Select one: A. The principal B. The position C. The term D. All of the above
B. The position
Which of the following statements is NOT true regarding points charged on a loan? Select one: A. They increase yield B. They are based on the selling price C. They are generally 1% of the loan amount D. They are negotiable
B. They are based on the selling price
A unilateral contract arises: Select one: A. When the offeror signs the contract B. Upon completion of the requested act C. When the offeree signs the contract D. After a reasonable period of time
B. Upon completion of the requested act
Two brokers agree to charge the same commission rate on all property listed by their offices. Such an action: Select one: A. Is common practice B. Violates Anti-Trust laws C. Violates both RESPA and Regulation Z D. Violates the Fair Housing Law
B. Violates Anti-Trust laws
The Real Estate Settlement Procedures Act (RESPA) requires lending institutions to provide a Loan Estimate of closing costs: Select one: A. When the loan application is submitted B. Within 3 days of the loan application C. Within 3 days of closing D. Within 10 days of the loan application
B. Within 3 days of the loan application
Jill lists her property with Broker Joe. After much hard work, it looks as if the property will finally sell. However, Broker Joe files for bankruptcy before the property actually does sell. Jill becomes nervous and seeks to terminate the listing agreement. May Jill terminate the agreement without breaching the contract? Select one: A. No, only Joe may terminate the contract without a breach B. Yes, because she is legally justified C. No, unless Joe is in breach of the terms D. Yes, provided that Joe cannot perform
B. Yes, because she is legally justified
An appraiser is estimating the value of a house. The sellers want to list for $370,000 since it has 4 bedrooms, 3 bathrooms, and a pool. A comparable property recently sold for $350,000 (with 3 bedrooms, 3 bathrooms, and a sun room). In the adjustment process, the appraiser estimates that an extra bedroom is worth $45,000, the pool is worth $4,000, and the sun room is worth $17,000. What is the adjusted sales price of the comparable property? Select one: A. $318,000 B. $338,000 C. $382,000 D. $402,000
C. $382,000- Your answer is correct. (methods of estimating value) The purpose of adjustment is to compensate for a subject property being more or less valuable than its comparables. If a comparable property has inferior amenities (no extra bedroom, no pool), then the value of the difference is added to the price. If a comparable has superior amenities (a sun room), then the value of the difference is subtracted. At the end, each comparable will be weighted according to the appraiser's own knowledge and experience. Comparable price: $350,000 - Extra bedroom: + $45,000 - Pool: + $4,000 - Sun room: - $17,000 Adjusted comparable price: $382,000 The correct answer is: $382,000
A property is purchased for $125,000 with a 20% down payment. When the first month's payment is made, $800 is applied to interest. What is the interest rate on this loan? Select one: A. 8.0% B. 8.7% C. 9.6% D. 10%
C. 9.6%
A net lease affords the lessee with: Select one: A. The right to depreciate the building B. A deduction for interest payments on the loan C. A pro rata share of building expenses D. The right to assign the lease
C. A pro rata share of building expenses
Who would not usually perform title searches? Select one: A. An examiner B. An abstractor C. A real estate salesperson D. The same company that issues title insurance on the property
C. A real estate salesperson
What is a written instrument or thing of value that is held by a disinterested third party, but which must be handed over upon satisfaction of specified conditions? Select one: A. A bond B. A mortgage C. An escrow closing D. An assignment
C. An escrow closing
In the process of taking a listing, a salesperson notices water stains on the ceiling of one of the rooms. What should the salesperson do? Select one: A. Nothing, because it is not a latent defect B. Nothing, because the stain is old C. Ask the owner if there is a leak D. Decline to list the property
C. Ask the owner if there is a leak
The type of value that a local government assigns to a property is the: Select one: A. Market value B. Appraised value C. Assessed value D. CMA value
C. Assessed value
Helen obtained a loan from ABC Mortgage Company. The monthly payments were set at a rate that would fully amortize the loan over a 25-year period. However, in the note that Helen signed, it specified that the entire balance was due at the end of 120 payments (10 years). What type of mortgage does this most likely describe? Select one: A. Open end B. Purchase money C. Balloon D. Participation
C. Balloon
Land moves by: Select one: A. Accretion B. Erosion C. Both A and B D. None of the above because land is immobile
C. Both A and B
A failure to perform without any recognized excuse is: Select one: A. Rescission B. Cancellation C. Breach D. Illegal
C. Breach
Dixie is selling her own home as a FSBO. On Sunday, a full price offer is made by an Asian couple. Dixie refuses the offer. On Monday, Dixie accepts an offer that is $4,000 below asking price from a Caucasian family. Dixie could be in violation of which of the following laws? Select one: A. Fair Housing Law of 1986 B. State license laws if Dixie is not licensed C. Civil Rights Act of 1866 D. None of the above
C. Civil Rights Act of 1866
An owner builds a beautiful brick colonial house in a neighborhood of contemporary, single level houses. The owner lists his newly constructed house, but is unable to sell. This would be consistent with the appraisal principle of: Select one: A. Highest and best use B. Progression and regression C. Conformity D. Substitution
C. Conformity
What is not a private limitation on title? Select one: A. Lien B. Deed restriction C. Eminent domain D. Encroachment
C. Eminent domain
Which of the following is prohibited by RESPA? Select one: A. Steering B. Redlining C. Kickbacks D. Blockbusting
C. Kickbacks
A real estate broker wishes to deposit an earnest money check in his business operating account in order to receive a higher interest rate on the purchaser's funds. Is he legally allowed to do this? Select one: A. Yes, if the purchaser receives a comparison of available interest rates B. Yes, if the broker promises to ensure such funds will be available at closing C. No, these funds must be placed in a separate escrow account D. No, the broker cannot guarantee a higher interest rate
C. No, these funds must be placed in a separate escrow account
The Government's right to control private land is limited by: Select one: A. Just compensation clause B. Right to privacy C. Rational relationships D. None of the above
C. Rational relationships
Nice and Easy Loan Company has a policy of either restricting the availability or requiring lower LTV ratios for loans made in "high risk" areas of the community. This practice is known as: Select one: A. Steering B. Blockbusting C. Redlining D. Good business
C. Redlining
A mortgage could include all of the following clauses, EXCEPT: Select one: A. Defeasance B. Alienation C. Subrogation D. Acceleration
C. Subrogation
Upon listing a property, a broker discovers mold in the basement. The broker should inform: Select one: A. The seller only if he is a seller's agent B. The buyer only if he is a buyer's agent C. The buyer and the seller, regardless of who he represents D. No one
C. The buyer and the seller, regardless of who he represents
All of the following statements about the impossibility defense must be true, EXCEPT: Select one: A. At least one party is excused from performance B. At least one party cannot legally perform as agreed C. The contract could be rescinded, pursuant to a rescission agreement D. Neither party is liable for damages
C. The contract could be rescinded, pursuant to a rescission agreement
Zorba leases a restaurant. He installs ovens, booths, and counters. Which of the following statements is true? Select one: A. The ovens, booths, and counters cannot be removed by Zorba B. The ovens, booths, and counters can be removed by Zorba at any time C. The ovens, booths, and counters can be removed by Zorba at any time before Zorba's lease expires D. Zorba is not responsible for any damage caused by removing the ovens, booths, and counters
C. The ovens, booths, and counters can be removed by Zorba at any time before Zorba's lease expires
A private homeowner is selling his property, but refuses to enter into a contract because the offerors are a black couple. Has the homeowner violated the law and, if so, which law? Select one: A. Yes, Title VIII of the 1968 Federal Fair Housing Act B. Yes, the Civil Rights Act of 1964 C. Yes, the Civil Rights Act of 1866 D. No, the owner is exempt from the law because he is selling his own property in his own name
C. Yes, the Civil Rights Act of 1866
The difference between an employee and an independent contractor depends on: Select one: A. Scope of work B. Degree of supervision C. Who pays insurance D. All of the above
D. All of the above
When showing and selling property, a salesperson must: Select one: A. Inform buyers about hidden property defects B. Avoid statements which may deceive the buyer C. Present all offers, even after the seller has already accepted D. All of the above
D. All of the above
A quitclaim deed may be used to: Select one: A. Transfer ownership of a fee simple estate B. Transfer interest in a life estate C. Terminate an easement D. Any of the above
D. Any of the above
An agency relationship between seller and broker may be terminated by: Select one: A. Mutual consent B. Renunciation of the agreement by the broker C. Expiration of the agreement D. Any of the above
D. Any of the above
Merging adjacent properties is known as: Select one: A. Annexation B. Abutment C. Marshalling D. Assemblage
D. Assemblage
Restrictive (negative) covenants cannot: Select one: A. Be based on aesthetic considerations alone B. Restrict the owner's lawful use of the land C. Be enforced over zoning ordinance, unless they are less restrictive than the zoning ordinance D. Be too broad
D. Be too broad
Employees generally: Select one: A. Work under direct supervision B. Hold regular office hours C. Choose how best to accomplish a task D. Both A and B
D. Both A and B
If a deed transferring legal title from one party to another is NOT recorded in the public record, which of the following statements is correct? Select one: A. The deed is valid B. The grantor gives up all rights to the property conveyed C. The transfer is not valid D. Both A and B
D. Both A and B
Paul Property Owner makes significant improvements to a lot that he has held for seven years. Which of the following statements is most likely to be true? Select one: A. Paul's land will increase in value B. Paul's land will decrease in value C. Paul is developing a subdivision D. Either A or B
D. Either A or B
Jon purchased a 640 acre tract of land. Which method of legal property description would work best for Jon? Select one: A. Monument B. Metes and bounds C. Recorded plat D. Geodetic
D. Geodetic-Geodetic and government survey are best suited to identify large tracts of land. Under this system, there are townships and sections. One section is one square mile, or 640 acres.
Salesperson Lynch found a home for a buyer, who agreed to pay a commission for this service. After closing, Lynch will receive his commission from: Select one: A. The seller B. The buyer C. The buyer and seller, equally D. His broker
D. His broker
A listing broker obtained a ready, willing, and able minority buyer to purchase at the listed price. However, the sellers refused the offer because of the buyer's race. The broker may legally take all of the following actions, EXCEPT: Select one: A. Sue the seller for his commission B. Advise the prospect of his right to complain to the HUD C. Warn the sellers that their refusal is a violation of the Fair Housing Laws D. Market the house only to non-minority customers
D. Market the house only to non-minority customers
Property sold for $168,000. There was an existing 1st mortgage in the amount of $75,000. The seller paid 6% commission and $2,100 in closing costs. What was the seller's net proceeds from the sale of his property? Select one: A. $165,900 B. $93,900 C. $90,900 D. None of the above
D. None of the above
The relationship that generally exists between a salesperson and a seller is a: Select one: A. Universal agency B. Special agency C. General agency D. None of the above
D. None of the above
What is the highest commission rate that a real estate broker may charge for marketing a farm property? Select one: A. 10% B. 15% C. 25% D. None of the above
D. None of the above- The amount of compensation (commission) can be any amount that was agreed upon by all parties to the listing agreement.
Tommy the Tenant takes over a tattoo parlor from an existing tenant. The parlor came with a comfortable dentist chair, which was perfect for people to sit on while getting their tattoo. One day, the chair breaks. Tommy installs a new dentist chair that he picked up at a flea market. The new chair is: Select one: A. Personal property, regardless of when it is removed B. Real property, if not timely removed C. Personal property, so long as it is timely removed D. Real property, regardless of when it is removed
D. Real property, regardless of when it is removed
A buyer looked at four similar houses for sale in the same neighborhood. The buyer purchased the house with the lowest asking price. This decision is an example of: Select one: A. Highest and best use B. Contribution C. Supply and demand D. Substitution
D. Substitution
What is most likely to be true if an optionee does NOT exercise his option during the option period? Select one: A. The optionor must return the optionee's consideration B. The optionor has a reasonable chance to win specific performance C. The optionor may keep the optionee's consideration as liquidated damages D. The optionor may keep the optionee's consideration
D. The optionor may keep the optionee's consideration
All of the following circumstances are examples of insurable title defects, except: Select one: A. Forged documents B. Undisclosed heirs C. Mental incompetence D. Unrecorded easements
D. Unrecorded easements