Real Estate Practice Chapter 3

The Real Estate Settlement Procedures Act (RESPA) applies to (a)1-4 unit residential property. (b)second mortgages. (c)commercial loans. (d)loans for multi-unit apartment complexes.

(A) 1-4 unit residential properties

A public report is good for five years from the (a)date of issuance. (b)date the first lot is sold. (c)date of approval. (d)date of delivery to the buyer.

(A) date of issuance

What does full disclosure mean?

Giving notice of, all material facts in a transaction

There are statutory rescission rights for a number of transactions. Which of the following provides for rescission rights? (a)A loan for consumer credit that is secured by a borrower's residence. (b)Selling his or her equity interest in a residence in foreclosure. (c)Purchase of a time-share. (d)All of the above.

(D) all of the above

The Real Estate Transfer Disclosure Statement (TDS) provides information regarding the (a)physical condition of the property. (b)properties chain of title. (c)agency relationships between the parties to the transaction. (d)commission split between real estate agents.

(A) physical condition of property

Creative financing and the complaints stemming from these questionable types of financing helped enact existing (a)seller financing disclosure requirements. (b)creative financing protection statutes. (c)purchase money disclosure forms. (d)ARM disclosure requirements.

(A) seller financing disclosure requirements

In the course of taking a listing on a single-family dwelling, the owner informs you that his roommate died of AIDS on the property one year ago. Which of the following is correct regarding your disclosure requirements? (a)If an occupant died on the property, it must always be disclosed to prospective buyers. (b)If the occupant's death was a result of AIDS, it does not have to be disclosed. (c)A death on the property is not a material fact in any case and does not need to be disclosed. (d)Unless the death occurred within one month of an offer to purchase, it does not need to be disclosed.

(B) If the occupant's death was a result of AIDS, it does not have to be disclosed.

A selling agent must comply with agency disclosures to the buyer: (a) prior to showing property. (b) before the buyer executes an offer. (c) prior to qualifying the buyer. (d) upon delivery of the seller's acceptance.

(B) before the buyer executes an offer

In addition to disclosing known material facts concerning the property, the listing agent also has a duty to disclose defects that can be discovered by (a)canvassing the neighborhood and interviewing neighbors. (b)conducting a reasonably diligent visual inspection. (c)ordering a detailed inspection of historical records and police reports. (d)All of the above.

(B) conducting a reasonably diligent visual inspection

The licensee who brings the buyer into the transaction is called the (a)listing agent. (b)selling agent. (c)associate licensee. (d)subagent.

(B) selling agent

dual agency is legal if (a)all parties are told before close of escrow. (b)the buyer and seller consent to it. (c)the broker and escrow company agree to it. (d)all parties are told after they sign the contract.

(B) the buyer and seller consent to it

Concerning the potential existence of lead-based paint in homes built prior to 1978, (a)the owner can avoid liability by instructing his/her agent to physically remove the lead paint. (b)the owner must deliver to prospective buyers the booklet entitled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants. (c)the owner should inform the party responsible for the painting that they are required to remove it. (d)the owner may ignore the existence of lead-based paint as long as they did not reside in the home prior to 1978.

(B) the owner must deliver to prospective buyers the booklet entitled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants.

When inspecting for structural failure, agents should look for (a)cracks in structural walls, beams, and columns, and foundations. (b)severe bulging in floors or structural walls. (c)doors that fail to close or that have been trimmed. (d)all of the above.

(D) all of the above

In an effort to help real estate agents fully disclose environmental hazard issues to prospective buyers, the Department of Real Estate and the Department of Health Services developed the (a)Sick Building Syndrome Pamphlet. (b)Hazardous Substance Release Form. (c)Residential Environmental Hazards Booklet. (d)Water Contamination Disclosure Form.

(C) Residential Environmental Hazards Booklet

A Transfer Disclosure Statement must be provided to the buyer when the sale involves: (a) a vacant lot. (b) a commercial building. (c) a 3-unit residential building. (d) all of these.

(C) a 3-unit residential building

In the correct order, which of the following lists the chain of events necessary to comply with the agency disclosure law? (a)confirm, disclose, elect (b)investigate, disclose, confirm (c)disclose, elect, confirm (d)disclose, confirm, reconfirm

(C) disclose, elect, confirm

When selling 1-4-unit residential properties built prior to January 1, 1960, the seller must disclose whether the dwelling has (a)flood risk. (b)fire risk. (c)earthquake weaknesses. (d)asbestos.

(C) earthquake weakness

When a developer intends to convert an apartment to a condominium, the developer must notify current tenants of their right to (a)vacate the premises. (b)cancel their lease. (c)purchase their unit. (d)extend their lease.

(C) purchase their unit

A seller (or seller's agent) must give the buyer a separate Natural Hazard Disclosure Statement if the property lies within which of the following specified areas? (a)A special flood hazard area. (b)A very high fire hazard severity zone. (c)An earthquake fault zone. (d)All of the above.

(D) all of the above

The Real Estate Transfer Disclosure Statement (TDS) is NOT required when the transfer involves (a)transfer of a unit in a subdivision when the buyer has been given a public report. (b)a transfer ordered by a probate court in administration of an estate. (c)transfers by foreclosure sale after default. (d)All of the above.

(D) all of the above

Which of the following items/facts must be disclosed when seller financing is involved (a)That the loan has or will have negative amortization, or that deferred interest ARMs could have negative amortization. (b)That the note, if not fully amortized, will have to be refinanced at maturity and that this might be difficult or impossible to accomplish in the marketplace. (c)The buyer's creditworthiness (credit report, job verification, etc.). (d)All of the above.

(D) all of the above

An agent's inspection under Easton vs. Strassburger (as codified by state statutes) applies to: (a) visual inspections and known or should-have-known defects. (b) accessible areas only. (c) 1-4 residential units. (d) all of these.

(D) all of these

The earthquake safety disclosure statement: (a) is voluntary. (b) applies to 1-4 residential units. (c) must be signed by buyer and seller (d) both applies to 1-4 residential units and must be signed by buyer and seller.

(D) both applies to 1-4 residential units and must be signed by buyer and seller

The agent does not disclose a Mello-Roos tax. After close of escrow the buyer may (a)rescind the contract within three days of receipt of the notice. (b)sue the seller for recovery. (c)sue the selling agent for recovery. (d)sue the listing agent for recovery.

(a)rescind the contract within three days of receipt of the notice.

What is a red flag? (a)A detrimental financing factor that may prevent the buyer from qualifying for a loan. (b)A physical factor about a property that is a potential material fact and that may need further investigation. (c)A defect in the subject property's chain of title that casts doubt on the validity of the seller's ownership. (d)A questionable commission split offer that may result in the selling agent receiving less than the advertised percentage.

(b)A physical factor about a property that is a potential material fact and that may need further investigation.

What does the "RE Transfer Disclosure Statement" Disclose?

1. Physical condition of property 2. Defects (if any) 3. Info about neighbor/s, neighborhood, how etc.

What is a material fact?

Anything that may affect the decision to sell or buy

What is the acronym for the three-step process of disclosing agency?

DEC

What does DEC stand for?

Disclose, Elect, Confirm