Real Estate Questions

Which of the following will NOT terminate an offer? A. An offer by a third party for more money B. Death of the offeror C. Revocation of the offer before acceptance D. A counteroffer by the offeree

A. An offer by a third party for more money

Which of the following environmental hazards poses a risk due to particles or fibers in the air? A. Asbestos B. UFFI C. Radon D. Carbon monoxide

A. Asbestos

Mr. Blue has just purchased a downtown building for his personal investment portfolio. The 9-story building has 2 small retail stores on the first floor, a dance studio on the second floor and residential apartments on the remaining floors. The category of this type of building is considered a(n): A. Unapproved commercial building according to zoning ordinances B. Mixed use building C. High rise service center D. Minimally productive classification

B. Mixed use building

Zohan calls ABC Real Estate and talks to the agent on floor duty. He wants to know the price of the house and the lot size to which the agent responds with the information. During the conversation, Zohan asks how much money is needed to be put down, the type of financing that is available and when the property is available to be seen. The agent is: A. Violating company policy by giving out information B. Performing ministerial acts for Zohan C. Now a dual agent D. Representing the best interests of the seller

B. Performing ministerial acts for Zohan

David constructs an eight-bedroom brick house with a tennis court, greenhouse, and an indoor pool in a neighborhood of modest 2 and 3-bedroom frame houses on narrow lots. The value of David's house is likely to be affected by what principle? A. Progression B. Regression C. Assemblage D. Change

B. Regression

In an Illinois real estate sale, the state transfer tax stamps are the prime responsibility of the: A. Broker B. Seller C. Both parties to the transaction D. Buyer

B. Seller

The responsibility to determine the asking price for a piece of real estate falls on the; A. Broker B. Seller C. Appraiser D. Buyer

B. Seller

Which of the following would allow a lender to legally reject a loan for a residential house that was in good repair? A. The buyer was of a different race than the other neighboring owners B. The house was located in an area primarily used for light industrial C. The house was located in a minority area of town D. The buyer had been recently divorced

B. The house was located in an area primarily used for light industrial

What is the purpose of the acknowledgment by a notary public on a deed? A. To make the deed eligible for delivery B. To assure that the grantor's signature is genuine C. To prove that the property has not be encumbered D. To assure that the title is valid

B. To assure that the grantor's signature is genuine

Caroline owns a strip mall on the outer edge of town. She has several good tenants, but is searching for a major retail chain to occupy the major space available in the center. The advantage of finding a well know "anchor" tenant is: A. It should force the smaller stores out of business and provide more business for the anchor B. To attract additional consumers to the center which is good for other smaller tenants C. It would provide for extra common maintenance issues D. It will stand on its own and make profits

B. To attract additional consumers to the center which is good for other smaller tenants

Discount points on a mortgage are computed as a percentage of the: A. Down payment B. Selling price C. Amount borrowed D. Closing costs

C. Amount borrowed

AceyDeucy Brokers has a standard commission rate of 7%. One of their licensees is trying to list a house that the owner is currently selling "By Owner." The owner is insisting on paying a 4% commission. What is the licensee's best course of action? A. List the house and later convince the owner to pay the full commission B. Refuse to take the listing because the commission is less than the area standard C. Consult the office policy manual and discuss the situation with the managing broker D. List the house, but do not do any advertising of any type to save money

C. Consult the office policy manual and discuss the situation with the managing broker

A city can originate zoning and building codes to control the use of land for the welfare of the greatest number of people through: A. Issuing occupancy permits B. Recording of all deeds and transfers C. Police powers D. The power of non-homogeneity

C. Police powers

The anticipated cost of home ownership is called a housing allowance and it is based on: A. Mortgage insurance, association fees, interest, and taxes B. Interest, insurance costs and mortgage payment C. Principal, interest, taxes, insurance, association dues and PMI D. Principal, interest, monthly utilities and expenses

C. Principal, interest, taxes, insurance, association dues and PMI

Alex purchased a home for $205,000; put 5,000 in earnest money and $20,000 down. Since his total amount of money down is less than 20%, the lender will require Alex to pay: A. A guarantee policy for the difference between his down payment and 20% B. A promissory note for the difference between his down payment and 20% C. Private mortgage insurance D. An extra $10,000 in points

C. Private mortgage insurance

The purpose of a building permit is to: A. Override a deed restriction B. Maintain municipal control over the volume of the building C. Provide evidence of compliance with municipal regulations D. Make building a property more complex and expensive

C. Provide evidence of compliance with municipal regulations

A property manager's first responsibility to an owner should be to: A. Report immediately all cost allocations to the owner B. Keep the building 100% occupied C. Realize the highest profit consistent with the owner's instructions D. Prevent the owner from suffering any losses

C. Realize the highest profit consistent with the owner's instructions

Which of the following normally triggers an alienation clause? A. Failure to pay mortgage payments B. Failure to pay taxes C. Sale or assignment of the mortgaged property D. Cancellation of the insurance

C. Sale or assignment of the mortgaged property

In a property management agreement, who is considered to be the principal? A. The property manager B. The tenants C. The owner D. The lender

C. The owner

Under a listing agreement, who would be the client? A. The salesperson B. The broker C. The seller D. The buyer

C. The seller

The primary purpose of a deed is to: A. Give constructive notice B. Establish the chain of title C. Transfer ownership rights and interests D. Prove ownership

C. Transfer ownership rights and interests

Knowingly misrepresenting a material fact in a deliberate way so that someone else suffers a loss in an attempt to make money is: A. a mistake B. misrepresentation C. fraud D. collusion

C. fraud

A lender charging an interest rate that is higher than allowed by laws would be violating: A. fair housing laws B. equal credit opportunity laws C. usury laws D. securities laws

C. usury laws

A property sold for $125,000 with a loan of $50,000. The seller paid $2,000 in closing costs and a 7% commission? How much would the seller net? A. $54,250 B. $57,000 C. $61,300 D. $64,250

D. $64,250

An appraiser is preparing a valuation of an apartment building which has a gross income from all sources of $30,000 annually. If the annual expenses are $20,000, which includes taxes of $4,795, what is the estimated value of this property when an 11% capitalization rate is used: A. $11,236 B. $134,500 C. $47,318 D. $90,909

D. $90,909

How many lots, each measuring 72.5 feet wide by 100 feet deep, could be created from a two-acre parcel of land? A. 14 B. 7 C. 3 D. 12

D. 12

What is the main difference between a freehold estate and a non-freehold estate? A. A freehold estate always involves ownership B. A freehold estate ends when a life estate terminates C. A freehold estate is always inheritable D. A freehold estate is for a fixed period of time

D. A freehold estate is for a fixed period of time

Which of the following loans would fall under the three-day right of rescission allowed under Regulation Z? A. A residential loan for a first mortgage B. A loan for a commercial property C. A loan for an agricultural property D. A home improvement loan for a principal residence

D. A home improvement loan for a principal residence

A grantee is to a deed as a devisee is to: A. A testator B. An estate C. A deed in trust D. A will

D. A will

A summary or condensed history of all conveyances and legal proceedings affecting a parcel of real estate is called a(n): A. Certificate of title B. Chain of title C. Affidavit of title D. Abstract of title

D. Abstract of title

Private deed restrictions on land may be created by: A. Deed B. Written agreement C. General plan restrictions in a subdivision D. All of the above

D. All of the above

Mold and mildew found in the home fall into which category of pollutants? A. Formaldehyde B. Pesticides C. Hazardous waste D. Biological

D. Biological

From a property management point of view, apartment buildings that reach as high as 98% occupancy would tend to indicate that: A. The building has reached its maximum potential B. The building is a desirable place to live C. The building is poorly managed D. It is time to raise the rent

D. It is time to raise the rent

In a closing statement, an accrued item is a(n): A. Prepaid expense B. Proration C. Item paid in advance D. Item that is unpaid, but is due

D. Item that is unpaid, but is due

A broker heads a team of licensed agents that work with her. Some work with buyers and others work exclusively with sellers. From a license law standpoint, a potential problem for the broker is how to: A. Declare dual agency with all clients B. Withhold federal and state taxes and unemployment compensation C. Write their independent contractor agreements D. Keep all individual client's records confidential

D. Keep all individual client's records confidential

Patrick, a licensee, lists the McNulty's property where their outstanding debt exceeds market value. After several attempts, a short sale contract is negotiated and accepted through a broker who is a member of the MLS. The lender approves the short sale on the condition that the brokerage commission is reduced by 1%. The listing licensee, Patrick, accepts this condition. The listing licensee: A. Must provide the IDFPR short sale disclosure form at closing B. May cancel the listing due to a breach of the listing agreement C. Must pay the cooperating broker based on the reduced commission D. May be liable for the full cooperative commission to the co-broker

D. May be liable for the full cooperative commission to the co-broker

A wealthy business woman wishes to hire someone full-time to buy and sell all her Illinois properties. Will this person need an Illinois real estate license? A. No, as long as the business woman is licensed B. Yes, this activity will require a license C. Yes, but only if the property is residential D. No, as long as the person just buys and sells for the owner

D. No, as long as the person just buys and sells for the owner

A prospective buyer wanted to have the right to purchase a home at a set price within the next 90 days but did not want to be obligated to purchase it. Which of the following documents would allow the buyer to do this? A. Quitclaim deed B. Estoppel C. Right of first refusal D. Option

D. Option

A breach of contract is a refusal or a failure to comply with the terms of the contract. If the seller breaches the sales contract, which of the following is NOT true? A. The buyer can sue the seller for damages B. The buyer can rescind the contract and recover the earnest money C. The buyer can sue the seller for specific performance D. The broker can be sued for non-performance

D. The broker can be sued for non-performance

An easement may be terminated by: A. The dominant tenement selling the property B. The servient tenement C. The expiration of the agreed time period D. The merger of the two properties

D. The merger of the two properties

Usury laws are designed to protect the: A. seller B. broker C. lender D. borrower

D. borrower

An Illinois homeowner dies without a will and without any traceable heirs. The real property in the estate will: A. pass to the state by eminent domain B. escheat to the state C. pass to the county by eminent domain D. escheat to the county

D. escheat to the county Real property escheats to the county where it is located. Personal property escheats to the state.

A buyer purchased a property for $60,000 putting 15% down and paying two discount points. How much in dollars were the points? A. $1,020 B. $1,200 C. $1,320 D. $1,500

A. $1,020

CERCLA would normally apply to which of the following situations? A. A residential property with a buried oil tank B. A buyer who was discriminated against based on race in obtaining a loan from a lender C. A person was discriminated against in buying property based on national origin D. A lender was loaning money to a

A. A residential property with a buried oil tank

One method of establishing the value of a 1-4 unit apartment building that does not recognize the impact of expenses is: A. Gross rent multiplier B. Capitalization rate C. Profit and loss statement D. Operating budget calculations

A. Gross rent multiplier

Which instrument indicates involuntary alienation? A. Grant deed B. Deed in foreclosure C. Quitclaim deed D. Executor's deed

B. Deed in foreclosure

The local real estate companies met for breakfast at a local restaurant and decided that they were disgusted with the current price increase by the local newspaper. They agreed to withdraw all their advertising from the paper until they lowered the price. This is an example of: A. Price fixing B. Group boycotting C. Division of territory D. Legal collusion

B. Group boycotting

The Real Estate Settlement and Procedures Act (RESPA) provides: A. That advertisements must include the annual percentage rate B. That the mortgagor must be given an estimate of closing costs before closing C. That real estate syndicates must obey blue sky laws D. A secondary market for mortgage loans

B. That the mortgagor must be given an estimate of closing costs before closing

At a listing presentation, a licensee tells the seller that "the going commission rate in the area is 7%". Which statement is true? A. This could be construed as a group boycott of discount rate competitors B. The agent could be charged with antitrust violations for price fixing C. Is a violation of confidentiality? D. Is good market information that a seller should know

B. The agent could be charged with antitrust violations for price fixing

A buyer was going to take over on a seller's existing loan as part of the real estate transaction. The lender, however, was going to change the interest rate on the buyer to the prevailing current rate. In order for the lender to do this, there must have been what type of clause in the mortgage? A. acceleration B. alienation C. defeasance D. subordination

B. alienation

A condominium development with a long standing established homes association would be governed by the: A. long established tenants B. association of unit owners C. developer of the condominium D. state licensing agency

B. association of unit owners

The value of a property over and above all outstanding debts is called: A. net income B. equity C. net value D. book value

B. equity

A mortgage is recorded to protect the: A. mortgagor B. mortgagee C. trustor D. trustee

B. mortgagee

An 80% loan to value ratio means that the loan amount will be based on 80% of: A. the contract price or appraisal, whichever is higher B. the contract price or appraisal, whichever is lower C. the contract price D. the appraisal price

B. the contract price or appraisal, whichever is lower

A contract where one or more of the parties can rescind is called: A. void B. voidable C. valid D. unenforceable

B. voidable

If a salesperson is an employee of a broker, then the broker must: A. give yearly vacations B. withhold FICA and federal tax C. pay a commission D. pay a salary instead of commission

B. withhold FICA and federal tax

Taxes on a property were paid in arrears running from July 1st to June 30th. If closing was on April 15th and the annual taxes were $912, what was the tax proration? A. $191 B. $437 C. $721 D. $912

C. $721

When a person owns home and has a mortgage, the difference between the amount owed on the property and its market value represents the owner's: A. Capital gain B. Replacement cost C. Equity D. Tax base

C. Equity

Which legal description would use the following verbiage; "Starting at the southernly side of Victoria Street, proceed 100 feet Easterly from the corner that was formed by the stone and tree stump...? A. Rectangular survey system B. Geodetic survey system C. Metes and Bounds D. Lot and Block

C. Metes and Bounds

In Illinois, real estate taxes are a lien against: A. the property owner B. the mortgagor C. the property D. the mortgagee

C. the property Property taxes are a specific lien. The lien attaches to the property, not the owner.

Which of the following constitutes illegal commingling by a licensee? A. Salesperson deposits earnest money into a broker's trust account B. Broker deposits commercial rent receipts from a property management contract into the trust account C. Salesperson deposits residential rental money into the trust account D. Broker deposits payroll funds into the trust account

D. Broker deposits payroll funds into the trust account

Rich owns a 24-unit apartment building in DuPage County, which is fully rented. According to state law all security deposits: A. Must be in an interest bearing account B. Can be deposited in Rich's vacation account C. Is non-refundable D. Can be deposited in a non-interest-bearing account

D. Can be deposited in a non-interest-bearing account

Leo, a licensed real estate broker, gives his brother $10,000 to start a home inspection company. Leo owns 1% of the business but does not participate in the inspection company at all. When referring buyers to the inspection company, Leo: A. Must disclose that his brother owns the company B. Is to receive 10% of the price of the inspection C. Is not required to make any disclosure D. Must disclose his interest in the company

D. Must disclose his interest in the company

The type of lease arrangement designed to allow the lessee to receive the capital investment from the leased property is called a(n): A. Sale and leaseback B. Percentage lease C. Index lease D. Step up lease

A. Sale and leaseback

A title insurance policy lists: A. all recorded defects against the title B. all owners C. any transaction that affected the title D. any mortgage ever against the property

A. all recorded defects against the title

Agent Jon's employment is terminated by sponsoring broker Kathy. DFPR requires sponsoring broker Kathy to: A. publish a notice of termination in the local REALTOR® publication B. terminate all of his listings C. immediately get his office keys and MLS keypad D. notify DFPR within 24 hours

D. notify DFPR within 24 hours

A right to buy a property for a definite sale price with a definite time period is referred to as a(n): A. sales contract B. listing contract C. right of first refusal D. option contract

D. option contract

Which of the following elements must be in a contract to have a valid contract? A. A clear description of the land B. A clear description of the land, house and improvements C. Earnest money D. Good faith estimate of closing co

A. A clear description of the land

Under the Illinois license act, a written policy manual: A. Is required if the company has multiple office locations B. Is required if the office has more than one agent C. Is not required unless there are at least ten agents in the office D. Is not required but highly recommended

B. Is required if the office has more than one agent

A child owns a life estate and sells the property to a friend. Which of the following statements is true regarding the friend's estate? A. It ends when the friend dies B. It ends when the child dies C. It becomes a fee absolute when the child dies D. It becomes a fee absolute when the friend dies

B. It ends when the child dies

When in the market to purchase real estate, the ability to pay for it is the foremost consideration in the selection process. What is typically the second consideration? A. Zoning B. Location C. Age D. Improvements

B. Location

When appraising a property, the appraiser determines the most probable price a buyer would be willing to pay for the property. This is known as: A. Objective value; fair market value B. Subjective value; fair market value C. Plottage value D. Best use value

A. Objective value; fair market value

A developer divided 5 acres into 20 equal lots all having depth of 120 feet. What is the approximate front footage of the lots? A. 108.9 feet B. 90.75 feet C. 95.5 feet D. 105 feet

B. 90.75 feet

Which clause in a mortgage would make the loan non-assumable? A. Acceleration B. Due on sale C. Prepayment D. Defeasance

B. Due on sale

A seller of a property could NOT transfer marketable unencumbered title. What should the broker do with any earnest money involved in the transaction? A. Give it to the seller B. Give it to the buyer C. Pay the broker's commission and give the balance to the seller D. Pay for any expenses and give the balance to the buyer

B. Give it to the buyer

When a lien against a parcel of property may result from a law suit currently filed in the court, one examining the public record would look for a A. Judgment lien B. Suit to quiet title C. Lis pendens D. Chain of title

C. Lis pendens

Which of the following is NOT a penalty for a RESPA violation? A. Liability up to three times the amount of the charge paid for the service B. Fines up to $10,000 C. Mandatory payments of legal fees of the prevailing party D. Imprisonment for up to one year

C. Mandatory payments of legal fees of the prevailing party

A licensee works with a broker who specializes in selling only commercial property and is explaining to the seller the disclosures he must provide to buyers. The licensee must have the seller complete: A. A Radon Disclosure Form B. A Lead-Based Paint Disclosure Form C. No specific disclosure form D. A Real Property Transfer Form

C. No specific disclosure form

Taxes of $1,200 were prepaid for the year on January 1st. If the property was sold with a closing date of March 1st and the buyer was credited with the day of closing, what would be the tax proration? A. $ 200 B. $ 500 C. $ 800 D. $1,000

D. $1,000

A buyer purchased a property for $100,000 obtaining an 80% loan to value ratio. The appraisal came in at $80,000. What would be the down payment? A. $12,800 B. $16,000 C. $19,200 D. $36,000

D. $36,000

A listing agent presents a contingency offer from a buyer to the seller. The offer contains language that says if the seller accepts the offer, the buyer will put their own home on the market within 24 hours. This is: A. considered to be a unilateral contract B. good for the seller as this would expose the buyer's property on the market within a short time frame C. a contingency that puts the buyer in the strongest position D. not allowed by law

B. good for the seller as this would expose the buyer's property on the market within a short time frame

Beginning at the SW corner of the SW ¼ of Section 23, then North for a distance of 1,320 feet, then Northeast to the Northeast corner of the SW ¼ of Section 23 then to the South Easterly corner of the SE ¼ of Section 23, then West to the point of beginning. If this property sells for $18,900 acre and your commission is 4.5%, what did you earn? A. $154,600 B. $123,000 C. $170,100 D. $134,000

C. $170,100

A buyer purchased a property for $130,000 putting 20% down. The buyer also immediately took out a $10,000 home equity loan. Five years later, the home has a current value of $175,000 while the home equity loan is down to a balance of $4,500 and the first mortgage has a current balance of $98,000. What is the seller's equity in the property? A. $61,500 B. $68,750 C. $72,500 D. $98,000

C. $72,500 $175,000 - $4,500 - $98,000 = $72,500

Who oversees and administers the provisions of the Real Estate Settlement Procedures Act (RESPA)? A. FBI B. CIA C. Consumer Financial Protection Bureau (CFPB) D. Securities and Exchange Commission (SEC)

C. Consumer Financial Protection Bureau (CFPB)

A seller and buyer have agreed to a sales contract. The buyer backs out of the agreement. Which of the following could the seller NOT do? A. Sue for specific performance B. Rescind the agreement C. File for a writ of execution D. Sue for compensatory damages

C. File for a writ of execution

Which of the following best describes a term loan? A. Reverse Annuity B. Amortized C. Interest only D. Interest and principal

C. Interest only

A property manager needs to be skilled at risk management analysis in order to protect a building from: A. Criminal activities of the landlord B. Burglars C. Code enforcement officers conducting surprise visits D. Damage and losses from certain perils such as flood, fire, and vandalism

D. Damage and losses from certain perils such as flood, fire, and vandalism

Which of the following deeds should a grantor use to transfer an uncertain interest in real property? A. Special warranty deed B. Grant, bargain and sale deed C. Warranty deed D. Quit claim deed

D. Quit claim deed

Which of the following is a lien that does not have to be recorded? A. Voluntary mortgage lien B. A tax deed C. Money judgment D. Real estate taxes

D. Real estate taxes

Two brothers wanted to purchase a property for their parents to live in during their retirement years. The brothers wanted to take title in a manner that limited their tax liability. As an agent helping the brothers in this purchase, what would you recommend? A. Severalty B. Tenancy in common C. Joint tenancy D. That the brothers seek advice from an attorney

D. That the brothers seek advice from an attorney

Which of the following is accepted by a buyer or his/her attorney as evidence of proof of ownership of an estate in land? A. Deed B. Warranty deed C. Homeowner's insurance policy D. Title insurance policy

D. Title insurance policy

What is the primary purpose of the Federal Housing Administration (FHA)? A. To buy notes from lenders B. To make loans to borrowers C. To set maximum interest rates D. To insure loans for lenders

D. To insure loans for lenders

Three years ago, Keith paid $150,000 for his 3-bedroom home. If the property has appreciated at 5% each year, what is the property value today? A. $173,644 B. $172,500 C. $175,464 D. $179,300

A. $173,644

A mortgagee foreclosed but the sale did not produce enough to pay all debts. Which of the following is the MOST likely course of action for the mortgagee to take? A. File for a judgment lien against the borrower B. Have the borrower sign a deed of assumption C. Have the borrower sign a sales contract D. The mortgagee could do nothing

A. File for a judgment lien against the borrower

In Illinois, mortgage foreclosures may be obtained only through a court proceeding. This means Illinois is considered a(n): A. Strict foreclosure state B. Judicial foreclosure state C. Foreclosure by lawsuit state D. Sheriff's foreclosure state

B. Judicial foreclosure state

Eric and Rick are next door neighbors. Eric tells Rick that he can store his classic car in his yard until Eric needs the space. Eric does not charge rent for the use of the yard. Eric has given Rick a(n): A. Easement appurtenant B. License C. Easement by necessity D. Life estate

B. License

Broker L was the listing agent. Broker S was the selling agent. Both were members of a multiple listing service. L did not know the buyer and S did not have any contact with the seller. No buyer agency agreement existed. Which of the following is the MOST likely agency relationship? A. L is a subagent of S B. S and L both represent the seller C. L is an agent of the buyer D. S is an agent of the buyer

B. S and L both represent the seller

Patrick wants to sell his property in Illinois for $190,000 and calls broker Sam to list the property. Broker Sam decided that this was a great property and wanted to purchase it for himself at the asking price. 2 weeks after the closing of the sale, Patrick found out that the property had been rezoned. Sam already had the property under contract with Tiffany for $325,000. Under what circumstances would this be legal? A. Sam should have had a friend purchase the property for him B. Sam should have informed Patrick that there was a potential of rezoning of the property making it more valuable, allowing Patrick to consider his options C. Sam did nothing wrong because Patrick knew Sam was a real estate broker D. Sam's actions were legal since he did not have a listing with Patrick

B. Sam should have informed Patrick that there was a potential of rezoning of the property making it more valuable, allowing Patrick to consider his options

In Illinois which party usually pays for the state and county transfer taxes? A. Buyer pays state taxes, seller pays county and municipal taxes B. Seller C. Buyer D. Whichever party is specified in the local ordinance

B. Seller

Under the Safe Drinking Water Act, non-community drinking water systems are under the responsibility of: A. The Illinois Department of Public Health B. The EPA C. The Resource Conservation and Recovery Administration D. The Superfund Amendment

B. The EPA

The reason a lender charges discount points is to: A. cover the costs of initiating the loan B. increase the effective yield to the lender C. offset selling the loan at a premium D. account for the time value of money

B. increase the effective yield to the lender

A contract that begins as uni-lateral but could end up being bi-lateral is a(n): A. sales contract B. option contract C. offer to purchase contract D. listing contract

B. option contract

A good example of a unilateral contract would be a(n): A. sales contract B. option contract C. listing contract D. lease contract

B. option contract

Title to real estate that is inherited from a person who dies intestate is: A. Title by descent B. A legacy C. Title by bequest D. A devise

A. Title by descent

A document that protects the insured parties (subject to specific exemptions) against loss due to defects in the recorded title and against hidden risks such as forgeries is called a(n): A. Title insurance policy B. Abstract of title C. Certificate of title D. Chain of title

A. Title insurance policy

Which of the following is not a typical qualifying statement when interviewing a buyer? A. What church the buyer will attend B. How much money is available for a down payment C. What are the total monthly expenses the buyer currently incurs D. How long has the buyer been on the job

A. What church the buyer will attend

A, B, and C are joint tenants. C sells his interest to Z: A. Z is a tenant in common with A and B, who continue as joint tenants with each other B. C cannot sell his interest C. All are now tenants in common D. Z is now a joint tenant with A and B

A. Z is a tenant in common with A and B, who continue as joint tenants with each other

Zeke, the listing agent, listed his neighbor's house after helping clean up the basement after heavy rains caused it to flood. The neighbor asked Zeke not to mention it because it has never happened before. Zeke agrees and never mentions it to anyone. A. Zeke is committing fraud B. Zeke is being a good neighbor and protecting his neighbor's investment C. Zeke is protected by the listing agreement D. Zeke knows this will help his resale value in the future

A. Zeke is committing fraud

A property with a value of $73,500 had a loan of $72,500. If the mill rate was 1 1/2, what were the monthly taxes? A. $9.06 B. $9.19 C. $9.54 D. $9.80

B. $9.19

Barbara transfers property to Mandy with a special warranty deed. Which of the following is TRUE? A. Barbara is making additional warranties beyond those given in a warranty deed B. Barbara's warranties are limited to the time she held the property C. Barbara's property is leasehold property D. Barbara is warranting that no encumbrances have ever been placed against the property that have not been satisfied or released

B. Barbara's warranties are limited to the time she held the property

Which of the following terms BEST describes the practice of encouraging owners to move from an area due to minorities moving in making the neighborhood more integrated? A. Steering B. Blockbusting C. Redlining D. Puffing

B. Blockbusting

Broker A enters a listing in the multiple listing service under the rules of sub-agency. Broker B, a member of the multiple listing service, finds a buyer and shows the house under the rules of sub-agency. Which of the following statements best describes the relationships of the parties? A. The buyer was an agent of Broker B B. Broker B was an agent of Broker A C. Broker B was an agent of the buyer D. Broker B was an agent of the se

B. Broker B was an agent of Broker A

The period of time during which a property may be profitably utilized is known as its: A. Income life B. Economic life C. Net life D. Gross life

B. Economic life

The pledging of property for a loan without giving up possession of the property itself is referred to as: A. Novation B. Hypothecation C. Alienation D. Defeasance

B. Hypothecation

A "variance" as applied to real estate use is: A. A reversion of ownership rights or interests B. A court order prohibiting certain types of business uses C. An exception to a zoning ordinance D. The nullification of an easement

C. An exception to a zoning ordinance

Under which of the following agreements are the owners of a property obligated to pay the commission even though they sell the property themselves: A. An exclusive agency listing B. An option listing C. An exclusive right to sell listing D. An open listing

C. An exclusive right to sell listing

The closing statement involves the debits and credits to the parties in the transaction. A debit is: A. A proration B. An adjustment for an expense paid outside of closing C. An expense D. A refund

C. An expense

In Illinois, which of the following must have a real estate license? A. A licensed attorney acting under a power of attorney to convey real estate B. A partnership selling a building owned by the partners C. An off-site apartment manager who manages 20 units in a residential building not owned by the manager D. A resident apartment manager working directly for the owner

C. An off-site apartment manager who manages 20 units in a residential building not owned by the manager

The successful bidder at a foreclosure sale in Illinois immediately receives a(n): A. Certificate of foreclosure B. Deed of foreclosure C. Certificate of sale D. Sheriff's deed

C. Certificate of sale

In order to calculate the capitalization rate for a multi-unit building, a property manager would: A. Multiply the net income by the value B. Divide the net income by the capitalization rate C. Divide the net operating income by the value of the property D. Multiply the capitalization rate by the property value

C. Divide the net operating income by the value of the property

When a contract is signed between a buyer and a seller, the buyer is known to have received an equitable title upon the happening of which of the following events? A. The buyer making the offer B. Recording of the deed C. The signing of the agreement by the buyer and seller D. Conveyance of the deed

C. Signing of the agreement by the buyer and seller

Environmental regulations in Illinois are: A. All more stringent than federal regulation B. Less restrictive than federal regulations C. Substantially equivalent to federal regulations D. Not subject to federal regulations

C. Substantially equivalent to federal regulations

In establishing rental amounts, a property manager considers the economic principles of: A. Profit and loss B. Gains on capital expenditures C. Diminishing returns D. Supply and demand

D. Supply and demand

Many states determine the order of water rights according to which users of the water hold a recorded beneficial use permit. This allocation of water rights is called: A. The Riparian Rights Theory B. The Receding Waters Act C. The Littoral Rights Theory D. The Doctrine of Prior Appropriation

D. The Doctrine of Prior Appropriation

Agent A has two buyer-clients interested in the same property. Today they both leave messages that they wish to write offers. Agent A must: A. write the offers and not reveal anything to either buyer B. tell only one buyer and give the other buyer a chance to seek another agent C. tell each buyer the situation and then write both offers D. disclose and get consent from each buyer to proceed

D. disclose and get consent from each buyer to proceed The law now requires disclosure and consent for an agent to represent more than one buyer in a transaction. This "contemporaneous buyer" rule requires written disclosure and allows for a buyer to request a different agent.

The right of a person to regain title to the property after paying all debts is known as: A. release B. reversion C. remainder D. redemption

D. redemption

Sandy wishes to start a new real estate company, although she has never had a real estate license of any type. Which of the following statements is true? A. She can receive her managing broker's license and start a company immediately B. She must be licensed for at least two years before she can manage an office C. She cannot own a real estate company without being licensed D. She can get licensed, start a company, but not hire any agents for two years

B. She must be licensed for at least two years before she can manage an office To manage a real estate office, a managing broker must have had a real estate license two of the last three years.

Real estate tax is an example of a: A. Specific, statutory lien B. Specific, voluntary lien C. General, voluntary lien D. General, involuntary lien

A. Specific, statutory lien

Mr. Smith is buying a piece of property that measures 500 feet on each side. How many acres has Smith bought? A. 5.74 acres B. 5.39 acres C. 7.2 acres D. 5 acres

A. 5.74 acres

Bob and Bill bought a gas station as tenants in common. If Bob dies, which of the following statement is CORRECT about the ownership of the property? A. 50% is held by Bill and 50% goes to Bob's estate B. Bill holds a life estate ownership in Bob's share of the property C. It automatically becomes tenancy by the entirety D. Bill holds fee simple ownership in Bob's share of the property

A. 50% is held by Bill and 50% goes to Bob's estate

Which of the following is regulated under the federal underground storage tank requirements? A. A 2,000-gallon tank used in a commercial fuel tank B. An underground oil tank used to heat a home C. A 1,000-gallon gas tank used at a private residence for personal use D. An underground wastewater tank

A. A 2,000-gallon tank used in a commercial fuel tank

An example of a kickback that is prohibited by RESPA is: A. A fee paid by a surveyor to a broker for a lead on a property to be surveyed B. A flower arrangement a broker sends to the buyer as a house warming gift C. A share of the commission paid by a managing broker to her sponsored licensees D. A fee paid by one broker to a second broker for referring a buyer

A. A fee paid by a surveyor to a broker for a lead on a property to be surveyed

Which of the following BEST describes an installment or land contract? A. A method of selling real estate whereby the purchaser takes possession, pays for the property in regular installments while the seller retains title until the property is paid in full B. A means of conveying title and possession immediately while the purchaser pays for the property in installments C. An agreement whereby the buyer or seller has the right to terminate the contract at will D. A contract to buy land only

A. A method of selling real estate whereby the purchaser takes possession, pays for the property in regular installments while the seller retains title until the property is paid in full

Joe Connelly inherited a parcel of land in Illinois from his father. He is unsure of the actual kind and condition of the title. In this case, his attorney would probably recommend that he use which of the following to convey the property to a buyer? A. A quit claim deed B. An abstract of title C. A bargain and sale deed D. A general warranty deed

A. A quit claim deed

Which statement regarding open buyer agency is TRUE? A. The buyer may enter into agreements with multiple brokers and is obligated to pay only the broker who locates the property that the buyer ultimately purchases B. While the buyer may enter into agreements with multiple brokers, he/she is under no obligation to pay the broker; the seller pays all brokerage expenses C. Because multiple brokers may be involved, an open buyer agreement involves reduced fiduciary duties D. The buyer may not look for or make offers on properties on his/her own

A. The buyer may enter into agreements with multiple brokers and is obligated to pay only the broker who locates the property that the buyer ultimately purchases

For a deed to be valid: A. The grantor must be legally competent B. The signature of the grantee must be witnessed C. The grantee must sign the deed D. Documents must pass through the hands of an escrow agent

A. The grantor must be legally competent

Which of the following is NOT a basic step in Illinois to evict a tenant? A. Verbal warnings to the tenant B. Writ of execution C. Forcible entry and detainer action D. Notice to quit

A. Verbal warnings to the tenant

An investor investing in land needs to understand that this is: A. a limited liquidity investment B. an investment where the rate of return does not keep up with inflation C. an investment that is hardly ever profitable D. a very expensive investment

A. a limited liquidity investment

Agent Rashad owns all his property in an Illinois land trust. When purchasing unlisted property, he must: A. disclose his status as a licensee before making an offer B. disclose his status as a licensee anytime before closing C. not make any disclosure, unless he so chooses D. not make any disclosure, as it would violate trust laws

A. disclose his status as a licensee before making an offer

An agreement to waive priority is: A. subordination B. subrogation C. acceleration D. alienation

A. subordination

When developing an operating budget, a property manager should allocate revenue toward such expenses as mortgage loan payments, property taxes, and insurance premiums. These are called: A. Supply expenses B. Fixed expenses C. Variable expenses D. Capital expenses

B. Fixed expenses

Which of the following statements about the relationship between the sponsoring broker and his licensees is NOT true? A. He can give his licensees permission to advertise their own listings under the banner of the firm B. He cannot have agents representing buyers and sellers in the same office C. He must have a written employment agreement with each licensee D. He is responsible for the actions of his licensees

B. He cannot have agents representing buyers and sellers in the same office

John Daly is a licensee working with his seller, Tom, as his exclusive agent. Yesterday, John brought Tom through Alex's house since Tom is looking to downsize into a smaller home. John has the listing on Alex's house and both Tom and Alex have signed consent to dual agency disclosures. Which of the following is TRUE? A. John may give advice to Tom as far as what price to offer, and what kind of counter offer to expect B. John must obtain confirmation of dual agency consent prior to an offer being presented and accepted C. John cannot be a dual agent under any circumstances D. John, acting as a dual agent, may not disclose any material facts about Alex's home

B. John must obtain confirmation of dual agency consent prior to an offer being presented and accepted

To protect the lender, which of the following items is usually NOT required for the borrower to pay? A. Hazard insurance B. Life insurance C. Property taxes D. Principal and interest

B. Life insurance

Documentation the buyer is usually required to bring to the closing is: A. The deed conveying the property B. Proof of hazard insurance C. A bill of sale D. A survey

B. Proof of hazard insurance

Broker Ben is showing the listing of a fellow sales agent in the office. Ben writes the offer which, after some negotiating and counter offering, is acceptable to the buyer and seller in all terms. The buyer has met the seller's price, is excited about the home, and his mortgage company has pre-approved him. The seller now wants to cancel the agreement. She may be liable to the broker for: A. Bad faith negotiations B. The full amount of the commission because the broker brought the seller a ready, willing, and able buyer C. Reimbursement of advertising costs D. Violating the broker's MLS agreement

B. The full amount of the commission because the broker brought the seller a ready, willing, and able buyer

Tommy is showing a young couple with small children several homes in a neighborhood with older homes, mature trees and established services. When the couple asked Tommy about the quality of the schools and the demographic make-up of the students, Tommy handed them a brochure published by the school district and a crime report published by the police. This practice is okay because: A. Tommy knows never to offer his professional opinion on schools B. The information was published by appropriate authorities and was available to anyone at anytime C. The clients requested the information and Tommy did not volunteer it D. Tommy does not live in the area

B. The information was published by appropriate authorities and was available to anyone at anytime

If a lender does not want to weaken the security of a property if taxes are unpaid, the lender should: A. pay the taxes personally B. require the prepaid tax money paid by the owner be put into a lender's escrow or impound account C. ask the state for a notice if the taxes are not paid D. require the owner to pay three years of taxes in advance at closing

B. require the prepaid tax money paid by the owner be put into a lender's escrow or impound account

All of the closing documents should be prepared in accordance with the terms of the: A. listing contract B. sales contract C. right of first refusal contract D. title policy

B. sales contract

Property manager Frazier hires Allen Pure as a full-time maintenance person in a building Frazier manages. While repairing a faucet in one of the apartments, Allen steals a television set. Frazier can protect the owner against this loss by purchasing: A. Worker's compensation insurance B. Liability insurance C. A surety bond D. Casualty insurance

C. A surety bond

XYZ listed a property for sale and put the listing in the multiple listing service (MLS). ABC, working with a prospective buyer, cooperated through the MLS and showed the property. What is true? A. XYZ represents the sellers and buyers B. XYZ represents the buyers only C. ABC is a subagent of XYZ D. XYZ is a subagent of ABC

C. ABC is a subagent of XYZ

Tina, the licensee who sold a property in cooperation with Dawn, a licensee with a cooperating broker attended the closing and realized that the commission check was made out to her and not to her sponsoring broker's office. In this case, the licensee should: A. Endorse the check back to the listing licensee B. Go to the listing licensee's bank and deposit the commission check C. Advise the closing agent that the check should be made out to the listing office D. Go to her bank and deposit the commission check

C. Advise the closing agent that the check should be made out to the listing office

What should be the first thing an agent discusses with a consumer who walks into the real estate office looking for housing information in the area? A. How much money does the consumer have to spend B. How many bedrooms does the consumer need C. Agency disclosure and representation D. Has the consumer looked at many houses in the neighborhood

C. Agency disclosure and representation

The brokerage company of Dewey, Cheatem, and Howe offers some agents a 50-50 commission split and other agents 60-40 splits. This policy is: A. Not enforceable in a court of law and B. Legal but a poor precedent to set C. Allowable and provides motivation and activity D. Discriminatory and should be eliminated

C. Allowable and provides motivation and activity

A licensee with Prove It Realty has been found guilty of violating the Illinois Real Estate License Act. The sponsoring broker may also be disciplined if the: A. Licensee was a convicted criminal B. The managing broker failed to keep all local business licenses current C. Managing Broker had prior knowledge of the violation D. The managing broker failed to conduct the four step licensee character and background check

C. Managing Broker had prior knowledge of the violation

When the listing broker under an exclusive right to sell listing receives two offers for the same house at the same time, one from the listing office and one from an agent of a cooperating broker, the listing broker must: A. D. Submit the listing office's offer first B. Submit the cooperating broker's offer first C. Submit both offer at the same time D. Submit the highest offer

C. Submit both offer at the same time

Which of the following is NOT a benefit of leasing vs buying? A. Stability of costs B. Flexibility C. Tax advantages for the depreciation of the property over time D. Lower up-front cash requirements

C. Tax advantages for the depreciation of the property over time

A tenant was in possession of leased property. The landlord gave a written notice to the tenant to quit. The tenant, however, remained in the property and continued to send rent payments to the landlord. The landlord refused to accept the rent checks. This situation would be described as a: A. periodic tenancy B. tenancy at will C. tenancy at sufferance D. tenancy for years

C. tenancy at sufferance

A licensee is holding an open house on a new listing. The open house is very busy and there are several interested buyers. One buyer wishes to make an offer on the spot. What should the licensee do? A. Check the buyer's credit report B. Close the open house and tell everyone the house is sold C. Ask what the buyer's financial qualifications are D. Ask if the buyer has an exclusive buyer agency with any other agent

D. Ask if the buyer has an exclusive buyer agency with any other agent

How would a loan origination fee normally show up on a closing statement? A. Debit buyer - credit seller B. Debit seller - credit buyer C. Debit seller - no entry to buyer D. Debit buyer - no entry to seller

D. Debit buyer - no entry to seller

An Illinois licensee who is designing a web site will need to: A. Register the web site with the IDFPR B. Display the real estate license number conspicuously C. Get permission from the local multiple listing service (MLS) to proceed D. Display the company name on every page

D. Display the company name on every page

Which of the following is NOT an unlawful act? A. Representing that a property is not available for sale or rent when, in fact, it is B. Altering the terms or conditions for a loan for the purchase, construction, improvement, or repair of a dwelling for a protected class C. Refusing to sell, rent, or negotiate with any person or otherwise make a dwelling unavailable D. Displaying the Equal Housing Opportunity poster and providing all clients and customers with pertinent information in every transaction

D. Displaying the Equal Housing Opportunity poster and providing all clients and customers with pertinent information in every transaction

A mortgagor is one who: A. Provides the transfer tax stamps B. Provides the loan money C. Holds the note D. Signs the note

D. Signs the note

During the listing presentation, agent Susan is filling out the listing contract and Residential Real Property Disclosure Report. In this situation: A. Susan is following company guidelines of obtaining up to date and accurate information B. Is making certain the seller completes all information necessary for the listing to go into effect C. Susan must have the seller fill in all the blanks in their credit report D. Susan is not allowed to complete the Residential Real Property Disclosure Report

D. Susan is not allowed to complete the Residential Real Property Disclosure Report

The city of Chicago just changed its buildable lot size from 25 feet to 50 feet wide. Mike owns a 25 foot lot he has been trying to sell. Now, in order to sell, he should: A. Give up because it is now hopeless to sell the lot B. Erect a pool on the property to attract more buyers C. Sue the city for changing the law D. Talk to the neighbor who also owns a 25-foot lot next to his, buy it, and through assemblage, combine both to make the property more valuable and saleable

D. Talk to the neighbor who also owns a 25-foot lot next to his, buy it, and through assemblage, combine both to make the property more valuable and saleable

A buyer purchases a property for $285,500. The buyer deposits the purchase price with a third party and the seller deposits a warranty deed for the property with the same third party. The third party is instructed to record the deed in the buyer's favor and pay the purchase price, less some agreed prorations, to the seller when the buyer has received the deed. This transaction is called: A. Provisional sale B. Option C. Escrow D. Installment sale

C. Escrow

A contractor failed to pay subcontractors for work performed on a property. What could the subcontractors do? A. Sue the contractor for fraud B. Remove the materials from the improved property C. File a mechanic's lien on the improved property D. Petition the attorney general for the money

C. File a mechanic's lien on the improved property

A licensee who has contracted with a condo owner to manage a high-rise apartment building she owns as an investment is probably a: A. Special agent B. Buyer's agent C. General agent D. Seller's agent

C. General agent

The best way for a seller to determine the price at which his/her property might sell on the open market is to: A. Decide how much profit must be made B. Look at an internet site with national data C. Get a comparative market analysis D. Ask the neighbors

C. Get a comparative market analysis

April just concluded a lease agreement with landlord Raines. April will pay $2,000 per month for 36 months with a right to renew the lease for additional periods of time with a 5% rent increase adjustment each renewal period. Raines agrees to pay the expenses of ownership such as taxes, repairs, insurance, janitorial, etc. The type of lease arrangement here is a: A. Ground lease B. Percentage lease C. Gross lease D. Net lease

C. Gross lease

Judy was a lifelong tenant in the building owned by Don. When Don decided to sell the building, he received a bona fide offer from purchaser Wayne. Before Don could accept Wayne's offer he was required to make the property available to Judy for the same offering price because Judy: A. Had been a tenant for so long she automatically received an option to purchase the property B. Was owed money by Don, so Don could not sell it to anyone else C. Had a recorded first right of refusal clause in her lease D. Wayne's offer did not have any earnest money on deposit, so his offer was void

C. Had a recorded first right of refusal clause in her lease

Property manager Nora has an agreement with Carlos, a well-known landscape architect in the area. Carlos provides a weekly landscape service for Nora, in which he compensates Nora monthly for the business. Nora, who counts on this money as part of her compensation for managing the building is: A. Does not need a license to perform her daily activities B. Is demonstrating exemplary duty to her principal C. Is subject to violations of the license laws for accepting compensation from Carlos D. Lucky to have such an arrangement with a well known vendor

C. Is subject to violations of the license laws for accepting compensation from Carlos

The value of a piece of real estate: A. Is the same as the market price B. Includes a measure of past expenditures C. Is what a buyer is willing to pay for a parcel of real estate D. Is the present worth of future benefits

C. Is what a buyer is willing to pay for a parcel of real estate

An offer to purchase contract has been presented to a seller. Which of the following statements is true regarding the offer? A. Any counteroffer must be close to the terms of the original offer B. Any counteroffer must be in writing C. It could be withdrawn anytime prior to conveyance of acceptance or rejection D. The buyer would have a three day right of rescission even after acceptance by the seller

C. It could be withdrawn anytime prior to conveyance of an acceptance or rejection

Jon works for Builder Bob, selling his new construction homes in Illinois. Does Jon need a real estate license? A. Yes, this is a licensed activity B. Yes, as new construction sales require a licensed agent C. No, as long as Jon is Bob's regular employee D. No, as new construction is exempt

C. No, as long as Jon is Bob's regular employee Regular employees of the owner of the property are exempt from licensing in Illinois. A regular employee must work at least 20 hours a week and be classified as an employee by IRS guidelines.

Julia, a real estate licensee, receives a fee from her favorite mortgage broker for every client she refers that results in a loan. Is this permitted? A. Yes, it's permitted as long as she does not require the client to use that mortgage company B. Yes, it is permitted if she discloses the fee arrangement to the client when she makes the referral C. No, this is not permitted under RESPA D. Yes, it's permitted if she discloses the fee arrangement to the client before the sale is closed

C. No, this is not permitted under RESPA

A real estate licensee selling a personal residence is offering a $1,000 gift card as a bonus paid upon acceptance of the offer to the "first agent to bring in an offer that is acceptable." Since this is the broker's personal residence this is: A. Not legal because any type of commission bonus is illegal in Illinois B. Legal as long as the bonus does not exceed $2,500.00 C. Not legal since any bonus must be paid to the sponsoring broker, not to an individual agent D. Perfectly legal

C. Not legal since any bonus must be paid to the sponsoring broker, not to an individual agent

Which of the following acts would be permitted under the 1968 Federal Fair Housing Act? A. Advertising to special groups only B. Selling or renting to someone based on their national origin C. Not renting a house to someone because they have a poor credit history D. Telling someone a house has been rented when it actually has not

C. Not renting a house to someone because they have a poor credit history

Which of the following transactions is EXEMPT from the requirements of the Federal Fair Housing Act? A. Broker selling vacant land on which a house will be built in the future B. Broker selling a residential condominium C. Owner renting one room in an owner occupied residence D. Religious community running a commercial venture for profit

C. Owner renting one room in an owner occupied residence

Pathway Commercial Brokers listed a prime commercial building in downtown Chicago. After several months of aggressive marketing and working with a large number of interested prospects, Pathway was successful in procuring an acceptable offer for the building that was accepted by the seller. In order for the broker to protect their commission in the transaction, it should: A. Do nothing and hope that the sale goes through as planned and the seller pays the commission B. Have the seller sign an additional IOU to safeguard the commission C. Place a commercial broker lien on the property for the amount of the commission D. Make sure their agents monitor the seller's activities

C. Place a commercial broker lien on the property for the amount of the commission

Eric has been working with Violet in searching for homes in the Crescent View subdivision. During a ride through the neighbor, Eric noticed a home owner putting a for sale sign up in his yard. After a brief conversation, the home owner agreed to allow Eric to show the home to Violet. Eric must: A. Get a consent to dual agency signed by the homeowner B. Have another agent in his office show Violet the house C. Present the home owner with a "non-agency" disclosure D. Not tell Violet about the crack in the basement wall which only leaks when it rains hard

C. Present the home owner with a "non-agency" disclosure

Marketable title to real estate is title which is: A. Guaranteed by the grantee B. Issued by a court C. Reasonably free from risk of litigation over possible defects D. Absolutely free of any possible defect

C. Reasonably free from risk of litigation over possible defects

Which of the following would be an example of a tying contract with a broker? A. A group of brokers setting a common commission rate B. A broker referring buyers to a particular lender C. Requiring a builder to list a finished house with the broker after buying a lot in the subdivision D. A broker listing a seller's house for sale and then finding the seller a bigger house to buy in that same area

C. Requiring a builder to list a finished house with the broker after buying a lot in the subdivision

A developer wants to sell a lot in a tract of land owned by the developer. The current interest rates are 13%. The developer would like to pay extra money to the lender to allow the buyer to obtain a reduced interest rate. This type of arrangement would be known as a(n): A. loan origination fee B. secondary market activity C. buydown mortgage D. tying contract

C. buydown mortgage

An assumed loan in a real estate transaction would appear on the closing statement as a: A. credit to the buyer only B. debit to the buyer, credit to the seller C. debit to the seller, credit to the buyer D. neither a debit nor credit to the seller

C. debit to the seller, credit to the buyer

In Illinois, an agent who proposes to become a dual agent must have written agreement from both buyer and seller regarding this situation. The dual agency language: A. should be drafted by the agent's attorney B. may take any form, as long as it is in writing C. is specifically dictated in the license law D. will change the amount of compensation the agent receives

C. is specifically dictated in the license law The required language is contained in Article 15 of the Illinois License Law.

In Illinois, a real estate agent: A. may accept cash gifts directly from a very satisfied client B. will usually have income taxes withheld from their commission check C. must have a written contract with their broker D. may accept commission from any licensed broker

C. must have a written contract with their broker Illinois salespeople must have a written contract with their employing broker. They cannot accept compensation from anyone else, including a client. Generally, they will work as independent contractors; therefore there are generally no taxes withheld from their commission checks.

A broker talks to a seller about listing the property for sale. The seller won't list just with this one broker, but tells the broker that if he finds a buyer for the property, the seller will pay a commission. This would be a(n): A. exclusive right to sell listing B. exclusive agency listing C. open listing D. net list

C. open listing

A land contract is also referred to as a(n): A. right of first refusal B. installment contract C. option contract D. listing contract

C. option contract

An agent is working with a married couple in the purchase of a home. The couple asks the agent how they should take title to the property. The agent should say: A. tenancy in the entireties B. joint tenancy C. see an attorney D. tenancy in common

C. see an attorney

According to the Uniform Vendor and Risk Act, during the period between the signing of a purchase contract and the date of the closing or possession by the buyer, the risk of any loss to the property is born by the: A. buyer B. agent C. seller D. buyer and seller equally

C. seller The seller bears the risk until closing. At closing, the risk shifts to the new owner.

All of the following clauses could be included in a mortgage EXCEPT: A. defeasance B. alienation C. subrogation D. acceleration

C. subrogation

The main difference a manager would need to realize between managing a condominium and an apartment complex is that in a condominium: A. the manager would not have to maintain the common areas B. the need for swimming pool regulations would not be as great C. the people who reside there are unit owners D. the residents are still considered to be tenants

C. the people who reside there are unit owners

Broker Ricky listed and sold Martin's home. Martin told Ricky that the home was structurally sound. Ricky passed this information on to the buyers in the course of the transaction. If Ricky had no way of knowing that the information is false, who will likely be held liable if a latent defect is discovered? A. The buyer, because a buyer must inspect carefully or bear the loss B. The seller and Ricky C.The seller D. Ricky

C.The seller

Bob and Bill bought a house as tenants in common. If Bob dies, which of the following statements is CORRECT about ownership of the house? A. 50% is held by Bill and 50% goes to Bob's estate B. It automatically becomes a tenancy in severalty C. D. Bill holds a life estate ownership interest in Bob's share of the property D. Bill holds fee simple ownership in Bob's share of the house

A. 50% is held by Bill and 50% goes to Bob's estate

Clyde conveyed property to Jerry by a deed dated June 1. Jerry did not record the deed or take possession of the property. Clyde then conveyed the property to Bill who promptly recorded the deed and took possession of the property. Jerry claimed ownership based on his earlier deed. Would his claim be recognized? A. No, because Jerry did not provide constructive or actual notice of his ownership B. No because priority is given to the deed with the later date C. Yes, because Clyde's conveyance to Jerry constitutes fraud D. Yes, because priority is given to the deed with the earlier date

A. No, because Jerry did not provide constructive or actual notice of his ownership

Abigail listed Tom Jones' home under a 90-day exclusive agency listing agreement. The following week Abigail began advertising and showing the property to two couples. One week later, Jones announced that he had decided to sell the house to his nephew. After the closing, Jones is liable to Abigail's broker for: A. Nothing B. The full amount of the commission C. Any expenses incurred by Abigail or her broker D. One half of the commission

A. Nothing

Broker A designated Nate as the broker representing Gus, the seller, on a new listing. Gus agrees that Nate may be a dual agent and signs the appropriate form. During a showing by Nate, Gus recognizes the buyer as a local investor who is considered quite shrewd. Gus no longer wants Nate to be a dual agent and represent him only. Nate must: A. Notify his sponsoring broker to designate another agent to represent either the seller or buyer B. Do nothing because Gus cannot do that C. Tell the buyer that the property is no longer available for sale D. Ignore Gus and continue as a dual agent as previously agreed

A. Notify his sponsoring broker to designate another agent to represent either the seller or buyer

What is the difference between an appraisal and a comparative market analysis (CMA)? A. One is used for estimating fair market value and the other is a marketing tool B. They are the same C. One is used to determine market value and the other is for land D. One is for financing and the other is for refinancing

A. One is used for estimating fair market value and the other is a marketing tool

A hypothetical projection of income and expenses for the first full year of an investment is a strategy called: A. Pro forma modeling B. Operating estimate C. Marketability analysis D. Demographic type casting

A. Pro forma modeling

Comparable properties as included in a CMA, do NOT include: A. Recently renovated B. Recently sold C. Recently expired D. Currently for sale

A. Recently renovated

An appraiser using the market data approach to value has information on a comparable property that is similar in all respects to the subject property except that, while the subject property is 10 years old, the comparable property is 5 years old and has one bath. In this case, the appraiser should adjust the: A. Sale price of the comparable property down for the age, and up for the number of baths B. Value of the subject property up for the age and up for the number of baths C. Sale price of the comparable up for the age and down for the number of baths D. Value of the subject property down for the age and down for the number of baths

A. Sale price of the comparable property down for the age, and up for the number of baths

According to Illinois License Law, broker-owner Joan is prohibited from doing which of the following items? A. Setting up a real estate booth in the local department store, which she also owns B. Having a managing broker for her branch office C. Owning more than one branch office D. Having an additional escrow account for her branch office

A. Setting up a real estate booth in the local department store, which she also owns A real estate company cannot be located in a retail outlet without being in a separate and distinct area.

Li, an Asian American real estate licensee, was showing a young Asian couple homes in a predominately Asian neighborhood. Li told them they would be happier living among their own. Li could be guilty of; A. Steering B. Blockbusting C. Redlining D. Advocating

A. Steering

When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is called: A. Subrogation B. Caveat emptor C. Surety D. Escrow

A. Subrogation

Broker Smith has placed an ad on his Web site for a property he has listed. License law will require that the ad contain at LEAST: A. The agent's company name and the property location B. The asking price, the company name, and the street address C. The asking price and the property location D. The company name and the asking price

A. The agent's company name and the property location

Which of the following is NOT a requirement of RESPA? A. The borrower may cancel the loan transaction within 5 days after settlement B. No kickbacks may be paid to any party in connection with a loan transaction C. Lenders must provide borrowers with a good faith estimate of closing costs D. A uniform settlement form must be used at a loan closing

A. The borrower may cancel the loan transaction within 5 days after settlement

Teddy wants to buy a piece of commercial real estate and realize a return on his investment of 10%. In order to obtain this return, Teddy will closely study: A. The capitalization rate B. The Limbaugh letter C. The traffic patterns for the area D. The MLS listings for recently sold properties

A. The capitalization rate

A handicapped person asked the landlord for permission to alter the apartment. Which of the following is true regarding the costs of changing the apartment back after the termination of the lease? A. The landlord can require that it be restored as it was before the alteration B. The landlord may raise the security deposit to cover renovation costs C. The landlord can require the tenant to move out if not comfortable D. The federal government will reimburse the landlord for any renovation costs if the landlord is unable to re-rent it to another handicapped person

A. The landlord can require that it be restored as it was before the alteration

In a property management agreement, who is considered to be the principal? A. The owner B. The tenants C. The property manager D. The lender

A. The owner

Which of the following is TRUE of real estate closings in Illinois? A. The seller usually pays the expenses for the day of closing B. The buyer must reimburse the seller for any title evidence provided by the seller C. The buyer usually receives the rents for the day of closing D. Closings are generally conducted by real estate licensees

A. The seller usually pays the expenses for the day of closing

A seller called a salesperson asking the salesperson to list the seller's home for sale. The salesperson did so and submitted the listing to the MLS after the salesperson's broker approved the listing. Another Broker within the MLS cooperated with the listing broker and found a buyer for the house. Which of the following best describes the relationship of the parties involved? A. The selling broker is an agent of the listing broker B. The selling salesperson is a subagent of the listing broker C. The selling broker is a subagent of the listing salesperson D. The selling broker is a contractor of the seller

A. The selling broker is an agent of the listing broker

What is the Illinois usury ceiling for loans secured by real estate? A. There is no ceiling for such loans in Illinois B. 9.5 percent C. A fluctuating rate based upon the quarterly federal reserve rate D. 8 percent

A. There is no ceiling for such loans in Illinois

Three agents made listing proposals to a seller. The first agent did a market analysis and came up with a price of $179,000. The second agent did a market analysis and came up with a price of $181,000. The third agent did not do a market analysis and told the seller it should sell for around $198,000. The third agent did get the listing, but the property sold for $174,000. The third agent violated the duty of: A. care B. loyalty C. notice D. accounting

A. care

The right of a defaulting borrower to retain title to a property by satisfying the debt prior to the foreclosure sale is referred to as: A. equitable redemption B. statutory redemption C. trustee's sale D. remainder rights

A. equitable redemption

Landlord L hires Broker B to manage his 16 unit Illinois apartment building. Broker B must: A. keep any security deposits in B's escrow account B. turn all security deposits over to L C. keep all rent in B's escrow account D. pay interest on all security deposits

A. keep any security deposits in B's escrow account Any deposits that B holds must be put into an escrow account. Interest need not be paid unless there are 25 or more units in the complex. L could hold his own deposits, but this is not required. Rent need not be held in escrow, as long as the management agreement addresses this.

A lender had to foreclose on a property. When the lender resold the property, the lender used a quitclaim deed. The purpose of this was to: A. prohibit any future title claims against the lender B. protect the grantee who purchased the property from the lender C. prove the lender did not further encumber the title D. guarantee that the grantor wouldn't come back on the lender

A. prohibit any future title claims against the lender

A contract whereby either party is not able to sue the other party would be classified as: A. unenforceable B. void C. voidable D. enforceable

A. unenforceable

A three year old property appraised for $105,000. If it depreciated an average of 10% per year, what was the original value of the property? A. $ 31,500 B. $136,500 C. $150,000 D. $350,000

C. $150,000 $105,000 represents 70% (10% averaged over the 3 years) of the original value. $105,000 / 70% = $150,000.

Sylvester bought a commercial warehouse for $850,000 and financed 75% of the purchase price. The lender charged 2.5% discount points to provide a 3.99% interest rate. How much cash did Sylvester need to bring to the closing if he incurred no other expenses? A. $233,750.00 B. $237,936.25 C. $228,437.50 D. $225,250.00

C. $228,437.50

A property sold for $129,000 with the buyer putting 20% down. The lender charged 2 points and $750 closing costs. What was the total due from the buyer at closing? A. $ 2,814 B. $ 3,330 C. $28,614 D. $29,130

C. $28,614 Total due at closing includes down payment, points and closing costs. $129,000 X 20% = $25,800 (down). $129,000 - $25,800 (down) = $103,200 (loan). $103,200 (loan) X 2% (discount) = $2,064 (points). $25,800 (down) + $2,064 (points) + $750 (closing costs) = $28,614 (total due).

Frankie and Johnny purchase a condominium Nellie and the closing was scheduled. If the annual real estate taxes on the condominium were $3,250.00 what would be the per diem amount for the prorations of the taxes using the actual number of days method? A. $108.33 B. $9.03 C. $8.90 D. $270.83

C. $8.90

On commercial property, the IRS allows certain deductions from income for investors which allow spreading depreciation over a period of years. For this property, depreciation can be taken for: A. 27.5 years B. 50 years C. 39 years D. The first 10 years only

C. 39 years

Which of the following are principal meridians located in Illinois? A. 2nd, 3rd, and 4th B. 2nd and 3rd only C. 3rd and 4th only D. lst, 2nd, and 3rd

C. 3rd and 4th only The 3rd and 4th are located in Illinois, while the 2nd, 3rd, and 4th describe property in Illinois. The 2nd principal meridian is located in western Indiana.

Hogan Hulk's mortgage calls for equal payments of $925.00 per month which has been amortized over 15 years. The final payment, however, is due in full in 5 years. His loan is an example of: A. An open end mortgage B. An adjustable rate mortgage C. A balloon mortgage D. A Budget loan

C. A balloon mortgage

Agent Wendell met with Kelton, who is the administrator for the estate of Emily Thorn. Wendell learned that the property was the sight of a mass murder. The licensee should: A. Disclose the event to all prospective buyers B. Recommend a reduction in the listing price by at least 10% of market value C. Determine whether the event affected the physical condition of the property D. Deny to any prospective buyer that the event occurred on the property

C. Determine whether the event affected the physical condition of the property

Mrs. Grass, a senior citizen, must sell her property in order for her to be able to move to Sun City Retirement Condos. She has lived on the property for over 40 years and cannot find her deed to the property. Mrs. Grass: A. Should execute a replacement deed to herself B. Needs to file a claim against her Owner's Title Insurance Policy C. Does not need the deed to sell her home, as long as it was recorded D. Must contact her attorney to file a suit to quiet title

C. Does not need the deed to sell her home, as long as it was recorded

An Illinois real estate licensee wants to rent his own personal condo, owned in tenancy by the entireties with his wife, who is not licensed. Which statement is true regarding their advertisements? A. They must advertise under the company name B. They need to have "agent-owned", even if it is a company ad C. They need make no disclosure, as both are not agents D. They may advertise "by owner," as long as they indicate "agent-owned" in any ads

D. They may advertise "by owner," as long as they indicate "agent-owned" in any ads It is allowable to advertise "by owner," as long as they indicate "agent owned" in any ads and on any yard sign. The company name or phone number should NOT be used.

An unlicensed personal assistant is working for a team of real estate agents. The assistant's compensation is 10% of the team's gross commissions. Regarding this arrangement, which statement is TRUE? A. This arrangement is legal as long as it meets minimum wage requirements B. This arrangement is illegal unless the sponsoring broker pays the compensation C. Can you please give me a call? This arrangement is legal in Illinois D. This arrangement is illegal as unlicensed assistants cannot be paid commissions

D. This arrangement is illegal as unlicensed assistants cannot be paid commissions

Under the terms of a trust established by a will, the trustee is required to sell the real estate the trust holds. The deed that will be delivered at the time of closing is a: A. Trustor's deed B. Warranty deed C. Deed of surrender D. Trustee's deed

D. Trustee's deed

A lender is going through the foreclosure process. The lender, however, would like to resell the property as soon as possible. The lender should seek a: A. judicial foreclosure B. quick foreclosure C. power foreclosure D. deed in lieu of foreclosure

D. deed in lieu of foreclosure

An amortized note left a loan balance to be paid off at the end of the term. This would be called a(n): A. term loan B. straight note C. fully amortized note D. partially amortized note

D. partially amortized note

An agent is working with buyers wishing to purchase an older home in a deteriorating neighborhood. Both of the buyers have good incomes and are well qualified. The buyers have been turned down by three lenders for a loan on the property. The lenders may be guilty of: A. steering B. blockbusting C. price fixing D. redlining

D. redlining

In a land contract or contract for deed, the seller who retains the fee simple title is referred to as the: A. optionor B. optionee C. vendee D. vendor

D. vendor

A buyer purchased a seller's home and assumed the seller's loan. The seller does not want to remain liable for the loan. What should the seller do? A. Put in the sales contract that the seller will not be liable anymore B. Have the buyer agree to a release of liability in the sales contract C. Arrange for the title company to give a release of liability to the seller D. Arrange for the lender to give a release of liability to the seller

D. Arrange for the lender to give a release of liability to the seller

A tenant signs a three-year lease with a landlord. The landlord dies with the heirs inheriting the rental property. The heirs then sold the rental property to a new owner. The new owner would like to terminate the tenant's lease. Can the new owner do so? A. Yes, because of the death of the original landlord B. Yes, because the rental property had been sold C. No, unless the new owner gives property notice to the tenants D. No, the lease is still valid for the remainder of the term

D. No, the lease is still valid for the remainder of the term

Sally purchased her first home and wanted to be certain that the property was in good condition and would not need major repairs or work. Before proceeding any further, Sally should: A. Call her dad to take a look at the property B. Wait for the appraiser to complete his analysis of the property to see what recommendations are made C. Have the broker walk through the home with her and point out possible problems D. Order a property inspection through a licensed, certified property inspector

D. Order a property inspection through a licensed, certified property inspector

At closing for the sale of a new home the lender requires the buyer to place a sum of money into an escrow account. The purpose of this money is most likely for: A. Loan processing fees B. Title insurance fees C. Discount fees D. Payment of future real estate taxes and/or property insurance

D. Payment of future real estate taxes and/or property insurance

A person who assumes an existing mortgage is: A. Not in danger of losing his/her property if a default occurs B. Generally released from liability, but not always C. Not personally liable for the debt D. Personally liable for the debt

D. Personally liable for the debt

Which action will NOT violate Illinois license law? A. Standing in the hallway of a testing center and offering employment to new licensees as they receive their passing score B. Encouraging a seller to reject an offer because the prospective buyer is a Methodist C. Advertising that individuals who attend a promotional open house will receive a prize without mentioning that they will also have to take a day trip to a new subdivision site D. Placing a for sale sign in the front of a house after asking and receiving the seller's written permission

D. Placing a for sale sign in the front of a house after asking and receiving the seller's written permission

A couple purchased a house for $350,000, making a down payment of $100,000. The buyer is to get a new mortgage of $230,000 from a lender and finance the remaining $20,000 through a mortgage given to them by the seller. The $20,000 mortgage is called a(n): A. Blanket mortgage B. Wraparound mortgage C. Balloon mortgage D. Purchase money mortgage

D. Purchase money mortgage

An FHA mortgage loan is obtained through which of the following: A. The Federal Deposit Insurance Corporation B. Any governmental agency C. The federal housing authority D. Qualified lending institutions

D. Qualified lending institutions

Which of the following activities is allowable under RESPA guidelines? A. Loan officer gives a $25.00 gift certificate to real estate agents for every referral B. Home inspector gives real estate agents tickets to local baseball games C. Title company pays the licensee's continuing education tuition D. Real estate agent is paid $20.00 to hand deliver documents for a closing for the title company

D. Real estate agent is paid $20.00 to hand deliver documents for a closing for the title company

Which of the following would NOT be a valid way for an agent to take a listing? A. Receiving a percentage of the sale price as a commission B. Receiving a flat fee C. Receiving money for fixed expenses in addition to a normal commission D. Receiving as commission anything obtained in sales price over a certain amount for the seller

D. Receiving as commission anything obtained in sales price over a certain amount for the seller

What does a standard title insurance policy cover? A. Questions of survey B. Rights of parties in possession C. Unrecorded liens D. Recorded title defects and liens

D. Recorded title defects and liens

Which of the following would a buyer's agent be required to disclose to his/her client? A. Seller's mortgage balance and monthly payment B. The asking price of other homes in the neighborhood C. The original cost of the property D. That the property is located in a flood plain zone

D. That the property is located in a flood plain zone

A buyer obtained a $50,000 loan with a 9% interest rate. The loan was amortized over 30 years with a monthly payment of $403. Which of the following statements is true? A. The total amount of interest paid over the term was $145,080 B. The total amount of interest paid over the term was $135,650 C. The amount of principal in the first month's payment was $129.00 D. The amount of principal in the first month's payment was $28.00

D. The amount of principal in the first month's payment was $28.00 $403 (P & I per month) X 12 months (per year) X 30 years = $145,080 (total P&I paid over the 30 years) - $50,000 (principal) = $95,080 interest paid over the term of the loan (so A & B are both wrong). $50,000 X 9% = $4,500 (interest per year) / 12 months = $375 (interest the first month); $403 (P&I) - $375 (int.) = $28 principal paid the first month.

A sponsoring broker placed the following order with the telephone company. "List my name in the phone directory under the heading "Real Estate". The broker must also include: A. License number B. Expiration date of broker's license C. Street address D. The company name

D. The company name

Pat owns a house in a modestly priced neighborhood of homes which are primarily 2-bedroom slab ranches. Pat decides to add a second-floor addition with 3 bedrooms and 2 baths. When Pat attempts to sell her property, the improvements may be affected by: A. The law of increasing returns B. Supply C. Anticipation D. The law of decreasing returns

D. The law of decreasing returns

In which of the following cases might a broker still be owed a commission on an unexpired listing? A. Destruction of property B. Death of the seller C. Foreclosure on the property D. The principal terminates the listing agreement

D. The principal terminates the listing agreement

Under the fiduciary duty of obedience, a licensee must: A. Follow the legal instructions of the principal B. Put the principal's interests above all other's C. Prevent negligence and incompetence in the representation of the client D. Keep confidential information confidential

A. Follow the legal instructions of the principal

In a real estate settlement, the recording charges the buyer usually pays for is a: A. Mortgage B. Release deed C. Release of a mechanic's lien D. Satisfaction of mortgage

A. Mortgage

Which is a voluntary lien against a person's property? A. Mortgage lien B. Mechanic's lien C. Judgment lien D. Property tax

A. Mortgage lien

A high vacancy rate may be due to: A. Inept management B. Non-licensed property managers C. Under market rent rates D. Gasoline prices

A. Inept management

Managing broker, A holds his monthly sales meeting in the office with all sales staff attending. During the meeting agents are able to promote their current properties for sale, or seek other properties that may be available for their current buyer prospects. Mike, a listing agent, stands and announces that his listing on Lime Road has been on the market for 97 days and has taken several offers that were not acceptable. He tells the group that the owner is now desperate because he has lost his job and cannot make the mortgage payments. Seller will now entertain any reasonable offer above the outstanding mortgage balance. Mike has: A. Has given legal advice to the staff B. Always presented his listings this way C. Done a great job in attempting to sell his client's property D. Violated his responsibility of confidentiality unless he has written approval from the client

D. Violated his responsibility of confidentiality unless he has written approval from the client

In a contract for deed, when does the buyer receive the deed to the property? A. When the contract is signed B. When the deed is recorded C. When the contract is recorded D. When the payment obligation is paid in

D. When the payment obligation is paid in

When does a sales contract become legally binding for the buyer? A. When the offer is made initially B. When the offer is presented to the seller C. When the offer is accepted by the seller D. When the seller's acceptance is communicated back to the buyer

D. When the seller's acceptance is communicated back to the buyer

The Americans With Disabilities Act (ADA) would NOT apply to a(n): A. office building B. real estate school C. commercial building D. church

D. church

A buyer wanted to purchase a property from a seller and assume the FHA loan on the property. The buyer, however, did not have enough money to assume the loan and make the down payment on the property. The buyer agreed to make equal monthly payments to the seller for one year for the down payment. This type of financing would be called a: A. shared appreciation mortgage B. package mortgage C. reverse annuity mortgage D. contract for deed

D. contract for deed

A mortgage contingency usually includes all of the following items EXCEPT: A. the amount of the mortgage B. commitment date C. maximum interest rate D. name of the lending institution

D. name of the lending institution

Mr. Smith sells his Illinois home for $151,050. He will be required to pay how much in Illinois transfer taxes? A. $ 227.25 B. $ 226.58 C. $ 454.50 D. $ 453.16

A. $ 227.25 Illinois transfer tax is $.75 per $500 of sales price, or portion thereof and is paid by the seller. $.50 goes to the state and $.25 is retained by the county where the property is located. $151,050 divided by $500 = 302.10. In this case, the .10 indicates we have a portion of the next $500 of sales price in addition to the 302 number. As the tax is $.75 per $500 of price, 303 times $.75 = $227.25 for transfer taxes.

A buyer was considering purchasing a house that contained 1,500 square feet. Based on the comparable houses that had sold in the area, houses were selling for $70 per square foot. The agent told the buyer, however, that the house needed painting which would cost $3,000 and new shingles which would cost $5,000. What price should the buyer offer for the house? A. $ 97,000 B. $105,000 C. $113,000 D. $118,000

A. $ 97,000 1,500 square feet times $70 per square foot equals $105,000. $105,000 minus the $3,000 for the painting and the $5,000 for the shingles means the buyer would offer $97,000.

A sale is to be closed on March 23, 2012. The 2010 tax amounted to $2,893 and was paid in 2011. How much must the seller credit to the buyer for prorated taxes? A. $3,560.00 B. $667.00 C. $1,447.00 D. $2,893.00

A. $3,560.00

An appraiser evaluating a subject property discovers that comparable properties are selling at the rate of $27.00 per square foot plus $8,500 for the lot. If the subject property has building dimensions of 22 feet by 48 feet and is 2 stories high, the appraiser's estimate of value is approximately: A. $65,500 B. $37,000 C. $28,500 D. $28,000

A. $65,500

A buyer bought a property for $60,000 which had an appraisal of $58,000. If the lender charged 1 1/2 discount points, with the borrower receiving a 90% loan, how much were the points? A. $783 B. $900 C. $1,200 D. $1,435

A. $783 A lender makes a loan on the lower of sale price or appraisal. Discount points are computed based upon the actual loan amount. In this case, the lower of the two figures is $58,000 x 90% = $52,200 for the loan x 1.5% = $783 for the discount points.

The previous year's taxes on Steve Seller's home were paid in full on December 31 and amounted to $2,753.00. Steve sold his home to Bill buyer and closed the sale on May 4. What was the prorated tax amount using a regular calendar year and prorating through the day of closing? A. $935.27 credit to the buyer B. $948.26 credit to the buyer C. $935.27 credit to the seller D. $948.25 credit to the seller

A. $935.27 credit to the buyer

During an interview, Zohan tells the agent that he has been looking for a home since he transferred into town a month ago and really likes the subdivision that the home is in. He tells that agent that he has seen 4 other homes in the neighborhood with broker A. He then tells the agent that he is qualified for a $200,000 mortgage and has $50,000 to put on deposit. What must the agent do? A. Advise Zohan that they have now created an agency relationship and ask if he has signed a representation agreement with broker A B. Tell the listing agent that he has a buyer with $50,000 down C. Tell Zohan that he cannot show him that home because he is Russian D. Thank Zohan for the call and tell his manager that Zohan already has an agent

A. Advise Zohan that they have now created an agency relationship and ask if he has signed a representation agreement with broker A

Roman owns a farm on a section of real estate located next to a very high-end subdivision. He has just sold the property to a developer who intends to build a golf course community. The owners of the existing high end homes nearby could expect an increase in overall value in the area due to the concept of: A. Anticipation B. Law of decreasing returns C. Contribution D. Over development

A. Anticipation

When is a purchaser said to have an "equitable title? A. At the signing of the sales contract by both buyer and seller B. When transference occurs C. When the purchaser gives earnest money D. When the offer is submitted to the seller

A. At the signing of the sales contract by both buyer and seller

When determining gross living area, which of the following is NOT counted: A. Basement bedroom B. Bedroom C. Living room D. First floor family room

A. Basement bedroom

A developer received a loan covering 5 parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This type of loan arrangement is called a(n): A. Blanket mortgage B. Wraparound mortgage C. Purchase money mortgage D. Package mortgage

A. Blanket mortgage

A seller lists with Broker X. Broker Y sells the property. To whom does the seller owe a commission? A. Broker X B. Broker Y C. Broker X and Broker Y's salesperson D. Broker X and Broker Y

A. Broker X

A metes and bounds legal description must: A. Commence and finish at the same identifiable point B. Cover an area larger than 10 acres C. Be used in areas not included in the rectangular survey system D. Always use north as the basis for directions

A. Commence and finish at the same identifiable point

Smith and Weston entered into a contract to purchase Colt's home. At the closing the earnest deposited by Smith and Weston appears as a: A. Credit to the buyer B. Debit to the seller C. Credit to the seller D. Debit to the buyer

A. Credit to the buyer

How would prepaid taxes, with a midyear closing, show up on a closing statement? A. Debit buyer, credit seller B. Debit seller, credit buyer C. Credit seller only D. Debit buyer only

A. Debit buyer, credit seller

The principal balance on an assumed mortgage loan paid in arrears is entered on a closing statement as a: A. Debit to the seller and credit to the buyer B. Credit to both seller and buyer C. Credit to the seller and debit to the buyer D. Debit to both seller and buyer

A. Debit to the seller and credit to the buyer

Which of the following is NOT part of the written evidences of dual agency disclosure? A. Disclosure of the broker's cooperation and compensation policy B. Disclosure of consent and confirmation of dual agency at the time of contract C. Notification of the possibility of dual agency with the buyer D. Notification of the possibility of dual agency with the seller

A. Disclosure of the broker's cooperation and compensation policy

Which of the following is NOT a responsibility of a property manager? A. Doing annual formal appraisals of the property's current value B. Purchasing supplies and services C. Being aware of environmental issues D. Negotiating with unions or other labor-based organizations

A. Doing annual formal appraisals of the property's current value

What type of interest does the buyer receive in the property after the seller accepts the offer? A. Equitable B. Easement C. Record D. Equity

A. Equitable

Len owns a multi-unit apartment complex which he has for sale. Jason has made an offer on the property and is doing his due diligence to protect his potential investment. Jason would be wise to have all the tenants acknowledge their obligations under their leases by signing a(n): A. Estoppel certificate B. New lease C. Subordination agreement D. Right of first refusal

A. Estoppel certificate

John Chance owns a real estate company and is the sponsoring broker with 50 agents, 4 staff members and several licensed and unlicensed personal assistants. Who is the sponsoring broker required to train? A. Everyone B. Unlicensed assistants C. Office staff D. Licensed assistants

A. Everyone

Bud wants to sell his retail center and purchase another larger center across town, but cannot do so without disposing of his current retail center. With the poor real estate market and sales being sluggish, he can't wait too long and risk losing the other property. His REALTOR suggested that he look closely at an opportunity to do business by: A. Exchanging his property under The Internal Revenue Code 1031 B. Abandoning his property and let the bank take it back C. Dropping his price immediately well below market in order to attract interest D. Raise the commission rate so other brokers will take an immediate interest

A. Exchanging his property under The Internal Revenue Code 1031

A real estate agent is limited to: A. Filling in the blanks of a pre-printed contract B. forms with factual information Sending the client to their attorney to draft all offers to purchase C. Not being allowed to use standard forms and documents D. Preparing and drafting all the language in a real estate contract to purchase

A. Filling in the blanks of a pre-printed contract

Rick walked into a real estate office and talked with the sales agent about the purchase of a home in the Bric-A-Brac subdivision. Rick discussed his needs, his financial ability, and motivation with the agent. Unless otherwise agreed in writing, the sales agent: A. Will automatically be Rick's general agent B. Will be named the designated agent by the managing broker C. Must obtain a written agreement with Rick D. Cannot show Rick any of his own listings

B. Will be named the designated agent by the managing broker

After the closing of a property, the buyer found out that agent was the beneficial interest in the trust that owned the building. The agent now: A. Has put his license in jeopardy because it is a violation of the license act in Illinois to be a dual agent on a property in which a licensee has an ownership interest, and the interest must be disclosed B. Can spend his money from the sale as he sees fit C. Has no problem because the buyer has moved into the building and has improved it D. Can invite the buyer to his annual customer appreciation luncheon

A. Has put his license in jeopardy because it is a violation of the license act in Illinois to be a dual agent on a property in which a licensee has an ownership interest, and the interest must be disclosed

James is building a new office complex containing 50,000 square feet. He is providing for a common lobby, elevators, restrooms and stairways of 8,000 sf, and a 2,000-sf atrium which will service the building tenants. The balance of the building will be divided in to quality office spaces of 10,000 square feet each. If Jordan leases one of the offices, her rent will include: A. Her actual office space plus her 25% share of the common areas B. Her actual office space plus all the common areas that she is responsible for C. Her actual office space less the common areas that she is not responsible for C. Her actual office space

A. Her actual office space plus her 25% share of the common areas

Broker Bob listed a home in an exclusive, high priced area of large impressive homes. After a strong marketing campaign and several months of diligent hard work, Bob was able to procure a buyer for the home and finalized the sale. Just prior to the closing, the buyer found out that the seller of the home has AIDS and has started an action to cancel the purchase. The seller has refused to cancel the sale and the buyer has filed a lawsuit against Bob for failing to disclose the seller's condition. A. Illinois law provides that no action can be taken against Bob for not disclosing the seller's condition B. Bob is in serious legal trouble for withholding material information from his buyer C. Bob has breached his fiduciary duty to the buyer D. Bob has violated the good sense clause of his listing agreement

A. Illinois law provides that no action can be taken against Bob for not disclosing the seller's condition

A potential buyer walks into an open house hosted by the licensee who also owns the home. The licensee should tell the buyer: A. Immediately of the licensee's ownership interest B. Of the licensee's ownership if asked by the buyer C. That the owner is flexible on the price D. That the licensee is prohibited from personally selling the home to the buyer

A. Immediately of the licensee's ownership interest

If a salesperson showed several houses to a buyer and told the buyer one home in particular was the best buy, what type of agency might have been created? A. Implied B. Expressed C. General D. Universal

A. Implied

Listing broker, Herb Smiley has successfully concluded negotiations for the sale of his listing on Main Street. The seller and buyer have a meeting of the minds and the contract has been signed by both parties. The buyer has applied for his mortgage loan and things are moving forward. Today, Herb got a call from Betsy Lou, a buyer's agent for the Abdul's, and she has written an offer to purchase Herb's listing. Herb advised Betsy Lou that the house is under contract and off the market. Betsy Lou insists an opportunity to present her contract to Herb's seller. Herb must: A. In absence to the contrary in writing from the seller, allow Betsy Lou to present the offer to the seller B. Tell Betsy Lou that the home is unavailable and the seller is satisfied C. Decline to present the offer because the house is sold D. Tell the seller about the contract but advise them not to entertain it

A. In absence to the contrary in writing from the seller, allow Betsy Lou to present the offer to the seller

Tenant, Joe and his wife had a party in their apartment. During the party, a fight broke out and a chair was thrown through their picture window, obviously shattering it. Since the weather was cold and snowy, Joe notified the landlord that the window was broken and needed to be repaired. The landlord ignored the notice and Joe paid to repair the window and sent the bill to the landlord. The landlord: A. Is not obligated to compensate Joe for the window since the damage was caused by Joe's negligence and an act by Joe's guests B. Will send Joe an eviction notice for negligence C. Is obligated to reimburse Joe because it is the landlord's responsibility to see that apartments are safe and secure D. Is obligated to reimburse Joe for the window because he did not respond within the 14 day required period

A. Is not obligated to compensate Joe for the window since the damage was caused by Joe's negligence and an act by Joe's guests

A subordination clause in a mortgage does which of the following? A. It changes the priority of the mortgages B. It cancels the mortgage after the final payment C. It prevents the loan from being assumed D. It calls the loan due and payable upon nonpayment

A. It changes the priority of the mortgages

Broker Jack and buyer Ella enter into an exclusive agency buyer agency representation agreement. This means: A. Jack is entitled to payment only if he, or any broker acting under his authority, locates the property Ella ultimately buys B. Ella is obligated to pay Jack regardless of who locates the property she ultimately buys C. If Ella finds the property without Jack's help she must pay a reduced commission D. Ella is free to enter similar agreements with other brokers

A. Jack is entitled to payment only if he, or any broker acting under his authority, locates the property Ella ultimately buys

Dick and Harry are co-owners of a fee simple estate in a parcel of real estate. Harry dies without heirs or a will. Dick is not related to Harry, nor is he a creditor of Harry. If Dick receives Harry's interest, they must have been: A. Joint tenants B. Tenants in common C. Tenants by the entireties D. Life tenants

A. Joint tenants

On July l, a contractor started work. On August l5, the work was completed. The general contractor was paid but the material vendor was not. On Oct. l, the material vendor filed a mechanic's lien. What is the effective date for the mechanic's lien? A. July l B. Aug. l5 C. Oct. l D. A material vendor cannot file a mechanic's lien

A. July l

Which of the following is NOT a term used for one who may acquire title to real estate? A. Lessee B. Grantee C. Devisee D. Legatee

A. Lessee

A listing broker, in an effort to obtain a listing, tells a property owner that the owner's home is located in a racially changing neighborhood. This is: A. steering B. blockbusting C. information that should be put in writing for the seller's benefit D. information the seller should factor in regarding the list price

B. blockbusting

The payment on a graduated payment mortgage usually has gradual increases: A. and then returns to the original low payment for the remainder of the term B. over the term of the loan C. and then levels out for the remainder of the term D. as the index increases over the remainder of the term

C. and then levels out for the remainder of the term

Kevin listed a commercial property and the seller agreed to the placement of a sign. After the expiration of the listing the seller told Kevin that he did not wish to re-list the property, but would allow Kevin to leave the sign up as long as he wanted. Kevin: A. Knows it is illegal to leave a sign on a property you do not have listed B. Must get the seller to agree in writing to leave the sign on the property C. Can rely on the verbal approval by the seller D. Does not have to do anything since the previous listing agreement already gave permission

B. Must get the seller to agree in writing to leave the sign on the property

The process by which expenses are handled at the settlement of a real estate transaction so that both the buyer and the seller pay their respective portions of the debts is called: A. Assessment B. Proration C. Balancing D. Reconciliation

B. Proration

Which of the following would not be an expectation of an investor to preserve their capital and realize a return on investment? A. Build equity through leverage and appreciation B. Purchase and flip the property C. Create a tax shelter D. Receive a continued income stream

B. Purchase and flip the property

Which of the following deeds would give the seller the LEAST amount of liability? A. Bargain and sale B. Quitclaim C. Special warranty D. General warranty

B. Quitclaim

The type of mortgage that may provide the borrower with a monthly check instead of the borrower making a monthly payment is known as a(n): A. Graduated payment mortgage B. Reverse mortgage C. Blanket mortgage D. Interest only mortgage

B. Reverse mortgage

Mary owns a commercial building in a prime location in the middle of town. She loves her location and does a good business. Lately, she has been in need of some additional capital to expand her business but does not want to leave her current location. Mary should: A. Go to the bank and leverage her property to maximize her indebtedness B. Sell the building and take a leaseback to free up liquid assets for reinvestment in her business C. Increase her current inventory to create enough supplies to last longer D. Sublease half of her current storage space to a local vendor

B. Sell the building and take a leaseback to free up liquid assets for reinvestment in her business

Mr. Williams obtained a conventional mortgage for the purchase of his home. The interest he will pay over the life of the loan is generally considered to be A. Prepaid interest B. Simple interest C. Compound interest D. Discounted interest

B. Simple interest

Commercial real estate professionals should always be sure to: A. Never analyze the cash flow data or prepare pro formas for clients because it is practicing accounting B. Stay current and up to date on the local marketplace, available properties and the law C. Wait for investors to pick their preferred property D. Give sound legal and tax advice to their commercial client

B. Stay current and up to date on the local marketplace, available properties and the law

A loan that provides for increases and decreases in the interest rate during the term of the mortgage is known as a(n): A. Reverse annuity mortgage B. A graduated payment mortgage C. An equity sharing mortgage D. An adjustable rate mortgage

D. An adjustable rate mortgage

A listing agent is showing the listed property to a prospective buyer. The buyer tells the listing agent that a favorable zoning is coming with regard to the listed property. What should the listing agent do? A. Call the broker for help B. Tell the seller because of the fiduciary obligation to the seller C. Don't tell the seller as this violated confidentiality to the buyer D. Don't tell anyone as the buyer could sue the agent for damages if the information was disclosed

B. Tell the seller because of the fiduciary obligation to the seller

An exclusive right to sell listing is BEST described as: A. An executory unilateral contract B. An executed bilateral contract C. An executed express contract D. An executory bilateral contract

D. An executory bilateral contract

An offer to purchase contract was contingent upon the buyer receiving a loan. The buyer was not able to obtain financing. The buyer informed both the seller and the broker of the loan denial. Which of the following statements is true? A. The broker must pay cash for the property B. The broker must return the earnest money to the buyer C. The seller may have cause to sue the buyer for specific performance D. The seller may keep the earnest money as a form of liquidated damages

B. The broker must return the earnest money to the buyer

Which of the following statements is true regarding security for a debt? A. The note secures the mortgage B. The mortgage secures the note C. The warranty deed secures the note D. The note secures the warranty deed

B. The mortgage secures the note

A mortgagor has just made her final payment to the mortgagee. Which of the following would MOST LIKELY occur? A. The mortgagee would give the mortgagor a mortgage estoppel B. The mortgagee would give the mortgagor a satisfaction of mortgage C. The mortgagor would give the mortgagee a deed of trust D. The mortgagor would give the mortgagee a release deed

B. The mortgagee would give the mortgagor a satisfaction of mortgage

Catherine told her friend Ida that she wanted to be represented as a buyer when she started looking for a new lease space for her business and if Ida wanted to be her agent she would pay her $10,000. A week later Catherine leased a retail space through Betty. Ida sued Catherine for the $10,000 but lost, because: A. Catherine never signed an exclusive buyer agency agreement B. The promise of compensation does not in itself create an agency relationship C. Ida never agreed that she would represent Catherine D. Ida never followed up

B. The promise of compensation does not in itself create an agency relationship

In the business of real estate and the representation of consumers, customers, and clients, our job is finally done when: A. The listing is taken B. The property is closed C. The financing is procured D. The contract is written

B. The property is closed

Which statement would be true regarding a deed? A. A deed must be signed by the grantor and grantee B. The purpose of a deed is to convey title C. The grantee must be of legal age D. Acknowledgment and recording of a deed are required

B. The purpose of a deed is to convey title

Which of the following is NOT a right to control one's own property?. A. The right to invite people on the property for a political rally B. The right to exclude the utilities meter reader C. The right to erect "no trespassing" signs D. The right to enjoy pride of ownership

B. The right to exclude the utilities meter reader

Sales agent, Lyn, is selling her own home through her sponsoring brokerage firm so she can receive a commission when the property sells. In this instance, all prospective buyers must be informed in writing that: A. Lyn will receive a 3% commission B. The seller is a licensed real estate broker C. The sponsoring broker disclaims any liability due to acts or statement of Lyn D. Lyn is behind 3 mortgage payments and the bank is threatening foreclosure

B. The seller is a licensed real estate broker

Which of the following is NOT a characteristic of an arm's length transaction? A. Neither party is acting under duress B. The seller is offering financing concessions C. The buyer and seller are not related D. Each party acts in their own best interest

B. The seller is offering financing concessions

When the costs of maintenance and rents are increasing, a fixed lease arrangement for a long term is advantageous to: A. The landlord B. The tenant C. Neither the landlord nor the tenant D. Both the landlord and tenant

B. The tenant

Which of the following ways to advertise loan terms is legal? A. Payments only $499 per month B. This mortgage is assumable C. Only $1,000 down D. Interest rate is only 4.9%

B. This mortgage is assumable

A for-sale-by-owner lists a property with a broker. The broker puts the listing in the multiple listing service. The seller continues to advertise the property themselves. The seller then finds a buyer for their own property but still owes a commission to the broker. This must have been a(n): A. exclusive agency listing B. exclusive right to sell listing C. open listing D. net listing

B. exclusive right to sell listing

An escrow or impound account for the lender is for holding: A. title insurance payments B. prepaid taxes and insurance C. discount point payments D. mortgage payments

B. prepaid taxes and insurance

A legal description included Range 2 East and Tier 1 North of a principal meridian. This is an example of a: A. metes and bounds description B. rectangular survey system description C. lot and block description D. geodetic survey system description

B. rectangular survey system description

Which of the following is NOT a responsibility of an agent when the agent is representing the buyer in a real estate transaction? A. To suggest the minimum amount of earnest money deposit to be made B. To show properties that protect the broker's commissions and select the best time to show properties C. To be fair and honest with the seller but safeguard the buyer's best interest under all circumstances D. To require the seller to provide a signed property condition report and confirm the condition of the property

B. To show properties that protect the broker's commissions and select the best time to show properties

Radon poses the greatest potential health risk to humans when it is: A. Emitted by malfunctioning or inadequately ventilated appliances B. Trapped and concentrated in an inadequately ventilated area C. Contained in insulation material used in residential properties during the 1970's D. Found in high concentrations in unimproved vacant land

B. Trapped and concentrated in an inadequately ventilated area

A property manager may NOT receive income for his or her services by way of: A. A fixed fee B. Weekend get-a-way provided by a supplier C. A percentage of the gross rent collected D. A percentage of the net income

B. Weekend get-a-way provided by a supplier

A buyer obtained a $60,000 loan at 11% interest for 30 years, with monthly principal and interest payments of $571.39. What was the total amount of interest paid over the 30 year term? A. $ 60,000 B. $145,700 C. $198,000 D. $205,702

B. $145,700 $571.39 (P&I/mo) X 12 months X 30 years = $205,700.40 (P&I paid over 30 years); $205,700.40 (P&I) - $60,000 (principal paid back) = $145,700.40 (interest paid)

A portion of the equity in a principal residence is protected from unsecured creditors in Illinois. This so called "homestead exemption" is: (rev 306) A. $7,500 per owner B. $15,000 per owner C. $ 5,000 per occupant D. $ 3,500 per occupant

B. $15,000 per owner This law was revised in Illinois in 2006 to $15,000 per owner (previously $7,500). Note that this is protection only from unsecured creditors, and would not include secured debt such as mortgages and real estate taxes.

A licensee lists a 30 acre property for $10,000,000. The seller originally paid $5.50 per square foot for the property. How much per square foot has the property increased in value? A. $1.65 B. $2.15 C. $7.65 D. $9.15

B. $2.15 30 acres X 43,560 sq. ft. per acre = 1,306,800 sq. ft. of land. 1,306,800 sq. ft. X $5.50 = $7,187,400 (original price of land). $10,000,000 (today`s price) - $7,187,400 (original price) = $2,812,600. $2,812,600 / 1,306,800 sq. ft. = $2.15 increase.

Carpeting costs were $19.95 per square yard plus an extra $5.00 per square yard for padding. If a room measured 22.5' by 15', what would be the total cost to install the carpet? A. $748.13 B. $935.63 C. $956.75 D. $998.99

B. $935.63

How long does a person have who has been discriminated against to file a complaint with the Department of Housing and Urban Development (HUD)? A. 6 months B. 1 year C. 2 years D. 3 years

B. 1 year

The Schaefer's have been living in their condominium at the shore for the past 5 years and leasing their home in the city to a tenant. When they sell the home, how much capital gain will be taxable? A. They are exempt from paying capital gains tax up to $500,000 profit B. 100 percent C. 0 percent D. 40 percent

B. 100 percent

Under Truth in Lending Act (Regulation Z), a lender is required to provide an applicant for a real estate loan with a copy of a(n): A. An amortization schedule B. A disclosure statement C. A closing statement D. Deed

B. A disclosure statement

An instrument used to change the priority of a creditor's lien from a second or junior lien to a first lien is called: A. A court order B. A subordination agreement C. Recording a lien before the first mortgage lien was D. A satisfaction of the first mortgage loan

B. A subordination agreement

Which of the following would be exempt under the Federal Fair Housing Law of 1968? A. An owner of an 8 unit apartment building who lives in one of the units B. An individual selling a personal residence who does NOT discriminate in advertising C. A private club that was an annex of a commercial motel D. A religious group that discriminated only on the basis of national origin

B. An individual selling a personal residence who does NOT discriminate in advertising

A budget created to project the income and expenses for a property over a one-year period is called: A. A stabilized budget B. An operating budget C. A projected budget D. An anticipated budget

B. An operating budget

The term reconciliation refers to: A. The process by which appraisers determine the highest and best use for a parcel of real estate B. Analyzing the results of the three approaches to value to establish a final estimate C. Loss of value to multiple causes D. Separating values of the land from the total value of the property to compute depreciation

B. Analyzing the results of the three approaches to value to establish a final estimate

If a buyer of a vacant lot builds a house that violates restrictions in his or her deed, the buyer may: A. Be required to pay cash damages B. Be sued and may be required to alter his or her house to conform with the restrictions C. Do so anyway D. Forfeit his or her title

B. Be sued and may be required to alter his or her house to conform with the restrictions

A salesperson included a protective period clause in a listing agreement with a seller. To protect the salesperson under this clause, what must the salesperson do? A. Verbally tell the seller about any interested buyers B. Before listing expires, give a list of all buyers who have seen the property to the seller C. Before listing expires, give a list of all buyers who have seen the property to the broker D. See an attorney close to the expiration date of the listing

B. Before listing expires, give a list of all buyers who have seen the property to the seller

Adam owns a large parcel of land accessible only by a navigable river. He sells the narrow strip of land that is on the river bank to Eve's Canoe Club. In order for Adam to gain access to his remaining land from the river, he must claim by implication an easement: A. In gross B. By necessity C. By restriction D. By prescription

B. By necessity

A purchase agreement was accepted with earnest money given as part of the contract. The broker deposited the earnest money in the broker's escrow account. How would the earnest money appear on the closing statement? A. Debit buyer, no entry for seller B. Credit buyer, no entry for seller C. Debit buyer and credit seller D. Credit seller, no entry for the buyer

B. Credit buyer, no entry for seller

A homeowner who always maintains his house has just discovered that there is an infestation of termites. This is an example of: A. Curable economic obsolescence B. Curable physical obsolescence C. Incurable internal obsolescence D. Incurable physical obsolescence

B. Curable physical obsolescence

Which of the following BEST defines physical depreciation? A. External obsolescence caused by any outside factor B. Deterioration caused by the age of the building C. Functional obsolescence caused by poor design D. A second-floor addition constructed in 2000

B. Deterioration caused by the age of the building

Albert purchased a commercial office building and analyzed all of the income that came from rents, vending machines, outside cash flows to the building, and all other forms of income in order to evaluate his: A. Long term indebtedness B. Gross income or revenue C. Risk assessment D. Net income or revenue

B. Gross income or revenue

When must a Residential Real Property Condition Disclosure Report form be completed? A. When an appraiser provides the estimate of value for the lender B. When the property is listed for sale C. When the buyer submits an offer to purchase D. When the lender evaluates the transaction to secure a loan

B. When the property is listed for sale

- A listing agent is showing property to a prospective buyer. The listing agent should disclose to the buyer that the agent: A. represents both the seller and buyer B. represents the seller only C. represents neither the seller nor the buyer D. is merely a consultant for both par

B. represents the seller only

Terry, the landlord of a 6-unit apartment building in which he lives in one of the units, has had continual arguments with his latest tenant. In frustration, Terry told the tenant to get out and changed the locks on the apartment. Terry can do this because: A. All tenants have the right of quiet enjoyment B. He cannot do this because it is illegal and must go through a legal process to evict a tenant C. He lives in the building and can regulate the actions of his tenant D. The tenant was told in the beginning what the rules of occupancy were

B. He cannot do this because it is illegal and must go through a legal process to evict a tenant

Landlord Dave has a policy that although he welcomes families with children into his apartment building, they cannot rent apartments above the first floor. Dave: A. Can keep his rents low due to his policy B. May be in violation of fair housing laws involving familial status C. Should soundproof his units D. Is within his rights to protect tenants from unnecessary noise

B. May be in violation of fair housing laws involving familial status

Time share ownership would be most evidenced by: A. joint tenancy B. tenancy in common C. tenancy in the entireties D. cooperative ownership

B. tenancy in common

A $55,000 mortgage and note are given by the buyer to the seller. The seller keeps the underlying $35,000 VA mortgage on the property. This is called a(n): A. reverse annuity mortgage B. wraparound mortgage C. equity mortgage D. land contract

B. wraparound mortgage

As buyer George is being shown a property in which he is interested, he immediately noticed water dripping from the ceiling below an upstairs bathroom. Upon inspection of the bathroom, George can clearly see that the toilet has been leaking and the surrounding floor is severely rotted. What is the basic rule regarding the disclosure of such a defect? A. A defect such as this is considered a latent defect and must be disclosed if the seller is aware of it B. Disclosure of defects is the responsibility of the seller, not the agent C. A defect such as this is considered a patent defect and is clearly visible to the buyer and, as such is considered sufficient disclosure D. Regardless of whether a defect is patent or latent, having an "as is" clause in a sales contract will protect the seller

C. A defect such as this is considered a patent defect and is clearly visible to the buyer and, as such is considered sufficient disclosure

A property was sold by a foreclosure sale. The sale did not produce enough money to satisfy all the debts on the property. What could the creditors who weren't paid now file? A. A deed in lieu of foreclosure B. An estoppel certificate C. A deficiency judgment D. A blanket mortgage

C. A deficiency judgment

Which of the following is NOT considered a definition of a lease? A. A binding obligation on each party B. A contract C. A freehold estate D. The right to use the property of another

C. A freehold estate

Which of the following is an example of external obsolescence? A. A house with 4 bedrooms located on the second floor and the bathroom on the first floor B. A house where you must get to a third bedroom by going through the kitchen C. A hog farm located ½ mile from a $500,000 home D. A house costing $50,000 to build in 1970 with major cracks in the foundation

C. A hog farm located ½ mile from a $500,000 home

Sullivan rented an apartment in his building to Marty who just got transferred to California. Marty signed a one-year lease with Sullivan 3 months ago. Sullivan agreed that if Marty could find another tenant to occupy the space after Marty leaves, he would allow the new tenant to be substituted for Marty under the terms of a new lease. This practice is: A. Illegal B. A sublet C. A novation D. An alienation

C. A novation

A loan for which of the following transactions would be covered under Regulation Z? A. A commercial restaurant purchased for $985,000 B. Buying three condominiums in a resort area C. A residential home purchased with a loan of $185,000 D. Purchasing an airplane for $5 million for a corporation

C. A residential home purchased with a loan of $185,000

Which of the following would be an example of an impossibility of performance regarding a sales contract? A. A buyer could not qualify for a loan B. A seller died after signing the sales contract but before closing C. A seller had signed the contract without the consent and knowledge of the other owners who were joint tenants D. The property was destroyed by fire after the signing of the contract but before closing

C. A seller had signed the contract without the consent and knowledge of the other owners who were joint tenants

The clause in a trust deed or mortgage that permits the mortgagee to declare the entire unpaid sum due on a default by the mortgagor is called: A. An escalation clause B. An alienation clause C. An acceleration clause D. A forfeiture clause

C. An acceleration clause

Anwar, an Illinois resident, dies intestate leaving his wife, two sons, and two daughters. Which of the following describes how the property will be distributed? A. Anwar's wife will receive all of the property B. Anwar's wife and children will split the estate equally, each receiving 1/5th C. Anwar's wife will receive half, and his four children will share the remaining half D. Anwar's property will escheat to the state of Illinois, as he had no valid will

C. Anwar's wife will receive half, and his four children will share the remaining half In Illinois, anyone dying without a will (intestate) will have their estate divided by rules of "intestate succession." In this situation, those guidelines call for the wife to get half and the children to split the other half.

Brokers Smith and Weston are commercial retail Professionals and competitors. Lately, business has Been extremely slow and leasing space is difficult. Over lunch they decide that in order to increase profits in the retail leasing business, they need to increase their commission rates and agree to a fair commission rate to charge. Together Smith and Weston: A. Need to increase their profits so they can continue to compete openly B. Want to attract more licensees by offering greater commission splits C. Are in violation of anti-trust issues by fixing prices D. Are perfectly within their rights because they are commercial brokers

C. Are in violation of anti-trust issues by fixing prices

Allison has lived in her apartment for 10 years. She has constantly complained to the landlord about the conditions of the property and issues of safety. Allison finally contacted the city about possible building code violations. The landlord, upon finding out that Allison complained immediately cancelled her lease and ordered her out of the building. The landlord can: A. Ignore the complaint to the city and claim a nuisance by the tenant B. Be within his rights to do so because tenants should not complain to the city C. Be committing a crime under the Retaliatory Eviction Act D. Tell Allison that he will not renew her lease next month

C. Be committing a crime under the Retaliatory Eviction Act

What does Freddie Mac do? A. Acts in tandem with Ginnie Mae to provide special assistance in times of tight money B. Buys and sells FHA and VA mortgages C. Buys and pools blocks of conventional mortgages, selling bonds with such mortgages as security D. Guarantees mortgages by the full faith and credit of the federal government

C. Buys and pools blocks of conventional mortgages, selling bonds with such mortgages as security

When determining whether an article of property is a fixture, a court will apply various legal tests. Which of the following is NOT one of the tests? A. Permanence of the article's annexation B. Adaptation of the article to the real estate C. Cost of the article D. Intent of the parties

C. Cost of the article

At closing, the real estate broker's commission is usually shown as a: A. Credit to the seller B. Credit to the buyer C. Debit to the seller D. Debit to the buyer

C. Debit to the seller

A clause in a mortgage which cancels the lien upon repayment of the mortgage is called a(n): A. Release clause B. Acceleration clause C. Defeasance clause D. Alienation clause

C. Defeasance clause

In an initial interview with a potential buyer, agent Bond was told by the buyer that he did not want to look at any property that was north of South Street or west of East Street and that he wants 3 bedrooms with multiple baths and at least a 2-car garage. During the interview Bond knows of a perfect house that meets the buyer's requirement to the letter, but is not in the location mentioned. Bond should: A. Not mention the home since the buyer has not indicated a desire for the location B. Not mention the home because he is the listing agent C. Should definitely mention the home in order to offer the buyer more options in more areas D. Tell his broker that the buyer is discriminating against him

C. Should definitely mention the home in order to offer the buyer more options in more areas

Why does Freddie Mac require that certain standardized forms and documents be used when a local lender makes a loan? A. This will guarantee the mortgage payment for the note holder B. So the lender can issue a certificate of authenticity C. So the loans can be sold easily through warehousing of loans D. So the buyer can easily understand all the loan costs

C. So the loans can be sold easily through warehousing of loans

Property manager, Nora, has an agreement with Carlos, a well-known landscape architect in the area. Carlos provides a weekly landscape service for Nora, in which he compensates Nora monthly for the business. Nora, who counts on this money as part of her compensation for managing the building is: A. Does not need a license to perform her daily activities B. Is demonstrating exemplary duty to her principal C. Subject to violations of the license laws for accepting compensation from Carlos D. Lucky to have such an arrangement with a well-known vendor

C. Subject to violations of the license laws for accepting compensation from Carlos

The Albert brothers owned a two flat apartment and rented the second floor to the Andersons. On June 1, they collected the rent from the Andersons for $950.00. The closing of the property took place on June 15. What is the status of the rent payment? A. The Albert brothers owe the Andersons $950.00 B. The Albert brothers must reimburse the tenants for the monthly rent C. The Albert brothers owe the buyers $475.00 D. The Albert brothers are entitled to the rent for the entire month

C. The Albert brothers owe the buyers $475.00

Which governmental agency is involved in regulating the country's money supply? A. The Federal National Mortgage Association B. The Government National Mortgage Association C. The Federal Reserve System D. The Federal Housing Administration

C. The Federal Reserve System

The Real Estate Settlement and Procedures Act originally provided that the closing disclosure must be made available to the parties in a real estate transaction. The new TRID version of the law requires: A. A qualified buyer and seller B. The seller's approval of the buyer's closing statement within 3 business days C. The disclosure of all closing costs be made available three business day prior to closing D. That the closing of a real estate transaction be held within 90 days of the execution of the purchase agreement

C. The disclosure of all closing costs be made available three business day prior to closing

After an exhaustive search for a suitable property, a buyer's agent finally submits a purchase offer that includes a hot tub and riding lawn mower in the initial offer. The seller accepts the price, but is not willing to include the lawn mower. The listing agent makes the change in the contract to exclude the lawn mower and the seller initials and signs the contract. The listing agent delivered the contract to the buyer's representative who verbally accepts the change on behalf of the buyer. Which of the following is true? A. The offer has been signed and accepted by all parties and is a valid contract B. Neither the seller nor his agent has a right to make any changes to the original offer C. The original offer was rejected, and the seller's counteroffer must be accepted in writing D. The buyer's agent can agree to the exclusion of the riding lawn mower on behalf of the buyer

C. The original offer was rejected, and the seller's counteroffer must be accepted in writing

The real estate settlement procedures act (RESPA) may apply to a loan assumption if the: A. A lender charges less than $50 for the assumption B. The buyer must be qualified by the lender for the assumption to occur C. The terms of the assumed loan are modified by the lender D. Seller does not want to be liable for the loan in the future

C. The terms of the assumed loan are modified by the lender

Home inspections are vital components of today's housing market. A home inspection is intended to provide a buyer with some peace of mind about the condition of the property. Which of the following is NOT an item a home inspector would investigate? A. The foundation B. The heating and cooling systems C. The title D. The floors and walls

C. The title

Which of the following statements would be true of a partially amortized loan? A. The amount going toward interest increases as time goes along B. At the end of the loan, there is nothing left to be paid off C. There are generally smaller monthly payments D. The loan payments consist of interest only

C. There are generally smaller monthly payments

What do the following persons have in common? (1) a person has received the right of way to cross adjoining land owned by a corporation to gain access to his lot; (2) a person has received permission to drive across a neighbor's farm to get to the highway; (3) a residential homeowner who shares a driveway with a neighboring property owner. A. They all have restrictions B. They all have encroachments C. They all have an appurtenant easement D. They all have a leasehold estate in the land

C. They all have an appurtenant easement

In a contract for deed, when does the buyer obtain legal title? A. At the signing of the sales contract B. At closing C. When the contract terms are satisfied D. Only after recording of the deed

C. When the contract terms are satisfied

A legal description that uses directions, distances and monuments is called: A. the rectangular survey system B. the geodetic survey system C. a metes and bounds description D. a lot and block description

C. a metes and bounds description

The Equal Credit Opportunity Act prohibits discrimination based on: A. sexual orientation B. a person being a minor C. a person being a senior citizen D. a person's credit rating

C. a person being a senior citizen

Which of the following will NOT terminate an offer? A. Revocation of the offer before acceptance B. A counter offer by the offeree C. Death of the offeror D. An offer by a third party for more money

D. An offer by a third party for more money

Sonja sells her home for $250,600. What is the total amount of Illinois transfer tax due? A. $ 187.95 B. $ 188.25 C. $ 375.90 D. $ 376.50

D. $ 376.50 Illinois transfer tax is $.75 per $500 of sales price, or portion thereof and is paid by the seller. $.50 goes to the state and $.25 is retained by the county where the property is located. $250,600 divided by $500 = 501.20. In this case, the .20 indicates we have a portion of the next $500 of sales price in addition to the 501 number. As the tax is $.75 per $500 of price, 502 times $.75 = $376.50.

Mrs. Paul, a senior citizen, has a property with a current value of $90,000 and is assessed at 40% of its market value. An equalization factor of 1.5 is applied to the assessed value. As a senior citizen, Mrs. Paul is entitled to a $3,000 reduction in the equalized assessed value. If the tax rate is $4.50 per $100 of assessed value, what will be her first installment payment be, if taxes are paid in 2 equal installment payments? A. $2,295 B. $2,340 C. $1,215 D. $1,147.50

D. $1,147.50

A buyer purchased a house obtaining a new loan with a 70 to 30 loan to value ratio. The annual interest rate was 9 3/4%. The first month's interest was $583.33. What was the sale price of the house? A. $ 43,520 B. $ 62,491 C. $ 71,794 D. $102,564

D. $102,564 $583.33 (int/mo) X 12 months = $6,999.96 (int/yr) / 9.75% = $71,794.46 (loan); $71,794.46 (loan) / 70% = $102,563.52

A salesperson earned 2.75% commission on $600,000 in sales for the year. However, the salesperson had only taken a draw against commission of $150 per week for the entire year for the salesperson's salary. What would be the total amount earned by the salesperson? A. $ 7,800 B. $ 8,700 C. $12,400 D. $16,500

D. $16,500 $600,000 X 2.75% = 16,500 (total commission)

Replacement cost of a building is $250,000 with an annual depreciation of 8%, a site value of $50,000, and annual taxes of $3,950. What is the current value of the property? A. $230,000 B. $276,000 C. $283,950 D. $280,000

D. $280,000

The taxes paid on a parcel of real estate were $1,800. Assuming the assessed value was 25% of its market value, the tax rate is $10 per $100 with an equalization factor of 1.20, what is the market value? A. $55,000 B. $50,000 C. $18,000 D. $60,000

D. $60,000

Illinois leasing agent licenses may be obtained with how many classroom hours and must be completed within how many days of beginning leasing agent activity? A. 12 hours within 45 days B. 30 hours within 45 days C. 45 hours within 120 days D. 15 hours within 120 days

D. 15 hours within 120 days

Susie vacated her apartment on January 15th. Upon the landlord's inspection of the apartment, he found it to be in good condition with no extra ordinary wear and tear. The landlord has how many days to return the security deposit to Susie: A. 10 B. 30 C. 60 D. 45

D. 45

The clause in a mortgage instrument that would prevent the assumption of the mortgage by a new purchaser without the consent of the lender is: A. A power of sale clause B. A defeasance clause C. A certificate of sale clause D. A due on sale clause

D. A due on sale clause

Which is an example of highest and best use of a parcel of real estate? A. A vacant lot B. An old home on a major highway surrounded by commercial buildings C. A flat, unpaved lot in Downtown Nashville D. A house in a residential neighborhood

D. A house in a residential neighborhood

Which of the following is exempt under the Federal Fair Housing Act? A. A real estate agent or broker selling his/her own home if the property is not listed with a brokerage firm B. An owner not occupying a duplex when he/she refuses to rent to a potential tenant because of race C. A private club operating a senior citizen's home for profit D. A religious organization if it gives preference to its members in leasing church owned property as long as discrimination does not occur in becoming a member of the organization

D. A religious organization if it gives preference to its members in leasing church owned property as long as discrimination does not occur in becoming a member of the organization

What does a standard title insurance policy insure against? A. Water rights B. Questions of survey C. Adverse possession claims D. Any recorded title defects or liens

D. Any recorded title defects or liens

Agent Dan, gets a call from Dewey about the office building listed by Dan on Front Street. Dewey told Dan that he is sitting in front of the building and would like to see it "right now". Dan jumped in his car and drove over to the property where he met Dewey and proceeded to show him through the building. As they walked and talked, Dan learned about Dewey's business and his profitable investments as well as his desire to purchase the property at a price less than the offering price, but with a substantial down payment and pre-approved financing. Dan immediately took Dewey back to the office and wrote an offer to purchase on Dewey's terms. Dan: A. Told Dewey it was his listing and Dewey felt it was not a problem B. Dan needs to go and celebrate because he finally sold the money pit on Front Street C. Has done a terrific job of closing Dewey as a buyer and getting him to sign the contract D. Clearly has no idea of the law of agency and has become an undisclosed dual agent

D. Clearly has no idea of the law of agency and has become an undisclosed dual agent

Jack is working exclusively with 2 buyers. Little did Jack know that both buyers attended an open house on Sunday and both want to make an offer on the home. Lisa, the agent sitting the open house, had no idea that the buyers were represented by Jack. In this case, when Jack submits offers from both buyers through the listing agent to the seller of the home, what kind of disclosure will be necessary from Jack? A. Notification of sub-agency to Lisa B. Notification of non-agency to both buyers C. Dual agency disclosure D. Disclosure of contemporaneous offers

D. Disclosure of contemporaneous offers

Caroline made an offer on a home through agent Kris. Kris was able to present the contract through the seller's agent, but the seller needed time to think about the offer. The next day, Caroline found a FSBO she liked better, called Kris and told him to rescind her previous offer. To that point Kris had not received any response from the previous seller and notified the seller's agent of Caroline's decision. Kris must now: A. Make sure the seller is notified of the revocation before making the offer on the FSBO B. Give the seller three days to decide, as stated in the original offer C. Make an immediate offer on the FSBO property before someone else does D. Do nothing more because he has notified the agent of her decision to rescind the offer

D. Do nothing more because he has notified the agent of her decision to rescind the offer

The owners of a house are being transferred. They want to sell but also want to avoid paying a commission if they are able to find their own buyer. The listing type that will meet their needs is a(n): A. Exclusive right to sell B. Net listing C. Multiple Listing D. Exclusive agency listing

D. Exclusive agency listing

When a grantor does not want to convey certain rights of ownership: A. He must note the exceptions in a separate document B. He must convey the entire premises and have the grantee re-convey the rights to be retained by the grantor C. He may not do so, as a deed conveys the entire premises D. He must note the exceptions in the deed

D. He must note the exceptions in the deed

The agency that regulates and oversees the real estate activities in the State of Illinois is: A. Attorney General's office B. Illinois State Board of Real Estate C. Illinois State legislature D. Illinois Department of Financial and Professional Regulation

D. Illinois Department of Financial and Professional Regulation

The Smiths own a retail store on a main street with accessibility to the store through revolving doors and handicap accessible automatic double doors. This type of easy access contributes to the store's: A. Higher congestion of foot traffic B. Corporate profits C. Popularity and reputation D. Ingress/egress

D. Ingress/egress

In order to cut costs, a sponsoring broker cancels her errors and omissions insurance. If she still wants her agents covered, she should: A. Not have cancelled her errors and omissions insurance because it is required by law B. Advise the agents to cancel their errors and omissions insurance C. Buy more liability insurance D. Insist that the agents maintain their own errors and omissions coverage

D. Insist that the agents maintain their own errors and omissions coverage

Jeff and Jim are co-listers of a home along the banks of a river. Esther has been working with Jennifer for over a year looking for the perfect home. Upon viewing the home Jennifer decides to make an offer on the home. In this circumstance: A. Esther can contact the seller and advise them of Jennifer's offer B. Jennifer needs to tell Jeff and Jim everything about her motivation to buy the home C. Esther must turn Jennifer over to Jeff and Jim to draft the contract and present the offer D. Jeff and Jim represent the seller and Esther represents the buyer

D. Jeff and Jim represent the seller and Esther represents the buyer

A tenant has negotiated a net lease with the property owner. Under the terms of the lease agreement, the tenant would probably be responsible for paying which of the following expenses? A. The owner's mortgage expense B. Depreciation expense C. The owner's income taxes D. Maintenance expense

D. Maintenance expense

Barry had Conrad's home listed for sale for over 9 months. During the time period Barry and Conrad had many discussions about the home and other facts that Conrad shared about his need to sell. When the listing expired in June, Conrad listed his property with Tanya at Fornel Realtors. A week later, Barry took an interested buyer through Conrad's house and wrote an offer. Barry: A. Must get a dual agency consent disclosure signed by all parties B. Must represent the interest of his buyer and tell him everything he knows about the listing C. Is in violation of Illinois license law and MLS rules by showing Conrad's home after the listing expired D. Must maintain the integrity of his former listing and not disclose information about Conrad that may be confidential in his negotiating position

D. Must maintain the integrity of his former listing and not disclose information about Conrad that may be confidential in his negotiating position

Susan and Nancy want to purchase a condominium as co-owners. Susan will hold a 60% interest and Nancy a 40% interest. Both ladies are single and each wants the other to inherit her share automatically upon death. Can title be conveyed to them in this manner? A. No, because survivorship can only exist between husband and wife B. Yes, by taking title as tenants in common with the right of survivorship C. Yes, by taking title as joint tenants with the right of survivorship D. No, because only as tenants in common can two co-owners have unequal interests, and there cannot be survivorship among tenants in common

D. No, because only as tenants in common can two co-owners have unequal interests, and there cannot be survivorship among tenants in common