California Real Estate Salesperson Practice Exam 1 - EBSCO 2022/11/12

A licensed California real estate agent wishing to do business in Lake Tahoe may A. represent sellers and buyers only on the California side of the lake. B. represent sellers and buyers on both sides of the lake since part of the lake is in California. C. represent sellers and buyers only for lakefront properties. D. property manage rentals on either the California or Nevada side of the lake.

Choice A A California real estate licensee is only allowed to engage in real estate business in California.

Which of the following is not a basic type of promissory note used to evidence a debt? A. a deed of trust B. a straight note C. a partially amortized note D. a fully amortized note

Choice A A deed of trust is a surety instrument used to secure the debt by real property. It is the security that stands behind the note and acts as collateral for the debt.

A financial analysis of the future cash flows from an investment property can be found on A. a pro forma cash flow report. B. the financial statement, income statement. C. the financial statement, balance sheet. D. the financial statement, statement of cash flows

Choice A A pro forma cash flow report is a forecast of the future, not a reporting of historical income and expense. "Pro forma" is Latin loosely meaning "per form." Predictions of future outcomes are expressed "in the form of" a cash flow statement.

Owner sales representation of a business opportunity including the sale of an existing liquor license (personal property) A. is an allowed activity of a licensed real estate broker. B. is a special Department of Real Estate license activity requiring an endorsement. C. is outside the scope of a licensed real estate broker. D. does not require a real estate license at all since it is not real property.

Choice A A real estate license is required to represent a seller of a business, including its personal property (fixtures), in the sale of the business.

A single individual who has never been married would most commonly hold title in real estate in which of the following? A. severalty B. singly C. privately D. secretly

Choice A A single or unmarried person who does not share ownership rights with anyone most commonly holds title in severalty, that is, sole ownership.

A custom-made bookcase in a bookstore is an example of personal property when it A. is a trade fixture. B. is permanently installed. C. was built into the building upon lease. D. came with the building when originally purchased as described in the sale document.

Choice A A trade fixture such as a bookcase used in the normal course of business is the personal property of the bookstore owner provided that the real property is left in the same condition in which it was found.

Ownership of personal property is transferred with which of the following? A. the "pink slip" B. the uniform commercial code form number 1 ("UCC-1") C. the sales receipt D. the deed

Choice A A trade fixture such as a bookcase used in the normal course of business is the personal property of the bookstore owner provided that the real property is left in the same condition in which it was found.

Fiduciary duties of a real estate agent acting on behalf of a seller include all of the following except the duty A. to explain the impact of the seller's disclosures to the buyer. B. to disclose their agency relationship to the buyer. C. to disclose all material facts to the buyer. D. of confidentiality.

Choice A Although the agent acting on behalf of the buyer owes fiduciary duty to the buyer to explain the practical or legal effect or the impact of the seller's disclosures, the agent acting on behalf of a seller does not need to do this for the buyer.

Property managers for non-residential, transient, or resort properties are A. exempt from California real estate licensing requirements. B. not exempt from California real estate licensing requirements. C. exempt for the first 6 months of business or 40 properties under management, whichever is first. D. licensed by the Department of Consumer Affairs.

Choice A By real estate regulation, rental property managers of transient, less-than-28-day rentals are not required to be licensed as brokers by the California Department of Real Estate.

California Proposition 13 A. allows for tax reassessment of real property for third-party sales. B. ties property taxes to real estate market values. C. caps annual tax increases at 5%. D. all of the above

Choice A California's Proposition 13, also known as the Jarvis-Gann Initiative, allows for county property reassessment in certain circumstances, such as when property changes hands between third parties or after a structural improvement to the property.

The comparison approach (market data approach) is commonly used to value which of the following? A. a residential tract home for sale in order to secure a home loan B. unique properties like Hearst Castle C. rebuilding of homes lost to California wildfires D. earthquake damage to a swimming pool

Choice A Comparing similar properties, in similar locations, with similar attributes is one of the standard techniques used in the comparison approach to appraisal.

Do commercial and industrial properties have the same consumer protection disclosure requirements as residential, owner-occupied 1- to 4-unit dwellings? A. No, they do not. B. Yes, they do and more so. C. The requirements are not exactly the same, but they are equivalent. D. They are different in Northern California and Southern California.

Choice A Consumer protection laws are designed to protect the general public and apply primarily to the purchase of residential properties, real estate loans, credit cards, and general consumer loans.

There are several methods to legally describe land in California for purposes of sale, lease, or financing. Which of the following methods is NOT legal? A. county assessor's parcel number B. lots, blocks, and tracts C. U.S. Government Survey D. metes and bounds

Choice A County accessor's parcel numbers can and often are renumbered. Parcel numbers are used for property tax assessment purposes only.

Covenants, conditions, and restrictions (CC&Rs) are A. private. B. county ordinances. C. state police powers. D. unenforceable.

Choice A Covenants, conditions, and restrictions are a set of rules created for the governance of private communities or neighborhoods.

Individual California taxpayers can expect to pay income taxes on monies received from A. rental property. B. the purchase price of the property in the year of acquisition. C. gain on the sale of the property. D. increase in market value of the property each year.

Choice A Income derived from rents received on investment property net of expenses and depreciation is reported on IRS Form 1040, Schedule E and is taxable at individual income tax rates.

When may an agent pay a finder's fee to a licensed individual? A. for an introduction that is not a procuring reason for the sale B. at any time C. never D. when they are the procuring reason of the sale

Choice A Introductions can be rewarded. A finder's fee, also known as procuring a buyer for the sale, however, is never appropriate when dealing with an unlicensed person.

A member of the National Association of Real Estate Brokers (NAREB) is referred to as A. a REALTIST®. B. a REALTOR®. C. a REALITOR. D. a REALIST.

Choice A Members of the National Association of Real Estate Brokers identify their members as REALTISTs®. Prior to the Civil Rights Act of 1968, the NAREB was a professional association of African-American real estate brokers, as African-American brokers were not permitted to be members of the National Association of REALTORS®.

Misrepresentation of a material fact on the Transfer Disclosure Statement by the seller's broker A. exposes the broker to civil liabilities. B. is not applicable if the 1- to 4-unit residential dwelling is sold "as is." C. can be avoided if an Agent Visual Inspection Disclosure (AVID) form is provided. D. exposes the broker to criminal liabilities.

Choice A Misrepresentation of a material fact is evidence of the agent's lack of due diligence and breach of fiduciary duty. The Easton v. Strassburger decision underscored the importance of visual inspection and agent liability when negligent.

Simple interest as expressed in dollars earned on an investment can be calculated using which of the following formulas? A. P * R = I B. P * I = R C. P * 1 * R = I D. none of the above

Choice A P (principal expressed in dollars) * (multiplied by) R (rate expressed as a decimal) = (equals) I (interest earned as expressed in dollars). For example, $100 * .04 = $4.00.

The next section number located just south of Section 33 in T4N, R3E Humboldt Base Line and Meridian is A. 4. B. 5. C. 34. D. impossible to ascertain from the information given.

Choice A Section 4 is located in the next township T3N, which is located directly south of T4N in the same R3E Humboldt Base Line and Meridian. --- Section 5 would touch the southwest corner of Section 33. Section 5 is not directly south of Section 33. Section 34 is located directly east of Section 33 in T4N, R3E Humboldt Base Line and Meridian. All 36 sections within all Townships are identical in the U.S. Government Survey method of land description.

What does "simple" mean in the term "simple interest?" A. It does not take the time value of money into the equation. B. The time value of money is key to its understanding. C. It is so simple that a child could calculate it. D. It involves bringing all future periodic earned interest to today's date or projecting all future periodic earned interest forward to a future date.

Choice A Simple interest is also known as the "face rate" or the "stated interest rate." The time value of money is not expressed in the term, hence it is "simple" or not complicated.

The Department of Real Estate audit checks to see that the Exclusive Authorization and Right to Sell Agreement (RLA) includes a A. specific end date. B. prohibition against the seller switching agents. C. confirmation of the seller's right to sell without paying a commission. D. prohibition on dual agency.

Choice A The Exclusive Authorization and Right to Sell Agreement must have written, specific start and end dates, as must all Right to Sell Agreements.

The California Megan's Law disclosure A. is required for all residential real estate sales and property management contracts. B. requires the agent to research the names and locations of sexual predators within the two-mile area. C. is required if the property is within one-half mile of a school. D. is an optional disclosure.

Choice A The Megan's Law disclosure is required for all residential sales and property management contracts in California.

"RESPA" is an abbreviation for an important law relating to the sale of one to four unit residential dwellings. "RESPA" stands for A. the Real Estate Settlement Procedures Act. B. the Real Estate Services and Protection Agency. C. the California Real Estate Subdivision Partition Act. D. the U.S. Real Estate Survey and Property Act.

Choice A The Real Estate Settlement Procedures Act is enforced by the U.S. Department of Housing and Urban Development. It allows borrowers to shop for settlement services for first or subordinate loans on 1- to 4-unit residential dwellings.

Liquidated damages are limited to which of the following? A. 3% of the sale's residential property contract price B. forfeit of the total deposit amount in escrow C. forfeit of the deposit amount in escrow or 3% of the sales contract, whichever is less D. the judge's decision at the conclusion of trial

Choice A The Residential Purchase Agreement and Joint Escrow Instructions specifically state that, when "liquidated damages" is checked and initialed, the buyer may walk away from the contract by forfeiting 3% of the agreed purchase price.

Which of the following financial terms is never expressed as a percentage? A. the principal B. the interest rate C. the discount rate D. the return on investment (ROI)

Choice A The principal amount loaned is expressed in whole dollars and cents in both numeric ($100.00) and written (one hundred dollars and no cents) form. When in conflict, the written amount takes precedence over the numeric expression.

The real estate recovery fund is A. limited to $50,000 per occurrence. B. limited to $1 million per individual license. C. an alternative to litigation. D. all of the above.

Choice A The real estate recovery fund helps reimburse those who have been harmed (civil tort) due unlawful acts of licensed real estate agents. Each recovery is limited to $50,000 regardless of the civil court award, if any.

Month-to-month lease agreements A. need not be in writing. B. must be in writing. C. require a deposit to be valid. D. can be terminated orally.

Choice A The statute of frauds does not apply, as this is a contract of less than one-year execution. A month-to-month rental agreement can be an oral contract.

A "4-3-2-1 depth table" would indicate what percentage of the value of the property is located in the front part of the parcel. This would apply to which of the following? A. lake-front property in Lake Tahoe B. forest timber land high in the eastern Sierra Nevada range C. suburban track homes in Glendale D. condominium projects in Palm Springs

Choice A The value of a lot along the shore of Lake Tahoe is greatest where it fronts the lake. Lake Tahoe property abutting the lake is often valued by the linear foot of lakeshore. In other words, 100% of the value is in the linear feet touching the water.

Buyer and broker agreements include all of the following EXCEPT a(n) A. gross listing. B. non-exclusive authorization and right to sell agreement. C. exclusive authorization and right to sell agreement. D. net listing.

Choice A There is no such thing as a gross real estate listing.

A secret profit made by a licensed agent or a member of the agent's family A. is unethical and a breach of the fiduciary relationship. B. is acceptable. C. never happens. D. pertains only to the licensed agent and not to a member of the agent's family.

Choice A This is completely unethical if not disclosed to the client. Buying on an agent, a family member, or even a business partner account without disclosing this relationship is a breach of fiduciary duty and harms the principal.

Unlicensed sales associates are permitted to do which of the following at an open house? A. greet visitors B. answer simple questions about the property C. show the visitors the property D. negotiate offers

Choice A Unlicensed sales associates are limited to opening and securing the open house property, greeting guests, presenting a guest book for signature, and collecting business cards.

The cost approach, also known as the replacement cost method, is most often used to value property for what purpose? A. property insurance replacement B. divorce proceedings C. sale of the property to relatives D. donation of real property to charities

Choice A Valuation of real property, particularly the structures, not the land, is a common method used for replacing damaged property.

The underlying premise for all real estate property valuation is A. individual ownership. B. location. C. availability of money. D. demand for housing.

Choice B "Location, location, location" is the basic tenet underlying all real estate valuation. Identical chicken coops in Pacific Heights, San Francisco, and Modoc County will have a different value due to location.

Real estate agents may engage in the business specialty of dealing in real property securities such as promissory notes and sales contracts upon A. securing a National Association of Securities Dealers (NASD) license. B. securing a Real Property Securities Dealer (RPSD) endorsement to their broker's license. C. joint licensing by the National Association of Securities Dealers and the Department of Real Estate. D. securing a National Mortgage Lending Service (MNLS) license.

Choice B A Real Property Securities Dealer (RPSD) endorsement to the broker's license is required in California.

Broker trust accounts A. hold the broker's unearned commissions. B. must not hold more than $200 of the broker's personal funds. C. hold the salesperson's undistributed commissions. D. are part of every broker's business accounting.

Choice B A broker must often use personal funds to open a bank trust account. The real estate regulations allow no more than $200 of the broker's personal funds at any time be held in the client's trust account.

The real estate broker and salesperson licenses require how many hours of continuing education for license renewal? A. 45 hours of approved continuing education every year B. 45 hours of approved continuing education every four years C. 15 hours of approved continuing education D. 45 hours of an approved pre-license real estate course such as real estate economics

Choice B A combined total of 45 hours of continuing education in several areas, including ethics, is required every four years.

Which of the following is used in California that makes real property collateral for a promissory note? A. a mortgage B. a deed of trust C. a trust deed D. a grant deed

Choice B A deed of trust conveys bare (naked) legal title to the trustee (but not possession) for the benefit of the lender (beneficiary). Action on a debt proceeds outside the court system and can move quite rapidly. --- A mortgage is generally not used in California to secure a promissory note. A mortgage requires action though the judicial system and can take years to make its way through the courts to satisfy the debt. This is a public procedure. A trust deed is more accurately called a trustee's deed and is used by the trustee of a trust entity (living trust or irrevocable trust) to transfer title. This is not a security device. A grant deed allows the grantor to transfer the bundle of rights consisting of possession, enjoyment, control, and disposition to the grantee.

A deed of trust is A. evidence of title. B. a surety device. C. provided by a living trust to the buyer. D. provided by child's guardian to the buyer.

Choice B A deed of trust executed by a borrower (grantor) is given to a trustee (grantee) for the benefit of the lender (beneficiary). The deed of trust encumbers the real property and ties it to the promissory note of the loan. The deed of trust empowers the trustee to sell the property for the benefit of the lender should the borrower default on the loan.

Who can act as an agent when the buying and selling parties have agreed to an escrow for handling the paperwork and funds in a real estate transaction? A. the seller's real estate broker B. a neutral third party C. a family member of either party D. a licensed property insurance agent

Choice B A neutral third party who will facilitate the written terms and conditions of the sale prior to exchange of funds and change of title is critical to a successful transaction

Licensed real estate brokers must retain all their agency records for a minimum of A. two years. B. three years. C. four years, if electronically scanned. D. their active license duration.

Choice B All agency records must be retained for three years. Additionally, the three-year retention period begins at the close of escrow, not at the beginning of the listing.

The four unities of time, title, interest, and possession must be concurrent for parties to hold which of the following types of titles? A. tenants in common B. joint tenancy C. severalty D. community property

Choice B All parties acquiring an interest in the property at the same time, holding the same title, holding 100% interest, and taking possession at the same time may vest as joint tenants.

Which of the following is an example of personal property (as opposed to real property)? A. shrub B. garden bench C. basketball hoop cemented into the driveway D. chandelier

Choice B Because a garden bench is not attached to the land, it is an example of personal property.

Which of the following requires probate taxes and court costs including attorney's fees? A. a revocable living trust B. a holographic will C. an irrevocable trust D. intestate succession

Choice B Both a witnessed will and a holographic will require probate action through the Superior Court of California to effect the instructions provided by the deceased as to how his or her property is to be distributed.

Who must visually inspect a residential property before purchase? A. both the buyer and the buyer's agent B. the potential buyer may elect not to, but the seller and the buyers' agents are required to visually inspect C. the buyer D. the listing agent's supervising broker

Choice B Both the seller and buyer's agents must visually inspect the property and disclose any material facts.

Commercial property is valued by A. the comparable property around it. B. the gross rents it generates. C. the replacement cost of the building. D. the historic cost of its acquisition.

Choice B Commercial property including leased industrial, leased commercial, leased agriculture, and leased residential properties are valued most commonly using the gross rent multiplier appraisal method

Which is the usual method for commercial property valuation? A. comparative analysis B. capitalization rate C. cost basis D. property tax valuation

Choice B Commercial, industrial, and non-owner-occupied residential properties are usually valued as a function of the gross monthly rental income they can command in the market place divided by the capital investment.

Disclosure or discussion of affliction with AIDS or of an AIDS-related death in the property A. may be provided in response to direct questioning. B. may constitute prohibited discriminatory conduct. C. may be addressed on line three of the Mandatory Death Disclosure form. D. may be a material disclosure.

Choice B Discussion of AIDS may constitute discriminatory conduct and jeopardize the real estate licensee's standing with the civil authorities and the Department of Real Estate.

Dual agency agreements are A. not legal according the California Business and Professions Code. B. legal if disclosed, elected, and confirmed by both parties. C. always more beneficial to a buyer than a seller. D. perfectly fine.

Choice B Dual agencies are legal in California if, and only if, the dual nature of the agency is disclosed, elected, and confirmed by both parties. However, it is difficult for the agent not to be compromised.

Easton v. Strassburger is a landmark 1984 California Court of Appeals decision that A. caps a real-estate broker's out-of-pocket liability at $1 million per incident. B. greatly expands a real-estate broker's liability for material fact disclosure. C. incorporates the concept "buyer beware" into property disclosures. D. places material disclosures squarely on the seller's shoulders.

Choice B Easton v. Strassburger emphasizes the responsibility and burden of a real-estate broker to visually inspect residential real estate and identify material facts on the Transfer Disclosure Statement.

Errors and omissions insurance will cover which of the following errors in a real estate transaction? A. material fact disclosures that the agent reasonably should have discovered by visual inspection B. minor or non-material errors in the sales document such as punctuation and spelling C. any secret profits that are discovered D. deliberate fraud

Choice B Errors and omission insurance is specifically designed to cover the real estate professional from minor or non-material errors. Examples include typographic errors, minor spelling errors, and minor punctuation errors.

Commingling an agent's personal funds with a client's funds A. could lead to criminal prosecution. B. could lead to civil prosecution. C. is defined as an agent depositing more than $50 of their personal funds in a client's trust account. D. is always allowed.

Choice B Generally accepted trust accounting procedures and the California Business and Professions Code specifies separate accounts and accounting for funds held in trust by an agent. Violating these procedures could lead to civil prosecution.

Which of the following is considered real property? A. motor homes and coaches B. land C. chattel real D. mobile homes resting on their original wheels

Choice B Land, appurtenances permanently affixed to the land, minerals in the ground, and the air above the ground are all examples of real property.

Impound accounts for property insurance and property taxes are often found in which real estate professional's accounting books of record? A. broker's accounts B. lender's accounts C. escrow accounts D. mortgage broker's accounts

Choice B Lenders often require borrowers to pay their property insurance and property tax payments in monthly increments. The lender "impounds" the funds in a separate trust account and pays the obligations on behalf of the property owner when due.

A licensed real estate agent's disclosure of agency relationship(s) may include any or all of the following EXCEPT A. the seller's agent. B. the agent. C. the buyer's agent. D. a dual agent.

Choice B Licensed real estate agents do not need to disclose a relationship with themselves. There are two parties to a fiduciary relationship: the agent and the principal.

When do licensed real estate agents perform appraisals for home sellers? A. all the time B. never C. only for their potential clients D. for their own needs

Choice B Licensed real estate agents never perform appraisals. They are not licensed to do so. A licensed real estate agent may do a comparable analysis in an attempt to estimate the market value of a property for purposes of proposing a listing. That analysis is not an appraisal. Only BREA-licensed appraisers can perform appraisals.

Licensed California real estate brokers may buy and sell promissory notes A. with their existing broker license. B. with a special Department of Real Estate license endorsement. C. with an additional National Mortgage Loan Servicing (NMLS) license. D. if outside their current fiduciary relationship with their client.

Choice B Licensed real estate brokers must take the extra step and secure a special endorsement from the California Department of Real Estate before engaging in the buying and selling of promissory notes.

Newly licensed sales agents may begin their new profession A. upon a written agency agreement with a broker. B. once the broker has notified the Department of Real Estate in writing of their affiliation. C. upon passing the California Real Estate Salesperson examination. D. upon passing the examination and paying the license fees to the state.

Choice B No licensed sales agent may engage in the real estate profession without a written contract with a licensed real estate broker. The broker must file the appropriate form to notify the Department of Real Estate of the agreement.

May a non-emancipated minor own and enter into a contract to sell real estate? A. Yes; if the property is in the non-emancipated minor's name, he or she can sell it. B. No; a non-emancipated minor may own real estate but cannot sell it. C. No; non-emancipated minors cannot hold real estate in their own name. D. Yes; if the non-emancipated minor inherited the real estate, he or she can sell it.

Choice B Non-emancipated minors may own real estate in their own names in severalty, but they cannot sell it as they do not possess the legal capacity to enter into a contract. Instead, the minor's legal guardian or parent may sell it and transfer title with a guardian's deed.

Mineral rights in the land pertain to all of the following EXCEPT A. gold. B. oil. C. coal. D. salt.

Choice B Oil is considered a "fungible" (meaning moving) substance by law, making it personal, not real, property.

Those listings not published through the multiple listing service are known as "pocket listings" and are A. common real estate agency practice. B. unethical. C. in violation of the California Business and Professions Code - Real Estate. D. unethical and illegal.

Choice B Pocket listings are considered unethical in the industry, but they are not illegal.

The Department of Real Estate audits focus primarily on which sector? A. sales brokerage B. property management C. real estate securities dealing D. subdivision act

Choice B Property management broker agencies are the most frequently audited by the Department of Real Estate. Their trust accounting records are particularly carefully audited.

Which of the following does NOT warrant that the seller owns the property? A. grant deed B. quitclaim deed C. gift deed D. land patent

Choice B Quitclaim deeds carry no warranty that the seller owns the property.

Commissions earned by the procuring real estate listing agent for residential 1- to 4-unit dwellings are A. fixed at 6%. B. negotiable. C. paid by the buyer. D. shared by the buyer and seller.

Choice B Real estate commissions are not fixed and are always completely negotiable.

The public report issued by the Department of Real Estate is a A. listing of disciplinary actions taken against agents by the Commissioner. B. formal disclosure report of important facts about a new subdivision. C. listing of all approved continuing education providers. D. statistical summary of all California real estate transactions of the prior year.

Choice B The "public report" from the Department of Real Estate always pertains to new subdivisions. It is the only report so named as issued by the Department.

California's usury statute restricts the amount of interest that can be levied on any loan by a non-exempt lender to what annual interest rate? A. the federal funds rate B. ten percent rate C. the monthly national average credit card rate D. the U.S. Treasury bond rate

Choice B The California Consumer Protection laws state clearly that rates above 10% APR are usurious, hence excessive, unreasonable, and punitive.

The licensed broker of record has a legal duty to supervise A. independent contractors. B. the business activities of their licensed agents. C. escrow officers. D. property stagers.

Choice B The California real estate regulations specify that brokers have a duty to supervise their affiliated licensed sales people. The broker has the ultimate responsibility for the fiduciary relationship with the principal.

What is the duration of a Residential Listing Agreement (Exclusive Authorization and Right to Sell)? A. until the property is sold B. negotiable C. until the agreement is terminated by the agent D. until the agreement is terminated by the seller

Choice B The Department of Real Estate states very carefully that the duration of the listing agreement is specifically dated as to its beginning and end. The dates must be agreed upon by the both parties.

The Sellers Advisory (SA) form includes a recommendation that the seller A. disclose the property's proximity to natural gas wells and pipelines. B. obtain a professional inspection before the sale. C. disclose any deaths occurring in the dwelling within the past three years. D. disclose the property's proximity to any ordinance dumps.

Choice B The Sellers Advisory form is provided by the licensed real estate agent to the principal (seller) with recommendations, such as to obtain a professional inspection before the sale.

The listing agent is engaged by the seller to A. find a buyer. B. procure a ready, willing, and able buyer. C. find a buyer and manage the sale through escrow. D. arrange financing for the buyer.

Choice B The agent's goal is to find a ready, willing, and able buyer.

The real estate listing agreement is A. the personal property of the salesperson who secures the client. B. the personal property of the broker. C. jointly held by the broker and the salesperson. D. jointly held by the cooperating broker and the salesperson.

Choice B The broker always owns the listing. The procuring sales associate works for the broker. He or she cannot engage in real estate sales for compensation without affiliating with a licensed broker.

A couple purchases a home together one week before their marriage. They may not hold title to the property in which of the following? A. joint tenancy B. community property C. tenancy in partnership D. tenancy in common

Choice B The couple may not hold title as "community property" as they were not married to each other at the time of purchase and title.

Are real estate agents who manage their personal, owner-occupied 1- to 4-unit residential property exempt from the 1968 Fair Housing Act as amended? A. yes B. no C. yes, but only for a two-family unit D. yes, but only if they do not publicly advertise

Choice B The real estate may be a person's private property, but licensing as a real estate agent requires all licensees to disclose that they hold a real estate license. The licensed real estate agent must comply with the 1968 Fair Housing Act and its amendments, regardless of the type of 1- to 4-unit residential property involved.

Transfer of real property between parties must legally describe the property and the parties to the transfer of title in which of the following ways? A. with two witnesses B. on paper C. with a handshake D. using common law

Choice B The statute of frauds clearly states that title to property can be transferred only in writing.

The government reserves the right of eminent domain according to the 5th Amendment of the U.S. Constitution to take private land for public use. An example of the taking of property for public use would include which of the following? A. a new Walmart store B. a highway bypass C. any property the government wants without just compensation to the owner D. agricultural land

Choice B The taking of private property for a new highway bypass is a uniformly agreed upon exercise of eminent domain given just compensation.

The U.S. Government Survey method uses which descriptors to identify property? A. benchmark points B. tiers, ranges, and townships C. property starting points D. state line markers

Choice B These criteria are part of the system established to identify all public lands by the use of "base lines" and "meridian lines" from a specific starting point.

The exercise of littoral rights pertains to the use of A. river water. B. lake water. C. recycled water. D. moving water.

Choice B Use of static water from a lake, bay, ocean, or sea is considered a littoral right. --- Use of moving river water is a riparian water right. Use of recycled water is considered neither a littoral nor a riparian water right Moving water, such as a river, stream, or creek, is a riparian right.

Electronic signatures using computer software tools such as DocuSign® are A. used as a placeholder until the parties can physically wet sign documents. B. valid except when a notarized signature by a licensed notary public is required. C. not valid for real estate transactions. D. intangible and therefore disallowed by state law.

Choice B Whereas a document signed using DocuSign® provides a verifiable, legitimate signature, it is not notarized. Some documents, such as deeds, require identification and notarization including the grantor's thumbprints.

An option agreement requires a minimum of how much value (money) to bind the contract? A. twenty percent of the proposed purchase price B. a nickel C. an amount equal in dollars to the buyer's FICO score D. one dollar

Choice B Yes, as little as this seems, five cents is the minimum amount required to bind the option contract. Regardless of the amount, it is advisable to take a check (rather than cash) because it is easier to document

A deed of trust filed at the county recorder's office is an example of which of the following? A. a tax burden B. something that takes precedence over property taxes C. a lien D. something that is removable at the owner's desire

Choice C A deed of trust is a monetary encumbrance or a lien on the property title.

The proverb "A bird in the hand is worth two in the bush" is most closely associated with which financial concept? A. $100 today is the same as receiving $100 in six months B. a month waiting on unemployment will gain $10,000 in yearly salary C. the time value of money D. the payback method

Choice C A dollar today is worth more than a dollar in the future due to its potential earning capacity, as well as inflation, etc.

A married man, James, buys a $300,000 condominium in Palm Springs. He secures a $250,000 fully amortized, 30-year loan from a mortgage broker. He pays the broker 1 point to reduce the interest rate to 2.654%. How much does James pay the broker? A. $1,000 B. $3,000 C. $2,500 D. cannot be determined from the facts provided

Choice C A point equals 1% (.01) of the borrowed amount. This is also known as an origination fee or a discount fee. $250,000 loan × .01 = $2,500.

Conventional lenders look carefully at loan to value (LTV) ratios when considering the security for a new owner-occupied home loan. Other matters being equal, which of the following ratios would make a loan on an owner-occupied residential dwelling most attractive? A. 1:1 B. 1.2:1 C. 0.8:1 D. it is impossible to determine from the facts provided

Choice C A ratio of 0.8:1 means 0.8 ÷ 1 = 1 would represent 0.8 (80%) of the purchase price is borrowed. The borrower is placing 20% of the loan value as equity in the property. The remaining 80% is borrowed from the lender. This 20% funds from the purchaser comforts the lender that the borrower has "skin in the game" and is less likely to walk away from the loan.

Natural hazard disclosures regarding the property may include which of the following? A. proximity to a decommissioned military base B. proximity to high-tension electrical transmission wires C. situation in a flood zone D. proximity to littoral or riparian features

Choice C A river, stream, lake, or ocean flood zone is a natural hazard.

An agent may terminate the agency agreement A. at any time. B. only with the concurrence of the principal. C. when asked to participate in discriminatory actions. D. if offered a better commission offer.

Choice C An agent can walk away from an agency agreement unilaterally if the principal has asked the agent to participate in an illegal act (illegal object) such as to violate the 1968 Fair Housing Act.

If the seller in a real estate agreement unexpectedly dies, the listing agreement A. is transferred to the deceased's heirs. B. will be administered by the trustee, executor, or executrix. C. is terminated. D. freezes the outstanding offers on the property until probate.

Choice C An agreement between living parties terminates at the death of any of the parties.

The "4 C's" of qualifying for a real estate loan include all of the following EXCEPT A. collateral B. credit and capacity C. character D. capita

Choice C Character is a traditional term for personal honesty and integrity. Contemporary loan qualification looks to credit history as reflected in the borrowers FICO score as an alternative assessment of character.

When does title transfer to the new property owner? A. the day following the recordation of the deed with the county recorder B. immediately upon recordation of the deed with the county recorder C. upon delivery and acceptance of the deed or constructive receipt of the deed D. by negotiation between the buyer and seller

Choice C Delivery of the title document (deed) and acceptance of the document by the buyer is sufficient for the transfer to take legal effect. Recording the title with the county recorder's office that offers constructive receipt is a good idea but not required.

Digital real estate forms and contracts are A. computer-generated forms that must be wet signed to be enforceable. B. required. C. a common and standard method of contract and disclosure creation and delivery. D. used only by members of the California Association of REALTORS®.

Choice C Digitally prepared real estate forms such as WinForms® or DocuSign® are acceptable and legal electronic tools used by the real estate industry. They are commonly delivered via the internet.

When an agent is in doubt of a probable material fact, it is always prudent to A. say nothing. B. point out the race of the applicant. C. disclose in accordance with ethical professional conduct. D. keep your eye on the commission.

Choice C Disclose, disclose, disclose! Ethical behavior is the highest calling for a licensed real estate agent.

It is common for an escrow agent to prorate rents or property taxes as part of the escrow process. How many days is the basis of proration of monies? A. the number of calendar days in the month B. the number of calendar days in the month except in leap years C. 30 days in the month regardless of the number of calendar days D. 30 days in September, April, June, and November; 31 days in all other months

Choice C Escrow proration is always based on 30 days regardless of actual number of days in the month. This method is fair to both parties.

CalVet home loans and private sales contracts (land contracts) have one thing in common. What is it? A. Title transfers immediately at close of escrow. B. Both require no money down. C. Title transfers to the buyer once the entire loan principal and interest are paid. D. They have nothing in common.

Choice C In a CalVet home loan, the State of California Veterans Affairs holds title to the property until the loan is paid, at which time the title is transferred to the buyer. In a sales contract (land contract), the seller (vendor) retains title until the buyer (vendee) makes the last principal and interest payment.

Of the following institutional lenders, which has the greatest money available to lend for real estate-secured loans? A. general-purpose banks B. mutual savings banks C. life insurance companies D. credit unions

Choice C Life insurance companies have by far the greatest assets available for real estate loans both on the primary and secondary loan markets. They are major lenders in both the commercial and residential property markets. Life insurance companies have more monies than general-purpose banks and mutual savings banks combined.

There are three main types of lenders that finance real estate transactions. What kind of lender is fictional Donald Duck's rich uncle, Scrooge McDuck? A. an institutional lender B. a government-backed lender C. a non-institutional lender D. a private foundation

Choice C Non-institutional lenders include credit unions, pension plans, mortgage companies, and private individuals like Donald Duck's uncle, Scrooge McDuck. --- Institutional lenders include commercial banks, life insurance companies, and savings banks. Government-backed lenders include CalVet and FHA. Private foundations would be an example of a non-institutional lender. However, fictional Donald Duck's Uncle Scrooge is a private individual.

Real estate commission for a property that is in probate is set by A. the administrator appointed by the court. B. the broker's sales agreement with the deceased. C. Superior Court of California order. D. negotiation between the executor and the real estate broker.

Choice C Only a Superior Court of California judge overseeing the probate process has the right to order the real estate broker commission. The executor may make a recommendation, but the court makes the final determination and order.

The 1968 Fair Housing Act as amended EXEMPTS which of the following? A. apartment buildings B. duplex residential housing managed by a licensed real estate agent C. rooms in owner-occupied residential units D. residential homes in resort areas managed by licensed property managers

Choice C Owner-occupied, residential housing is exempt from the 1968 Fair Housing Act as amended. Examples include additional dwelling units ("ADU"), rental of rooms in an owner-occupied residential property, and 1-4 residential housing units in which the owner lives in one of the four units.

The California Coastal Commission regulates California property boundaries located along the Pacific Ocean. Property boundaries are set by which of the following? A. the mean low tide line B. the average tide line C. the mean high tide line D. the red tide line

Choice C Private property borders are set by the California Coastal Commission law and regulation at the mean high tide line. The beach or coast laying between the mean high tide line and the surf is public accessible property.

A pre-paid rental listing service (PRLS) as licensed by the Department of Real Estate provides A. assistance to the consumer in securing rental housing. B. an additional license to property managers in addition to a broker's license. C. a list of real estate property available for tenancy for a fee. D. a licensed, streamlined, guaranteed method for securing a tenancy.

Choice C Rental listing services sell the consumer a list of available rental properties for rent. That is where their service ends. Ethics is key in this service.

The Truth in Lending Act (TILA) is a federal law as administered by the Federal Reserve (Regulation Z). It requires its lenders make certain disclosures to which of the following type(s) of borrowers? A. commercial, agricultural, and business B. both commercial and consumers C. consumers only D. agricultural

Choice C TILA and Regulation Z specifically apply to loans for 1-4 residential units and are created in the interest of consumer protection and disclosure.

The greatest level of title insurance coverage is associated with which type of policy? A. a Federal Land Title Association (FLTA) policy B. a California Land Title Association (CLTA) policy C. an American Land Title Association (ALTA) policy D. a North American Land Title Association (NALTA) policy

Choice C The American Land Title Association (ALTA) policy, also known as the "lenders policy," is the greatest level of title insurance coverage and is required for purchase by the borrower. The lender is named as the beneficiary.

Real Estate Appraisers are licensed by the A. U.S. Department of Housing and Urban Affairs (HUD). B. California Department of Real Estate (DRE). C. California Bureau of Real Estate Appraisers (BREA). D. California Department of Real Estate Appraisers (DREA).

Choice C The BREA is the exclusive California Department of Consumer Affairs bureau engaged in licensing and regulating real estate appraisers.

The California Department of Real Estate A. protects licensed agents when they are sued by buyers B. protects licensed agents when they are sued by sellers C. has the jurisdiction to revoke the license of an agent D. all of the above

Choice C The California Department of Real Estate has the jurisdiction to suspend, restrict, or even revoke the license of an agent. A license suspension, restriction, or revocation is a matter of record that is publicly associated with your license.

Administration of the Subdivided Lands Act is the responsibility of which of the following? A. individual California county recorder's offices B. the U.S. Environmental Protection Agency C. the California Department of Real Estate D. the California Bureau of Real Estate Appraisers

Choice C The California Department of Real Estate is jointly responsible for administering the California Real Estate license laws and the Subdivided Lands Act.

A life estate interest in real property is in effect for the remainder of the A. grantee's life. B. beneficiary's life. C. life of a designated person. D. grantor's life.

Choice C The duration of a life estate is a function of the "life," which can be a third party, the grantor, or the grantee. There are always three parts to a life estate: the grantor, the grantee, and the life.

An individual invests $1 million in a $4 million dollar bottling plant and secures a 10-year, triple-net lease from a beverage company. Annual gross rents are $500,000 per year. Using the payback method, how long will it take for the individual to get the invested money back? A. eight years B. four years C. two years D. impossible to determine from the facts provided

Choice C The individual invested $1 million, not $4 million, in the bottling plant. Gross rents are $500,000 per year. $1 million divided by $500,000 equals two years. The arithmetic is $1,000,000 ÷ $500,000 = 2.

Jessica has a $250,000 30-year fully amortized loan at 4.25% secured by deed of trust. The loan was acquired to purchase her personal residence, where she has lived for 15 years. Jessica notices that interest rates on refinance loans have dropped to 2.85%. What should she do? A. nothing because interest rates do not concern her B. increase her monthly principal payment because an economic recession is coming C. consider refinancing the remaining principal balance with a 15-year fully amortized loan to reduce her monthly payments D. impossible to determine from the facts provided

Choice C The mortgage holder will wish to research refinancing options. Refinancing the remaining 15 years on her mortgage at a significantly lower interest rate will result in lower monthly payments, less interest paid over the life of the loan, and she would still own the home free and clear as originally planned.

The mudsill is what part of conventional construction? A. the place you leave your shoes before entering the dwelling B. the plate upon which the structure rests C. the treated lumber or plate through which the building is bolted to the foundation D. the joist upon which the walls rest

Choice C The mudsill is where the house joins the foundation. In California, the land of earthquakes, it is important that the house is physically and firmly attached by bolts to the foundation. Otherwise, the structure may slip off the foundation, causing tremendous harm.

The Transfer Disclosure Statement (TDS) for 1- to 4-unit owner-occupied residential dwellings is A. only completed when a licensed real estate agent is involved in the transaction. B. completed exclusively by the property owner. C. completed by both the property owner and agents. D. Both A and B are correct.

Choice C The owner-occupant seller completes section I of the Statement independently. The listing agent completes section II. Finally, the buyer's agent completes section III.

The Wire Fraud and Electronic Funds Transfer Advisory (WFA) is A. now an optional disclosure. B. incorporated into the Residential Listing Agreement as of 2015. C. now a mandatory disclosure. D. contains places for account holder name, bank name routing number, and bank account number.

Choice C The risks of cyber theft, wire fraud, and cautionary statements to keep personal banking information safe has been a separate and unique required disclosure since 2015.

The obligation to prepare the mandated and necessary disclosures is the responsibility of A. the seller's agent. B. both the seller's and the buyer's agent. C. the seller and the seller's agent. D. all parties involved.

Choice C The substance of all the property disclosures is the responsibility of the seller and the seller's agent.

A seller executes a grant deed to a buyer but does not record the document at the county recorder's office. This real estate sale and property transfer is A. illegal. B. void. C. legal. D. voidable.

Choice C This is a legal transfer of real property ownership as long as the grant deed is properly executed. Filing a grant deed (recordation) with the county recorder is recommended but not required.

Government-backed loans such as the Federal Housing Administration (FHA), U.S. Department of Housing and Urban Affairs (HUD), and U.S. Veterans Affairs (VA) A. lend millions of dollars to home borrowers each year. B. have competitive interest rates. C. insure and guarantee loans. D. provide funding directly from the federal government to the borrower.

Choice C This is exactly what FHA, HUD, and VA do. The FHA and HUD insure government-backed loans in their areas of interest. The VA guarantees loans. Borrowers and properties must conform to government-backed agency guidelines in order for the loan to be insured. Note the loan term "conforming loan."

A "seller's market" occurs when prices for real estate rise due to A. an increase in the Federal Reserve discount rate. B. a great quantity of real estate is for sale or rent. C. an increasing demand for real estate purchase or rent. D. recent college graduates prefer to move home to live with their parents.

Choice C This is standard microeconomics supply and demand analysis. The availability of real property in the short term is fixed (inelastic). The greater the demand, the higher the prices or rent.

One acre of land is a common measurement in rural areas. An acre of land equals which of the following? A. 5,280 feet B. a section in a township C. 43,560 square feet D. 43,560 feet

Choice C This is the definition of an acre of land.

The California Residential Purchase Agreement and Joint Escrow Instructions are also known as the A. short form. B. sales agreement. C. deposit receipt. D. long form.

Choice C This nickname is derived from the usual last item in creating a binding sales contract: the deposit or earnest money. The other elements of a real estate contract include capacity, legal object, on paper, and acceptance.

The "parol evidence" rule states that A. in ambiguity, money decides the contested contract term or condition. B. the terms and conditions expressed last either orally or in writing are the final intention of the contracting parties. C. the terms and conditions made in writing are the complete and final intention of the contracting parties. D. third or impartial witness evidence decides the contested contract term or condition.

Choice C When there is a question of the final understanding or modification of a contract, the final word goes to the written, not the oral, word.

What type of media may be used by a licensed real estate agent to place a blind advertisement? A. print only B. online only C. any D. none

Choice D A blind ad is commonly one in which the property owner advertises without revealing their name or personal information. Licensed real estate agents may not run blind advertisements even if they are the owner of the property. California real estate law requires the license number in the interest of consumer protection and disclosure.

Agent rates of commission on sales of real property are A. set by the California Department of Real Estate. B. a fixed six percent of the final sales price for residential properties. C. negotiable between buyer and seller. D. negotiable between the principal and agent.

Choice D A commission rate earned for services resulting in a real estate sale are negotiated between the selling agent and agent's principal as part of the agency agreement.

A monetary encumbrance on land is known as A. an easement. B. a promissory note. C. an I.O.U. D. a lien.

Choice D A physical encumbrance is an easement. A monetary encumbrance is a lien.

A non-licensed agent acting as a principal's attorney-in-fact may A. not sell the principal's real estate. B. act in their own personal interest. C. administer their principal's estate. D. sell the principal's estate.

Choice D Any individual who has legal capacity and holds their principal's power of attorney may sell the principal's real estate.

Real property is NOT characterized by which of the following? A. land B. that which is permanently attached to the land C. that which is appurtenant to the land D. that which is movable by law

Choice D Any property characterized by mobility is defined as personal property, not real property.

The presence of lead-based paint in homes or condominiums built before 1978 is A. an optional disclosure. B. required for rental properties only. C. required for owner-occupied properties only. D. required for both owner-occupied purchases and rental properties.

Choice D Both federal and State of California law require disclosure of the potential presence of lead-based paint in any human-occupied building constructed before 1978 without exception.

"Puffing" is when a real estate agent describes a A. very small, cramped house as "cozy." B. two-year old roof as "new." C. mediocre school system as "desirable." D. all of the above

Choice D Choices A, B, and C are all examples of "puffing," making choice D the correct answer. Puffing is exaggerating a quality of a property to put it in a more positive light. It may be unethical, but it is not illegal as long as it is presented as an opinion. Although puffing is common, it is considered unethical when taken too far. However, unless the exaggeration rises to the level of a deliberate distortion of material facts about the property, it is not illegal.

The three steps of the agency disclosure law are all of the following EXCEPT A. disclose. B. elect. C. confirm. D. collect.

Choice D Collecting fees or anything of value is not part of this agent to principal fiduciary duty. Compensation need not be involved in establishing an agency relationship. The agent shall disclose, elect, and confirm the relationship between the parties.

Can a married person who has acquired sole and separate real property transfer the title without their partner's consent? A. yes, as long as it is his or her sole and separate property B. yes, as long as the person informs their spouse C. yes, without restriction D. no

Choice D Even though the property might have been acquired as sole and separate property without the partner's knowledge, the property cannot be transferred without the partner's written consent (quit claim deed).

Which of the following statements about California residential property managers is true? A. They are required to live in commercial hotels as well as in all residential apartment buildings. B. They are never required to live in the residential property. C. California real estate licensing is only required for residential buildings with greater than 16 units. D. A California real estate license is never required.

Choice D In California, a residential property manager is not required to have a real estate license.

In California, mortgage loan brokers can be licensed by which of the following? A. the Department of Business Oversight (DBO) B. the Department of Real Estate (DRE) C. the California Finance Lenders (CFL) D. all of the above

Choice D In California, all three of these departments license mortgage loan brokers.

Is it adequate for a licensed real estate agent to conduct business in accordance with California state law? A. yes B. yes, but it is encouraged to also take ethics into account C. no, but it is adequate as long as an agent also follows federal law D. no

Choice D Licensed real estate agents are expected to conduct themselves in accordance with state, federal, and common law, as well as with the California Code of Ethics.

A property owner has a lake existing completely within the property boundaries. The property owner has what rights to the water in the lake? A. riparian rights B. ownership rights C. drainage rights D. littoral rights

Choice D Littoral rights pertain to still, non-moving water as found in a lake, ocean or delta. The property owner has the right to use the water in the lake. The water itself is owned in common by society even though the lake lies completely within his property boundaries.

Question Number 35 Margaret Byer (vendee) has no down payment and is unable to secure a loan to purchase a house and barn on five acres. Carol Rivera (vendor) agrees to finance Margaret's purchase using a land contract with a 20-year term. When will Margaret acquire title to the property? A. at the close of escrow B. when the total principal is paid C. at the end of the agreed 20-year term D. at such time as all the principal and interest are paid in full

Choice D Margaret will secure the title after the principal and interest are paid in full.

The statute of frauds is a legal concept that states that all of the following must be in writing EXCEPT A. contracts with an executory period greater than one year. B. marriage contracts. C. transfer of real estate title. D. month-to-month rental agreements.

Choice D Month-to-month rental agreements can be oral contracts as the period of rental is 30 days. In California, this is also called a "tenancy at will." Of course, a prudent licensed real estate agent would seek a written document, but it is not required by the statute of frauds.

May an agent request an advance fee? A. Yes, if the listing seller agrees and authorizes payment from escrow in writing. B. Yes, as long as escrow has been fully funded by the buyer. C. Yes, as long as escrow is closing within 10 days. D. No, an agent can never request an advance on commission for any reason or purpose.

Choice D No disbursements from escrow or privately from either party can be advanced prior to the closing of escrow. It cannot be legally done. The agent would be in violation of professional ethics to even ask.

Novation is the process whereby A. the contract signatures are notarized. B. the original contract is rescinded and a new one created. C. material facts are corrected in a contract. D. a new contract is substituted for an old one.

Choice D Often a novation occurs when a difficult-to-read, handwritten contract is replaced with an easier-to-read, word-processed document. None of the terms and conditions may be changed.

Elements of a real estate contract include all of the following EXCEPT A. capacity of the parties. B. legal object. C. consideration. D. legal residence or citizenship in the United States.

Choice D One need not be a legal resident or a citizen of the United States to acquire real estate in the United States.

The Truth in Lending Act requires all consumer, home loan, and refinance loan interest rates be published as A. both numbers and words. B. effective interest rate (EIR). C. simple interest. D. annual percentage rate (APR).

Choice D Presentation of the annual percentage rate (APR) is required regardless of the stated interest, face interest, or simple interest presented on the loan marketing materials. Using APR helps to more accurately express the true cost of the loan.

Which of the following is NOT a method of transferring real estate title? A. a witnessed will B. accession C. intestate succession D. a handshake

Choice D Property cannot be transferred by a verbal agreement or handshake. The transfer must be in writing.

Residential lofts (zero-bedroom dwelling) are always considered A. commercial real property. B. multi-use real property. C. residential real property. D. exempt from a consumer protection transfer disclosure statement and rental lead disclosure statement.

Choice D Residential lofts are a gray area in the real estate law and zoning area and a hotly debated area of urban planning. The licensed agent will be careful to note their exemption from most consumer protection regulations.

The ownership "bundle of rights" includes A. possession. B. enjoyment. C. exclusion. D. all of the above.

Choice D The "bundle of rights" includes possession, enjoyment, and exclusion—in addition to other rights, including use and disposition.

The Unruh Civil Rights Act prohibits A. "steering" in real estate practices. B. "blockbusting" in real estate practices. C. any business establishment from discriminating on any arbitrary basis. D. all the above.

Choice D The Act prohibits discrimination in all business establishments or by all licensed real estate agents in California based on sex, race, color, religion, ancestry, national origin, age, disability, medical condition, genetic information, marital status, or sexual orientation.

All licensed and registered mortgage loan originators (MLOs) in California may set their commissions A. at a minimum of 15% for loans under three years. B. at the Federal Reserve discount rate. C. at whatever commission rate they are able to negotiate. D. in accordance with the California Business and Professions Code.

Choice D The California Business and Professions Code, Division 4, Real Estate (Commissions and Other Requirements) is very specific as to loan broker commission limits. A violation can result in a fine, suspension, or loss of license.

Public controls of real estate and its uses is a police power of the state derived from which source? A. the Articles of Confederation B. the Declaration of Independence C. local zoning ordinances D. the U.S. Constitution

Choice D The U.S. Constitution, 10th Amendment (Bill of Rights), states that the police powers "not delegated to the United States" are thus granted to the individual states to establish and enforce laws protecting the welfare, safety, and health of the public.

A fiduciary relationship exists between all of the following EXCEPT A. the client. B. the agent. C. a third party. D. the agency staff.

Choice D The agency staff is not a party to this fiduciary relationship; however, the agency staff is called upon to act in accordance with ethical and professional standards in line with their position and employment.

In order for an appraisal report to comply with BREA guidelines, it must contain all of the following EXCEPT A. the signature of the BREA licensed appraiser. B. the reason for the appraisal. C. the date of the appraisal. D. the compensation paid for the appraisal.

Choice D The amount of compensation or fee charged or received by the licensed BREA appraiser is not included in the appraisal report.

Is a 50-gallon solar water heater, costing $2,000 and requiring hours for installation, considered a fixture and therefore real estate? A. Yes. B. No, because it is personal property. C. No, because it cost less than $10,000. D. It depends on many factors, including the method of attachment.

Choice D The five tests for determining whether an item is real property are (1) method of attachment, (2) adaptability, (3)relationship of the parties, (4) intention, and (5) agreement ("M-A-R-I-A").

The California Association of REALTORS® (CAR®) multiple listing service (MLS) is California's largest database and is key to A. maximizing CAR® member commissions. B. minimizing non-CAR® member access. C. assuring full property disclosure. D. reaching the greatest number of potential buyers.

Choice D The intent of the multiple listing service is to present properties to the greatest number of potential buyers interested in a real estate purchase. A large and open marketplace is a basic tenet of economics assuring a price that the market will bear.

Agents must disclose their license number and broker affiliation on all of the following EXCEPT A. email signature blocks. B. marketing materials. C. business cards. D. personal correspondence.

Choice D The licensed real estate agent need not provide their agent identification number and broker affiliation on any non-real estate, personal correspondence.

"Escheat" is the term that most closely relates to what process? A. the state taking real property by eminent domain B. the method by which the state deprives someone of their inheritance C. the way in which beneficiaries receive distributed property from a will (probate) D. the state taking assets if there is no will and are no heirs

Choice D The property will go to the State of California if no will or heirs are found. Potential heirs may make a claim on the assets during a five-year period. The assets are sold if no heirs come forward.

The real estate broker examination A. includes true/false questions. B. has the same number of questions as the real estate salesperson examination. C. has fewer questions than the salesperson exam. D. has more questions than the salesperson exam.

Choice D The real estate broker's examination has more questions than the real estate salesperson examination.

The California Law of Agency is entered into by an agent and principal A. only if granted in express or written authority. B. only by estoppel. C. only by ratification. D. by all of the above plus implied authority.

Choice D This is the best choice. Implied authority harkens back to estoppel agencies. Note that no compensation need exist for an agency relationship to be formed and valid.

Examples of negotiable instruments include all except which of the following? A. personal checks B. United States promissory notes C. private promissory notes D. United States savings bonds

Choice D United States savings bonds are not negotiable instruments. They are specifically registered to the purchaser and cannot be traded amongst third parties. Treasury notes are tradable; treasury bonds are not.