Practice Exam - Salesperson Course 1

Gunther's gross monthly income is $3,800, and he has no monthly 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 Gunther can afford?

$1,064

Caitlin purchased a Minnesota property for $350,000. She put down $70,000 and financed the remaining $280,000. How much deed tax did she owe for the purchase?

$1,155

A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?

$2,333.33

What is an eviction?

A legal action by the courts to remove the tenant and the tenant's belongings from the premises

LuAnn is a Minnesota real estate licensee. Several of her former clients were awarded final judgments related to LuAnn's illegal trust fund conversion activities. Which statement best describes any recovery that could be paid out by the Real Estate Education, Research, and Recovery Fund to LuAnn's victims?

A maximum of $150,000 may be paid per claimant, per transaction, and $250,000 per licensee.

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

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

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?

Area preference

Which duty requires a client to take an active and present role in a real estate transaction?

Availability

LaTonya's aunt left her a bungalow on the outskirts of the city. For many years, it was the place for family holiday gatherings, and LaTonya's sister was even married there. That's why her family is so upset to learn that she plans to sell the bungalow as soon as she gets it cleaned out. Which real property right allows her to sell the property?

Disposition

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would be, they found he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. Kurt owns the _______ estate or tenement.

Dominant

What's the term for the area a perforated pipeline travels through while redistributing partially filtered water from a septic tank?

Drainfield

In which of the following scenarios is impossibility of contract performance occurring?

Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do.

What type of easement is created when the government exercises its right of eminent domain?

Easement by condemnation

What division of Minnesota's Department of Natural Resources administers the Lake Superior Coastal Program?

Ecological and Water Resources

Avoiding antitrust violations is critical. Which one of the following actions will help you avoid price fixing allegations?

Establish fees independently or as a company.

Which of the following is true regarding express agreements?

Express agreements may be written or verbal.

Which type of easement is created with a specific written agreement between two landowners, often through a deed?

Express easement

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA

What entities make up the secondary mortgage market?

Fannie Mae, Ginnie Mae, Freddie Mac, Farmer Mac, and lending institutions that buy loans from other lenders

Which agency prohibits unfair acts, practices, or methods of competition, and enforces federal antitrust and consumer protection laws nationally?

Federal Trade Commission

Bonnie just sold a property in Duluth with an underground storage tank. She should ______.

File a change of ownership form within 30 days

If you sell mineral rights to your land, which easement type describes the assumption that you'll grant the company access to your land, allowing it to bring in equipment and excavate the minerals?

Implied easement

Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______.

Option fee

Paige is a Minnesota property owner. The entire amount of her property tax bill is due on May 15. What can we reasonably assume based on this fact?

Paige's tax bill was less than $100.

Which of the following is true about radon?

It's a naturally occurring gas.

Bartholomew was a practicing real estate licensee in Minnesota, but spent some time dabbling in other careers for a few years before deciding to get back into real estate. He's studying to take the licensing examination again. Which of the following is most likely true?

It's been at least two years since Bartholomew's last renewal deadline.

In Minnesota, what entity is primarily responsible for regulating coastal development and use policies?

Lake Superior Coastal Program

Where will you find official documentation about the licensing of real estate professionals?

Laws and regulations

Children and pregnant women are especially vulnerable to poisoning caused by what hazard?

Lead

Paint, soil, pipes, dust, and drinking water are all potential sources of what hazard?

Lead contamination

In Minnesota, approval for regulated activities in wetlands must be obtained from which entity?

Local government units

The state has seized a strip of Marge's land. It's relatively small but goes right through her sheep pastures. She just found out that the state will use it for a six-lane highway. She's pretty sure that the value of her land is going to plummet, and she can't figure out how to use it as pastureland anymore. What kind of involuntary alienation is she dealing with?

Regulatory taking

What type of title insurance covers defects of an incorrect survey and boundary encroachments?

extended title insurance

There are three types of listing agreements. They are exclusive right-to-sell, exclusive agency, and _______.

open listing

In an addendum to the purchase and sale contract, the seller agrees to paint the house before conveying the house to the buyer. The weather changes, and the seller is unable to finish painting the house before closing. Of what is this an example?

partial performance

Which of the following is a legal term that can mean the right to take products out of the soil?

profit

A lender initiated a foreclosure action against a borrower. What purpose is this action intended to serve?

Sell the property to recover monies owed.

Lorraine, a Minnesota broker, was engaged as a listing agent for a property. The home didn't sell during the contract period, and upon expiration Lorraine and the property owner went their separate ways. How long must she retain the listing agreement?

She must keep listing agreements for six years, regardless of whether the transaction closed.

Jenna is licensed to appraise all property types in Indiana. She's involved in the purchase of a Minnesota manufacturing facility by a federal agency that intends to transform it into a training and testing facility. She's been asked to appraise the factory. What type of license should she apply for?

Temporary practice appraiser

When faced with an ethical dilemma, which of the following is true?

The Golden Rule always points the way to the most ethical action.

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law.

Besides the appraisal, what's a common hurdle as transactions approach closing?

The buyer's financing falls through.

Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he's placed on it, though his agent told him it's underpriced. Rex's distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn't legally competent to manage his business affairs; the judge agrees. What's the status of the listing agreement?

The listing agreement is terminated by force of law.

Which of the following states that, in certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract?

The parol evidence rule

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?

They should have a loan-to-value ratio of 80% or less.

Which of the following is true of professional codes of ethics?

They're broad, but they can't possibly cover every ethics-related situation.

Why is it important to publicly record a deed?

Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

What's the purpose of the financing contingency?

To protect the buyer in case the buyer cannot obtain financing

Dory owns a condo. What type of ownership does Dory hold in the common elements?

Undivided interest

Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law?

Using approved fill-in-the-blank forms

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this?

Void

When can a Minnesota licensee deposit personal funds into a trust account?

When the personal funds deposited are explicitly identified as either paying a service charge or maintaining a minimum balance.

Marissa, a new licensee, has some questions. Which of the following questions can the association of REALTORS® in her state help her answer?

Where can I go to find some marketing data on my area so I can advertise more effectively?

Janet gives Warren, the buyer of a condominium in her new Minnesota development, a copy of the public offering statement two weeks after he enters into a contract to buy the unit. Five days after receiving the statement, Warren decides to cancel the contract. Can he do this?

Yes, Warren can cancel the contract without penalty within 15 days of receiving the public offering statement.

Which of these statements about selling mobile homes is true?

You need a broker or sales person license to sell mobile homes

You don't need a license to sell subdivided lands if your sole job is to sell timeshares, you're supervised by a limited broker, and ________.

Your limited broker maintains a roster of all staff selling timeshares

Before closing, who should get an appraisal of the property if the transaction's being financed?

Buyer

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?

$387,000

How much would a lot that is 400 feet wide by 500 feet long cost at $900 per acre?

$4,132

A licensee sells a property for $325,000. The total commission rate is 6%, which is split evenly with the cooperating agent. What amount goes to the listing broker?

$9,750

According to the EPA, at what level does radon become a health concern requiring mitigation?

4.0 picocuries per liter of air

How long is a mile?

5,280 feet

How many feet are in a mile?

5,280 feet

Jerry is holding an open house for a property he has listed. He speaks to several visitors, but none of them discuss making an offer. What are these visitors called?

Customers

Which of the following is an example of illegal market allocation?

Acme Realty and Hawthorne Realty Group agree to divide the city in half, each working its own half.

Related to the legal test of a fixture, in the acronym MARIA, what do the two As stand for?

Adaptability of item to land's use and agreement of the parties

In Minnesota, which of the following documents must you present to a potential seller client prior to entering into a listing agreement?

Agency Relationships in Real Estate Transactions form

Which of these is Minnesota broker Nancy NOT required to retain for six years?

Agency disclosure form with a consumer where no employment relationship was established and no services were performed

What feature do most adjustable rate mortgages have?

Allows borrowers to convert to a fixed-rate during a specific period of the mortgage

You're the listing agent representing Stacey, the seller. Barb is a potential buyer who's made an offer through her agent, Daniel. Who are the third parties in this transaction?

Barb and Daniel

Lake Side Homeowners Association was formed in May 1994. Which statement best describes their participation in the Minnesota Common Interest Ownership Act?

Based on the date the association formed, the association must opt in to participate.

Anastasia wants to get her real estate license and bring together buyers and sellers. This means she will be involved in which of the following?

Brokerage

Which of the following is a legitimate reason to terminate a sales contract?

One or both parties are in default.

Why did the implementation of TRID impact closing dates?

Certain financing changes may trigger a new three-day waiting period.

Which one of the following says that real estate acquired by either spouse during a marriage (in most cases) is considered community property?

Community property rights

Eminent domain is the governments' power to take private land for public use. What is it called when the government actually seizes someone's property?

Condemnation

Johnnie and Mary each own a unit in a new condominium complex. According to Minnesota law, in which element do they NOT have an undivided ownership interest?

Condo units

Which of the following is an allowed expenditure from Minnesota's Real Estate Education, Research, and Recovery Fund?

Creating a university real estate department and a position to chair that department

Through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee?

Deed

Over which of the following areas do local authorities have no police power?

Deed restrictions

While working with a buyer client, Jeffrey filled in the blanks on the purchase agreement, drafted an early occupancy addendum, and assured his buyer that she was "fully protected" and would get her earnest money back if the sale didn't close. He encouraged her to hire an attorney to review the contract and addendum, and then invoiced her for a nominal $15 fee to prepare transaction documents. Which of the following tasks was Jeffrey legally permitted to do?

Filling in the contract blanks

Johnstone's Realty is a new discount, menu-based brokerage firm. Its approach usually results in a lower listing commission rate than other firms offer. Johnstone's also offers a lower cooperating brokerage split than most other firms. Business is booming for Johnstone's, and the remaining firms in town are concerned. These brokers agree to not show Johnstone's listings to their buyer clients. What is this an example of?

Group boycotting

Theo is a buyer who's contemplating a land contract. Why might he choose this route over traditional financing?

He doesn't qualify for traditional financing.

Anita is a new buyer. Luckily, ______ will help her before the sale and can reimburse her after the sale if a title issue arises.

Her title insurance

Which term describes a tenant who refuses to vacate after a lease has ended?

Holdover

Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get?

Home equity

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession?

Mortgage broker

What are the main benefits to veterans of the VA-guaranteed loan program?

No down payment, no mortgage insurance, and no prepayment penalty

Which of the following actions would violate Minnesota statute related to records?

Not providing the commissioner access to the records in a reasonable time

What two things must a Minnesota contractor include in a notice to a homeowner that the contractor reserves the right to lien the property in the event of nonpayment?

Notice of right to lien and notice that subcontractors will be paid

Government agencies usually become involved during which phase of an environmental assessment?

Phase III: Clean-up

A subdivision that consists of common property and improvements that are owned and maintained by an owners association is called what?

Planned unit development

According to the DOJ, which type of antitrust violation is an agreement to establish or adhere to uniform price discounts?

Price fixing

What problems can a VA loan pose in the approval process?

Prohibition against buyer-paid repairs

______ taxes are a reliable source of income for the state because they are difficult to conceal, their value tends to remain relatively steady, and people tend to pay them.

Property

According to the Minnesota statute, which piece of advertising information must be clearly and conspicuously displayed in all advertising?

Real estate brokerage name

Genevieve performs real estate activities in Minnesota on behalf of Vern, a real estate broker. What type of license does she have?

Real estate salesperson

You were just given information that the buyer found some issues during the walk-through. You immediately phone your seller client and let her know. This is an example of ______.

Reasonable skill and care

Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property?

Record the deed in his name.

Seller Garrett has a closing date of October 11. He's responsible for closing costs up to but not including the day of settlement, but has already paid his annual taxes of $1,820. Using a calendar year proration, Garrett will be ______ on the closing statement.

credited $409