Georgia Real Estate Exam Review Part B
Why do brokers feel that an exclusive right to sell listing gives the broker the best protection? A. Because the broker would be paid regardless of who finds the buyer. B. Because exclusive right to sell listings permit protection clauses. C. Because exclusive right to sell listings never expire. D. Because exclusive right to sell listings do not have to be included in the local MLS.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A A broker who gets an exclusive right to sell listing would be paid the commission regardless of who finds the buyer.
In Fair Housing discrimination cases, the burden of proof is on the claimant. The claimant must be able to prove: A. That discrimination occurred. B. That the act of discrimination was not provoked by the claimant. C. Only that the accused partly intended to discriminate. D. Actual damages resulted from the acts of the accused.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A A complainant must be able to prove that discrimination did in fact occur. Any lawyer will tell you that you cannot prove intent.
An agreement in which rent is increased at specified intervals is known as: A. Graduated rental lease. B. Participation lease. C. Acceleration lease. D. Net lease.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A A graduated rental lease has provisions for rent increases at prescribed intervals. An acceleration lease could apply to the same type of situation, but 1 is the better answer.
A broker when showing property, should disclose to the buyer any known latent defects about the property. Which of the following is NOT considered a latent defect? A. Crumbling concrete in the driveway. B. A defective septic system. C. A foundation crack covered with paneling. D. An inoperable garbage disposal.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A A latent defect is something that is not obvious. An appliance that does not work, a defective septic system or a crack in the foundation would not be obvious to a prospective buyer. Crumbling concrete would be obvious and is therefore not a latent defect.
A broker who intends to be compensated if any other person sells his listed property during the listing period, should acquire: A. An exclusive right-to-sell listing. B. An open listing. C. An exclusive agency listing. D. A net listing.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A An exclusive-right-to-sell listing means that the broker gets paid, regardless of who sells the property. An exclusive agency means the broker gets paid if anyone other than the OWNER sells the property. In an open listing ONLY the person selling the property gets paid. A net listing is illegal.
In the usual property management agreement, the property manager can do all of the following EXCEPT: A. Enter into a 2 year lease, verbally B. Hire and fire employees C. Collect rents every month D. Furnish the owner with a monthly statement of income and expenditures
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A An oral lease for over ONE year is unenforceable in a court under the Statue of Frauds. In the best interest of the owner, the property manager would not be permitted to take an oral lease regardless of the period of time.
Each of the following would be considered a "person with a disability," EXCEPT: A. An individual who currently uses illegal drugs. B. A person with a past history of mental impairment. C. A person with a learning disability. D. A person who has difficulty walking.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A Current drug use is excluded from protection under the "person with a disability" class
The legal process of removing a tenant from property is: A. Eviction. B. Ejection. C. Quitting. D. Constructive notice.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A Eviction is a legal process to remove a tenant in possession. Ejection is an action by an owner to regain possession from someone who is in possession illegally. Quitting means departing. Constructive notice of ownership can be given by recording a deed.
Jones leases a building and an earthquake destroys it. Usually A. the lease is no longer enforceable. B. the tenant must pay rent when the building is rebuilt. C. the landlord must rebuild the building. D. the tenant may rebuild the building and the landlord will have to reimburse the tenant.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A If a leased property is destroyed or condemned, the lease terminates and is therefore no longer enforceable.
A broker, acting as a dual agent, with the knowledge and consent of all parties, collected one-half the commission from the seller and one-half from the buyer at settlement. Which of the following statements is true concerning this situation? A. This action is illegal. B. The broker needed only the consent of the seller. C. The broker needed only the consent of the buyer. D. This action is permitted only with the consent of both parties.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D A dual agency is the type of agency where a broker represents BOTH buyer and seller to a transaction. It is lawful in most states as long as both parties (buyer and seller) know about the dual agency and provide written consent.
If a broker has an exclusive right-to-sell listing, which of the following statements is INCORRECT? A. There must be a definite termination date in the listing. B. All money given, by the seller to the broker, must be accounted for. C. The broker may cancel the listing if he chooses. D. The broker is legally obligated to sell the property.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D All exclusive listings must have definite termination dates. The broker (agent) is accountable to the seller (client) and also to the buyer for any monies received from either party. The broker is NOT obligated to sell the property. He is only obligated to make a reasonable effort to sell the property.
An oral listing is: A. Void. B. Voidable. C. Illegal. D. Unenforceable
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D An oral or verbal listing may be valid, but it is UNENFORCEABLE.
Which of the following MUST be disclosed by an agent to his client, in a real estate transaction? A. Minority groups are moving into the area. B. The average commission recommended by the local real estate association. C. The buyer intends to violate deed restrictions. D. The buyer has had previous credit problems which may have an impact on loan qualifications.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Disclosure of minority groups are moving into the area would be a violation of Fair Housing Laws and could be considered blockbusting. The fact that the prospective buyer has credit problems is vital to the decision of the seller to accept or reject the offer.
A broker receives a call from a family that is moving into the area from another state. They advise the broker that they want the opportunity to look over different neighborhoods before making a buying decision, but do need to move soon. How should the broker handle this situation? A. Find a house for sale with immediate occupancy. B. Put the couple into a rental property with only a one year lease. C. Locate an owner willing to enter into a lease with option to buy. D. Suggest they rent on a month to month basis.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Find something that is going to allow the family flexibility after they move here. A month to month lease will allow them to act quickly if and when they find something in an area that they like.
If a seller breaches a valid and enforceable sales contract, the purchaser may A. sue for damages. B. rescind. C. sue for specific performance. D. any of these options.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D If the seller defaults, the buyer can do any of these options.
Under a net lease, which of the following is the tenant NOT required to pay? A. Taxes B. Repairs C. Utilities D. Mortgage
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D In a net lease the tenant pays the rent, the property taxes, the repairs and maintenance and the utilities, but not the mortgage payment. It would be a rare case where the tenant pays the mortgage payment in any type of lease.
When a lessee assigns his or her leasehold interest in a property, all of the following statements are true, EXCEPT: A. The assignor transfers all of his or her rights in the property to the assignee. B. The assignee pays the rent directly to the landlord. C. The lessor has the right to require prior approval of the assignment. D. The assignor remains primary liable for the rental payment
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D In an assignment of a lease, the assignor remains only secondarily liable for the rent.
A broker obtains an open listing on a piece of property. In order to collect a commission on the sale of this property, the broker must be able to prove which of the following? A. He was licensed at the time of the sale. B. He was employed at the time of the sale. C. He was the procuring cause of the sale. D. All of these choices.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D In order to receive his commission, the broker must be able to prove he was licensed as a real estate professional, he had a listing (was employed), and he was the procuring cause (that effort which brings about the desired result). This is an OPEN listing and the only person paid is the one that brings in the buyer.
How can a broker best demonstrate his compliance with Fair Housing laws? A. Display the Equal Housing Opportunity Poster in the office and all places of business. B. Document all transactions with all clients or customers. C. By showing all prospective buyers all property for which they are financially qualified. D. All of these choices.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D It is always best to document all transactions with all customers to make certain that you have treated all customers the same. There is nothing in the law which says that you have to waste your time showing property to those that are not financially qualified to buy.
When a seller and licensed salesperson agree to a listing, on terms acceptable to the broker, an agency relationship is established between: A. The seller agent and the seller. B. The listing salesperson and the seller. C. The listing broker and the buyer. D. The listing broker and the seller.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Legally, the listing is between the BROKER and the SELLER, not the seller and the sales agent, therefore the agency relationship is between the seller and the listing broker.
Which of the following would not be legally sufficient to support consideration in a sales contract? A. Money B. Property C. Service D. Love and affection
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Love and affection is usually not considered sufficient consideration in real estate contracts.
Generally, a property manager may NOT be compensated by receiving A. a percentage of the gross lease. B. a fee for leasing. C. a fee for supervising repairs. D. rebates from suppliers unless disclosed to the owner.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Property managers are generally prohibited from compensation in the form of rebates from suppliers unless disclosed to the owner.
Meredith "fell in love" with and made an offer to purchase a beautiful cape cod style house. When she learned that the seller had accepted her offer, she was so happy that she agreed to pay the selling agent an extra commission for her effort. How will the sales agent receive her "extra" commission, when the sale is consummated? A. From the buyer. B. From the seller and buyer as agreed. C. From the settlement attorney handling the closing. D. From her employing broker.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Remember, a sales agent only receives compensation from his or her employing broker.
Licensee Laura has a listing on Seller Sally's house. Seller Sally has accepted an offer for $200,000 but the sale has not yet closed. Licensee Larry then presents an offer on the house to Licensee Laura for $175,000. Must Licensee Laura present this offer to Seller Sally? A. Yes, but Larry must be informed that an offer has already been accepted and Larry's offer will be considered a "back-up" offer. B. No, because the house is already under contract. C. No, because the listing price is less than the price of the accepted offer. D. Only if Larry and Laura work for the same real estate broker.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A Laura must present all offers until the sale closes. Larry must be told that the offer would be considered a back-up offer at best since the house is already under contract.
An agent may discriminate against a potential buyer on the basis of A. inability to pay. B. sex. C. race. D. none of these options.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The Fair Housing Act prohibits discrimination against people on the basis of race or sex (among other things) but nothing requires a real estate licensee to work with buyers who are unable to pay for or finance the purchase or rental of the home.
Which of the following listings is the most advantageous to the broker? A. Exclusive right-to-sell. B. Exclusive agency. C. MLS. D. Implied.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The exclusive right-to-sell is most advantageous to a broker because, regardless of who sells the property, the broker receives a commission.
One who engages another to act for him or her under a contractual agreement is referred to as: A. A client. B. An agent. C. A seller. D. A testator.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The one who ENGAGES is the client (this may be a buyer or a seller). The one who is engaged is the agent.
In a revaluation lease, the rent is adjusted automatically according to the reappraisal of the real estate. ( True/False )
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The statement is true.
Most leases do not allow assignment without the consent of the landlord. ( True/False )
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The statement is true.
A borrower has the obligation to keep the mortgaged property in good repair for the benefit of the mortgagee. ( True/False )
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A The statement is true. It is required by the covenant of good repair.
Which of the following would be a violation of antitrust law? A. Two brokers agree that each will market his services only in specific areas of the community. B. Jim, a broker, advertises that his firm will only represent buyers. C. An independent broker refuses to join the local Association of Realtors. D. A real estate company has some sales agents working as independent contractors and other sales agents working as employees.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A When brokers agree to limit their marketing efforts to a particular area or agree to charge the same commission rates, it is a violation of antitrust laws
A buyer enters into a contract for the purchase of property, agreeing to make a specified down payment, and further agreeing to regular monthly payments to the seller, who is holding legal title, for a specified period of time. This describes what type of contract? A. Installment contract. B. Purchase money mortgage. C. Option contract. D. Agreement contract.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: B This situation describes as an installment contract. The seller holds legal title. With a purchase money mortgage the seller is acting as the lender and holds only "bare or naked" title as a pledge to pay the debt. An option is a contract for the right to purchase property in the future. The term agreement contract is meaningless.
When a buyer obtains a loan for the purchase of property, the lender will require: A. Mortgage and a promissory note. B. Deed of trust and a hypothecation note. C. Promissory note and a purchase agreement. D. Deed of trust note and a contract for sale.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: C The two items that are required are a promissory note, which is written evidence of debt, and a mortgage (or deed of trust), which is to pledge title to the property as security for the debt. A hypothecation note is NOT a requirement.
When a buyer obtains a loan for the purchase of property, the lender will require: A. Deed of trust and promissory note. B. Deed of trust and hypothecation note. C. Promissory note and purchase agreement. D. Deed of trust note and contract for sale.
>> CORRECT ANSWER IS: A Of the answer choices given, the correct answer is a promissory note and deed of trust. In many parts of the country it would be a mortgage and promissory note instead, but that was not a choice.
If Jan makes a counteroffer in response to Joe's offer to buy Jan's house, Joe is bound by his original offer. ( True/False )
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B A counteroffer works as a rejection of the original offer.
A husband and wife own property with a mortgage payment due on the first of each month. They are thirty days late in making a payment and receive notice from the lender to make payment within ten days. If they fail to make the payment the entire loan balance becomes payable immediately. Which clause in the mortgage allows the lender the right to take such action? A. Alienation clause B. Acceleration clause C. Estoppel clause D. Forfeiture clause
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Any covenant (promise) in a mortgage which is not kept by a mortgagor, such as the promise to make payments on time, may result in making the entire loan balance due immediately under the acceleration clause.
How does a purchaser obtain equitable title to a property? A. With an abstract. B. Through a valid contract. C. By deed. D. By an estoppel certificate.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Equitable title is conveyed to the buyer when the seller signs the offer to purchase, thereby creating a contract. An abstract is a complete historical summary of everything affecting title. A deed would convey complete legal title, not just equitable title.
An apartment complex has a "no pets" policy. Mary is a blind person who applies to rent a unit, but she wants to have her certified guide dog live in the apartment with her. This request: A. Can only be granted if the landlord agrees to remove the "no pets" policy. B. Should be considered a "reasonable accommodation." C. Should be considered a "reasonable modification." D. Cannot be granted.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Having a certified guide dog live with the tenant would be a reasonable accommodation.
An owner has entered into a listing agreement with a broker. During the period of the agreement, the owner sells the property himself. The owner is not legally required to pay a commission to the broker. What type of listing agreement did the owner have? A. A net listing. B. An exclusive agency. C. An exclusive right-to-sell. D. A lease contract
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B In an exclusive agency, even though the owner has given the listing exclusively to a broker, the owner reserves for himself the right to sell the property and NOT pay a commission. In an exclusive right-to-sell, the broker WILL get paid a commission regardless of who sells the property (even the owner).
The enforcement of the Fair Housing Law of 1968 is the responsibility of: A. The Federal Housing Administration. B. The Department of Housing and Urban Development. C. The Federal National Mortgage Association. D. The Government National Mortgage Association.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B It is HUD, the Department of Housing and Urban development that enforces the Fair Housing Law.
A property is listed for sale with a real estate agent at $190,000. A buyer submits a proper written offer of $185,000. Under these circumstances, which of the following is true? A. The seller is legally bound to either accept or reject the offer in writing. B. The buyer may withdraw his offer at any time prior to acceptance by the seller. C. The agent need not bother to submit such a low offer to his client. D. The buyer is bound to the offer the moment he signs it.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Of the answer choices given the only one that is true is that the buyer may withdraw his offer at any time prior to acceptance.
The Civil Rights Act of 1866 prohibits discrimination on the basis of: A. Sex. B. Race. C. Religion. D. Marital status.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The Civil Rights Act of 1866 prohibits discrimination on the basis of race in all property, public and private. It was eventually upheld by the U.S. Supreme Court in the Jones v. Mayer Co. case in 1968.
Broker Jenkins has presented an offer from buyer Frazer. Before the seller has accepted the offer, Jenkins is informed that Frazer is acting for an unknown purchaser in this transaction. What should Jenkins do in this situation? A. Inform the seller that the offer is void. B. Inform the seller of the existence of an unknown purchaser. C. Return the earnest money deposit to Frazer. D. Inform Frazer that his offer is illegal.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The fact that Frazer is acting for an unknown buyer is a material fact and must be revealed to the seller.
Broker Jones is considering lowering the price on an overpriced listing. Which of the following is the best answer? A. This is good business practice. B. Jones must have the owner's permission to lower the price. C. Jones, as the listing agent, has implied authority to do this. D. Jones is legally liable for misrepresenting the price to previous prospective buyers.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The listing price is set in the listing, a contractual agreement between Jones and the owner, and nothing in the agreement may be altered (including the price) unless the owner agrees to do so. Since this is an absolutely true statement it is the best answer. This may or may not be a good business practice..."overpriced" properties have sold.
A lease provision that prohibits using certain premises for a drugstore is called a A. protective covenant. B. use covenant. C. restrictive covenant. D. condemnation covenant.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The question gives an example of a use covenant. While it is a type of restrictive covenant, the "use covenant" choice is more specific and the better answer.
Only the seller may attempt to sell property listed under an open listing. ( True/False )
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The statement is false. The seller and broker named in the open listing may attempt to sell the property.
A property management contract is between the property manager and: A. His or her employees. B. The property owner. C. The tenants. D. The broker.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B There is no contract between the manager and the tenants. Any contract that might exist between the manager and his employees would be an employment contract NOT a property management contract.
In 1968 the Supreme court ruled in the Jones vs. Mayer Co. case. The courts' decision upheld the law which provides protection on the basis of: A. Sexual discrimination. B. Racial discrimination. C. Discrimination on the basis of national origin. D. Religious discrimination.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B This court action was brought on the basis of the 1866 Civil Rights Act which prohibited discrimination on the basis of race. Remember this law was the very first to address discrimination in the purchase and/or sale of ALL property not just real property and not just housing.
Bill, the buyer, signs an offer to purchase agreement and gives broker Joan, a $1,000 earnest money deposit. The next day, before Joan has a chance to present the offer to the seller, Bill finds he needs his $1,000. What should he do? A. Ask the broker to return his money. B. Nothing because he is bound to go through with the offer. C. Withdraw his offer and ask Joan for his money. D. Give Joan $500 for letting him out of the contract.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C A buyer can withdraw the offer to purchase at anytime before the offer is accepted by the seller. If Bill withdraws his offer prior to seller's acceptance he is entitled to have his deposit returned.
Each of the following statements is correct about property subject to a sublease, EXCEPT: A. The sublessor remains solely liable for the rental payments. B. Landlords can include a clause in the lease requiring lessor approval of any sublease arrangement. C. The sublessee makes the rental payments directly to the landlord. D. The original lessee becomes the sublessor.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C In a sublease, the sublessee makes the rent payment to the sublessor (the original tenant), not directly to the landlord.
Which of the following is (are) true regarding the Multiple Listing Service? A. It can only accept residential listings. B. It can establish minimum and maximum commission rates. C. It can refuse to accept open listings. D. All of these choices.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The MLS is an advertising arm of the real estate industry and as such, the license law and regulations do not address their activities. Multiple Listing Services do take commercial listings. Most refuse to accept open listings because the terms of an open listing provide little protection for the listing brokers interest. If the MLS were to establish commission rates, it would be in violation of federal antitrust Laws.
Smith died and his real property was sold. Which of the following determines the amount of commission paid to the broker handling the sale? A. The State Real Estate Board or Commission B. The local bar association C. The listing signed by the broker and the executor or administrator for the estate D. The State Association of Realtors
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The commission is determined by the listing contract signed by the parties to the transaction (broker and seller). In this case, the seller is the executor or administrator of the estate.
Which of the following would NOT terminate an offer to sell real property? A. Lapse of reasonable time B. Rejection of the offer by the offeree C. Death of the sales agent D. Revocation of the offer
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The death of the sales agent would not terminate an offer (nor would it terminate the listing, since the listing is with the broker, not the sales agent).
Which of the following is required for a contract to be valid? A. In writing. B. An earnest money deposit. C. Consideration. D. Signature and seal of a notary public.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The essential elements of a contract are competent parties, legality of object, agreement of the parties and consideration. The question does not address a REAL ESTATE contract which would require that it be in writing and property description in addition to the other essentials. Even in a real estate contract, an earnest money deposit is not REQUIRED if all parties agree.
The 1988 amendment to the Fair Housing Law affords protection on the basis of familial status. Which of the following best defines a family as it applies to this amendment? A. Legally married persons. B. A household in which there are children related to the adults by blood. C. A household in which there are children under 18 years of age. D. Any household in which there are children, regardless of age.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The familial status designation applies to any household in which there are children under 18 years of age.
A housing complex may advertise itself as being for Senior Citizens if: A. 100% of residents are at least 62 years old. B. 80% of residents are at least 55 years old. C. Either of the 2 choices. D. None of these choices.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The housing complex must meet either of the requirements in choices A or B in order to run advertisements directed to attract senior citizens specifically.
Which of the following statements is true regarding time limits for complaints regarding alleged violations of the Fair Housing Act? A. The time limit is 1 year for both complaints to HUD and federal lawsuits. B. The time limit is 2 years for both complaints to HUD and federal lawsuits. C. The time limit is 1 year for complaints to HUD and 2 years for federal lawsuits. D. The time limit is 2 years for complaints to HUD and 1 year for federal lawsuits.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The time limit is 1 year for complaints to HUD and 2 years for federal lawsuits
Which of the following statements is true regarding an assumed loan? A. The seller continues making the monthly payments. B. The buyer has no personal liability for the payments. C. The buyer has primary liability for making the payments. D. The seller has no liability to the lender.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C The true statement is that in an assumption the buyer has the primary liability for making the payments. The seller would have no liability to the lender only if the seller received a lien release from the lender, which is rare and was not included in the choice.
An owner sells his property and immediately leases it back from the purchaser. This describes: A. An option. B. A wraparound mortgage. C. A sale and leaseback transaction. D. A right of first refusal.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C This is a sale-leaseback. It allows the former owner to obtain capital (money) from his property. Usually this is done with commercial property, not residential.
Encouraging a homeowner to sell his or her property because minority group families are moving into the neighborhood is: A. Redlining. B. Steering. C. Blockbusting. D. Puffery.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C This is a textbook example of blockbusting.
A buyer requests the broker take a listed property off the market until his wife sees the property. Should the broker do this? A. Yes, as long as his wife can see it before the next business day. B. Yes, if the buyer pays the brokerage firm a small fee for this service. C. No, this would violate the agency agreement. D. No, only the local Association of Realtors can approve such an arrangement.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C This is not a question of should he do it, he CANNOT do it. Only the SELLER can authorize that the property be taken off the market.
A seller wants to list her home with a broker but would like the option to sell it herself and not pay a commission. Which type of listing should she AVOID signing? A. Open listing. B. Exclusive agency listing. C. Exclusive right-to-sell listing. D. General listing.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C With an exclusive right-to-sell listing, the seller must pay the broker regardless of who sells the property, even if she sells it herself.
A property is listed at $168,000. A full price offer is made without contingencies. Which of the following statements is the most complete correct answer? A. The seller must accept the offer. B. The seller is not obligated to sell the property. C. The seller may refuse to sell, but could be required to pay the broker a commission. D. The seller would be in violation of Fair Housing law.
>> CORRECT ANSWER IS: C The seller does have the right to refuse to sell, but it would appear that the offer met the terms of the listing and therefore the broker may be able to sue for the commission.
A broker, acting as a dual agent, with the knowledge and consent of all parties, collected one-half the commission from the seller and one-half from the buyer at settlement. Which of the following statements is true concerning this situation? A. This action is illegal B. The broker needed only the consent of the seller C. The broker needed only the consent of the buyer D. This action is permitted only with the consent of both parties
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D A dual agency is the type of agency where a broker represents BOTH buyer and seller to a transaction. It is lawful in most states as long as both parties (buyer and seller) know about the dual agency and provide written consent.
An offer is made to a seller. Prior to acceptance of the offer, the buyer finds another house he likes better at a cheaper price. Under these circumstances, the buyer: A. May withdraw the offer. B. May not make an offer on the second house until the first offer is rejected. C. Can make an offer on the second house without fear of recourse from the first seller. D. Is bound by the terms of the original offer.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A Any offer may be withdrawn without recourse, PRIOR to the acceptance of that offer by the offeree.
The Federal Fair Housing Act may be enforced by bringing complaints to A. the Federal Housing Administration. B. the Department of Housing and Urban Development. C. The U.S. Court of Appeals. D. The U.S. Department of Commerce.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Fair Housing complaints are filed with the Department of Housing and Urban Development.
If an individual defaults on a $100,000 mortgage and only $95,000 is received by the lender as a result of a court-ordered sale (foreclosure), which of the following is true? A. The lender must file a $5,000 judgment against the person who purchased the property. B. The lender may be entitled to a $5,000 judgment against the original borrower. C. The lender cannot recover the $5,000. D. None of the above.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B In the situation described, the lender could file for a deficiency judgment against the original borrower and could recover the full amount, depending on the borrower's other assets and the law of the particular state.
If a broker lists a property, she CANNOT be: A. A dual agent. B. A buyer's agent only. C. An agent for the seller only. D. An agent for both buyer and seller.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The broker COULD be an agent to both buyer and seller (if all agree) which is the same as dual agency. The agent could represent the seller only, but the agent who takes the listing cannot be a buyer's agent exclusively.
A listing agreement will automatically terminate: A. If the selling agent changes brokers. B. On the date specified in the listing agreement. C. When the owner vacates the property. D. If the property owner marries.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The listing will automatically terminate on the date specified in the agreement
A salesperson represents the: A. Seller. B. Broker. C. Buyer. D. Lender.
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The salesperson is an "agent" of the broker that he represents.
Leases are unilateral contracts that survive the death of the parties. ( True/False )
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B The statement is false. Leases are bilateral contracts that survive the death of the parties.
Transvestites and drug addicts are protected classes under Federal Fair Housing Laws, who cannot be discriminated against in housing. ( True/False )
>> CORRECT ANSWER IS: B >> YOUR ANSWER IS: B Transvestites are not among the protected classes listed in the text. (Some states and municipalities have laws that add them to the various protected classes, but not the federal laws.)
A landlord and tenant's mutual agreement to cancel a lease is best described as a A. release and surrender. B. rescission and acceptance. C. surrender and acceptance. D. release and acceptance
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C A landlord and tenant's mutual agreement to cancel a lease is best described as a surrender and acceptance.
In the event a person was deemed mentally ill but is later found to be free of any mental illness, this person is: A. Still ineligible to sign contracts. B. Can be discriminated against for other reasons C. Competent and should be treated as any other person D. No longer protected under the Americans with Disabilities Act (ADA)
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C If a person is free of any mental illness, they no longer are considered to be incompetent and can enter into valid binding contracts.
The Anytown Helpers is a charitable group run by a local church. They provide temporary low-cost housing to people with children who are poor and/or victims of abuse. They give preference to those who are members of the church. Does this violate the Fair Housing Act of 1968? A. Yes, in all cases. B. No, in no case. C. No, as long as the church does not discriminate in membership against any protected class. D. Yes, unless the church has received a specific waiver from HUD.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C Religious organizations may give preference to their members so long as they do not discriminate against any protected class when accepting members.
When a mortgagee substitutes a new party for another on a mortgage in order to release the original borrower of liability, it is referred to as: A. Satisfaction. B. Subordination. C. Novation. D. Substitution.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C Substituting a new party (mortgagor) for an old one is an example of novation. When one party to the contract agrees to the substitution of another party it is Novation. The transfer of rights and or obligations without approval constitutes an assignment.
All listings must include A. a dragnet clause. B. permission for the listing broker to appoint subagents. C. a description of the property. D. an automatic renewal clause.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C There must be a description of the property sufficient to identify the property. In some states the legal description is required. While almost all listings will include permission for the listing broker to appoint subagents, it is not a legal requirement.
When does title pass in an installment sales contract (land contract)?. A. At closing. B. In one year. C. When the debt has been satisfied. D. When the contract is signed.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C Title pass in an installment sales contract (land contract) when the debt has been satisfied (repaid).
William Wells, a principal broker, listed parcel A under an exclusive agency listing agreement and listed parcel B under an exclusive right-to-sell agreement. Both listings expired. Three days later, without seeing each other's property beforehand, the two owners exchanged properties in a Like-Kind exchange. William will receive: A. One commission. B. Two commissions. C. No commission. D. A split commission.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C William gets no commission since the listings have expired. The contracts (listings) between him and the former sellers to pay him a commission no longer exist. If the stem of the question had indicated that William was involved in the transaction between the two parties during his listing period, then he may have had a course of action to collect from one or both parties.
Upon signing a management contract with an owner, a broker becomes a/an: A. Trustee. B. Receiver. C. Director. D. Agent.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D A management contract creates an agency relationship between the property manager and the owner.
Who holds the security in a deed of trust? A. The trustor. B. The mortgagor. C. The beneficiary. D. The trustee.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D In this question we are talking about a deed of trust, NOT a mortgage. The security is held by a neutral third party known as the trustee. With a deed of trust, the mortgagor (borrower) is called the trustor and the mortgagee (lender) is called the beneficiary
A broker brought a ready, willing and able minority buyer who signed an offer to buy a house at the listed price. Because of the buyer's race, the sellers refused the offer. The broker may legally take all of the following actions EXCEPT: A. Sue the seller for his commission B. Advise the prospect of his right to complain to the U.S. Department of Housing and Urban Development (HUD) C. Warn the sellers that their refusal is a violation of Fair Housing laws D. Market the house only to non-minority customers
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D It would be illegal to market the house only to non-minority customers.
Leases generally contain a quiet enjoyment clause. The meaning of this clause is that: A. The lessor (owner) will not disturb the lessee during the period of the lease. B. The lessee will not be evicted by a person having a superior title to the lessor. C. The tenant may quietly enjoy the property while he is in possession, provided his enjoyment does not violate the terms of the lease. D. All of these choices.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Quiet enjoyment denotes that the lessee will not be disturbed in his enjoyment (use) of the property by someone having a greater interest in the property during the term of the lease. This would include the lessor (owner).
In a home loan using a trust deed, who holds naked legal title to the property? A. The trustor. B. The beneficiary. C. The intermediary. D. The trustee.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D The trustee is given the naked legal title to the property in the trust deed
A commercial tenant's rent is increased because a property is shown to have increased in value by a recent appraisal of the property. This lease is most likely a(n): A. Revaluation lease. B. Index lease. C. Percentage lease. D. Net lease.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: A A revaluation lease would have the rent adjusted proportionate to periodic appraisals of the property.
By including an exculpatory clause in a mortgage contract, the lender? A. Waives her right to escalate the interest rate. B. Releases the borrower from personal liability. C. Agrees to permit an assumption to a qualified buyer. D. Grants the borrower immunity from foreclosure.
>> CORRECT ANSWER IS: B An exculpatory clause releases the borrower from personal liability for a possible deficiency judgment.
Casper is planning to sell his house and desires the broadest possible exposure. He gives Bert an exclusive right-to-sell listing, Gail an exclusive agency listing and Mark an open listing. Mark sells the house. Under these circumstances, which of the following statements is true? A. Mark must split his commission with Bert and Gail. B. Casper owes two commissions, one to Mark and one to Bert and Gail to be split between them. C. Casper owes 3 commissions. D. Mark is the only one who will receive a commission.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: B Bert's listing means that regardless of who sells the property, Bert will get a commission. Gail's listing means that if anyone, other than the owner, sells the property, she will get a commission. Mark's listing means that if he sells the property he gets a commission. Casper therefore, is obligated to pay 3 full commissions.
A broker acts as an agent in all of the following functions EXCEPT: A. Leasing property. B. Selling property. C. Appraising property. D. Exchanging property.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C A broker employed by another party (client) to lease, sell, or exchange property for them would hold a position of trust. An appraisal is an estimate or opinion of value given by an appraiser for a fee. Even though the broker may be a qualified appraiser, he should not appraise property if he is involved as the listing or selling broker due to the obvious conflict of interest.
When a clause is included in a mortgage, requiring it to assume a lower lien priority position, it is called: A. An estoppel clause. B. An acceleration clause. C. A subordination clause. D. A participation clause.
>> CORRECT ANSWER IS: C >> YOUR ANSWER IS: C A subordination clause states the rights of the mortgagee shall be secondary (subordinate) to a subsequent mortgage.
>> CORRECT ANSWER IS: A >> YOUR ANSWER IS: C Of the answer choices given, the correct answer is a promissory note and deed of trust. In many parts of the country it would be a mortgage and promissory note instead, but that was not a choice.
>> CORRECT ANSWER IS: C In most cases, the lender will hold the seller and the buyer jointly and severally liable. That means that the lender may go after both of them, or either one individually.
Licensee Larry works for Broker Bob. Larry obtains a listing contract from Seller Steve. This contract is between Seller Steve and: A. Licensee Larry. B. Broker Bob and the local MLS. C. The local MLS. D. Broker Bob.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Listing contracts are between the seller and the broker who employs the salesperson.
If a prospective buyer (who is of a minority group) asks an agent to show her properties, the agent should: A. Show her properties in areas that are predominantly of the same minority group. B. Refer her to an agent in the firm of the same minority. C. Advise her that the firm does not handle people of her minority group and refer her to another brokerage. D. Show her any property for which she is financially qualified.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D The minority buyer should be treated exactly the same as a non-minority buyer and should be shown whatever property for which the buyer is financially qualified.
A clause in a lease which enables the lessor to raise the rent in the future is called a(n): A. Protective covenant. B. Restrictive covenant. C. Subordination clause. D. Escalator clause.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D The question describes an escalator clause.
Seller Chaney has rejected three offers which were all $2,500 below the listed price of her home. Broker Rudy receives a fourth offer which is also $2,500 below the listed price. What should Rudy do? A. Tell the prospective buyers to forget it, as the same offer has already been rejected by Chaney. B. Tell the prospective buyers their offer will be submitted to Chaney only if they increase the offered price. C. Hold the offer to see if a better one comes in. D. Immediately submit this offer to Chaney.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Rudy is the agent of the seller (client) and must act in the best interest of the seller in getting the property sold. Rudy must submit the offer to Chaney immediately even though Chaney has previously rejected offers of the same amount. Chaney may like this prospective buyer better than the others and accept the offer. It is the seller's decision. The broker must submit all offers.
Salesperson Susan sells to buyer Pete, a home belonging to seller Tom. At the same time she writes a six month option for Pete to buy an adjoining lot, also from Tom. When does Susan earn her commission on the option contract? A. When she is paid her commission on the sale of the home. B. When the optionor and the optionee are brought together. C. When local custom dictates, she has earned it. D. None of the above.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Susan will earn her commission on the optioned property if and when Pete decides to exercise his right to buy the property and does so within the six month period of the option.
Who is required to comply with the Civil Rights Act of 1866? A. Only licensed real estate professionals. B. Real estate professionals and insurance complainants. C. Lenders and real estate professionals. D. Everyone, without exception.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D The Civil Rights Act of 1866 applies to everyone, without exception.
An optionee is obligated to do which of the following? A. To rezone a property prior to exercising his option. B. To convey further assurance to the optionor. C. To exercise the option within 60 days. D. To pay consideration for the option right.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D The optionee is the person who buys the option to purchase the property. The optionee's only obligation is to pay the consideration for the option, but is not obligated to actually purchase the property by exercising the option.
XYZ Mortgage Co. has an established 80% L/V ratio on loans for owner occupied housing. It has further established that home loans made for property located in the Sand Hills subdivision require a 70% L/V ratio because this subdivision is considered less desirable. Which of the following statements is correct? A. A minority person applying for a home loan in the Sand Hills subdivision can only be required to meet the 80% L/V criteria. B. XYZ is prohibited by the Federal Fair Housing Law from having two separate loan policies. C. Real estate brokers would be in violation of the Fair Housing Law if they refer prospective buyers to XYZ for any loan. D. The policy of XYZ is referred to as redlining.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D This is an example of redlining, which is refusing to lend (or insure) in specified geographical areas.
If the landlord (owner) of property dies during the period of a valid lease, what effect would it have on the lease and the tenant? A. The lease is void, by operation of law. B. The lease would be voidable, at the option of the tenant. C. The right of possession would revert to the estate of the deceased. D. It has no effect.
>> CORRECT ANSWER IS: D >> YOUR ANSWER IS: D Upon the death of the landlord, the lease (contract) continues in effect between the tenant and the estate or heirs of the landlord. Death of either of the parties to a contract has no effect on the contract, EXCEPT in an agency type contract.
A mortgage is released by? A. Revision. B. Reconveyance. C. Quitclaim deed. D. Satisfaction.
>> CORRECT ANSWER IS: D The lien is released by a satisfaction of mortgage.
