Practice Exam Version 1

A licensee sells a property for $525,000. The total commission rate is 6%, which is split evenly with the cooperating agent. What amount goes to the listing broker after this split?

$15,750

How much would a lot that is 300 feet wide by 400 feet long cost at $900 per acre?

$2,479

A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value?

$200,000

Josie has signed a lease agreement for a furnished apartment for $2,000 and the required security deposit is equal to the highest amount the landlord could ask for. How much is her security deposit?

$6,000

A square room has an area of 144 square feet. How long is each side?

12 feet

A property is 30 square yards. How many square feet is this?

270 square feet

A triangle has a base of 10 feet and a height of eight feet. What is its area?

40 square feet

What is vicarious liability as it applies to real estate?

A broker is held responsible for the actions or omissions of the broker's licensees.

What term is defined as the addition of value to property through labor or the addition of new materials?

Accession

Which of the following is true of agency disclosures?

Agency disclosure is required for both landlords and tenants.

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

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

When financing is structured, when are disbursements typically made?

As stages of construction are completed

When licensees follow through on what prospects have asked, arrive for meetings on time, and come prepared, what trait are they exhibiting?

Competence

The Hendersons were hoping to list their home for $400,000; however, four other comparable homes in the neighborhood just went up for sale, and they now must list their property at $380,000 to sell quickly. Which economic principle is at work here?

Competition

A new development is complete, and almost all the homes are now occupied. All is well for the first year, but after a season of heavy rains many homeowners are experiencing issues with sewage backing up into their homes. What process should have prevented this from happening?

Compliance with building codes and inspection by a local health official to ensure sanitation and drainage systems were adequate

Which agency administers the Interstate Land Sales Full Disclosure Act?

Consumer Financial Protection Bureau

This is a legal written agreement between a buyer and seller that states the purchase price and other terms of understanding by which real property will be transferred.

Contract for sale

In addition to its potential health hazards, what is a common consequence of a brownfield's presence in a community?

Decreased property values

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?

Defeasance

Jackson holds a real estate broker license with an MLO endorsement. How often must he renew his MLO endorsement?

Every year

Which of the following is true regarding express agreements?

Express agreements may be written or verbal.

Jimbo doesn't yet have a real estate license. Which activity is he legally allowed to perform without one?

Give advice to a friend who is negotiating the purchase of a house.

From a lender's perspective, what does a credit score on the low end indicate?

Higher risk

The purpose of ______ commissions is to preserve buildings, landmarks, and the character of certain areas.

Historic preservation

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?

It's owned as an estate in severalty.

Which of these situations is an example of designated (appointed) agency?

Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction.

Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have?

Joint tenancy

Which one of the following is a true statement regarding prepayment penalties?

Lenders must disclose up front if they reserve the right to charge a prepayment penalty, and under what conditions a penalty will apply.

Gregory is looking for an apartment to rent for six months. He's hired Franklin as his agent to help with this search. Is Franklin required to provide Gregory with an agency disclosure form?

No, agency disclosure is only required for lease agreements exceeding one year in length.

An area of 640 acres is equal to ______.

One square mile

Which type of property is exempt from the Fair Housing Act?

Owner-occupied with no more than four units

Ruby just bought a few undeveloped acres in the California desert. Once she installs her manufactured home, she plans to obtain water for herself and her animals by digging a well to access the ______.

Percolating ground water

Bobby has just found out that he was named as the executor of his grandfather's will. In accordance with the terms of the contract, he may sell his grandfather's property while serving as a ______.

Personal representative

The Simpsons are buying a five-acre lot that was part of a much larger tract of acreage. When the owners of the large acreage decided to subdivide it, they needed to have a legal description created for the five-acre lot. What was used as the starting point for creating that legal description?

Plat Map

While Martha's paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?

Promissory note

Which of the following is a piece of specific data an appraiser may gather?

Property lot size.

Alice listed a three-bedroom home for her client, but before she finds a buyer, the home burns to the ground. What happens to the agency agreement that Alice has with her client?

The agency agreement is terminated if the property is destroyed.

What must take place if a real estate salesperson wants to transfer their license to a new sponsoring broker?

The existing sponsoring broker must notify the California DRE and give the salesperson their license certificate. The salesperson and new sponsoring broker complete a change application.

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note?

The lender holds the mortgage and the note.

Paula is bidding on a property that's being sold at a foreclosure auction. She's excited about the great deal she's getting on the property after she finds out she submitted the winning bid. What could cause Paula's great deal to turn into a nightmare?

The title to the property may have hidden issues that could cost her a lot of money to clear.

What would happen if you bought a house and later found out that there were unpaid liens against the property?

The unpaid liens could trigger a foreclosure on your property.

Which of the following terms means the price a property is worth to its owner as currently enjoyed?

Value in use

Which of these scenarios describes a voluntary specific lien?

When Rob and Sue bought their house using a mortgage, the lender put a lien on the property.

What is the starting point for any land surveyor who has been asked to perform a survey?

A review of existing historical records

Which of the following statements is true about appraisals?

Appraisals may only be performed by certified appraisers (with certain exceptions in some states).

Which of the following is typically used for purposes other than a prospective listing or sale?

BPO

What are the three Cs of credit?

Character, Capacity, Capital

When a Department of Fair Employment and Housing complaint reaches litigation, the parties have the option to have the case heard before _____________________.

Civil court

Which type of subdivision is defined as separately owned parcels where purchasers also share interest in common areas?

Common interest subdivision

Which of the following elements is always required for a real estate contract to be valid?

Consideration

You're working with a client, Donny, who's found his dream home in the neighborhood where he grew up. Unfortunately, the title search finds some issues and the title company refuses to issue a policy. Donny still wants to go forward with the purchase, and since he's paying cash, he doesn't have to worry about obstacles from a lender. In California, what is one thing that has to happen in this situation?

Donny must receive written notice that no title insurance will be provided.

You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?

Dual-license dual agency

Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?

Easement by prescription

nterest rates, availability of credit, and employment trends are examples of which force that influences property value?

Economic

In investments, each type of depreciation is defined by a particular event. Which of the following best describes a depreciation type and an event it's tied to?

Economic depreciation and physical deterioration

Which of these groups of people are considered legally able to enter into a contract in California?

Emancipated minors, aliens, LLCs

The power of ______ was commonly used by community redevelopment agencies (CRAs) to acquire blighted properties.

Eminent domain

Which of the following is a tactic used by a predatory lender?

Encouraging debt

A commercial landlord finds herself in trouble because the rent she is collecting is not keeping up with inflation due to the type of leases she signed with her tenants. She has the longest tenancies of commercial landlords she knows, which is probably because she signed with them ______ leases.

Flat rate

A poor floor plan is an example of which type of depreciation?

Functional obsolescence

What's supposed to be installed wherever water can be found, such as in bathrooms, kitchens, basements, utility rooms, garages, outdoors, and near swimming pools, to protect people from getting electrocuted?

GFCI

A California homeowner might receive an energy credit for opting for ____________.

Geothermal power

"Income received before expenses are deducted" is the definition of ______.

Gross income

A property is 21,780 square feet. How many acres is this?

Half an acre

Billie (Wilhelmina) Silva was just licensed as a broker, and she plans to hang out a shingle and go into business for herself. As a sole proprietor, which of the following business names can she NOT use?

Happy Home Realty

Brandon is interested in purchasing a piece of property, but before doing so, he'd like to verify the accuracy of the legal description. Which of these options will accomplish this?

Having a survey conducted

Lisa purchased an older home with a large backyard that's perfect for her pack of collies to romp in. Six months after she bought the property, a total stranger knocked on her door and told her he's the true property owner. After investigating, it turns out the person who sold Lisa the property had forged the deed without the true owner's knowledge. What's true about Lisa's situation?

Her title insurance policy may protect her from loss.

Gina received an earnest money check from her buyer on Friday, after the office had closed and her broker had gone home for the day. For safekeeping, Gina should ______.

Hold onto the check until Monday, and give it to her broker then

To meet the requirements of the statute of frauds, an agreement must clearly identify the contract's subject matter, present the contract's essential terms and conditions, and ______ to be enforceable.

Identify the contracting parties

Kenny is updating a bathroom. Under what circumstances is a contractor's license required?

If he is preparing his house to sell

Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?

Improvements

Which economic characteristic of land contains the concept that a land's value can be affected by the changes made to it, such as construction of a home or shopping center?

Improvements

What's the purpose of a typical subordination agreement?

It allows a junior mortgage to move into first lien position.

Which one of the following is a reason mold is an environmental issue?

It damages what it grows on and can be unhealthy to humans.

Why do lenders care so much about their borrowers' debt reduction?

It makes it easier for borrowers to pay their mortgages.

James is a California licensee accused of serious license law violations. Which of these will NOT be part of the process of investigation by the DRE?

It will issue a warrant for James's arrest, and James will be held while the DRE completes its investigation.

Melinda is selling her home and has hired Megan as her agent. Megan enlists the services of another licensee, Alison, to act as a sub-agent for the transaction without permission from Melinda. Who is liable for Alison's actions?

Megan and Alison

A legally competent party means that an individual has the capacity, legally and ______, to enter into a contract.

Mentally

Which of these situations does the Americans with Disabilities Act address?

Meridian Apartments provides a gym and pool area for residents, but it's not accessible to residents who use wheelchairs.

The income a property could bring if it's fully leased is known as the ______.

Potential gross income

Amy purchased a new home and obtained financing through a bank, called Natula Bank. Natula originated the loan, but before Amy's first mortgage payment was due, it sold her loan to CitiMortgage. As a loan originator, what market is Natula Bank operating in?

Primary mortgage market

Your neighbors build a high-quality addition to their home, increasing its value compared to your own home's value. Because of this, you notice a bump in your property value. Which economic principle is at work here?

Progression

In California, incentives in the form of __________ may be available to homeowners who use alternative energy forms.

Rebates.

Rusty received an acceleration letter from his mortgage lender. What is the most likely reason for receiving this letter?

Rusty is two or three months in default.

The DRE investigated Sheila and has imposed a license suspension. What does this mean for Sheila?

She's not allowed to practice real estate during the term of the suspension, but after that time she can continue performing licensed activities.

Elisa agreed to list Simone's house for sale. After the listing contract was signed, Simone lost her job, and her father, George, offered to help Simone by paying Elisa's listing commission. The buyer's agent, Carl, also reduced his commission by a quarter percent to help Simone. Who is Elisa's client?

Simone

Which of the following involves street specifications, lot size, single- or multi-family dwellings, utilities provided and easements, how far houses must be set back from property lines, and drainage requirements?

Subdivision regulations

Which of these does a sponsoring broker owe their associate brokers and salespersons?

Supervision of activities

What signifies that a survey is certified and represents a guarantee of accuracy?

Surveyor's stamp

Lenders examine a variety of documents to determine whether the buyer is a good risk for a loan, such as _______.

Tax returns

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding, and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true?

The agent has breached his duty of confidentiality to his client.

Which of the following pieces of information may you share with the buyer if you are the seller's agent?

The roof leaks when it rains.

Which of the following is true about easements appurtenant?

They can be terminated if dominant and servient lands are merged into one parcel.

In what way, other than actual fire, does owning property in a designated forest fire hazard area affect home owners?

They may not receive fire protection services.

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

Voidable

How is priority determined in cases where more than one judgment lien is filed against a property?

Whoever filed their claim first receives priority.

Which of the following must be included on the subdivision map?

Widths and names of all streets

What legal document must be delivered to the sheriff before a tenant may be forcibly removed from a rental?

Writ of possession

Anthony owns a new commercial strip mall with several units. He's hired Jillian as his agent to find tenants to rent each unit. Is Jillian required to provide Anthony with an agency disclosure form?

Yes, Jillian is required to provide Anthony with an agency disclosure form.

Julian and Clara want to leave their real estate holdings to their children. If at all possible, they'd like those holdings to avoid the probate process after they're deceased. Their attorney recommends a land trust. Is there a type of trust they could establish that would avoid probate?

Yes, a living trust would avoid probate.