Alabama State Practice Exam

To which of the following borrowers might a lender be most likely to recommend an FHA loan?

A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores

Percy and Jackson have formed a team within their Montgomery real estate brokerage firm. They are drafting some advertisements to help launch their team. What do they need to keep in mind when designing their marketing materials?

Ads must include the brokerage firm name

A buyer and a seller signed a sales contract with a definite closing date of May 15. It's a buyer needs to move the closing date to June 15, what document with the buyer used to make this change?

Amendment

Amber is a new licensee in Alabama. She's having trouble getting her sales off the ground, so she's considering offering commission rebates or holding a lottery. Which is a true statement?

Any type of rebate or lottery related to a real estate transaction is always illegal.

Which of the following questions can an agent in a dual agency transaction answer without breaching her duties to either client?

Are you aware of any structural issues with the property?

Agent wall has met with Diane, a seller, three times. The first time, she told him she wanted him to help her sell her house. The second time, at the open house, Diane told him, "honestly, I want to list this place for $400,000 but I would be open to offers as low as $315,000." The third time, Walt presented three offers to Diane. When should he have presented her with the real estate brokerage services disclosure form?

At their first meeting, after Diane asked him for representation

Which of these statements about a conventional mortgage loan is true?

Borrowers with larger down payments, and higher credit scores are most likely to select a conventional mortgage.

How does the Alabama requirement for licensing protect the public?

By requiring licenses to have certain education, training, and standards

A local buyer is purchasing a property for $120,000. What will the seller pay in transfer tax if the rate is $.37 per $100?

$444 Multiply 0.37 x 120,000

John and Amy purchased a builders home warranty when they bought their home. They have found structural damage that could be detriment to their home. On average, how many years does a home warranty cover structural damage?

10 years

Lenore makes a 95% offer on a townhouse that's listed at 285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashiers check for 35,025 compromising the balance of her 20% down payment and closing cost. What's the amount of her total down payment?

54,150 (285,000 x .95 = 270,750) Total down payment is 20% of her accepted offer of 270,750, which is 54,150 or (270,750 x .2)

A tenant lease is an apartment from Quad city leasing. The tenant has filed a complaint with the state real estate, licensing, division, stating that Quad cities property manager breached her fiduciary loyalty to the tenant. Which of these statements about the situation is true?

A property manager owes fiduciary duties to the client and the apartment community

Milk has had a temporary real estate license since April. Which of the following must be due to convert it to an original license?

Complete his post licensing requirements by October

Which of the following is a step that Pauline must take to change her license status from inactive to active?

Complete the 15 hours of CE that are required for the current licensing period.

Alice owned a double lot on the waterfront. She sold a lot to Sally and included a deed restriction prohibiting construction of any building taller than one story. Sally wants a three-story house. What should she do?

Conform to the deed restriction

Which of these situations represents the illegal practice of blockbusting?

Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values.

Burt owns a development company that specializes in constructing new, energy efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built home is the

Cost approach

Jules is new to property management. Which of the following task may be one of her duties?

Creating a budget for next year's projected maintenance costs

What factors does the underwriter consider in reviewing a mortgage loan application?

Credit, capacity, and collateral

A real estate transaction has a closing date of May 20. The seller, who is responsible for closing cost up to, but not including the day of closing, has already paid annual property taxes of $1,949. How will the closing statement reflect the proration for the seller? Use a calendar year proration and round to the nearest dollar.

Credited $1,207 The seller is required to cover the property taxes for January 1 through May 19, which is 139 days. $1,949/ 365=$5.34 $5.34 x 226 days (# of days buyer will cover taxes) = 1,206.84 rounded to $1,207.

Fewer buyers in a higher price range would create what kind of pressure on housing prices?

Downward

What must sellers provide prospective buyers of homes built prior to 1978, in addition to the federally required disclosure form?

EPA lead safety pamphlet

What is a true statement regarding qualifying brokers in Alabama?

Qualifying brokers are responsible for the actions of all licenses who work under them.

Drew and Hank were camping at Hank Riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he would buy it from Hank for $80,000 which he agreed was a fair price. It is two months later, and Hank is upset that Drew now says he won't buy it. Why isn't the contract enforceable?

Real estate contracts must be in writing

Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?

Reconciliation

A homeowner has converted two rooms in his home to a rental unit. What does the "Miss Murphy"exemption permit him to do?

Refuse to rent to a female tenant

Stan and Margo want to redevelop an old industrial site in order to create a micro brewery and event space. However, in environmental review, found that hazardous chemicals were once used on site, and there is a possibility they will be released during redevelopment. Stan and Margo may not be liable for cleanup, under what federal law?

SARA

George wants to coworker a home purchase in Alabama. His state allows this arrangement. Which of the following is a requirement he must meet?

Enter into a written agreement with the Alabama broker

An easement dictates that property owner A gives a right to property owner B to use a portion of the property. Which term describes property A?

Servient Estate

Eva, Stella, and Lynn owned a vacation home, two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella's nephew, Drew, to whom Stella will her share of the property. What type of ownership is this?

Tendency in common

Elite reality in Tuscaloosa needs a qualifying broker. Which one of these people is qualified for this position?

Erica, a broker who works full-time

Which of the following statements about estimated closing statements in Alabama is true?

Estimated closing statements, help prevent mortgage fraud by showing all cost upfront.

Which of the following scenarios describes actual knowledge that an Alabama licensee must disclose?

The seller didn't disclose any leaks, but the licensee sees moisture on the basement floor.

Clint has an inactive real estate license. Which of the following is true?

He can keep his license in this status indefinitely as long as he pays his license renewal fees.

Carl has just received his Alabama sales person real estate license. Which of the following must be true?

He is at least 19 years old

A landlord has an available unit, but refuses to show it to several applicants. These applicants are all single women with children. The applicants who are shown the apartment are all individuals or couples without children. And what way is the landlord violating their housing law?

He is discriminating against people based on familial status by refusing to show available housing

Licensed flip tried to compel the Browns to accept the buyers offer, saying that he knew a better offer wouldn't come along. What is Phillips mistake?

He violated Alabama license law

Jasmine hasn't completed her CE requirements, and it's August 28 of an even numbered year. Which of these options can she do?

If she can't finish her CE by the end of August, she can finish it by the end of September, and pay a late renewal fee

Related to a reasonable accommodation of being allowed to have an assistance animal, which statement is true

If the disability for which the tenant is making, the request is obvious, the landlord may not ask why it is needed

Josef is a sales person in Alabama. His buyers clients have just given him a check for earnest money. What should he do with it?

Immediately turned it over to his qualifying broker.

Title XI of the financial institutions, reform, recovery, and enforcement act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed

In writing, and in accordance with uniform standards

Which approach to value is typically used for investment property of 2 to 4 family units?

Income approach

Ashleigh is purchasing a bank owned property. Her real estate agent tells her the bank is offering insurable, not marketable, title. What does this mean to ashleigh?

Insurable title is one that may have known defects, but is still insurable. Ashleigh should carefully review the title policy.

Huntsville licensee Kayden gave his buyer client a cash rebate as part of the recent real estate transaction. Which of the following statements about the cash rebate is true?

It is illegal for licenses to give cash rebates as part of a real estate transaction.

When applying for an Alabama broker license, under what circumstances can a sales person continue to perform real estate activities?

It's a broker license will be issued to the same company as the sales person license

When it comes to contracts for sale or lease in Alabama, which of the following statements is true?

It's illegal for real estate licenses to interfere with contracts for sale or lease.

What happens to an initial offer from the buyer after a seller counters?

It's no longer in play.

Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current years property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit

Which of the following actions would result in the legal termination of an agency agreement?

The term specified in the agency agreement expired

Assuming licenses Shannon has actual knowledge of all the following property issues, which of these issues should she disclose to prospective buyers?

The upstairs bathroom has a leaky toilet

What special concern do foreclosed properties often present?

There could be hidden title issues.

Which of the following is an example of price fixing?

Three brokerages determine a standard commission rate

Assuming that dual agency is legal where the scenarios occur, and that the licenses brokerages permit it, which of these situations demonstrates illegal dual agency?

Tom is holding an open house for his client. Ruby, a buyer, says she wants to make an offer. She details her situation. Tom waits until she finishes, and then suggest that she offer a nonrefundable, earnest money deposit to strengthen her offer.

Jim represents Joel in the sale of Joel's country, acreage, and house. Jims business partner, Rolly informed Jim that he wants to put an offer into the property with the intention to subdivide it. Which statement best represents the disclosure requirements regarding this transaction?

Jim must disclose that Rolly is his partner, and that Rolly intends to subdivide the property.

Which form of real property ownership (for owners other than married couples) means there's equal ownership shares with undivided possession rights?

Joint tenancy

Maria is the buyer's agent, and Julia is the seller's agent in a real estate transaction in Alabama. Jack is Maria's qualifying broker. Julia works for Kyle's firm. From whom can Julia accept compensation?

Kyle

To be an effective property manager, a licensee must be familiar with a variety of

Lease agreements

Leo's client is looking for a property with at least 2500 finish square feet. Leo finds a 2200 square-foot property with all the other features. The client is looking for, and purposely doesn't mention the square footage to his client. His client agrees to look at the property, falls in love with it, and wants to make an offer, but does not realize it doesn't contain his desired square footage. Which of these statements accurately represents Leo's level of misrepresentation in this situation?

Leo knew about the square footage and intentionally didn't mention it. He is guilty of intentional misrepresentation.

Which of these situations does the Americans with disabilities act address?

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

In a real estate transaction, in which you represent the seller, your duty to other parties is to

Treat them honestly and fairly

Blake is allowed to use his property in a way that is prohibited under current zoning, ordinances, because those ordinances would cause undue hardships for him. What gives this permission?

Use variance

Hopes mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this?

Voluntary

Which of the following factors helps the IRS determine whether a licensee is classified as an employee or an independent contractor?

Whether the licensee receives benefits from the brokerage firm

Chelsea's mother owns several rental properties and intends to keep them to pass on to the family. Chelsea holds a special power of attorney to manage the rental properties, including working with the property manager to place and evict tenant size necessary. Which of these would violate the POA?

Without consulting, her mother, Chelsea decides to completely refurbish one of the properties.

Bernie represented Oscar in the sale of Oscars home. They signed an exclusive right to sell listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?

Yes, because exclusive right to sell means, Bernie gets paid, no matter who finds the buyer

Dane was accused of writing a fraudulent contract. During his hearing, he brought a copy of the contract, and his lawyer demonstrated that it was legal. He was found guilty, and the commission never addressed his lawyers points. Can Dean ask for a rehearing?

Yes, because the outcome was opposed to reliable evidence

Jared wants to purchase property. One of the properties his agent shows him was formally zoned for commercial use. It has a steep drop off as a back of the property, as well as some soft spots and mounds. Should Jared's agent recommend that he have a home inspector, investigate it?

Yes, these are clues that the property may have been used as a waste disposal site

Which of the following is a reason why the Alabama real estate commission might impose a disciplinary penalty against you?

You make false and dishonest promises to clients or customers.

Which of the following is an example of commingling?

Mixing earnest money with personal funds

Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?

Pending

Because there were no deadlines specified in the contract, a buyer delayed applying for a loan to help purchase the property. The seller ended up, suing the buyer for breach of contract, stating that the delay was impacting the sellers ability to purchase a new home. What did the buyer fill to do?

Perform contractual obligations within a reasonable time.

An example of this type of leasehold estate is a month to month lease

Periodic estate

Marilyn is reviewing the inspection report with her buyer clients. Which of the following issues in the report should Marilyn Flagg is most significant?

Presence of mold

Subdivision regulations imposed by developers, in an effort to maintain control of the development of the subdivision, or an example of

Private land use control

Which of the following is a promise from the borrower to repay a certain sum of money to another party under specified terms

Promissory note

Sylvia, who's 15 years old, and her neighbor Marge, who's 24, agree that Sylvia will babysit Marge's toddler for the summer for $10 an hour. What type of contract is this?

voidable

A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400 feet deep. What was the price per front foot of the property?

$1,335.67 To find the square footage 5.5 x 43,560= 239,580 You are given one dimension of the rectangle, so find the other: 239,580/ 400= 598.95 front feet. To find the price per foot, $800,000/ 598.95= $1,335.67 per front foot

Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $200,500. Their tax rate is 1.5%. How much will their monthly taxes be?

$250.62 $200,500 x 0.15% = $3,007.50/12 = $250.62

A seller wants to break even after the brokers commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

$315,789 100% - 5% = 95% or .95. Take $300,000 and divide it by .95.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. Assuming every transaction for the month was shared with a cooperating brokerage, what is Jared's brokerage's commission rate?

6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What is the loan to value ratio?

75% 300,000/400,000= 75%

What is the best description of a deed?

A document to transfer ownership/interest in real estate

Desmond has signed listing agreement with his clients, the Harpers. In exchange for helping the harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond in the harpers have?

Bilateral

Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?

CC&R

Which of these statements about handling documents, and Alabama is not true

Failure to meet document-handling requirements always results in a $550 fine.

Jeremy is developing an ad for three properties. He has listed in an upscale community. He wants to keep it short and simple. Which of these would not trigger full disclosure under TILA?

Get a low 4.925% APR

Matt is a qualifying broker for Rocky Ridge brokerage, and he is thinking about working as an associate broker for integrity brokerage. Which of the following about this situation is true?

Matt can only do both jobs if the brokerages are located at the same place.

Which of the following must be reported to a REC via certified mail within 10 business days?

Maxine had a pending criminal action against her, but it was dismissed

In which of the following situations, can the state use its power of escheat?

Nadine died with no heirs and no debt.

Devon has submitted his transfer request to the AREC, given a copy to his current managing broker, and paid the transfer fee. His new managing broker, Florence, has filed her request and liability statement with the AREC. Can Devon start working for Florence now?

No, because the ARC hasn't yet issued Devon his new license

You are representing Abe and Ben in a dual agency situation. Abe tells you something that would give Ben a distinct advantage if he knew. Do you tell Ben?

No, because you can't share one client's confidential information with another client.

AREC has just noticed that the amount of money in the Alabama recovery fund has dropped below 500,000. Can it impose a fee on an inactive licensee?

No, but it can have inactive licenses pay the fee when they reactivate

Which of the following is an example of a fixture that is real property?

Shelves attached to the wall with brackets

Joel, and aggrieved claimant, wants to make a claim from the Alabama recovery fund. He says that his agent, Maria, defrauded him. Which of the following does he need to do?

Show that he is not related to Maria

Which of these individuals needs an Alabama real estate license?

Someone performing real estate services for others for a fee

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

The agency agreement is terminated if the property is destroyed

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

The agent has breached his duty of confidentiality to his client

The commission is investigating the actions and records of Alabama licensee Sam. Which of the following is true?

The commission can investigate Sam without a written complaint

Gus, the qualifying broker at Harmony Realty, had a debilitating stroke and is unable to return to work. What happens next?

The company company chooses a temporary qualifying broker, who must apply for and receive a license for this position.

Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?

busy street