National Exam Test Practice 4
Which of these situations addresses the fiduciary duty of confidentiality? A) Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness. B) Mark discloses the commission split he receives from his broker to a colleague at another firm. C) Regina tells her seller client that he's required to disclose the roof damage. D) Todd's lender shares Todd's financial information with the loan underwriter.
A) Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness.
If an apartment building is valued at $970,000 and has a capitalization rate of 9%, what is the net operating income? A) $112,000 B) $87,300 C) $882,700 D) $9,278
B) $87,300
The duty of reasonable skill and care assumes that agents can provide expert advice to their clients in which area? A) Home construction B) Mortgages C) Property tax assessments D) Real estate
D) Real estate
A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal for that payment? A) $1,110.64 B) $1,246.10 C) $1,578.57 D) $1,780.75
A) $1,110.64
What is a transfer tax? A) A tax that's applied to the transfer of property from one person to another B) A tax the buyer pays to the seller after the property transfers C) A tax the courts determine for the transfer of property D) A tax the seller pays to the Internal Revenue Service
A) A tax that's applied to the transfer of property from one person to another
Your brokerage firm uses pre-printed sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information? A) Addendum B) Amendment C) Annotation D) Appendix
A) Addendum
Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis' condo is worth much more two years later. Which economic characteristic does this demonstrate? A) Area preference B) Improvements C) Permanence D) Scarcity
A) Area preference
In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what? A) Bracketing B) Bridging C) Substituting D) Surrounding
A) Bracketing
You're showing a house when you notice piles of what looks like sawdust outside near the basement windows. This may be evidence of which pest? A) Carpenter ants B) Fire ants C) Ladybugs D) Powder post beetles
A) Carpenter ants
Mariah was appointed to a two-year term on Garden City's planning board. She's looking forward to meeting her fellow board members and working collaboratively on issues that affect their town. She's been told that the first order of business is a revision of the document that outlines the community's long-term needs and provides guidance on capital budgeting for those needs. What is this document called? A) Comprehensive master plan B) Environmental impact study C) Special use permit D) Zoning ordinance
A) Comprehensive master plan
Margaret has an L-shaped living room. How would you calculate the area of this room? A) Divide the room into two rectangles, calculate the area of each, and add those together. B) Measure the room as if it were a single rectangle and compute the total square footage. C) Measure the room as if it were a single rectangle, compute the total square footage, and divide by two. D) Select the larger of the two rectangles that form this room, calculate its area, and multiply by two.
A) Divide the room into two rectangles, calculate the area of each, and add those together.
Ted's property is in foreclosure, but he has some equity in his property. An investor suggests that she and Ted enter into a sales contract for a substantially higher price than the investor would actually pay. The investor pockets the cash and allows the house to be foreclosed on. What sort of scheme is this? A) Equity skimming B) Inflated appraisal C) Silent second D) Straw buyer
A) Equity skimming
What does the income approach to value rely on when valuing properties that are five or more units? A) Gross income multiplier B) Gross rent multiplier C) Monthly gross rent D) Sales comparison
A) Gross income multiplier
Which of the following statements about the fiduciary duty of confidentiality is true? A) It doesn't extend to material facts relating to the property. B) It encompasses any and all information the client tells the agent, not just confidential information. C) It ends with the termination of the agency agreement. D) It never conflicts with the duty of disclosure.
A) It doesn't extend to material facts relating to the property.
You've just signed a listing with a new seller client. What's true about electronic delivery of written notice or contract forms to your seller? A) It's allowed if the seller consented to it in the listing contract. B) It's allowed with special permission from the commission. C) It's illegal in Colorado. D) It's legal as long as it's subsequent to physical hard copy delivery.
A) It's allowed if the seller consented to it in the listing contract.
Which of these is an example of severability? A) Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force. B) Mark's contract with Reuben states that either party may sever the contract if any contract term is only partially performed. C) Misty's lease agreement with Thomas contains a provision that permits her to sever the lease if Thomas doesn't remodel the apartment as promised. D) Ricardo and Timothy are under contract in the sale of Ricardo's office building. Ricardo's tenant leases gives him the option to sever the lease agreements upon sale of the building.
A) Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.
Which of the following statements is true about conventional loans? A) Originators usually package and sell the loans on the secondary market. B) They're guaranteed by the U.S. Department of Veterans Affairs. C) They're insured by the Federal Housing Administration. D) They're provided by the U.S. Department of Agriculture.
A) Originators usually package and sell the loans on the secondary market.
Which of the following is true about air rights? A) They allow the owner to use the open space above buildings. B) They allow the owner to use the space directly below buildings. C) They cannot be bought or sold. D) They include mineral rights.
A) They allow the owner to use the open space above buildings.
You're representing Crystal in the purchase of a house. Crystal has a trust fund and can easily afford the house on which she's made an offer. Which of the following statements is true? A) Your duty of confidentiality to your client dictates that you not disclose your client's financial situation to the seller. B) Your duty of disclosure to customers and third parties requires that you disclose Crystal's financial status to the seller. C) Your duty of honesty and fairness to customers dictates that you must share with the seller Crystal's ability to pay more for the property than she offered. D) Your duty of working in your client's best interests means you should be showing her properties that are in a higher price range since she can afford it.
A) Your duty of confidentiality to your client dictates that you not disclose your client's financial situation to the seller.
Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment she can afford? A) $1,075 B) $1,152 C) $1,176 D) $1,512
B) $1,152 **The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.
Gabi owns one parcel measuring one square mile and another parcel measuring one mile by a half mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land? A) $1,953.13 B) $2,604.17 C) $3,125.00 D) $3,906.25
B) $2,604.17
Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax? A) $336,000 B) $387,000 C) $420,000 D) $432,000
B) $387,000 ** use assessed value
A small duplex sold for $550,000. Each unit can gross $2,500 in monthly rent for the owner, and there are no additional income sources from the property. What's the GRM? A) 100 B) 110 C) 200 D) 220
B) 110
Related to the legal description of land, what is a monument? 43,560 square feet A permanent land marker sometimes used in legal descriptions A point from which elevations are measured The subdivision of air above the land
B) A permanent land marker sometimes used in legal descriptions
Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited? A) After Millie receives loan approval for the purchase B) After the seller accepts the purchase offer C) At least 10 days prior to closing on the sale D) Immediately upon receipt by her agent
B) After the seller accepts the purchase offer
Which act sets guidelines for public and common use areas at housing developments? A) Accessibility Options Act B) Americans with Disabilities Act C) Fair Housing Act D) Multi-Family Dwelling Act
B) Americans with Disabilities Act
Through the divorce process, Gail was granted ownership of the couple's vacation timeshare. Gail is ready to sell the timeshare but discovers that her ex-husband Daniel's name is still on the deed, creating a cloud on the title. What should Gail do? A) Ask Daniel to sign a general warranty deed so the new buyers enjoy all the deed covenants. B) Ask Daniel to sign a quitclaim deed to release his ownership share. C) File a quiet title suit against Daniel. D) Purchase a title insurance policy for the new owners to cover any eventual ownership issues.
B) Ask Daniel to sign a quitclaim deed to release his ownership share.
Which one of these situations represents the illegal practice of redlining? A) Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values. B) Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods. C) Eunice refused to allow her listing broker to show her house to families with children. D) Jaime was working with Korean clients, so he focused on showing them homes in Korean communities because he thought they would be more comfortable there.
B) Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods.
Tristan's offer has been signed by all parties and delivered to the seller. This means that ______ has occurred. A) Acceptance B) Binding acceptance C) Notarization D) Personal delivery
B) Binding acceptance
Cambridge Apartments provides an open parking lot for its residents. There is adequate parking, and all spaces are available on a "first-come, first-served" basis. Alton has multiple sclerosis and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests? A) As long as the current parking policy were already in place before Alton made application, Cambridge need not make an exception. B) Cambridge must allow an exception to the first-come, first-served policy for Alton. C) Cambridge must provide a space for Alton that is no farther than 50 feet from an accessible building entrance. D) Provided at least two parking spaces per living unit are available, a parking space need not be reserved for Alton.
B) Cambridge must allow an exception to the first-come, first-served policy for Alton.
Terri just bought her first home! She's so excited to be living the American Dream. She owns her home's interior, including the walls, but not the land on which it sits. What type of home does Terri own? A) Apartment B) Condominium C) Cooperative D) Townhouse
B) Condominium
Seth owns a property on a small island with six other property owners. Recently, Seth built a fishing pier along the water's edge; however, the pier is actually on his neighbor's property, which Seth has no rights to. What might this be an example of? A) Easement B) Encroachment C) Estate D) Eviction
B) Encroachment
Regarding restrictive covenants/deed restrictions, to what does the doctrine of laches refer? A) Creation B) Enforcement C) History D) Types
B) Enforcement
What's the best definition of personal property? A) Artificial attachments to land that include things such as fencing, buildings, and walkways B) Everything that's not real property C) Land D) Property that's fenced
B) Everything that's not real property
Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay an MIP. What type of loan does Lydia have? A) Conventional B) FHA C) Standard D) VA
B) FHA
Magda, a property manager, wants to enter each of the dwellings to change the furnace filters. She should _______. A) Enter at her convenience B) Give tenants proper advance notice C) Provide a same-day notice D) Tell tenants to change their own filters
B) Give tenants proper advance notice
Amira's seller Tom just received the news that his buyers are walking away from the sale. They weren't willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What's the most likely reason for that? A) Amira doesn't trust this particular inspection company. B) If they see the report, they'll be required to disclose any adverse findings. C) They are unwilling to pay for the report as the buyer requires. D) Tom wants to pay for his own inspector so that he can question the inspector.
B) If they see the report, they'll be required to disclose any adverse findings.
Andrea and Jim were planning to list their home with Cheryl, but just let her know they no longer wish to work with her. When Cheryl mentioned that listing agreements are legally binding, Andrea and Jim reminded her that their agreement is not legally binding. What would be the reason for this? A) It wasn't notarized. B) Jim didn't sign it. C) They changed their minds about the asking price. D) They want to list it for 90 days, not 60.
B) Jim didn't sign it.
Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence? A) Listing a multi-million-dollar residence in the city's exclusive lakeshore estates B) Listing a property in the main part of the city that she'll market as a fixer-upper C) Working with a buyer client to purchase a condo D) Working with an investor who intends to purchase a rental property
B) Listing a property in the main part of the city that she'll market as a fixer-upper
When agents put their clients' interests ahead of their own, this describes the duty of ______. A) Accounting B) Loyalty C) Obedience D) Reasonable skill and care
B) Loyalty
Which statement most accurately describes the type of notice provided by recording a change of ownership document? A) Recording the deed provides actual notice of the property sale. B) Recording the deed provides constructive notice of the property sale. C) Recording the new owner's title policy serves as constructive notice of the sale. D) Recording the promissory note provides constructive notice of the property sale.
B) Recording the deed provides constructive notice of the property sale.
Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively? A) Termination by division B) Termination of co-ownership by partition C) Termination of estate in severalty D) Termination of joint tenancies
B) Termination of co-ownership by partition
Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure? A) At closing B) The Closing Disclosure isn't required for a HELOC. C) Three days before closing D) Three days from her loan application date
B) The Closing Disclosure isn't required for a HELOC.
Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean? A) The HOA can collect twice the amount of the money that she owes. B) The HOA lien takes priority over all other liens. C) The HOA must involve an administrative law judge in order to collect. D) The lien can be attached to both her real and personal property.
B) The HOA lien takes priority over all other liens.
When a buyer is represented by a licensee, who is responsible for following up on issues identified in the inspection report to ensure that they are addressed? A) The buyers B) The buyer's agent C) The listing agent D) The sellers
B) The buyer's agent
Which of the following would NOT likely be a location issue of concern to buyers? A) The house sits in a historic preservation district. B) The house was built in 1985. C) The property borders a wetland. D) The property sits in a flood plain.
B) The house was built in 1985.
Which of the following statements about the number of contingencies in a sales contract is true? A) Every sales contract should contain a minimum of three contingencies. B) The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. C) The more contingencies, the better from the seller's perspective. D) The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.
B) The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted.
The Smith home has an assessed value of $64,120, and their tax rate is 3.2%. What is their annual tax bill? A) $1,664.16 B) $170.98 C) $2,051.84 D) $20,518.40
C) $2,051.84
A homeowner has $80,000 of principal left to pay on her mortgage. Her home was recently appraised at $156,000, which is $13,000 more than what she purchased it for. How much equity does she have in her home? A) 100% B) $13,000 C) $76,000 D) $80,000
C) $76,000
Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction? A) $5,562 B) $6,909 C) $8,343 D) $9,200
C) $8,343
The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000? A) 0.524% B) 5.24% C) 6.29% D) 6.39%
C) 6.29%
Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent? A) An executed contract B) A valid contract C) Consideration D) Michael's legal competence
C) Consideration
Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a contingency that's generally the most risky. Which contingency is that? A) Appraisal B) Financing C) Home sale D) Inspection
C) Home sale
The Druid Hills neighborhood sits firmly within a single-family residential zoning area. Most of the lots are one-third of an acre or larger. A 20-acre parcel on the edge of the neighborhood sold recently. The buyer wants to build condominium flats since multi-family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this? A) Aesthetic zoning B) Downzoning C) Incentive zoning D) Spot zoning
C) Incentive zoning
Which of the following is the price a lender believes the property will bring at a foreclosure sale? A) Insured value B) Investment value C) Mortgage value D) Value in use
C) Mortgage value
In which of the following situations can the state use its power of escheat? A) Hannah passed away with no children and no debt, other than $83,000 left on her mortgage. B) Maury died, and his three children are upset because his estate isn't large enough to settle all of his debts. C) Nadine died with no heirs and no debt. D) Sam died with no will, and his son lives overseas.
C) Nadine died with no heirs and no debt.
Frieda is practicing dual agency, and neither party seems to mind, even though she didn't obtain written informed consent. Is this legal? A) It's only legal if she doesn't get caught. B) No. Dual agency is always illegal. C) No. Without informed consent, it's illegal. D) Yes, if the parties are agreeable.
C) No. Without informed consent, it's illegal.
Kendra made an offer on Sam's property. Sam rejected Kendra's offer, but made a counter-offer. Kendra is now considering the counter. What role does Kendra currently have in this scenario? A) Examiner B) Executor C) Offeree D) Offeror
C) Offeree
Ken, Dale, and James were brothers who owned more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result was that the court gave each brother a designated set of acres to own. What did the court grant? A) Bifurcation B) Parcel C) Partition D) Severalty
C) Partition
What might the government do if property owners fail to pay taxes on their property? A) Do nothing. B) Evict those living on the property. C) Place a lien on the property. D) Take ownership of the property.
C) Place a lien on the property.
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold? A) Alluvial B) Littoral C) Prior appropriation D) Riparian
C) Prior appropriation
The Millers moved to a small town and were interested in buying a house. At the first meeting with real estate sales professional Nora, she asked them where they went to church. They replied that they were atheists and didn't attend church. Nora then told them that she didn't know of any listings that met their needs, even though that wasn't true. Nora is discriminating based on _______. A) Familial status B) National origin C) Religion D) Sex
C) Religion
Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating? A) Against encumbrances B) Quiet enjoyment C) Seisin D) Warranty
C) Seisin
Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement? A) The broker B) The buyer C) The closing agent D) The seller
C) The closing agent
Which of these statements about frontage is true? A) A lot that's 75 feet wide by 30 feet deep has a frontage of 30 feet. B) Frontage is used in calculating property taxes. C) The frontage for a lot that's 120 feet by 85 feet is 120 feet. D) The frontage of a property on a corner is measured from the lot line on one side to the street's center on the other.
C) The frontage for a lot that's 120 feet by 85 feet is 120 feet.
Which one of these would void a deed that's intended to convey property? A) The grantee is not mentally competent. B) The grantee's signature is not acknowledged. C) The grantor is not mentally competent. D) The transfer includes no monetary consideration.
C) The grantor is not mentally competent.
Two competing firms are found guilty of illegal market allocation. Which of the following scenarios must be true? A) The two firms are located in different parts of the state. B) The two firms are owned by the same umbrella company. C) The two firms have agreed not to compete in one another's markets. D) The two firms have agreed to set commission rates and/or co-op fees at a specific amount.
C) The two firms have agreed not to compete in one another's markets.
Which of the following is true about net listings? A) The listing agent is guaranteed at least some commission. B) They don't include compensation for the buyer's agent. C) They often involve a conflict of interest. D) They're legal in all 50 states.
C) They often involve a conflict of interest.
The ease with which the property can be conveyed to another describes which factor that influences value? A) Demand B) Scarcity C) Transferability D) Utility
C) Transferability
Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements? A) No, because Gus won't be using a real estate professional. B) No, because there's no transfer of title involved. C) Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit. D) Yes, because the bank is also the lender for his home mortgage. If he'd used a different lender, RESPA would not apply.
C) Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.
Can police power ever be used in a way that restricts citizens' freedom? A) No, that's beyond the scope of police power. B) Yes, but only when the citizen has committed a crime. C) Yes, if it's for the public good. D) Yes, that's the purpose of police power.
C) Yes, if it's for the public good.
"I understand why you want a buyer representation agreement," your buyer tells you. "But what's in it for me?" You answer: A) "It's required by law." B) "Without it, I owe you no duties." C) "Without it, I won't work very hard for you." D) "Without it, you're unrepresented."
D) "Without it, you're unrepresented."
A buyer with a $350,000 loan has a monthly principal and interest payment of $2,102.36. If $1,801.23 is interest, what's the new principal balance after the first payment is applied? A) $340,987.46 B) $347,897.64 C) $348,198.77 D) $349,698.87
D) $349,698.87
Recently retired Admiral Bongo and his wife, Lucy, contact you. They want you to help them purchase their dream house now that he's retired, but one that has the necessary accommodations for the admiral's disability. They also confide in you that they don't have a lot of money saved up for a down payment. Which type of financing may work best for them? A) A conventional loan combined with a seller carry back. B) A conventional loan using the admiral's retirement money as a down payment. C) An FHA 203(k) loan to fix their new home up. D) A VA loan, which requires no down payment.
D) A VA loan, which requires no down payment.
Which one of the following examples describe a prepayment penalty? A) A fee the government charges the lender if the borrower pays off a loan before its intended time B) A fee the lender charges for servicing a loan C) A loan origination fee charged to the borrower D) A monetary penalty imposed on a borrower for paying off a loan before its intended time
D) A monetary penalty imposed on a borrower for paying off a loan before its intended time
Which of the following is an example of constructive eviction? A) A landlord locks a tenant out of her unit after she fails to pay her rent for three months. B) A tenant chooses not to renew a lease when the term expires and moves out. C) A tenant dies. D) A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.
D) A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.
Which of the following is an example of an escalator offer? A) Buyer offers $650,000. Seller accepts. B) Buyer offers $650,000. Seller counters at $675,000. Buyer accepts. C) Buyer offers $650,000. Seller counters at $675,000. Buyer counters back at $665,000. D) Buyer offers $650,000 with clause that buyer will beat all competing offers by $3,000 up to $675,000.
D) Buyer offers $650,000 with clause that buyer will beat all competing offers by $3,000 up to $675,000.
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______. A) By licensed real estate professionals B) By members of the Appraisal Foundation C) In the most expeditious and inexpensive way possible D) In writing, and in accordance with uniform standards
D) In writing, and in accordance with uniform standards
Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the ______. A) Examiners B) Executors C) Offerees D) Offerors
D) Offerors
A brokerage firm that hires licensees as employees instead of as independent contractors must ______. A) Advise the state licensing regulators of the non-traditional working relationship B) Avoid controlling their activities too closely to ensure proper worker classification C) Offer incentive bonuses to ensure a motivated workforce D) Pay licensees a regular salary regardless of the revenue they generate
D) Pay licensees a regular salary regardless of the revenue they generate
Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe? A) Acceleration B) Alienation C) Defeasance D) Prepayment
D) Prepayment
Governments like property taxes as a revenue source because ______. A) Everyone has to pay property taxes B) Property owners are easy to find C) Property taxes always increase, creating ever greater revenue D) Property values, and therefore taxes, tend to remain stable
D) Property values, and therefore taxes, tend to remain stable.
Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded? A) He can't legally make any improvements to the property until the deed is recorded. B) He doesn't legally own the house until that occurs. C) Recording provides actual notice that he owns the property. D) Recording provides constructive notice that he owns the property.
D) Recording provides constructive notice that he owns the property.
Kelvin isn't sure how to read this legal description, but his agent said something about reading it from right to left. Here's the description: "The north half of the northwest quarter of Section 6, Township 8 North, Range 68 west of the 5th principal meridian." What land description method did surveyors use for this piece of property? A) Lot and block B) Metes and bounds C) Monument and benchmark D) Rectangular government survey
D) Rectangular government survey **Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.
Eleanor is moving from a starter home into something a little larger. Her agent has cautioned her against making the offer on the new place contingent on the sale of Eleanor's starter home. Why the caution? A) Eleanor might want to keep and rent out her smaller home as an income source. B) Eleanor should include a minimum of two contingencies to let the sellers know she is serious. C) Eleanor's lender might be wary of contingencies. D) Sellers would view an offer without that contingency as a stronger offer.
D) Sellers would view an offer without that contingency as a stronger offer.
If a private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply? A) Housing designated for senior use B) "Mrs. Murphy" exemption C) Owner-occupied buildings with no more than six units D) Single-family housing sold or rented without the use of a broker
D) Single-family housing sold or rented without the use of a broker
The appraisal report submitted to Jenkins, the lender, notes that the property is being conveyed with all property rights intact. Which step in the appraisal process does this represent? A) Determine highest and best use. B) Estimate the land value. C) Gather and analyze data. D) State the problem.
D) State the problem.
Florence lives in a planned community with an HOA regulation that prohibits flagpoles. As a veteran, she feels strongly about displaying the flag on Independence Day, Flag Day, and Veteran's Day, so she put up a pole for that purpose. How can the regulation be enforced? A) Any member of the HOA may take Florence to criminal court to enforce the regulation. B) Anyone may take Florence to court to enforce the regulation. C) Only the HOA board of directors may take Florence to court to enforce the regulation. D) The HOA has the power to enforce the regulation through fines or by taking Florence to court.
D) The HOA has the power to enforce the regulation through fines or by taking Florence to court.
Two real estate firms in one small town, Vineyard Realty and Homestead Homes, agreed to charge the same commission rate to avoid the possibility of clients selecting a firm based simply on price. What specific federal legislation prohibits this? A) The Clayton Act of 1914 B) The Federal Trade Commission Act of 1914 C) The Restraint of Trade Act of 1894 D) The Sherman Antitrust Act of 1890
D) The Sherman Antitrust Act of 1890
Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Which of the following best describes this contract? A) The contract is missing a legal object. B) The contract is missing offer and acceptance. C) The contract is void. D) The contract is voidable.
D) The contract is voidable.
What title guarantees will Jody have when she buys a property at a foreclosure auction? A) The covenant against encumbrances B) The covenant of further assurances C) The covenant of quiet enjoyment D) The covenant of seisin
D) The covenant of seisin
When a mortgage is used as a security instrument, who holds the mortgage and the promissory note? A) The borrower holds the mortgage, and the lender holds the note. B) The borrower holds the mortgage and the note. C) The lender holds the mortgage, and the borrower holds the note. D) The lender holds the mortgage and the note.
D) The lender holds the mortgage and the note.
Shalonda is looking to purchase a home for $325,000 using a conventional loan. She has $49,000 to place as a down payment on the house. Which of the following statements is true? A) Her down payment on the loan only needs to be 3.5%. B) She must come up with another $16,000 to purchase the house. C) She will be required to purchase MIP. D) The loan-to-value ratio exceeds 80%.
D) The loan-to-value ratio exceeds 80%.
Which of the following actions would result in the legal termination of an agency agreement? A) The client wants the seller to make improvements to the property. B) The client wants to attach an addendum to the sales contract. C) There's an unexpected death in the agent's family. D) The term specified in the agency agreement expired.
D) The term specified in the agency agreement expired.
What special concern do foreclosed properties often present? A) Buying the property at a discount may have tax implications. B) The homeowners may or may not have property insurance. C) The property sale may be subject to additional fees that will be passed to the new buyer. D) There could be hidden title issues.
D) There could be hidden title issues
An agent is trying to build up business for a friend's mortgage company. She offers to charge a lower commission rate to clients who use her friend's mortgage company for their financing. What's this an example of? A) Group boycotting B) Market allocation C) Price fixing D) Tie-in arrangement
D) Tie-in arrangement
What's another name for an escrow account? A) Closing fund B) Locked account C) Savings account D) Trust account
D) Trust account
How long does the borrower have to pay private mortgage insurance? A) 12 years B) 20 years C) Until 50% of the original loan is paid off D) Until the borrower reaches a 22% equity position
D) Until the borrower reaches a 22% equity position
Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law? A) Disclosing in writing to all parties in a transaction that the licensee isn't a licensed attorney, so there's no licensee liability B) Having a designated broker review and notarize all completed contracts C) Having a designated broker write all contracts from scratch to make them specific to each transaction D) Using approved fill-in-the-blank forms
D) Using approved fill-in-the-blank forms
Supply and demand determine competition within a market. Which of the following is a true statement? A) When there are fewer houses on the market, buyers will pay less. B) When there are fewer houses on the market, demand wanes, as well. C) When there are fewer houses on the market, neighborhood blight occurs. D) When there are fewer houses on the market, sellers can demand more for their properties.
D) When there are fewer houses on the market, sellers can demand more for their properties.