Real Estate PSI Exam

A person has the capacity to contract if he: Select one: a. Has given consent b. Has agreed to the terms of the contract c. Is not subject to coercion d. Is mentally competent

Consent, agreement, and coercion do not establish whether one has the legal capacity (ability) to contract with another person. Mental competence, on the other hand, is relevant to whether one has the capacity to contract. That is, assuming no other problems, a person who is mentally competent has the capacity to contract. Compare this to minors who have a limited capacity to contract, and to the legally insane who do not have the capacity to contract. The correct answer is: Is mentally competent

Which of the following deeds creates the most liability for a seller? Select one: a. Quitclaim deed b. Special warranty deed c. Universal warranty deed d. General warranty deed

The general warranty deed is the most complete of all deeds, it carries all the warranties of title and therefor the seller would incur the most liability. A quitclaim deed is the least complete in that it warrants nothing. A special warranty deed only warrants against defects which arose during the tenure of the grantor's ownership and not against previous title defects. The correct answer is: General warranty deed

Which of the following contracts will provide instruction for the distribution and proration of escrow and impound funds? Select one: a. The sales contract b. The listing c. The mortgage d. The deed

The settlement agent will examine various documents to ascertain how to distribute funds. Of the choices, the sales contract will come closest to containing all pertinent information about disbursements. The correct answer is: The sales contract

Industrial property owners need to be knowledgable about which of the following? Select one: a.HOA b. CERCLA c. PUD d. None of the above

Those specializing in Industrial property will need to have special knowledge of laws concerning hazardous waste such as CERCLA (superfund), as well as other state and federal environmental laws. HOA (Home Owner Associations) and PUD (Planned Unit Development) are related to residential properties. The correct answer is: CERCLA

Seller Edward feels bad that Sam, who was going to buy Edward's property, lost his job. Edwards agrees to ______________ Sam from his obligations and _______________ the contract. Select one: a.Release / Extend b.Release / Continue c. Release / Keep d. Release / Rescind

"Release" is when one party (Sam) wants out of the contract and the other party (Edward) agrees to release that party from any obligations. To "Rescind" a contract is when both parties mutually agree that it makes sense to terminate the contract. The correct answer is: Release / Rescind

Jill owns a lot that is 1,600 square feet. The lot is 80 feet in length. What is the width of her lot? Select one: a. 10 feet b. 20 feet c. 30 feet d. 40 feet

Determine the width of Jill's lot as follows: Area = Length x Width Width = Area / Length Width = 1,600 sq. ft / 80 ft. = 20ft. The correct answer is: 20 feet

In order for a dual agency to be legal, it must be: Select one: A. Disclosed orally prior to negotiations B. Disclosed in writing and agreed upon prior to negotiations C. Disclosed in writing after negotiations D. Dual agency is always illegal

In states that permit dual agency, it must be disclosed and agreed upon in writing by all parties prior to negotiations. The correct answer is: Disclosed in writing and agreed upon prior to negotiations

A borrower paid $4,550 interest on a $16,000 interest-only, 10% note. What was the term of the loan? Select one: a. 24 months b. 29 months c. 34 months d. 39 months

First, calculate the amount of interest that is paid in each interest-only payment. Interest (annual) = $16,000 x 0.10 = $1,600 Interest (monthly) = $1,600 / 12 = $133.33 From here, we can determine the number of monthly payments (the loan term): Number of payments = $4,550 / $133.33 per month = 34.12 months The closest, and therefore the best, answer is 34 months. The correct answer is: 34 months

Government rights to control private land stem from: Select one: a. The Constitution b. Local zoning authorities c. Common law d. Municipal governments

The United States Constitution delegates police power to individual states. In turn, individual states delegate this authority to counties and municipalities. Governments exercise the police power in a variety of activities, often referred to as "public controls." The correct answer is: The Constitution

Betty makes a down payment of $20,000 for a house that costs $80,000. What percentage of the house price is her down payment? Select one: a. 15% b. 20% c. 25% d. 27%

Determine Betty's percentage as follows: Down payment percentage = Down payment / House cost Down payment percentage = $20,000 / $80,000 = 0.25 = 25%. The correct answer is: 25%

A parcel of real estate that you are trying to sell is located near a toxic waste site. The seller (your client) does not want you to disclose this information because he thinks that no one would buy if they knew. As a real estate agent, you have an obligation to: Select one: a. Disclose the information only when you are involved in an transaction b. Say nothing as per your fiduciary relationship with the seller (your client) c. Note it on the disclosure form--by doing this, you do not need to disclose the fact verbally d. Disclose the information regardless of whether you are involved in the transaction

Disclosure laws apply regardless of whether a real estate agent is involved in the transaction. Although using disclosure forms adds a layer of protection for all parties in the transaction, the forms themselves do not replace an agent's independent responsibility to disclose all known material property defects. Environmental hazards are material facts and must be disclosed to all parties in the transaction. The correct answer is: Disclose the information regardless of whether you are involved in the transaction

A salesperson is employed by Broker Able, but she works alone to market and sell her own home. She must: Select one: a. Abide by all fair housing laws b. Disclose in all forms of advertising that she is a licensee c. Disclose to all buyers her license status d. All of the above

Licensees must make specified disclosures when selling their own property. Disclosure of license status is also required if they have any other interest in a property for sale (for example, if their firm or a family member has an interest in the transaction). The correct answer is: All of the above

Mr. Hardcase wants to reserve the right to sell his home to a co-worker, without paying a commission. Which of the following listings would best serve Mr. Hardcase's interests? Select one: a. An exclusive agency b. An exclusive right-to-sell c. A net listing d. None of the above

Of the choices here, an exclusive agency listing would allow the owner to sell the home himself without being liable for a commission. A net listing is illegal in most states. An exclusive-right-to sell guarantees a Broker their commission regardless of who finds the buyer/sells. The correct answer is: An exclusive agency

Which authority enforces Fair Housing Laws? Select one: a. The National Association of Realtors b.HUD c. Dept. of Justice d.Both B and C

While the Department of Housing and Urban Development (HUD) administers federal fair housing laws, BOTH HUD and the Department of Justice enforce federal fair housing laws. The correct answer is: Both B and C

Which of the following items may be disclosed by the seller on a property disclosure form? Select one: a. a cracked foundation b. a faulty furnace c. a leaking basement d. all of the above

Sellers use property disclosure forms to disclose mandated disclosure items the seller has actual knowledge of such as: roofing, plumbing, electrical, heating/air and structural defects. The correct answer is: all of the above

Which of the following statements is true about state-chartered S&Ls? Select one: a. They only make conventional loans b. The must obtain FDIC insurance c. They only make government backed loans d. They may obtain FDIC insurance

State chartered S&Ls may, but are not required to, subscribe to the FDIC. They make both conventional and government backed loans. The correct answer is: They may obtain FDIC insurance

TILA (Regulation Z) applies to which of the following loans? Select one: a. A loan to purchase a single family home b. A purchase money mortgage c. A loan to purchase a 16-unit apartment building d. All of the above

The Truth-In-Lending Act (TILA), which is implemented through Regulation Z, applies only to consumer loans and commercial lenders. Therefore, TILA does not apply to loans for the purchase of commercial property (apartment complex), or individuals loaning money under a purchase money mortgage (seller financing). The correct answer is: A loan to purchase a single family home

If a salesperson lists a property, she CANNOT be: Select one: A. A dual agent B. Only a buyer's agent C.Only a seller's agent D. An agent for the buyer and seller

The agent COULD represent the buyer and seller (if all parties consent dual agency can be permitted). The listing agent could choose to represent ONLY the seller, but the agent who takes a listing cannot be ONLY a buyer's agent. The correct answer is: Only a buyer's agent

A broker placed one of her signs on property without permission from the owner. The broker is guilty of: Select one: a. Improper dealing b. Disparate impact c. Misrepresentation d. Violation of anti-trust laws

The regulations stipulate that signs may ONLY be placed on property with permission of the owner. This is addressed in the "Improper Dealing" section of the regulations. The correct answer is: Improper dealing

A salesperson took a listing on a property that had a crack in the foundation, caused by water seepage. Although the owner tells her that the water problem had been corrected, it's obvious that the owner had only filled in and painted over the crack. If the salesperson shows the property without informing potential buyers about the issue, she would be guilty of: Select one: a. puffery b. nothing c. misrepresentation d. fraud

This is fraud because it is an intentional concealment. The licensee is obligated to disclose known material facts about property. The correct answer is: fraud

Under what circumstances would a buyer receive a sheriff's deed? Select one: a. For the purchase of a stigmatized property (murder occurred) b. For the purchase of property with a cloud on the title c. For the purchase of property at a foreclosure sale d. Both A or B

A Sheriff's Deed is similar to a deed in foreclosure, which is presented to a buyer by the courts after a property is sold to satisfy a judgment. When anyone other than the delinquent borrower buys property at a public auction, they receive a sheriff's deed (also known as a referee's deed). A sheriff's deed functions to eliminate all unpaid junior liens against the property so that the purchaser may receive marketable title. The correct answer is: For the purchase of property at a foreclosure sale

A person feels that his rights have been violated according to the Virginia Fair Housing Law. If he wants to file a formal complaint, it must be filed: Select one: a. Only against a licensed salesperson or broker b. Within 90 days of the alleged act c. Within 2 years of the alleged act d. Only with the Department of Housing and Urban Development (HUD)

A complaint can be filed up to 2 years after the alleged violation, either with the Real Estate Board (within 1 year) or in Virginia state court (within 2 years). The correct answer is: Within 2 years of the alleged act

A court action to remove a cloud from the title is called an action or suit for: Select one: a. title insurance b. quiet title c. specific performance d. legal injunction

A court action (suit) for the removal of a defect, cloud, or claim against the title of a property is called a suit to quiet title. The correct answer is: quiet title

Which of the following is considered a title defect? Select one: a. Mechanics lien b. Improper recording of ownership c.Missing signature d. All of the above

A defective title means that the title is not marketable. One example of a defective title is land being sold by a party claiming to have good title, but which is actually owned by someone else. Other defects may include: • Improper recording of ownership • Failure to include the signature of a party that is necessary to the transaction, such as a spouse • Previous liens and other encumbrances have not been removed (the title needs to be free of encumbrances to be marketable) • Mechanics lien if the seller failed to pay the contractor for an improvement to the home. The contractor can place a lien on the property for his/her unpaid labor. • Tax Liens if an owner failed to pay his/her taxes and a certificate was sold in the amount of the unpaid taxes. The correct answer is: All of the above

What provides the best estimate of a property's value? Select one: a. A comparative market analysis b. The amount a lender is willing to lend c. A formal appraisal d. The market data approach

A formal appraisal is performed by a licensed appraiser who develops his opinion based on experience, education, and an analysis of the subject property. Therefore, of the choices listed, an appraisal is likely to produce the best estimate of a property's value. A comparative market analysis is, at best, an educated guess of the market value of a property. The correct answer is: A formal appraisal

Which agency duties is a limited service agent held to when representing a client? Select one: a.Fewer duties than a standard agent, detailed in a brokerage agreement b. The same duties as a standard agent c.The duty of material disclosures and honesty d. Only the duty of reasonable care

A limited service agent is a licensee who agrees to represent a client, with the exception of one or more of the duties required of standard agents. A limited service agent is only held to the duties which are not listed as an exception in the brokerage agreement, and upon entering the agency relationship, she must provide the client with copies of any and all disclosures required by federal, state, or local law. The correct answer is: Fewer duties than a standard agent, detailed in a brokerage agreement

legal land description must: Select one: a. Show the area of the land being described b. Carry the measurements to the nearest inch c. Contain an informal reference d. Be reasonably identified by a surveyor

A property description is considered legally sufficient if it can be reasonably identified by a surveyor. Legal property descriptions are required for any document that will be formally recorded (deed, mortgage, title, power of attorney). The correct answer is: Be reasonably identified by a surveyor

Which of the following items would cancel a contract without breaching it? Select one: a. Subordination clause b. Option clause c. Right of first refusal d. Rescission agreement

A rescission or cancellation agreement is an agreed upon remedy in a contract that allows the parties to terminate under specified conditions. The correct answer is: Rescission agreement

Which of the following situations is an example of a tenancy at sufferance? Select one: a. A tenant who installed trade fixtures, but did not remove them when the lease expired b. A tenant who uses the premises in violation of her lease c. A person who leases a store and renews her lease on a month-to-month basis d. A farmer who refuses to cede possession upon lease expiration in order to harvest his crops

A tenant "at sufferance" is one who remains in possession of leased property after the lease expires. While the farmer retains title to his crops (because they are fructus industriales), he has no rights in the leased premises. A tenant that violates the conditions of her lease before it expires has lawful possession unless or until she is evicted. The correct answer is: A farmer who refuses to cede possession upon lease expiration in order to harvest his crops

Sue the seller received an offer from Bryan the buyer on Saturday at 3:00 pm and decided to accept the offer. Sue signed the offer on Sunday at 11:00 pm and then she mailed the offer acceptance to Bryan on Monday at 9:00 am. Bryan received the acceptance of offer on Wednesday at 1:00 pm. On which day and time was the acceptance effective and resulted in a contract? Select one: a. At 9:00 am on Monday when Sue mailed the acceptance of offer b. At 1:00 pm on Wednesday when Bryan received the acceptance of offer c. At 11:00 pm on Sunday when Sue signed accepting the offer d. At 3:00 pm on Saturday when Sue decided to accept the offer

Acceptance is the act of declaring a desire to create a contract consistent with a specific offer (offers must be accepted as the offer specifies). Offers may be accepted orally or in writing. When the signed acceptance is mailed the acceptance of offer becomes effective when it is deposited into the mailbox by the offeree, not when the offeror received it. The correct answers are: At 9:00 am on Monday when Sue mailed the acceptance of offer, At 1:00 pm on Wednesday when Bryan received the acceptance of offer

Tom makes a full price offer to purchase property from Jerry, while Jerry considers the offer it is revealed that Tom was deemed legally insane last year. What are Jerry's options, can he accept the offer? Select one: a. Yes, Jerry can still accept the offer and then Tom will have to follow through with the purchase b.Yes, Jerry has a right to accept any offers that are presented c.Yes, Jerry can accept as long as there is a meeting of the minds d. No, insanity terminates all unaccepted offers

Acceptance of an offer and the subsequent formation of a contract require a "meeting of the minds". A "meeting of the minds" occurs when both parties understand exactly what they have promised to do or not to do. Both death and insanity prevent a meeting of the minds from occurring. Therefore, the death or insanity of either party terminates an offer that has not been accepted. The correct answer is: No, insanity terminates all unaccepted offers

If the Board receives a written complaint about a licensee, what is the first thing they will do? Select one: a. Review the complaint to determine if there is a possible violation of License Law or Board regulations b. Hold a hearing in order to allow the licensee to defend himself c. Suspend the respondent's license d. Advise the licensee of the charges

After receiving a complaint, the very first thing the Board will do is to see if it alleges a violation of License Law. Even when true, a complaint could be about an issue that is not a violation, or something that is entirely outside of the Board's jurisdiction. The correct answer is: Review the complaint to determine if there is a possible violation of License Law or Board regulations

Billy the Broker represents Suzy Seller in an effort to sell her home. Bob the Buyer makes an offer that is $20,000 below what Suzy is asking. Knowing that Suzy would reject such a low offer, Billy tells Bob to "forget it." Has Billy violated the VA License Law? Select one: a. Yes, because Suzy must communicate directly with Billy b. No, because Billy is a broker c. Yes, because Billy failed to present the offer to Suzy d. No, because he acted in Suzy's best interests

All licensees (salesperson and broker) are prohibited from making omissions related to a transaction, including a failure to present offers in a timely manner. Agents must receive and present all written offers and counteroffers in a timely manner, even when the property is already subject to a contract of sale. The correct answer is: Yes, because Billy failed to present the offer to Suzy

All of the following circumstances are examples of insurable title defects, except: Select one: a. Forged documents b. Mental incompetence c. Undisclosed heirs d. Unrecorded easements

All of the listed items, except unrecorded easements, are commonly insured title defects. Unrecorded easements and other rights of parties in possession are generally excluded. Also excluded are facts that an accurate survey would reveal, taxes, assessments not yet due or payable, zoning, and other governmental restrictions. The correct answer is: Unrecorded easements

Valid restrictive covenants: Select one: a. Restrict what an owner may do on his own land b. Run with the land c. May appear in a lease d. All of the above

All of the listed statements are true about valid deed restrictions. To "run with the land" means that the restrictions remains with the property as it passes from owner to owner. The correct answer is: All of the above

Regarding the value of real estate property, what is plottage? Select one: a. Profit resulting from sale of commercial property b. Decrease in value due to assemblage c. Profit resulting from sale of industrial property d.Increase in value due to assemblage

Assemblage is viable when the combined property will be more valuable than the sum of the individual parcels. Any increase in value resulting from assemblage is known as plottage value. The correct answer is: Increase in value due to assemblage

Bob, an associate broker, sold a property. Several weeks after closing, the seller sent him $250 and a thank you note for a job well done. Bob accepted the check since he worked hard and felt the bonus was deserved. In the situation described, which of the following statement is true? Select one: a. Bob may keep the money because of the fiduciary relationship between himself and the seller b. Bob may keep the bonus since he has a broker's license c. Bob has violated the Board regulations d. Bob may accept the bonus if more than 30 days have passed since closing

Associate brokers cannot accept payment directly from a client. Like salespersons, an associate broker must ONLY be paid by the principal broker. The correct answer is: Bob has violated the Board regulations

arnwell lists property with Broker Bob, and Bob assigns the transaction to Salesperson Ben. Ben shows the property. He quickly receives an offer and earnest money check from Billy. However, Barnwell cancels the listing agreement two days later, before Ben has time to act. What should Ben do with the earnest money that he received with the offer to purchase? Select one: a. Give it to Bob b. Give it to Barnwell c. Give it back to Billy d. Split it between Bob and Billy

Ben must give all earnest money to his broker (Bob) for deposit into escrow. Broker Bob should then return the deposit to Billy (not Barnwell) because there is an offer, but no acceptance (since Ben didn't have time to present the offer). Therefore, there is no contract between the buyer and seller. The correct answer is: Give it to Bob

Joan and Bob negotiate for the sale of Joan's property. Joan lists her property for $150,000. Bob declares that he will pay $125,000. Under these circumstances, Bob has: Select one: a. Made a counteroffer b. Invited Joan to enter into a contract c. Entered into a binding contract d. Invited Joan to enter into an option contract

Bob made an offer, also known as an invitation to enter into a contract. Bob did not make a counteroffer because this is the first offer on the table--the listing price is not an offer. Bob's offer did not give rise to a contract because it was not (yet) accepted by Joan. Finally, there are insufficient facts to indicate whether Bob proposed an option contract in his offer. The correct answer is: Invited Joan to enter into a contract

Cheryl and Chris enter into a buyer-broker agreement. They specify that the agreement will last for a two week period. At the end of two weeks, Chris informs Cheryl that the agreement is no longer binding. Chris is: Select one: A. Correct, so long as the agreement was written B. Incorrect, because the agreement is valid for a reasonable amount of time C. Correct, regardless of whether Chris informed Cheryl D. Incorrect, unless Cheryl agrees

Buyer-broker and other personal service contracts may be oral. Such agreements are valid for a "reasonable" amount of time if no expiration was specified, but the question mentions an agreed upon expiration date. As such, Cheryl need not agree at the end of the two weeks. She already gave approval by entering into a contract with those specified terms. Therefore, regardless of whether Chris informs Cheryl, the agreement automatically expires at the end of the stated duration. The correct answer is: Correct, regardless of whether Chris informed Cheryl

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

Dixie could only be in violation of the 1866 Civil Rights Act, and not current Fair Housing Laws. Strange as it may seem, the Fair Housing Law exempts owner sales so long as the owner does not use discriminatory advertising. However, NO ONE is exempt from the 1866 Civil Rights Act. Finally, most states permit an owner to sell her property without a license. The correct answer is: Civil Rights Act of 1866

What should a salesperson do with the earnest money deposit she receives from a buyer? Select one: a. Give it to the seller b. Attach the check to the contract and file it c. Give it to her broker d. Deposit it in her escrow account

Earnest money deposits (which are usually tendered by check) should be given to the broker as soon as the buyer's offer is accepted by the seller. Remember that it is the broker, not the salesperson, that must have an escrow account and the salesperson must give any earnest money deposit to her broker. The correct answer is: Give it to her broker

The legal process to remove a tenant from property is: Select one: a. Eviction b. Ejection c. Abandonment d. Constructive notice

Eviction is a legal process to remove a tenant that has possession of the property. Ejection is an action by an owner to regain possession from someone who has possession illegally (i.e a squatter). Abandonment means the tenant departed prior to the lease ending and the lessor regains full possession control of the premises. Constructive notice of ownership is what can be provided by recording a deed. The correct answer is: Eviction

Betty the buyer would like to purchase property being sold by Sam the seller. Betty sees that the house has been on the market for a few months and that the listing is about to expire. Betty makes an offer to Sam the day after the listing expires in order to deal directly with Sam and avoid paying commission fees. Will Sam's agent have any right to a commission since the listing is expired? Select one: a.Yes, if the listing agreement contained a protection clause b.No, the listing has to be active in order to earn a commission c.Yes, the agent was the procuring cause of the sale d.No, once a listing has expired the seller and buyer have to deal with each other directly

Exclusive right-to-sell listing agreements usually contain a protection clause that entitles the broker to a commission after the listing expires or is otherwise terminated if the buyer purchases the property after the listing expiration/ termination. This clause is specifically set up to "protect" the broker's commission in the event that the buyer attempts to wait for the listing to expire and then deal directly with the seller. If an agent is the procuring cause of the sale they would be entitled to a commission but in this case, the agent was not the procuring cause of the sale as Betty presented the offer directly to Sam. The correct answer is: Yes, if the listing agreement contained a protection clause

Question text At closing Seller Sally gets chatty and reveals the property has a roof leak, this material defect was not disclosed in the sales contract. What option does the Buyer Bob have? Select one: a. Back out of the sale, contract rescission b. None, roof leak is usually covered by warranty c. None, buyer should have verified there were no defects before closing d. None, now that the defect has been revealed at closing

Failing to make mandatory disclosures could result in liability for fraud or misrepresentation as a result of the broker's concealment. Fraud or misrepresentation could be grounds for the buyer to rescind the sales contract, as fraud or misrepresentation can render a contract void or voidable. The correct answer is: Back out of the sale, contract rescission

Which of the following Federal Agencies may prosecute violations of the Federal Fair Housing Act: Select one: a. The Department of Housing and Urban Development (HUD) b. The Department of Health, Education and Welfare (HEW) c. The Federal Trade Commission (FTC) d. The Federal Bureau of Investigation (FBI)

Fair Housing Enforcement: Federal Fair Housing Laws are administered by the Office of Fair Housing and Equal Opportunity (FHEO) under the direction of the Department of Housing and Urban Development (HUD). Any person who believes he has been discriminated against (aggrieved party) may file a complaint with HUD within one year of the alleged act, or HUD may initiate its own complaint. The correct answer is: The Department of Housing and Urban Development (HUD)

Who is required to comply with the Fair Housing Laws?

Fair Housing Laws apply to ALL people. The Fair Housing Act permits otherwise discriminatory behavior under limited circumstances (private individual owners, owner occupants, religious organizations, private clubs, elderly housing and threats to health and safety). Racial discrimination is never exempted and some exemptions are not available when there is a real estate agent involved in the transaction. The correct answer is: Everyone, unless specifically exempted by the law

Which of the following qualifies for the familial status fair housing exemption? Select one: a.A single male in the process of getting custody of his 12 year old nephew b. A pregnant woman c. A single woman just granted the adoption of a baby from South America d.All of the above

Familial status means one or more individuals who have not attained the age of 18 years who are domiciled with (1) a parent or another person having legal custody, or (2) the designee of such parent or other person having custody, with the written permission of a parent or other person. The term also includes any person who is pregnant or in the process of securing legal custody of an individual who has not yet attained the age of 18. Familial status is only applicable if at least one member is under 18, pregnant, or has applied for custody of a minor. Family includes a single individual, whether male or female The correct answer is: All of the above

What is an advantage of FHA financing? Select one: a. Loans are fully guaranteed b. The FHA establishes maximum interest rates c. Lenders cannot charge prepayment penalties d. No insurance premiums are required

Federally backed loans, like FHA and VA loans, allow the loan to be paid off at any time prior to maturity and without penalty. FHA loans are insured, NOT guaranteed. VA loans are guaranteed. The correct answer is: Lenders cannot charge prepayment penalties

A property sold for $168,000. There was an existing 1st trust in the amount of $75,000. The seller paid 6% commission and $2,100 in closing costs. What were the seller's net proceeds from the sale of his property? Select one: A. 165,900 B. $90,900 C. $72,900 D. None of the above

First, add together the expenses that the seller will need to pay: Commission: $168,000 x 0.06 = $10,080; Closing Costs = $2,100; Existing loan = $75,000. Total Expenses = $10,080 + $2,100 + $75,000 = $87,180 Next, subtract these expenses from the selling price to determine the net profit. Net Profit = $168,000 - $87,180 = $80,820. Therefore, the net proceeds to the seller is $80,820. The correct answer for the presented question is D. The correct answer is: None of the above

A house was purchased for $75,000. The lender requires a 20% down payment and will charge the buyer 3.5 points. How much is the buyer required to pay at closing? Select one: a. $18,425 b. $17,100 c. $2,625 d. $2,100

First, calculate the amount of the loan: Downpayment = $75,000 x 0.20 = $15,000 Loan amount = $75,000 - $15,000 = $60,000 Next, calculate the cost of the points as follows. Remember that one point is considered to be 1% of the loan amount. So, 3.5 points would be 3.5% of the loan amount: $60,000 x 0.035 = $2,100. Finally, in order to know how much the buyer should bring to closing, we need to add the downpayment to the cost for the points: Total needed: $15,000 + $2,100 = $17,100 The correct answer is: $17,100

How many acres are in a square parcel of land if one side is 1/2 mile long? Select one: a. 480 b. 320 c. 160 d. 640

First, calculate the square footage of the property. Note that as a square piece of property, each side will be 1/2 miles in length. Area = length x width Area = 1/2 miles x 1/2 miles = 1/4 sq. mile = 0.25 sq. mile Now, convert this area into acres, as follows: 1 square mile = 640 acres Area = 0.25 square miles x 640 acres/sq. mile = 160 acres. The correct answer is: 160

A homeowner is planning to install carpeting in the family room of his house. The area to be carpeted is 30ft by 15ft. The cost for the carpet is $24.50 per sq. yd. There will also be a flat charge of $265 for the installation. How much will the carpeting and installation cost? Select one: a. $10,025 b. $11,290 c. $1,490 d. $1,225

First, determine the amount of carpet that will be needed: Area = 30 ft. x 15 ft. = 450 sq. ft. From here, we need to convert this area into square yards: 1 yard = 3 ft. 1 sq. yard = 3 ft. x 3 f.t = 9 sq. ft. Area = 450 sq. ft. / 9 sq. ft = 50 sq. yards. Now, we can add up the total costs for the carpeting: Carpeting cost = $24.50 x 50 = $1,225 Installation costs = $265 Total costs = $1,225 + $265 = $1,490 The correct answer is: $1,490

What is the sales price of a property if the loan-to-value ratio (LTV) is 80%, and the buyer puts 20% down and pays $1,000 in cash for two points? Select one: a. $62,500 b. $70,000 c. $55,750 d. $50,000

First, we use the price of the discount points to determine the loan amount. Remember that a discount point is 1% of the loan amount. Because the buyer paid for TWO points, we divide the cost by 2% to get the loan amount: Loan amount = $1,000 / 0.02 = $50,000 Based on the LTV ratio, we know that the loan amount is equal to 80% of the sales price. To determine the sales price, we divide the loan amount by the LTV ratio, as follows: Sales Price = 50,000 / 0.80 = $62,500. The correct answer is: $62,500

One property has lower taxes, new fixtures, and conforms to the style of other properties in the neighborhood. Another nearby property does NOT have any of these benefits. The latter property would have: Select one: a. Functional desirability b. Economic obsolescence c. Functional obsolescence d. Economic desirability

Functional obsolescence occurs when an improvement loses value because it becomes functionally inadequate; this may be caused by poor design or merely the improvement's age. Because the second property has a poor design and/or lacks the improvements of the rest of the neighborhood, the appraised value will be reduced. The correct answer is: Functional obsolescence

on purchased a 640 acre tract of land. Which method of legal property description would work best for Jon? Select one: a. Metes and bounds b. Geodetic c. Monument d. Recorded plat

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. The correct answer is: Geodetic

A broker would be in violation of the Federal Fair Housing Act for all of the following actions, EXCEPT: Select one: a. Hiring salespersons on the basis of sex, regardless of experience or qualifications b. Refusing to show a German couple property that is located in a mostly Italian neighborhood c. Accepting a listing with the intention of changing the racial make-up of the neighborhood d. Refusing to list a 4-unit apartment because it is owned and occupied by a minority couple

Hiring people on the basis of sex is a gross violation of the law, but NOT the Fair Housing Law. Such a practice is a violation of the Equal Employment Opportunity Act. The correct answer is: Hiring salespersons on the basis of sex, regardless of experience or qualifications

It would NOT be considered commingling of funds, if: Select one: a. The broker holds an earnest money deposit check, at the request of the offeror, until acceptance by the offeree b.The broker holds an earnest money deposit in his brokerage account because the deal is going to be all cash c. The broker holds an earnest money deposit check, at the request of the offeror, after acceptance by the offeree d. The broker holds an earnest money deposit in his personal account until the offer is accepted or rejected

Holding a check at the request of the offeror (buyer) until acceptance by the offeree (seller) is a normal practice and is NOT commingling. Once the offer is accepted, the money must be immediately placed in the escrow account. The broker must NEVER put money that belongs to others in his personal or brokerage account. The correct answer is: The broker holds an earnest money deposit check, at the request of the offeror, until acceptance by the offeree

If there is a breach to a valid real estate sales contract, what remedy is available to the non-breaching party? Select one: a. Rescission b. Specific performance and monetary damages c. Punitive damages d. Both A and B

If a party is in material breach of a sales contract, rescission is a remedy available to the non-breaching party. Other remedies available to the non-breaching party include specific performance OR monetary damages, but not both. Punitive damages are not available for breach of contract. The correct answer is: Rescission

According to the Virginia Landlord and Tenant Act, what can the landlord do if rental payments are late? Select one: a. Issue a written notice, which terminates the rental agreement b. Wait 10 business days before asking the tenant why the payment is late c. Issue a written notice, which gives the tenant 5 days to pay or vacate the property d. Issue a written notice, which obligates the tenant to pay a late fee

If a tenant hasn't paid rent on time, the landlord may provide a 5-day written notice to pay or vacate the property. The landlord may begin the eviction process (unlawful detainer, suit for eviction) if payment is still not received at the end of that time frame. The correct answer is: Issue a written notice, which gives the tenant 5 days to pay or vacate the property

Property Owner Paul makes significant improvements to a lot that he has been holding for seven years. Which of the following statements is most likely to be true regarding Paul's improvements? 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

Improvements may have a positive or negative affect on the economic value of the land and surrounding area. Whether Pau's land value will increase or decrease is dependent on the type of development or improvement. The correct answer is: either A or B

A buyer entered into a contract to purchase a new condominium. At the time of contract ratification, the swimming pool cited in the POS was not completed. How should the sales agent advise the prospective buyer? Select one: a. Withhold a portion of the purchase price until the pool is complete b. Obtain a mechanics lien release from the developer c. Make certain that the plat included in the condo documents is clearly marked that the pool is "to be completed" d. Refuse to close the transaction

Improvements to the common elements that are not yet finished must be clearly marked as "TO BE COMPLETED" on the condominium plat. Many times, the notation will include an estimated date of completion. The selling agent should advise the buyer about this to prevent allegations of failing to disclose material facts. The correct answer is: Make certain that the plat included in the condo documents is clearly marked that the pool is "to be completed"

Which type of listing agreement allows the seller to sell his property and NOT have to pay a commission, but assures the broker a commission if anyone else (other than the owner) sells the property?

In an open listing, only the person who sells the property receives commission. In an exclusive right-to-sell listing, the broker gets commission regardless of who sells the property (even if it's the owner). Special listing is an invalid term. The correct answer is: An exclusive agency listing

Under the Virginia Landlord and Tenant Act, tenants: Select one: a. May not sublease, even if the landlord has approved b. May pay rent into escrow if the landlord was given written notice, but fails to make repairs c. May terminate lease due to military purpose, so long as the tenant provides 15 days notice d. May terminate lease if a landlord fails to make repairs after being notified

In the event of a Landlord violation the tenant must notify (in writing) the landlord and allow 30 days to correct (or as necessary in an emergency). If the landlord fails to correct, the tenant may pay rent into escrow (care of local court) until the matter is corrected. Tenant cannot terminate the lease without a court order. However, early termination is permitted for military purpose (requires a copy of orders and notice, at least 30 days before the next rental payment). Tenants may sublease if the lease permits (requires landlord approval). The correct answer is: May pay rent into escrow if the landlord was given written notice, but fails to make repairs

Broker Evans fired Sally because she was stealing from the petty cash fund. Evans told her that he would not return her license until the money had been repaid. But, Sally is innocent! She started looking for new firms after the accusations were made, but can't transfer until her license is returned to the Board. What can Sally do to force Evans to return the license to the Board? Select one: a. File a complaint with the Real Estate Board b. Sue Evans in the local court c. File a complaint with the local Realtors' Association d. Do nothing until the matter is legally resolved

In this case, the Board will get involved because it involves a license. Evans is in violation of the License Law, which requires that a broker return salesperson licenses when they are no longer affiliated, REGARDLESS OF THE REASON. The correct answer is: File a complaint with the Real Estate Board

Bill is very excited for selling his house at 23% more than what he paid 2 years ago. If Bill paid $52,500 for his home, what did he sell it for? Select one: a. $12,075 b. $62,525 c. $1,207,500 d. $64,575

In this scenario simply take $52,500 x 23% (.23) = $12,075 this gives you the 23% above the amount paid for the home. Now, add the $12,075 to the $52,500 for the total sale price. Bill sold his house for $64,575. The correct answer is: $64,575

Seller Jones gives Martin an exclusive listing to sell his property. Martin is a salesperson for Broker Doe. Which of the following statements would best describe the relationships between these parties? Select one: a. Jones has contracted for the services of Martin b. Doe has a fiduciary relationship with Martin c. Martin is the agent of Doe d. Jones is the agent of Doe

Jones has contracted for the services of Doe (the broker), not Martin (the salesperson). Martin (salesperson) has a fiduciary relationship with Doe (his broker). The correct answer is: Martin is the agent of Doe

Randy renter has been breaking the parking rules in his apartment complex for quite a while by leaving his car, boat, RV and motorcycle parked in the parking lot which only allows for two vehicles per renter. How many days does the Landlord have to give Randy renter to correct the violation?

Landlords must notify the tenant (in writing) and allow at least 21 days for correction if it is a fixable offense. If the tenant does not correct such behavior, the lease will terminate no less than 30 days after notice was provided The correct answer is: 21 days

Which items are set by Federal regulations? Select one: a. Lending institution regulations b. Zoning ordinances c. Real estate license laws d. Real estate tax rates

Lending institutions are controlled by Federal regulations. License laws are established by State governments. Zoning ordinances and tax rates are set by local municipalities. The correct answer is: Lending institution regulations

What must Brokers be aware of regarding commissions when they list properties on the Multiple Listing Service (MLS)? Select one: a. A flat fee (per listing) is taken from the Broker's commission as a fee to support the MLS site b. A Broker may have to split their commission with any member broker who is the procuring cause of the sale c. A percentage of the Broker's commission (based on list price) is taken as a fee to support the MLS site d. None of the above, listing a property on the MLS site has no affect on Broker commissions

Most MLS associations require the listing broker to split his or her commission with any member broker who is the procuring cause of sale. The correct answer is: A Broker may have to split their commission with any member broker who is the procuring cause of the sale

A broker may NOT accept which of the following listings? Select one: a. Open listing b. General listing c. Net listing d. Neither B nor C

Net listings (where a licensee keeps all proceeds over certain amount) are prohibited in Virginia. Therefore, accepting a net listing is a violation of the licensing law. An open listing is an agency agreement between a seller and any number of brokers, wherein the seller promises to compensate the broker if the broker sells the property. Note that a general listing is the same thing as an open listing. The correct answer is: Net listing

According to Virginia License Law and the regulations of the Board, a salesperson may accept a net listing: Select one: a. If the owner is a non-resident of Virginia b. With a written consent from the owner only c. By written contract between the owner and the principal broker d. Under no circumstances

Net listings are illegal in Virginia. As such, a salesperson may never legally accept a net listing. The correct answer is: Under no circumstances

Without prior consent to the contrary, telephone solicitation calls may be made at which of the following times? Select one: a. Between the hours of 8am and 9pm b. At any time c. Between the hours of 6am and 10pm d. Between the hours of 9am and 5pm

No telephone solicitor shall initiate a telephone solicitation call at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person's location, unless the telephone solicitor has obtained the prior consent of the called person. The correct answer is: Between the hours of 8am and 9pm

Hearings before the Virginia Real Estate Board must be held in accordance with the: Select one: a. Virginia Association of Realtors Regulations b. Administrative Process Act c. Uniform Commercial Code (UCC) d. Supreme Court Judicial Procedures Act

Note that the License Law gives the Real Estate Board authority to conduct hearings in accordance with the Administrative Process Act. The correct answer is: Administrative Process Act

How can a broker best demonstrate his compliance with Fair Housing Laws? Select one: a.Obtain the Equal Housing Opportunity Poster b. Document all transactions with all clients or customers c. Show all prospective buyers all listed properties d. All of the above

Of the answer choices, documenting all transactions with all customers is the best way to demonstrate compliance with Fair Housing Laws. You must do more than obtain the equal opportunity poster; you must display it. The law does not require that you show all listed properties to all buyers. For example, you do not have to show listings that priced above the client's financial qualifications. The correct answer is: Document all transactions with all clients or customers

Harry is a broker. He works out a deal with Larry (a developer), Darrell (a contractor), and Tony (a mortgage banker). The deal states that Harry will sell all of the houses that Darrell built on Larry's land. After that, Tony would handle the mortgages of any buyers through his bank. Harry sells three houses, then runs off with all the funds. Larry, Darrell, and Tony all file claims for payment from the Transaction Recovery Fund. Who is most likely to collect?

People who regularly deal in real estate transactions are not eligible for payment from the Transaction Recovery Fund. This includes real estate agents, bankers, developers, and contractors. The correct answer is: No one

The Police Power authorizes a local government to act: Select one: a. Only to take property for just compensation b. In a manner to promote public health, safety c. In any way it chooses d. In any way consistent with its state constitution

Police Power stems from the government's authority to create laws, including those that promote legitimate land use objectives, so long as such laws further public health, safety, morals, and aesthetics. The United States Constitution delegates police power to individual states. The correct answer is: In a manner to promote public health, safety

The Real Estate Settlement Procedures Act (RESPA) requires lending institutions to provide an estimate of closing costs: Select one: a. within 10 days of loan application b. within 3 days of loan application c. One week prior to closing d. when the loan application is submitted

RESPA and TILA state that lenders must provide a Loan Estimate of closing costs that the borrower will likely have to pay (within three (3) days of application). Lenders must also provide borrowers with a Closing Disclosure at least three (3) days before settlement, which contains an itemized list of the actual closing costs. The correct answer is: within 3 days of loan application

Which of the following principles addresses how property is affected by the quality of neighboring properties? Select one: a. Plottage b. Increasing and Diminishing Returns c. Regression and Progression d. Growth, Equilibrium, and Decline

Regression/Progression addresses how property is affected by the quality of neighboring properties. According to the principle of regression and progression, a very luxurious house in a modest neighborhood tends to be valued down towards the more modest range of values. Conversely, a modest home located in a neighborhood of more expensive homes tends to be valued up. The correct answer is: Regression and Progression

Which of the following is most accurate: Select one: a. Mandated property disclosure forms replace an agent's independent disclosure responsibility b.Property disclosure forms are Federal forms mandated by the government c. Seller's Agents are required to fill out property disclosure forms and provide them to the buyer d.Mandated property disclosure forms must be filled out by the seller

State disclosure laws may include mandated forms that must be completed and signed by the parties. There are no mandatory federal property disclaimer or disclosure forms. Agents should never fill out a disclosure form for the seller. An agent's duty is to advise the sellers of the state's disclosure laws and the seller's obligations thereunder. Using disclosure forms adds a layer of protection for all parties in the transaction, but the forms themselves do not replace an agent's independent responsibility to disclose all material property defects known by the agent. The correct answer is: Mandated property disclosure forms must be filled out by the seller

In states that follow the "lien" or "mortgage contract theory," which of the following persons holds title to property while the loan is being paid? Select one: a. The state courts b. The buyer c. The seller d. A neutral third person

State laws favor either mortgages (majority of states) or deeds of trust (minority of states) for financing real estate. States that favor mortgages are known as "lien" theory states. In a Lien theory state the borrower (buyer/mortgagor) holds title to the mortgaged property during and after repayment. The correct answer is: The buyer

A broker has been approached by a minority, who requests to see properties in a specific section of a city. The broker refuses and indicates that the buyer would be better off in a part of the city where there is a greater concentration of that minority group. The broker's illegal conduct is known as: Select one: a. Redlining b.Steering c. Panic selling d. Blockbusting

Steering is the Illegal act, under the Fair Housing Act, where an agent discourages protected classes of people from purchasing property in certain neighborhoods or directs them to certain properties or neighborhoods (often motivated by the ethnic or cultural composition of the neighborhood in question). The correct answer is: Steering

A broker has been approached by a minority buyer, who requests to see properties in a specific section of a city. The broker refuses to show these properties. Instead, the broker indicates that he would be better off in a location with a greater concentration of his particular minority group. The broker's illegal conduct is known as:

Steering is the act of directing buyers into or away from specific property based on their minority status. The correct answer is: Steering

Which of the following describes Step 4 of the appraisal process? Select one: a. Appraiser gathers data for an appraisal based on the selected method of appraisal b.Appraiser determines the use that gives a subject property its greatest value c. Appraiser weighs the results of the three approaches d. Appraiser applies separately each of three (3) methods of estimating value

Step 4 is to Estimate Value where the appraiser applies separately each of three (3) methods of estimating value to the subject property (market data, cost, and income approaches). While this may not always be feasible, it is most desirable to apply all three approaches. There are 6 total steps in an appraisal: define the problem, gather data, identify highest and best use, estimate value, reconciliation, appraisal report. The correct answer is: Appraiser applies separately each of three (3) methods of estimating value

Six months after Brady bought his home, he installed custom-made storm windows and doors. If Brady subsequently transfers title to someone else, will the storm windows and doors automatically transfer as well? Select one: a. No, so long as Brady reinstalls the original windows and doors b. Yes, because the storm windows and doors are fixtures c.Yes, unless the parties agree that they will be removed before the sale has advanced d. No, because they can be easily removed without damaging the property

Storm windows and doors that are "custom made" for a property are fixtures since they were adapted to the property. As fixtures, they will automatically transfer with the property unless they can be severed (removed) legally. Determining whether an item may be severed is a common source of dispute. As such, the best option is a written agreement, which will settle the issue. The correct answer is: Yes, unless the parties agree that they will be removed before the sale has advanced

The Real Estate Board has power to take all of the following actions, EXCEPT:

The Board has authority to suspend, revoke, or deny a license, and to impose monetary penalties for violating the law and regulations. The Board has no authority to impose a jail sentence; this can only be done by a court of law. The correct answer is: Impose a criminal penalty

The Virginia Real Estate Board administers which of the following statutes? Select one: a. The Virginia Fair Housing Act b. The Virginia Time Share Act c. The Virginia Condominium Act d. None of the above

The Board may enforce the Virginia Fair Housing Act in cases involving real estate licensees and their employees. The correct answer is: The Virginia Fair Housing Act

Which of the following are constitutional limitations on the police power? Select one: a. Equal Protection b. Eminent Domain Clause c. Suspect Class Provision d. None of the above

The Equal Protection Clause is a Constitutional limitation on government power which prohibits the government from applying laws in a discriminatory manner. The equal protection clause prevents governments from intentionally regulating private land in a discriminatory manner. The correct answer is: Equal Protection

The Closing Disclosure Form informs borrowers of: Select one: a. Whether the lender expects someone else to service the loan b. Settlement service charges that the borrower will likely have to pay c.All the payments expected to be deposited into the escrow account d. The actual fees and services that will be provided

The Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) require that lenders provide a Closing Disclosure at least 3 days before settlement. This disclosure itemizes the services provided and the actual fees charged. The correct answer is: The actual fees and services that will be provided

Which of the following loans would NOT be subject to RESPA? Select one: a. A conventional loan from a federal S&L, used to purchase a single family residence b. An assumption without lender approval c. A mortgage purchased by FNMA d. A VA loan

The Real Estate Settlement Procedures Act (RESPA) prescribes certain settlement procedures which must be followed when real property is purchased with a federally related loan. All answer choices would be considered federally related, except for an assumption where the lender's approval is not required or obtained. The correct answer is: An assumption without lender approval

A broker is representing a buyer. When the broker is showing property, he must NOT disclose to his client: Select one: a. Deed restrictions that might affect the buyer's intended use of the property b. That the seller will not accept an offer based on VA financing c. Information the broker knows about the financial condition of the seller d. That the current owner as HIV

The broker is agent to the buyer and owes fiduciary duties to him. He must keep the buyer informed about all things he knows. BUT, if the broker discloses that the seller has HIV/AIDS, he would violate Fair Housing Laws and federal privacy laws. The correct answer is: That the current owner as HIV

Seller Corcoran is in very poor health and cannot work on his farm anymore. Corcoran's broker discloses this fact to prospective buyers. Has the broker done anything wrong? Select one: A. No, because it is a material fact B. No, so long as the farm sells at or above the list price C. Yes, because it is not a mandated disclosure and is contrary to Corcoran's interest D. Yes, because Corcoran's status is protected by Federal Fair Housing Laws

The broker is precluded from discussing Corcoran's health with prospective buyers without Corcoran's permission. Doing so is contrary to his client's best interests because it might weaken Corcoran's bargaining position. The seller's health is not a material fact related to the property, nor is it covered under Federal Fair Housing Laws. The correct answer is: Yes, because it is not a mandated disclosure and is contrary to Corcoran's interest

Who has ultimate responsibility for the management of real estate escrow accounts? Select one: a.Managing Salesperson b. Affiliate Brokers c.Brokers d.All of the above

The broker is usually responsible for maintaining the escrow account and keeping records. Not all brokers will have escrow accounts, however if a broker receives money for deposit to be held for a third party during a real estate transaction they must establish and maintain an escrow account. The correct answer is: Brokers

Bill is selling his house for $345,000. Mike and Jan are interested and tell Bill they will pay $340,000 and the sale will be contingent on a home inspection and they are asking for the refrigerator to convey with the sale. Bill tells Mike and Jan he will sell the home to them for $340,000 after their home inspection but the refrigerator is not available to convey. What Bill told Mike and Jan is considered what? Select one: a. An offer b. An amended offer c. A counteroffer d. A partial offer

The buyer begins the contracting process by making an offer. The seller must then determine if he should accept that offer and enter into a contract (purchase agreement) with the buyer. If the seller makes another offer in response to the initial offer, the seller's second offer is known as a counteroffer.In this case, Mike and Jan made an offer on Bill's property and then Bill made a counteroffer to Mike and Jan. There is no such thing as a partial offer or an amended offer. The correct answer is: A counteroffer

John, a single teacher, purchased a home for $150,000. Three years later, he sells his home to Sue and earns a whopping $150,000 in equity from the sale! John: Select one: a. Must pay income taxes on at least $50,000 of the $150,000 b. Must pay income taxes on the entire $150,000 c. Need not pay income taxes on any of the $150,000 d. Need not pay income taxes on $75,000 of the $150,000

The capital gains exemption provides an income tax exemption for profits realized on non-investment residential property. A single taxpayer is eligible for the $250,000 exemption and married taxpayers are eligible for the $500,000 exemption on the sale of a principal residence owned for at least two of the preceding five years. In this case John, as a single taxpayer, sold his home after three years of ownership and is exempt from paying taxes on sale profits up to $250,000. The correct answer is: Need not pay income taxes on any of the $150,000

A lender advertises 80% LTV conventional loans. 80% is applied to: Select one: a. Appraised value b. Selling price c. The buyer's income d. Either A or B

The loan-to-value (LTV) ratio is always applied to the appraised value of the property or the selling price, WHICHEVER IS LOWER. The correct answer is: Either A or B

The money under an FHA loan is provided by: Select one: a. The FDIC b. The Federal Treasury c. The Federal Housing Administration d. Qualified lenders

The money for the loan comes from a qualified lending institution, not FHA. The FHA insures the lender against loss; they do NOT loan money to finance the purchase of property. The correct answer is: Qualified lenders

Which of the following is a zoning-related fact that an agent should disclose to prospective buyers? Select one: a. The neighborhood contains vacant lots which may be sold and improved upon b. The property is in a Historic District c. The property is on land that contained apple orchards prior to development d. One of the neighbors has a home auto repair business

The only one of these choices that could truly impact a buyer, is if the house is in a historic preservation district. Property in an area zoned as a Historic district will have constraints on the types of renovations and changes that can be done. The correct answer is: The property is in a Historic District

Listing agreements should be specific about their exact terms. Under what conditions may the listing be altered? Select one: a. If the changes are reasonable b. With written permission from the listing broker c. With the knowledge and written consent of the owner d. To encourage a prospective buyer to make an offer

The only time that a salesperson or a broker could change (alter) a listing agreement is with the permission of the seller. This should also be in writing. The correct answer is: With the knowledge and written consent of the owner

A listing agreement will automatically terminate: Select one: a. if the selling agent changes brokers b. on the date specified in the listing agreement c. if the owner abandons the property d. all of the above

The only true statement is that a listing agreement will terminate on the date specified in the agreement. There are other reasons that cause a listing to terminate, but they are not offered as answers. The fact that the owner abandoned his property is NOT grounds to terminate a listing; he may still enlist the broker in attempting to sell his abandoned property. However, if the broker abandoned the listing, the seller would be justified in terminating the listing. The correct answer is: on the date specified in the listing agreement

Sellers are required to provide buyers with a residential property disclosure statement, is there a required format? Select one: a. Yes, the disclosure statement must follow the VA Residential Property Disclosure Act guidelines b. Yes, the disclosure statement provided must be the one found on the VREB website c. No, the seller can choose the format of the disclosure statement d. No, but typically the seller's agent will draft the disclosure statement

The owner of the residential real property shall furnish to a purchaser a residential property disclosure statement for the buyer to beware of certain matters that may affect the buyer's decision to purchase such real property. Such statement shall be provided by the Real Estate Board on its website. The disclosure form provided by the board informs the buyer that the seller makes no representations or warranties with regard to adjacent properties, covenants/restrictions, historic districts, registered sex offenders, resource protection area, flood zone or hazard areas, easements etc. The correct answer is: Yes, the disclosure statement provided must be the one found on the VREB website

Kent made an offer on Bill's property. Bill rejected Kent's offer, but Bill then made a counter-offer. Kent is now considering the counter. Who is Kent in this scenario? Select one: a. Testator b.Executor c. Offeree d.Offeror

The person considering the offer is the offeree, so that's Kent's role now that Bill (offeror) made a counter-offer. Executors and Testators have to do with parties in a will. The correct answer is: Offeree

Which of the following statements is true? Select one: a. Physical life is generally shorter than economic life b. Physical life is generally longer than economic life c. Physical and economic life are generally the same d. Economic life is based solely on functional obsolescence

The physical life of a building is generally longer than its economic life. For example, a little shop is located in what was once the business center of town. When a new shopping center is built, the customers go to the new center. The structure of the little shop may still be very good, but it has no business. Thus, the economic life has passed. The correct answer is: Physical life is generally longer than economic life

Julia the Salesperson obtains a listing. Several days later, Julia meets prospective buyers at the property and remarks that since she is the listing agent, she is very familiar with the property. Under the circumstances described, Julia: Select one: a. Has disclosed her agency relationship with the seller b. Has created a dual agency, which is a violation of Board regulations c. Is in violation of Board regulations because she cannot sell her own listing d. Has failed to properly disclose her agency relationship

The problem with this disclosure is that it is not written. Such disclosures must be made upon having substantive discussions about specific property, and they must be written before providing any specific real estate assistance. The correct answer is: Has failed to properly disclose her agency relationship

The intent of the Virginia Fair Housing Law is to: Select one: a. Prevent federal involvement in matters occurring within the state b. Eliminate housing discrimination by virtue of the state's police powers c. Increase revenue by imposing a monetary penalty on people who violate the law d. Allow for the development of minority-specific housing

The purpose of the Fair Housing law is to eliminate housing discrimination. The correct answer is: Eliminate housing discrimination by virtue of the state's police powers

Robert the Broker wants to stay on top of technological trends. Therefore, Robert decides to advertise his firm via banner ads on commercial web pages. Since the ad must be small, Robert makes no disclosures in the banner itself. Instead, Robert provides a link that redirects the user to his web page, which displays the necessary disclosures. Has Robert violated the rules? Select one: a. No, because the Board does not regulate banner advertising b. No, because it is permissible to provide a link to the required disclosures c. Yes, because his ad appears on another commercial site d. Yes, because the required disclosures must appear in the ad itself

The regulations allow a licensee to link to the requisite disclosures if not included in the banner itself. Such disclosures must be found no more than one click away. The correct answer is: No, because it is permissible to provide a link to the required disclosures

By Virginia regulation, a licensee that is "actively engaged" is defined as someone who works: Select one: a. Less than 20 hours per week b. At least 30 hours per week c. Any amount of time d. At least 40 hours per week

The regulations define "actively engaged" as someone who has an active license AND is engaged in regulated real estate activity for at least 40 hours per week. The correct answer is: At least 40 hours per week

Rainy Yeng has been transferred out of the area on an extended work assignment. She plans to rent her condominium in that time period, and asks Salesperson Cindy to handle the rental. Rainy tells Cindy that she wants $500 per month for the rental and Cindy may have any amount over $500. May Cindy accept this rental listing? Select one: a. No, but the listing may be accepted by Cindy's broker, who in turn will pay Cindy the brokerage fee b. Neither Cindy nor her broker may accept this listing c. Cindy may accept this listing if her license is current d. Yes, Cindy may accept this rental listing because brokerage fees are always negotiable between the owner and the agent

The situation described is a NET listing for a rental, which is illegal in Virginia. The listing can ONLY be accepted if the fee is expressed as a percentage of the rental or as a fixed amount. Even then, a listing can ONLY be accepted by the broker. Salesperson Cindy cannot accept the listing under the circumstances. The correct answer is: Neither Cindy nor her broker may accept this listing

Broker Foster manages an apartment building for Owner Smith. Foster used the security deposits of two tenants (Petri and Gonzales) for general maintenance on the apartment building. Was this action permissible?

The tenant's security deposits may be used to repair any damages (except fair "wear and tear") to the tenant's apartments. The Virginia License Law and Board Regulations require that such funds to be placed in an escrow account, they cannot be kept in a general operating account. The correct answer is: No, security deposits are held for tenants in an escrow account and are not part of the operating funds

After the death of his wife, a property owner lists his property with a broker. Two days later, the owner sells the property himself, but is NOT obligated to pay a commission to the broker. What type of listing agreement did he most likely sign? Select one: a. Exclusive Agency b. General (open) c. Exclusive right-to-sell d. Both A and B

The widower probably signed a general listing (also known as an open listing) or an exclusive agency listing, both would allow the owner to sell and not pay commission (specifies that the listing broker/salesperson must sell the property in order to earn a commission). In an exclusive right-to-sell listing the broker is paid regardless of who sells the property (even if the owner finds his own buyer). The correct answer is: Both A and B

Cathy submits a lease application to Brook View Apartments and as one form of income she lists public assistance. The leasing agent denied the application based on non-employment income source. What has the leasing agent violated, if anything? Select one: a. Nothing b. Federal Fair Housing laws c. VA Fair Housing Laws d. Both B and C

This is a violation of Virginia Fair Housing laws, the Federally protected classes do not include source of income, military status or elderly but in Virginia they are protected classes. In Virginia and in the Sale and Rental of Housing It is illegal discrimination to refuse to rent or sell housing based on race, color, sex (including gender, gender identity, sexual orientation, and sexual harassment), source of income, military status, disability, familial status or national origin. The correct answer is: VA Fair Housing Laws

Under the Virginia Time Share Act, the right of rescission may be exercised: Select one: a. Within 10 days of either contract ratification or receipt of the POS, whichever is earliest b. Within 7 days for a new sale or 5 days for a resale c. Within 15 days for a new sale or 10 days for a resale d. Within 5 days for a new sale or 3 days for a resale

Time Share Initial sale (new construction by the declarant) must include a public offering statement (similar to condominium POS, discussed below); a contract containing disclosure of the purchaser's right of rescission (7 days after contract ratification) or for a resale the purchaser is not liable for any unpaid expenses not listed in the resale certificate, and will have a 5-day right of rescission after all information is received. The correct answer is: Within 7 days for a new sale or 5 days for a resale

A form of ownership where possession is divided into fixed, variable, or rotating time periods is known as: Select one: a. Cooperative b. Condominium c. Fee Simple d. Time Share

Time Shares are ownership interest in real estate, also known as interval ownership, where possessory rights are divided into fixed, variable, or rotating time periods (weeks, months, or years). Time share ownership is most commonly used in the sale or lease of vacation properties The correct answer is: Time Share

Bill hires Larry to sell his home. Bill prefers to communicate with Larry via email. One night, Larry replies to one of Bill's emails, but includes none of the required disclosures. Has Larry violated the rules? Select one: a. No, because Bill is Larry's client b. No, because disclosure was provided in prior communication c. Yes, so long as Larry is a Broker d. Yes, because the rules require specified disclosures in emails

Under Virginia Law, "advertising" includes all forms of representation, promotion, and solicitation related to licensed real estate activity. Emails sent in order to advertise real estate services must contain specified disclosures. These disclosures shall be viewable on the main page (i.e., within the email itself) or no more than one click away. In this situation, the safest option is for Larry to add the required disclosures into his email signature. The correct answer is: Yes, because the rules require specified disclosures in emails

a broker acts for more than one party in a real estate transaction without the full knowledge and consent of all parties, it is: Select one: a. Acceptable, if the compensation is less than $500 b. Acceptable, as a result of the listing contract c. Acceptable, if no one is defrauded d. Grounds for suspension or revocation of a license

Under no circumstance may a broker represent more than one party in a transaction UNLESS everyone knows about it and agrees to the arrangement. Dual and designated agency/representative disclosures must be properly written and conspicuous (or on standardized forms). This written consent must be timely obtained from both buyers (before receiving an offer) and sellers (before presenting an offer). Failure to provide dual agency disclosure is grounds for investigation of license law violation. The correct answer is: Grounds for suspension or revocation of a license

An unlicensed investor plans to open a real estate brokerage business. The business will be operated as a sole proprietorship. In this situation, which of the following statements is true? Select one: a. The investor must hire a broker to manage the business b. The business can only be organized as a corporation c. The business name must include the name of the investor d. Unlicensed persons cannot own a real estate brokerage

Unlicensed investors may own brokerage firms, so long as they hire a broker to manage the business and do not directly engage in acts of brokerage. The correct answer is: The investor must hire a broker to manage the business

The Virginia Residential Property Disclosure Act requires disclosure of all of the following property conditions, except: Select one: a. The property has a pending building violation b. The property is in an aircraft noise zone c. The property is in a dam break inundation zone d. The property has hazardous or defective drywall

Virginia requires sellers to provide a "buyer beware" disclosure to buyers. This form specifically states that a seller makes no representation with respect to whether the property is located in a dam break inundation zone. However, when applicable, a seller should provide additional written disclosure about defective drywall, building violations, and aircraft noise zones. The correct answer is: The property is in a dam break inundation zone

Private Mortgage Insurance (PMI) covers which portion of a loan? Select one: a. Top 30% of the loan b. Top 20% of the loan c. One-half of the loan d. Top 10% of the loan

When a lender lends more than the established loan to value ratio (usually 80% LTV), the lender may require insurance to cover the amount of the loan over and above the standard rate. For example, lenders could choose to lend as much as 95% of the property value. In these situations, the general rule is that PMI covers the top 20-25% of the loan. The correct answer is: Top 20% of the loan

What is the best description of ownership in severalty? Select one: a. One person owns several pieces of real property b. Limited to corporate ownership c. Several persons own one piece of real property d. Property owned by several members of the same family

When one person alone owns the property, it is owned in severalty. This means that ownership is severed (separate) from all others. The correct answer is: One person owns several pieces of real property

While searching for a suitable property, the buyer requests that his broker submit a copy of the same earnest money check for multiple offers. May the broker do this? Select one: A. yes, because the broker does not represent the seller B. yes, because the broker must obey all lawful instructions of his client C. no, because this is improper and dishonest conduct D. no, because this contradicts the broker's obligations to the parties

Your answer is correct. Actions constituting engaging in improper, fraudulent, or dishonest conduct, including a licensee submitting copies of the same earnest money deposit check for inclusion with multiple offers. The correct answer is: no, because this is improper and dishonest conduct

What do agents who represent seller clients owe to unrepresented prospective buyers? Select one: A. Honesty B. Disclosure of all known material adverse facts C. Disclosure of brokerage relationship D. All of the above

Your answer is correct. Standard agents representing seller clients must treat all prospective buyers honestly and shall not knowingly provide false information. Standard agents representing seller clients shall disclose in writing to prospective buyers all material adverse facts which are actually known to the licensee about to the physical condition of the property Standard agents representing seller clients must properly disclose their brokerage relationship to an unrepresented buyer. The correct answer is: All of the above

An agent takes a listing for a rural ranch style house built in 1972. As a seller's agent, what must they ensure is provided the buyer? Select one: a. Home warranty information b. stigmatized property disclosure c. A lead-based paint disclosure pamphlet d. A Federal property disclosure form

ellers must provide a disclosure pamphlet regarding lead-based paint to the buyer. Under the Lead-Based Paint Hazard Reduction Act, anyone buying a home that was built prior to 1978 must be provided a disclosure pamphlet and at least 10 days to be able to inspect the property for lead-based paint. There are no mandatory Federal disclosure forms, home warranty information is not a mandatory disclosure and neither is a stigmatized (haunted, murder, suicide) property. The correct answer is: A lead-based paint disclosure pamphlet