RE Practice exam

A building is valued at $150,000 with an estimated 25-year useful economic life. The building has an effective age of 8 years. Use the age-life method to find the depreciated value of the building. 1) $48,000 2) $102,000 3) $40,000 4) $100,000

$102,000 Effective age ÷ Total economic life × Reproduction cost new = Accrued depreciation; 8/25=0.32X$150,000=$48,000; $150,000-$48,000=$102,000

You are the listing agent representing seller Nancy. You listed her house for $350,000 at 6% commission. You offered 2.5% to a buyer's agent as a co-brokerage in the MLS. After 3 months on the market, you sell the house yourself for $325,000 to buyer Tim. Based on your agreement with your broker, your broker keeps 25% of the commission and pays you the rest. How much do you pocket? 1) $14,625 2) $7,312.50 3) $15,750 4) $4,875

$14,625 Price sold at $325,000X.06 = $19.500X.75 = $14,625.00

A buyer applied for a 30-year mortgage on a $100,000 at 3.5% interest. How much of the $750 monthly payment paid in the FIRST month will be applied to the principal? 1) $291.67 2) $458.33 3) $466.21 4) $542.13

$458.33 Beginning Principal Balance × Annual Interest= Annual Interest. Annual Interest ÷ 12 = Monthly Interest Due. Scheduled Monthly Payment - Monthly Interest Due = $ Paid on Principal. $100,000 X .035=$3,500/12=$291.67 $750-$291.67=$458.33

If a house sells for $167,550 and a mortgage is assumed at $127,800 and a new mortgage of $20,000 is also taken out. What is the total doc stamps tax due on the mortgages? 1) $517.30 2) $110.00 3) $40.00 4) $447.30

$517.30 $127,800+ $20,000= $147,800/100= $1,478X.35= $517.30

The section number located due west of section 6 is: 1) 7 2) 5 3) 3 4) 1

1 Remember counting from left to right. Starting with 1. So, 6, 5, 4, 3, 2, 1, leaves 6 due west of 1.

You own residential property valued at $500,000. The land accounts for 19% of the total value. Calculate the annual IRS depreciation deduction. 1) $14,727.27 2) $3,454.54 3) $10,384.62 4) $10,272.10

1) $14,727.27

N ½ of NW ¼ of SE ¼ of section 16 contains how many acres? 1) 20 2) 120 3) 240 4) 360

1) 20 You take the number of acres, begin with 640 and divide it by the numbers in the denominator from left to right. 640/ 4= 160/4 = 40/2 = 20.

Bob and Jane took out a mortgage on their first home. They had a monthly total debt obligation of $2250. Their total house payment is $990. They have a gross annual income of $32,000. Calculate their housing expense ratio (round to the nearest %). 1) 37% 2) 32% 3) 60% 4) 68%

1) 37% $32,000/12= $2,666.67; $990/$2,666.67=.37124 or 37%

The zoning board will only grant a variance if the property owner demonstrates that: 1) A land hardship exists relating to use of land 2) The owner has a physical hardship 3) The owner has a mental hardship 4) The owner has either a physical or mental hardship

1) A land hardship exists relating to use of land Typically, variances are granted when the property owner can demonstrate that existing zoning regulations present a practical difficulty in making use of the property known as a land hardship.

Which property is exempt from property taxes? 1) Church 2) County courthouse 3) Public school 4) Air force base

1) Church Some reports claim that as much as one quarter or one half of a typical U.S. city may be made up of tax-exempt property. Included are the non-government owned property such as churches, church schools and other nonprofit organizations.

Which one of the following accurately describes a note? 1) Contains the interest rate, loan amount, maturity date, and payment schedule 2) Is the instrument that pledges property as security 3) Is legally sufficient to ensure recovery of the loan 4) Is shared between two nice people

1) Contains the interest rate, loan amount, maturity date, and payment schedule Promissory note is the document signed by the borrower promising to repay a loan under agreed-upon terms. It is also called a note. Specific elements of the note include the specific terms of the loan such as rate, length of term, payment, etc. It also must be signed by the buyer to be valid.

A covenant that promises that the grantor owns the property and has the right to convey title is: 1) Covenant of Seisin 2) Covenant against Encumbrances 3) Habenum Clause 4) Granting Clause

1) Covenant of Seisin

Which task is typically the responsibility of a rental agent? 1) Find a tenant for the property for a fee 2) Manage the property for the owner once the tenant is found 3) Collect the rent each month from the tenants 4) Maximize the return on the owner's investment

1) Find a tenant for the property for a fee Rental agents find a tenant and collect a fee. Property managers continue to manage the property once the tenant is secured.

What is TRUE about a due-on-sales clause? 1) It prevents the assumption of a mortgage 2) It defeats the prior action when the final payment has been made 3) It allows the borrower to pay off the mortgage without penalty 4) It authorizes the mortgagee to accelerate the due date

1) It prevents the assumption of a mortgage It calls the entire loan balance due upon sale.

If three people have undivided interest in real property, which estate may NOT be created unless specific wording in the deed provides for the right of survivorship? 1) Joint tenancy 2) Tenancy in common 3) Tenancy by the entireties 4) Tenancy at will

1) Joint tenancy Let's compare how a joint tenancy with right of survivorship is different from a tenancy in common. First, joint tenancy always has right of survivorship. If you hold property that has a tenancy in common, when you die the property can be passed on to your heirs. This is not true for a joint tenancy. A joint tenancy has the right of survivorship meaning that it survives past your death. So, if you die holding a joint tenancy, the people you held the joint tenancy with would now equally own your interest in the property.

Which activity is NOT a real estate service? 1) Mortgaging real property 2) Advertising real property 3) Renting real property 4) Auctioning real property

1) Mortgaging real property Note that although mortgages are involved, financing is not a real estate activity as it is not regulated under Chapter 475 of the Florida Statutes.

The direct opposite of North 45 degrees East (N 45 E) in a metes-and-bounds description is: 1) S 45 W 2) N 90 W 3) E 45 S 4) S 45 E

1) S 45 W The direct opposite of north will always be south and the direct opposite of east will always be west and vice versa. The numbers do not change when dealing with direct opposites in a metes and bounds description.

An owner wanted to develop a farm that had a home on it that was quite old. The owner was comparing the cost to renovate the home verses tearing it down and building a new one. The home had structural details that the owner felt could be sold piece by piece at an auction. What type of value is this? 1) Salvage value 2) Going-concern value 3) Liquidation value 4) Assessed value

1) Salvage value Salvage value is when property is sold piece by piece rather than the whole.

Collard Sashis wanted to build a house on a property that was already mortgaged to Quality Bank. Builder bank told Sashis that they would extend him a loan if Quality Bank allowed Builder Bank to take lien priority. What mortgage provision would Quality Bank need to agree to make this happen? 1) Subordination 2) Novation 3) Partial Release 4) Blanket Mortgage

1) Subordination A Subordination Agreement is defined by a change in lien priority order. One lien holder gives up their place in line to another lien holder (Mortgagee). Common when the first mortgage is for vacant land.

A broker received conflicting demands from the buyer and the seller for the earnest money deposit. What timeline applies? 1) The broker must notify the FREC within 15 business days of the conflicting demands and implement a settlement procedure within 30 business days 2) The broker must notify the FREC within 20 days of the conflicting demands and implement a settlement procedure within 30 more days of notification 3) The broker must notify the FREC within 15 days of the conflicting demands and implement a settlement procedure within 30 more days of notification 4) The broker must notify the FREC within 30 days of the conflicting demands and implement a settlement

1) The broker must notify the FREC within 15 business days of the conflicting demands and implement a settlement procedure within 30 business days Recall that once a broker has a good-faith doubt as to how to distribute the escrow funds, the broker notifies the FREC of the conflicting demands on the deposit within 15 days, and within 30 days of having received conflicting demands.

Positive leverage is defined as: 1) The increase in return on equity from using borrowed funds 2) Using the art of persuasion to sell real estate at the highest price 3) Gaining a higher rate of return on real estate than on other types of investments 4) Selling a commercial property for more than its purchase price

1) The increase in return on equity from using borrowed funds An investor is said to be leveraging their investments when, instead of using all their own money to purchase a property, they borrow all or part of the funds to make the investment.

If the Federal Reserve votes to raise the discount rate, how will this likely affect interest rates on short-term credit? 1) They will likely increase 2) They will likely decrease 3) There will likely be no effect because the discount rate affects mortgage rates only 4) There will likely be no effect on short-term rates because the discount rate is charged directly to borrowers

1) They will likely increase Increase in discount rate results in less lending and reduces money supply. Decrease in discount rate results in more lending and increases money supply. It is actually the least effective way to influence the interest rate charged with real estate loans.

Sales associate Donald hired Sam as a personal assistant. Sam normally spent his day preparing marketing material under the direction of Sam. However, when Donald was out of town, Sam transported a contract to Donald's sellers to get it signed. Which statement best describes this situation? 1) This is a legal act as long as he acted only as a courier 2) This is a legal act as long as Donald stayed on the phone with Sam via facetime to monitor the procedure 3) This is a legal act because Sam can present offers to a client on the behalf of Donald 4) This is an illegal act because Sam cannot touch a contract

1) This is a legal act as long as he acted only as a courier It is unlawful for a licensee to pay any unlicensed person for performing real estate services. This means that brokers, as well as licensees, have to be careful when they hire an assistant to aid them in their real estate services.

A broker followed the instructions in an escrow disbursement order, but he was the defendant of a civil court judgment that resulted in a payment of $10,000 from the Recovery Fund due to his actions. As a consequence, the FREC: 1) Will take no action against the broker 2) Will probably suspend the broker's license 3) Will probably revoke the broker's license 4) Is required to suspend the broker's license

1) Will take no action against the broker The Recovery Fund can also be used to reimburse a consumer who won a court case against a broker who followed an Escrow Disbursement Order (EDO). In this case, the fund would pay the broker's costs and legal fees. Punitive damages will not be paid. In this case, the broker's license would not be suspended.

You own a corner lot which is 100 x 125. The city puts in a new street around your block. Paving costs are $24 per foot. The city is paying 50% . What is your portion of the bill? 1) $675 2) $1,250 3) $1,350 4) $2,700

2) $1,250 100+125= 225 x $24= $5,400 city pays half =$2,700 neighbor pays half =$1,350.

A lease calls for 2.5% of annual gross sales in excess of $325,000 plus a base annual rent of $18,000. What is the annual rent due for the year if the annual gross sales are $410,000? 1) $26,000 2) $20,125 3) $34,000 4) $24,125

2) $20,125 $410,000-$325,000=$85,000 $85,000 X .025=$2,125 $18,000+$2,125= $20,125

You are appraising a 5-year-old home. If the livable square footage is 3,500 with a cost of $95 to replace according to a cost-estimating service and the 400-square foot garage can be replaced at $60 a square foot, calculate the reproduction cost of the structure. 1) $365,500 2) $356,500 3) $332,500 4) $71,300

2) $356,500 Square footage of home. 3,500 x price per square foot $95 = $332,500. Add garage footage at 400 square feet x price of square feet $60 = $24.000. You then add both totals $332,500 + $24,000 = $356,500.

A widower exemption increases a homestead exemption by how much? 1) $25,000 2) $500 3) $2,500 but not for school taxes 4) $50,000

2) $500

Martin Sanders entered into a parol agreement with Sarah Clinton. Martin failed to follow through with agreements in their parol contract. How long would Sarah have to sue Martin? 1) 2 years 2) 4 years 3) 5 years 4) 7 years

2) 4 years Florida Statutes of limitations states that a legal remedy for oral/parol contracts can be pursued for 4 years.

Brokerage Top Notch moved from one office to another. They wanted to downsize the amount of files that they stored. How long did they need to keep documents including agency disclosure documents for properties that failed to close? 1) 3 years 2) 5 years 3) 7 years 4) 10 years

2) 5 years

When complaints of an alleged violation of the Florida statute, DBPR rule, or FREC rule, the following steps are taken in the following order: 1) A complaint is filed, an investigation of the complaint is made, an informal hearing is conducted, a probable cause hearing is held, a formal administrative complaint is issued if probable cause was found, a formal hearing is conducted, a final order is issued and finally a Judicial review is made (if initiated by the licensee) 2) A complaint is filed, an investigation of the complaint is made, a probable cause determination is made, a formal administrative complaint is issued if probable cause was found, an informal hearing or formal hearing is conducted, a final order is issued and finally a Judicial review is made (if initiated by the licensee) 3) A formal administrative complaint is issued, an investigation of the complaint is made, a probable cause determination is made, an informal hearing or formal hearing is conducted, a final order is issued and finally a Judicial review is made (if initiated by the licensee) 4) A complaint is filed, an investigation of the complaint is made, a probable cause determination is made, a formal administrative complaint is issued if probable cause was found, formal hearing is conducted, a Judicial review is made, a final order is issued.

2) A complaint is filed, an investigation of the complaint is made, a probable cause determination is made, a formal administrative complaint is issued if probable cause was found, an informal hearing or formal hearing is conducted, a final order is issued and finally a Judicial review is made (if initiated by the licensee) If someone believes that they have been wronged by a licensee, here is a complaint process that can be initiated: A complaint is filed, an investigation of the complaint is made, a probable cause determination is made, a formal administrative complaint is issued if probable cause was found, an informal hearing or formal hearing is conducted, a final order is issued and finally a Judicial review is made (if initiated by the licensee).

Duties owed by a transaction broker include: 1) Loyalty 2) Accounting for all funds 3) Confidentiality 4) Fiduciary

2) Accounting for all funds Transaction broker relationship duties include: Dealing honestly and fairly, accounting for all funds, skill, care and diligence in the transaction, disclosing all known facts that materially affect the value of residential real property that are not readily observable, presenting all offers and counteroffers in a timely manner, limited confidentiality and any additional duties that are mutually agreed to with a party.

An appraiser is estimating the value of a villa with an attached garage. She found three comparable villas. However, none of the comps have garages; only carports. The appraiser estimates that the garage has a value of $18,000. How would the difference be handled? 1) Add $18,000 to the mid-priced comp only 2) Add $18,000 to all the comps 3) Subtract $18,000 from all the comps 4) Subtract $18,000 from the subject property

2) Add $18,000 to all the comps If the comparable property is superior to the subject property, then you subtract value from the comparable property. If the comparable property is inferior to the subject property, then you add to the comparable property value. How much you add depends upon the value attributed to the difference.

When completing a license application, which statement is TRUE regarding criminal convictions? 1) If you were told that your criminal record has been expunged, there is no need to verify it by requesting a copy from the local Department of Law Enforcement where the crime occurred. 2) Applicants do not need to report parking and speeding offenses. 3) Applicants are not asked to report a conviction if a plea of no contest was entered. 4) Convictions occurring more than 10 years ago will not show up on the fingerprint check.

2) Applicants do not need to report parking and speeding offenses

Recording of a mortgage instrument in public records is an example of what type of notice? 1) Actual 2) Constructive 3) Administrative 4) Government

2) Constructive Constructive notice is knowledge which, according to law a person can acquire by making normal and reasonable inquiries.

The four characteristics of value are: 1) Supply, Demand, Utility, and Scarcity 2) Demand, Utility, Scarcity, and Transferability 3) Supply, Demand, Utility, and Transferability 4) Demand, Utility, Supply, and Transferability

2) Demand, Utility, Scarcity, and Transferability Goods and services, including real estate, have value if four characteristics apply: demand, utility, scarcity, and transferability.

Which item would be classified as a fixed expense in the calculation of net operating income? 1) Water bill 2) Hazard insurance 3) Mortgage payment 4) Depreciation

2) Hazard insurance Net operating expenses include fixed expenses, variable expenses, and reserves for replacements of building components. Fixed expenses are things that do not change based on occupancy. You must pay it regardless such as property taxes and hazard insurance.

Seller Tina owned a house originally built in 1925. It had been renovated so many times that it was practically like new and had an effective age of only 10 years! What disclosure did Seller Tina need to give to buyer Ronald? 1) Home Owner Renovation Disclosure Form 2) Lead based Paint Disclosure 3) Building Code Compliance Form 4) Historical Foundation Disclosure Form

2) Lead based Paint Disclosure

What are the steps in protesting the assessed value of real property? 1) Seek an adjustment by contacting the local mayor, appeal to the value adjustment board, and then sue in court 2) Seek an adjustment by contacting the local property appraiser, appeal to the value adjustment board, and then sue in court 3) Seek an adjustment by contacting the local property appraiser, appeal to the value adjustment board, and then issue an ad valorem protest form 4) Seek an adjustment from the ad valorem protest board, appeal to the value adjustment board, and then sue in court

2) Seek an adjustment by contacting the local property appraiser, appeal to the value adjustment board, and then sue in court Protest Procedure: Property owner contact property appraisers within the legislated time frame. File an appeal with The Value Adjustment Board. Litigation in courts

A real estate broker is typically authorized by a principal to act as a: 1) Universal agent 2) Special agent 3) General agent 4) Nonagent

2) Special agent The special agent is appointed for a specific purpose or to do something such as to handle a single business transaction. Often the activity is outside of the individual 's usual course of business.

Which statement is TRUE regarding homeowners' association disclosure requirements? 1) The contract is not voidable even if the disclosure summary is not provided to the buyer before executing the contract 2) The buyer cannot waive the right to void the contract if the disclosure has not been provided 3) The buyer is advised to execute the contract without receiving HOA disclosures 4) If the buyer decides to walk away from the contract, he can do so verbally

2) The buyer cannot waive the right to void the contract if the disclosure has not been provided The right to void (rescission) cannot be voided by the buyer. This rescission right ends at closing, meaning that if a buyer purchases a home without having ever read the disclosure summary, the buyer cannot back out of the deal after the deal is closed.

A homesteaded property is held only in one spouses name. That spouse has never changed his will upon his new marriage so his will still states that his children inherit the house upon his death. Upon his untimely death, what happens to the property? 1) It is immediately passed on to his children per the will 2) The surviving spouse has a life estate. Then upon her death, his children obtain ownership of the property as a remainderman. 3) The surviving spouse has a life estate. Then upon her death, his children obtain ownership of the property as an estate in reversion. 4) The surviving spouse immediately gains the property in severalty

2) The surviving spouse has a life estate. Then upon her death, his children obtain ownership of the property as a remainderman.

Tom Hideau specializes in the sale of distressed businesses that need to liquidate quickly. Which statement is true? 1) Tom can facilitate the sale as a regulated securities broker 2) Tom would have to hold an active real estate license to sell distressed businesses 3) The sale of distressed property is exempt from real estate licensure 4) So long as he has an account calculate the going concern value of the property, Tom does not need to have a real estate license to handle these types of sales

2) Tom would have to hold an active real estate license to sell distressed businesses When assisting sellers to sell a property by AUCTIONING the property, this is considered a real estate activity and a license is required - unless exempt by already being licensed as an auctioneer.

Under which circumstance may a real estate licensee lawfully refuse to show a listed property to a member of a protected class who has specifically requested to see the property? 1) Never 2) When the owner is out of town and has instructed the broker not to show the listed property when the owner is away on business 3) When the owner has expressed his intent in writing to exercise his exemption under the Fair Housing Act 4) When the licensee believes that showing the property to the prospective buyer will be considered steering

2) When the owner is out of town and has instructed the broker not to show the listed property when the owner is away on business When the owner is out of town and has instructed the broker not to show the listed property when the owner is away on business

Within how many days after receiving written notification of a landlord's claim on deposit does a tenant have to object in writing to the claim? 1) 30 2) 10 3) 15 4) 60

3) 15 When a landlord is holding a security deposit the landlord must: Return the deposit to the tenant within 15 days if no claim is to be made or send written notice by certified mail within 30 days if the claim is made on deposit. Tenant is allowed 15 days to respond to landlords written claim.

Developer Tom purchased 1200 front footage for $155,000. And then divided them into 6 lots which he sold at $200 per front foot. Calculate the developer's percentage of profit (round to nearest whole number). 1) 33% 2) 67% 3) 55% 4) 30%

3) 55% 1,200X200=240,000; $240,000-$155,000=$85,000/$155,000=0.5483 or 55%

The federal telemarketing laws restrict telephone solicitation calls to what hours? 1) 8:00 AM to 5:00 PM 2) 8:00 AM to 6:00 PM 3) 8:00 AM to 9:00 PM 4) 9:00 AM to 8:00 PM

3) 8:00 AM to 9:00 PM

A closing is set for October 10th. How will the property taxes be entered on the closing statement? 1) Only as a credit to the seller 2) Only as a debit to the buyer 3) A proration debited to the seller and credited to the buyer 4) A proration credited to the seller and debited to the buyer

3) A proration debited to the seller and credited to the buyer Items that are prorated: Pre-paid rent, county and/or city taxes, mortgage interest on assumed mortgages and Home Owner Association fees.

Which requirement must be fulfilled in order for a purchase and sale agreement to be enforceable in court? 1) Type of deed that will convey title be specified 2) Be signed by two witnesses 3) Be in written form and signed by both parties 4) Be acknowledged by a notary

3) Be in written form and signed by both parties According to the Statute of Frauds, the purchase and sale contracts must be in writing to be enforceable.

Making statements about minority groups moving into a neighborhood in order to persuade existing owners to sell is: 1) Steering 2) Redlining 3) Blockbusting 4) Unethical but not illegal

3) Blockbusting Blockbusting is convincing owners to sell property cheaply by scaring them that the property will lose value due to members of a protected group is moving into the neighborhood, and thus profiting by reselling at a higher price.

A sales associate's license expired 20 months ago. What MUST this sales associate do to again work as a real estate sales associate? 1) Complete Course I and pass the end-of-course exam 2) Complete 14 hours of continuing education 3) Complete a 28-hour commission-prescribed education course 4) Pass the state license exam

3) Complete a 28-hour commission-prescribed education course Any licensee that lets their license expire for more than 12 months, but less than 24 months can reactivate their license by taking the required 28-hour course.

Bolton Realty has a house listed for sale for Seller Nancy in a single agent relationship. Bolton Realty produces the buyer. What must the listing agent have signed by Seller Nancy to allow both buyer and seller to be represented by Bolton Realty? 1) Single Agent Agreement 2) No Brokerage Disclosure 3) Consent Transition to Transaction Broker Notice 4) Transaction Broker Disclosure Notice

3) Consent Transition to Transaction Broker Notice Once the single agent relationship has been formed, it may be changed to a transaction broker relationship at any time during the relationship between an agent and the principal, provided the agent gives the transition disclosure and the principal consents to the transition in writing before a change in the relationship.

Which type of alienation is involuntary? 1) Will 2) Deed 3) Escheat 4) Equitable

3) Escheat Florida Statutes provide that the property of a person who dies intestate and who has no known heirs to pass to the state. The property is transferred to the state by escheat. This is a form of involuntary alienation.

Which statement regarding state intangible taxes is TRUE? 1) The tax is calculated on new and assumed mortgages 2) The rate is calculated on each $100 3) Every dollar of debt is multiplied by .002 4) The rate is $.35 per $100 of debt

3) Every dollar of debt is multiplied by .002 An intangible tax is paid by the buyer on NEW mortgages (not assumed mortgages) and are paid on the value of the new mortgage at $.002 of every dollar.

Sam and Sue have entered a purchase agreement with Tom. They started the process to move the transaction along but there are still tasks to be performed. What type of contract classification is this? 1) Option 2) Open Listing 3) Executory 4) Executed

3) Executory

The license status that results when a license is not renewed at the end of the license period is referred to as: 1) Canceled 2) Delinquent 3) Involuntary inactive 4) Voluntary inactive

3) Involuntary inactive Involuntary inactive is when the licensee fails to fulfill the renewal requirements. However, the state allows a licensee to reactivate a license if the licensee fulfills the renewal requirements within two years of expiration. Reactivation is not possible if the licensee fails to meet requirements of the first renewal period.

A man owned two farms and a home when he died intestate. The court appointed a personal representative to dispose of any portions of the decedents estate that might be subject to estate taxes and debts of the deceased. The personal representative: 1) Must have the clerk of the circuit court auction any property sold 2) Must register with the DBPR if he expects to be paid for his work 3) May advertise, negotiate, and sell the property and be compensated for his work without registering with the DBPR 4) Must dispose of all real property through an active real estate broker

3) May advertise, negotiate, and sell the property and be compensated for his work without registering with the DBPR Any person acting as an Attorney in Fact having Power of Attorney or a Court Appointed Individual for the execution of contracts or conveyances only are exempt from having a real estate license.

One criterion used to determine if an item is considered a fixture is whether the real property would be damaged by removing the item in question. What "test" for fixtures does this describe? 1) Intent of the parties 2) Relationship of the parties 3) Method or degree of attachment 4) Adaptation of the item

3) Method or degree of attachment Another legal test of determining whether an item is personal property or a fixture is the method or degree of attachment. This test examines whether the object can be detached without substantial damage being caused.

A broker associate is ordering her business cards. May she put broker on her cards instead of broker associate? 1) Yes, because she is broker-qualified 2) Yes, with the consent of her broker 3) No, she must use the title broker associate 4) This is a matter of personal taste

3) No, she must use the title broker associate Know that false, deceptive, or misleading information in advertisements for real estate is illegal and is a second-degree misdemeanor.

Which power gives the Florida Real Estate Commission (FREC) the authority to enact, revise, and interpret administrative rules regarding real estate license law and practice? 1) Executive 2) Quasi-judicial 3) Quasi-legislative 4) Ministerial

3) Quasi-legislative Quasi-legislative: Create and pass rules. Regulates professional practices.

The lender's estimated overhead plus profit is what part of the calculated interest rate of an adjustable-rate mortgage? 1) Index 2) Points 3) Spread 4) Prime Rate

3) Spread Components of an ARM : Index, margin ( spread), adjustment interval, interest rate caps, payment cap and teaser rate.

The lot and block method of defining a legal description requires which one of the following? 1) A base line and principal meridian travel through the center 2) Beginning a point of beginning 3) That plat maps have been recorded in the public records 4) The reliance on monuments

3) That plat maps have been recorded in the public records The lot and block survey method is also called the recorded plat method.

Which statement is FALSE? 1) Townships have 36 sections 2) A section has 640 Acres and measures 1 mile by 1 mile 3) There are 56,430 square feet in an acre 4) There are 5,280 linear feet in a mile

3) There are 56,430 square feet in an acre There are 43,560 square feet in an acre.

The Hampshires wanted to buy their first home. Mr. Hampshire wanted to draw money out of their IRA, but MRS. Hampshire was afraid of the tax consequences. What would their tax advisor most likely tell them? 1) They can pull out money penalty-free if used as the down payment on their first home, but they would forfeit their $500,000 capital gain exclusion if they do so 2) They can withdraw money out tax free of their IRA to use for any purpose as long as it is within 6 months of their closing date. 3) They will experience many tax advantages including being able to deduct the interest on their mortgage, being able to withdraw the down payment penalty free from their IRA, and have up to $500,000 excluded from capital gains tax of their primary residence at the time of sale as long as they live in the home 2 of the 5 years prior to sale 4) There are no tax advantages to purchasing a home.

3) They will experience many tax advantages including being able to deduct the interest on their mortgage, being able to withdraw the down payment penalty free from their IRA, and have up to $500,000 excluded from capital gains tax of their primary residence at the time of sale as long as they live in the home 2 of the 5 years prior to sale Principle resident tax advantages: Mortgage interest deduction on a principal residence and second home, deduction of property taxes on a principal residence and second home, IRA withdrawal for first time home buyer, exclusion of gain from sale of a principal residence.

A transaction broker may disclose, without exception _________________. 1) To the buyer, that the seller will accept a price less than the listed price 2) The motivation of the other party for buying or selling the property 3) To the buyer the listed price and physical characteristics of the home 4) To the seller, the race of the prospective buyer

3) To the buyer the listed price and physical characteristics of the home Transaction broker may work for both buyer and seller and Disclose all known facts that materially affect the value of residential property that is not readily observable to the buyer.

Chapter 475 Brokerage Relationship Disclosure rules require: 1) Nonresidential transaction deals to include written disclosures 2) The leasing of property to include written disclosures 3) Written disclosures to be provided when working as a transaction broker 4) Written disclosures be provided when working as a single agent

3) Written disclosures to be provided when working as a transaction broker Disclosures do have to be made for residential sale as defined as being an improved residential property of four units or fewer, or the sale of unimproved residential property intended for use of four units or fewer, or the sale of agricultural property of 10 acres or fewer.

While on a fishing trip in Montana, a Florida real estate sales associate pleads guilty to a misdemeanor. Is the Florida licensee required to notify the Florida DBPR? 1) No, because the infraction was not a felony 2) Yes, but only if the licensee ever applies for a brokers license, at that time the guilty plea must be disclosed on the license application. 3) Yes, the sales associate must report the guilty plea to the Florida DBPR within 30 days. 4) No, because the incident did not occur in Florida

3) Yes, the sales associate must report the guilty plea to the Florida DBPR within 30 days. If a licensee gets in trouble after having obtained a license - even if in another state besides Florida- the licensee must report the infraction to the DBPR. Failure to do so is a violation of licensure.

A sales associate was issued a citation for failing to timely notify the Commission of her change of address. How many days does the licensee have to either pay the citation or file an objection to the alleged violation? 1) 30 2) 45 3) 60 4) 90

30 The DBPR/DRE has the authority to issue citations for minor violations. The licensee has 30 days to accept or reject the penalty. The penalty involved with a citation are fines from $100 to $500 per infraction.

If a tenant vacates rented premises at the end of a lease, how many days does the landlord have by law to notify the tenant if the landlord intends to claim part of the tenant's security deposit? 1) 3 2) 7 3) 15 4) 30

4) 30 When a landlord is holding a security deposit the landlord must: Return the deposit to the tenant within 15 days if no claim is to be made or send written notice by certified mail within 30 days if a claim is made on deposit.

A farmer has 112 acres of land. He wants to preserve 75% of the land for himself and sell the rest as separate lots. If zoning requires the lots to be at least 32,670 square feet, how many lots can he sell? 1) 28 2) 67 3) 112 4) 37

4) 37 Calculate the actual land to be developed by taking the starting acres of 112 and multiply x .25 land available for lots= 28 acres. 28 acres x 43,560 sq. ft. per acre= 1,219,680 total sq. ft. available. 1,219,680 sq. ft. /32,670 sq. ft. per lot= 37.33 round to 37. Note that with this type of problem you ALWAYS round down. Otherwise, you would be developing 1 lot that is too small per requirements.

The established useful asset life for nonresidential income-producing property under the IRS code is what number of years? 1) 15.5 2) 27.5 3) 31 4) 39

4) 39 The IRS uses a 27.5-year useful asset life for residential rental property and 39 years for non-residential income-producing property.

A listing to sell property and obtain a specified amount for the owner-principal is called what? 1) An open listing 2) An exclusive right-to-sell listing 3) An implied listing 4) A net listing

4) A net listing A net listing is where a seller tells the broker what he wants to walk away with at the closing and the broker keeps anything above that price.

If 2 discount points were purchased by the buyer on a conventional mortgage of $100,000, what would the effect be? 1) The lenders yield would increase by ¼% 2) The buyer would have to pay $2,000 for the cost of the discount points 3) The buyer would experience a reduction in interest rate compared to not purchasing the points 4) All of the above

4) All of the above

Which law prohibits racial discrimination in the sale or lease of all real property without exception? 1) Civil Rights Act of 1968 2) Fair Housing Act 3) Equal Credit Opportunity Act 4) Civil Rights Act of 1866

4) Civil Rights Act of 1866 Civil rights laws that affect real estate date back to 1866 when the Civil Rights Act of 1866 was passed. The act makes it illegal to discriminate in the sale or leasing of real estate (housing) based on race - without exception.

Which document must a prospective buyer of an existing condominium unit receive? 1) Prospectus 2) Estimated operating budget 3) List of unit owner names and addresses 4) Copy of Frequently Asked Questions and Answers (FAQ)

4) Copy of Frequently Asked Questions and Answers (FAQ) Frequently Asked Questions is a prepared document that informs prospective buyers about restrictions on things such as leasing and pets and provides general information about assessments, etc.

The constitutional homestead law protects real property from forced sale to satisfy which type of delinquent debt? 1) Real property taxes 2) Mortgage lien on the homesteaded property 3) Construction lien for home improvements 4) Credit card debt

4) Credit card debt The legal life estate of homesteaded property is also demonstrated by the inability of a creditor to force the sale of a homesteaded property. If the debt is unrelated to the home such as with a mortgage or a mechanics lien, the home is protected.

Right of survivorship is contained in which tenancy? 1) At will 2) In common 3) By the entireties and joint tenancy 4) Estate for years

4) Estate for years Joint tenancy always has the right of survivorship, meaning that it survives past your death.

Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loans differ in that: 1) VA requires the borrower to make a down payment on a single-family, fixed rate loan; FHA does not 2) FHA guarantees the mortgage and requires a set minimum down payment; VA does neither 3) VA charges a mortgage insurance premium; FHA charges a funding fee 4) FHA insures the mortgage and establishes a maximum mortgage amount; VA guarantees the mortgage and has no legislated down payment requirement

4) FHA insures the mortgage and establishes a maximum mortgage amount; VA guarantees the mortgage and has no legislated down payment requirement The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. Also, different from FHA loans is that the VA loan does not have a maximum loan amount or home price that can be purchased if the buyer meets the TOR requirement and that, the value of the property has been supported by the Certificate of Reasonable Value.

A broker wishes to be issued several broker licenses for business reasons. He may: 1) Only be issued one broker license 2) Be issued one broker license, but have several broker associate licenses 3) Be issued a group license 4) Hold multiple licenses

4) Hold multiple licenses

Which is not a remedy for breach of contract? 1) Compensatory damages 2) Specific performance 3) Liquidated damages 4) Mitigated performance

4) Mitigated performance Remedies for breach of contract include specific performance, award of damages, rescission, and compensatory damages.

A commercial tenant pays a fixed rent each month plus taxes, insurance, and maintenance. This is called a ______________. 1) Percentage Lease 2) Gross Lease 3) Expense Lease 4) Net Lease

4) Net Lease With a net lease, the tenant pays a fixed rent amount. Plus, they are responsible for the other expenses associated with the property. This includes utilities, property taxes, property insurance, and maintenance and repairs.

Which business entity may register as a real estate brokerage? 1) Joint Venture 2) Corporation Sole 3) A business trust 4) Nonprofit corporation

4) Nonprofit corporation Entities that may register as a brokerage: 1) Sole proprietorship, 2) General partnership, 3) Limited partnership, 4)Corporation, 5) Limited liability company, 6) Limited liability partnership

A licensed real estate sales associate and broker desire to open a new real estate brokerage firm as general partners. They may: 1) Be registered as a joint venture 2) Register the partnership with the broker as the required active broker partner and the sales associate as a junior partner 3) Not register as a partnership. However, they can incorporate and register as a corporation with the sales associate as vice president and the broker as president 4) Not do so

4) Not do so Sales associates may not be general partners.

Which statement is FALSE regarding a broker's price opinion (BPO)? 1) BPOs do not need to conform to USPAP standards 2) A BPO must never be referred to as an appraisal 3) Compensation paid for performing a BPO must be paid to the broker and not directly to a sales associate. 4) Only licensed or certified appraisers may prepare BPOs

4) Only licensed or certified appraisers may prepare BPOs Cannot be referred to or be represented as an appraisal does not have to comply with USPAP Sales associates may complete a BPO for compensation

A leasehold estate is NOT: 1) An interest in real property that a tenant possesses. 2) A tenancy with a specific period of time. 3) An agreement that can be terminated with appropriate notice. 4) Ownership interest.

4) Ownership interest. Estates are divided into two groups: freehold and leasehold estates. A freehold estate is ownership for an indefinite length (unknown) duration. A leasehold or a (nonfreehold) estate is for fixed (known) duration.

False advertising concerning real estate information incurs what type of penalty? 1) Administrative penalty 2) Third-degree felony 3) First-degree misdemeanor 4) Second-degree misdemeanor

4) Second-degree misdemeanor

Which lien is an example of a superior lien? 1) Judgment 2) Income tax 3) Vendor 4) Special assessment

4) Special assessment Liens are designated as either a superior lien or a junior lien. Superior liens are paid before junior liens. Some superior liens include property tax, special assessments, and federal estate tax liens. Some junior liens include mortgages, vendor's, income tax, and judgments.

Which statements are not true about the unlicensed practice of real estate? 1) Practicing real estate without a license is a third-degree felony. 2) Falsifying a DBPR license application is a third-degree felony. 3) The DBPR may issue fines of up to $5,000 per count to a person found guilty of unlicensed activity. 4) The criminal penalty for a third-degree felony includes jail time for up to 10 years in jail.

4) The criminal penalty for a third-degree felony includes jail time for up to 10 years in jail. The unlicensed practice of real estate is a third-degree felony and carries a $5000 fine and up to 5 years in prison.

Which instrument is used to transfer ownership of a mortgage from one company or individual to another? 1) Novation 2) Assignment of mortgage 3) Satisfaction of mortgage 4) Estoppel certificate

Assignment of mortgage Question Feedback The legal instrument that transfers the mortgage and promissory note to the purchaser is called an Assignment of Mortgage. With the assignment, the buyer becomes responsible for that remaining debt. However, the seller is still responsible for the debt as well unless a novation agreement has been approved by the lender.

Which phrase, when used in credit advertising, is NOT considered a triggering term under the Truth in Lending Act? 1) Just 3% down 2) Down payment as low as $250 3) Below-market rate financing available 4) Fixed-rate mortgage loans as low as 6%

Below-market rate financing available If along with the real estate property you are advertising for sale, you also mention any of the following types of phrases (triggering terms), you are also subject to TILA disclosure requirements: "25% down" "90% financing" "Monthly payments less than $67" "36 small payments are all you make" "4 year loans available" "Less than $100 interest"

Which statement is NOT true regarding Fannie Mae? 1) FNMA buys conventional, FHA and VA loans 2) FNMA is the largest secondary mortgage government sponsored entity 3) FNMA guarantees mortgage-backed securities that carry the full faith and credit guarantee of the U.S. Government 4) FNMA issues mortgage-back securities to investors

FNMA guarantees mortgage-backed securities that carry the full faith and credit guarantee of the U.S. Government Fannie Mae is a private (not government agency) that trades on the NYSE. Because of the problems that resulted in the mortgage market around, in 2008, Fannie Mae came under "Conservatorship" of the Federal government. This means that Fannie Mae is still a private corporation (not government owned) but is under strict government oversight.

Which type of income is used to derive a gross income multiplier? 1) Gross monthly income 2) Net operating income 3) Gross annual income 4) Effective gross income

Gross annual income With the gross income multiplier, you use the annual rents plus other annual income.

An active Florida broker accompanies her husband when he goes on active military duty in Ohio for five years. She is not active in real estate in Ohio. Upon her return to Florida, she: 1) Must first complete 7 hours of continuing education for each inactive year 2) Must first complete 14 hours of continuing education 3) Must first complete 28 hours of reactivation education 4) Is exempt from renewal requirements for two years and may start using her real estate license

Is exempt from renewal requirements for two years and may start using her real estate license A licensee in good standing, who is a member of the U.S. Armed Forces, is exempt from renewal requirements during active duty and for 2 years after discharge from active duty.

Which characteristic might be classified as functional obsolescence? 1) Exterior needs repainting 2) Property fronts on a busy expressway 3) Property has a one car garage 4) Neighborhood is 60 years old

Property has a one car garage Functional Obsolescence is a type of depreciation that results in a loss of value. Buyer preferences change over time making the designs of some homes no longer desirable. Examples of functional obsolescence would be a 1 car garage.

Which of the following criteria best describes the requirements of a sales associate applicants? 1) Proof of U.S. citizenship, social security number, and high school diploma or its equivalent 2) Proof of U.S. citizenship, social security number, and at least 18 years of age 3) At least 18 years of age and a high school diploma or its equivalent 4) Social security number, at least 18 years of age, high school diploma or its equivalent

Social security number, at least 18 years of age, high school diploma or its equivalent Basic requirements for licensure: Being 18 years of age or older, have a high school diploma or equivalent, possessing a social security number, being of honest and of good character and being competent and qualified.

Who gets the credit for an earnest money deposit on a closing statement? 1) Both the buyer and the seller 2) The buyer only 3) The seller only 4) The listing agent

The buyer only On the closing disclosure, most items are entered on both the buyer and seller sides. This is called a double entry system. There are some exceptions where the item is only put on either the buyer or seller side as appropriate. For example, the buyer gets credit for an earnest money deposit.

A tenant was required to pay $1,200 as security deposit. Three weeks after making the deposit, the landlord passed along to the tenant by phone the mandatory information concerning his deposit of funds. Why has the landlord violated F.S. 83? 1) The landlord failed to notify the tenant in writing of the bank name, address, and other information regarding the deposit 2) The landlord collected the deposit in an amount exceeding the legal limit 3) The landlord failed to notify the tenant within 15 days 4) Advance rent and deposits of $1,200 is an unconscionable agreement or provision

The landlord failed to notify the tenant in writing of the bank name, address, and other information regarding the deposit The landlord must provide written notice to tenant within 30 days of collecting deposit as to which method was chosen.

A broker associate listed a villa home for $320,000. A sales associate from a competing firm called the listing associate to inform them of a verbal offer of $250,000. The listing associate did not present the verbal offer to the seller. Which statement applies to this situation? 1) Licensees are required to present written offers only 2) The listing associate was required to present the verbal offer to the seller when acting as a single agent or a transaction agent 3) Licensees are required to present all written and verbal offers only when working in the capacity as a single agent 4) The listing associate was not required to present the verbal offer if the seller had indicated in previous conversations that she only wanted to consider written offers.

The listing associate was required to present the verbal offer to the seller when acting as a single agent or a transaction agent By law, the licensee is required to present all offers. This includes all verbal offers.

Which statement does NOT describe an owner's title insurance policy? 1) The premium is paid only once at time of issue 2) The policy may not be transferred from one owner to another owner 3) Damages are paid for any defect in the title not listed as an exception 4) The policy is issued for an amount equal to the unpaid balance of the mortgage

The policy is issued for an amount equal to the unpaid balance of the mortgage An owner's policy is issued for the price of the house whereas the lender's policy is issued for the price of the mortgage the policy is protecting.

Which statement is TRUE regarding a title company holding the escrow funds? 1) The broker must be a signatory on the title company's escrow account 2) Within 5 business days after the deposit is due, the broker must confirm that the deposit was made 3) If the buyer and seller make demands for the escrowed funds, the broker must make a timely report of conflicting demands to the DBPR 4) With 10 business days after the date the broker requests written verification of receipt of the deposit, the broker must provide the seller's broker with a copy of the verification

With 10 business days after the date the broker requests written verification of receipt of the deposit, the broker must provide the seller's broker with a copy of the verification Within 10 business days after deposit is due, the buyer's broker shall make written request to the title company (attorney) for verification of receipt of deposit (Unless, held by a title company or by an attorney nominated in writing by a seller or seller's agent). Within 10 business days after broker made a written request, provide seller's broker with a copy of written verification.