9-b
147. What duties does an agent owe to third parties? A. All material facts regarding the property B. Only information sanctioned by the seller C. Full disclosure of all facts including the financial situation of the seller and the motivation for selling D. Disclosure of all facts that become known to the agent
The correct answer is A. "Third parties" include potential buyers. An agent has a duty to disclose all facts materially affecting the value, desirability, or intended use of the property.
112. If a seller has to make an amendment to the Real Estate Transfer Disclosure Agreement, the buyer can: A. Back out of the sale B. Sue the seller C. Sue the agent D. Purchase the property below the asking price
The correct answer is A. A If any disclosure or amended disclosure is delivered after execution of the offer by the buyer, the buyer has three days after delivery in person or five days after delivery by deposit in the US mail to terminate the offer or agreement to purchase by delivering a written notice of termination to the seller or the seller's agent.
130. Acquisition of property during "intestate" succession is determined by: A. Probate court B. A holographic will C. A nuncupative will D. N/A
The correct answer is A. A person who dies without a valid will has died intestate. The probate court determined whether a will is valid. If there is no will, or the will is considered invalid, the probate court will then determine the proper distribution of the estate, including real property.
110. Which of the following is true about in-house sales? A. A salesperon can make an offer on one of the broker's own listings B. Salesperon cannot sell their own in-house listings C. N/A D. N/A
The correct answer is A. A salesperon can sell his or her own in-house listings. It is important to note that a salesperon must be very clear when disclosing his or her role as both agent and principal.
134. Sally listed her house for 90 days with ABC Realty because her good friend Lisa is a salesperson with the agency. Lisa leaves ABC Realty and joins Sunshine Realty 30 days into the listing. What happens to the listing? A. The listing stays with ABC Realty B. The listing goes to Sunshine Realty with Lisa C. Lisa decides what happens to the listing because it is her good friend D. The listing is canceled
The correct answer is A. All listings are taken in the name of the broker and the broker is the agent for the seller. When a salesperson leaves the employ of a broker, the listings are owned by the broker and stay with that broker. Sally, as the principal, does have the option of canceling the listing but may be liable to ABC Realty for a commission.
123. Able sells his property to Byrnes in a land contract. Six months later, Byrnes loses his job and stops making payments. Able believes that Byrnes has left the state. What can Able do to clear the title? A. Start a quiet-title action B. N/A C. N/A D. N/A
The correct answer is A. In a land contract, the buyer (Byrnes) receives the right to possession and the seller (Able) keeps legal title. A quiet-title action is a court proceeding used to clear the title of a seller under a defaulted land contract, tax titles, and titles based on adverse possession.
128. All of the following are types of misrepresentation except: A. Malicious misrepresentation B. Innocent misrepresentation C. Fraudulent misrepresentation D. Negligent misrepresentation
The correct answer is A. Misrepresentation is commonly considered to be a false statement of fact, but can also be a withholding of information. Innocent misrepresentation is a misstatement of material fact without the intent to deceive. Fraudulent misrepresentation is the purposeful misstatement with the intent to defraud. Negligent misrepresentation is an unintentional misstatement of fact that should have been known and for which reasonable care and skill was not taken. "Malicious" is a descriptive term that refers to an intent to injure, defame, etc., but would not ordinarily be used in a real estate context.
146. Most major institutions that loan money for residential mortgages get the funds from: A. Individual savings accounts B. Business investments C. Government funds D. Fannie Mae
The correct answer is A. Most Savings and Loan associations and banks which make home loans obtain most of their funds from the savings of individuals
131. If a property has a Mello-Roos tax lien and a broker sells it in a deal with a buyer's agent, who must disclose the lien to the buyer? A. Seller B. Seller's agent C. Buyer's agent D. N/A
The correct answer is A. Not only is the seller required to disclose the existence of the lien, he or she must try to get the details, in writing, from the local tax agency.
120. Which of the following statements concerning property taxes and special assessments is NOT true? A. Both are used to support the general functions of government B. Property taxes are ad valorem taxes and special assessments are for specific improvements C. Property taxes and special assessments have equal priority D. If the owner does not pay the special assessment, the property can be foreclosed in a method that is similar to a property tax sale
The correct answer is A. Special assessments are used to pay for local improvements which benefit a limited local area.
126. How much compensation can an owner receive from down-zoning because of loss property value? A. None B. The amount due to the downzoning (the before and after difference) C. Face value of the property D. N/A
The correct answer is A. Under present law, the owner receives no compensation because downzoning is considered only a "partial taking." A number of "compensation for partial takings" laws and propositions have been and continue to be proposed by those who believe compensation should be required for losses caused by various governmental actions such as downzoning, use limitations, and access restrictions. A change in the current law will likely involve, among other things, a court battle over the interpretation and application of the Fifth Amendment of the U.S. Constitution.
140. When transferring title to personal property, which of the following is true? A. Title is always assumed to be held at the owner's residential address regardless of physical location B. Title can be determined by a search of public records, just not as accurately as real property title C. Title is assumed to be transferred when possession to the property is delivered D. Written title may be used but is not legally necessary
The correct answer is A. You should also remember that personal property is transferred by bill of sale.
144. Bailey purchases a dilapidated property and makes arrangements for the existing building to be removed. He records the deed of trust then immediately hires a contractor to begin construction on a new home. Soon after, a subcontractor files a mechanics' lien. Which takes precedence? A. Trust deed as it was filed first B. Mechanics' lien always takes precedence C. N/A D. N/A
The correct answer is A. in this particular instance, the trust deed takes precedence because it was recorded before work started. If the contractor was hired before the trust deed was recorded, the mechanics' lien would take precedence, even if the deed is recorded before the lien is filed.
111. Which of the following would not cancel a listing agreement? A. Death of the agent B. Offer is accepted C. Incapacity of the agent D. Bankruptcy by the principal
The correct answer is B. A listing agreement is not terminated when an offer is accepted. A listing agreement is an agency contract and is terminated by the death or incapacity of either the agent or principal, the bankruptcy of the principal, expiration of the listing, mutual agreement, renunciation by the agent, revocation by the principal, or the destruction or condemnation of the subject property.
129. Which of the following is not valid for transferring real property in California? A. Witnessed will B. Nuncupative will C. Holographic will D. Statutory will
The correct answer is B. A nuncupative will is given orally, before witnesses, just before death and the witnesses must then write everything down. Nuncupative wills are not valid in California or most other states. A witnessed will is a formal witnessed instrument, usually drafted by an attorney, signed by the testator and at least two witnesses. A holographic will is handwritten by the testator and must be signed and dated. Holographic wills are valid in California and most other states. A statutory will is a preprinted or "fill-in-the-blank" form that is written according to the rules set out in the California Probate Code (or according to the laws of the State in which it is executed).
127. If the title to real property contains language referring to race that is discriminatory, how can this be changed? A. Only through probate court action B. Only I the owner agrees C. Only if the title company agrees D. N/A
The correct answer is B. Answer B is the best choice of the three answers given. The county recorder, title company, escrow company or real estate licensee must give the owner a statement that the language is discriminatory and the homeowner may have the language removed.
135. Broker's escrow account must be held in the name of the: A. Broker and principal B. Broker as trustee C. Principal D. Third party as trustee
The correct answer is B. Brokers' trust accounts must be designated as a trust account in the name of the broker as trustee.
116. Who usually sets deed restrictions on a subdivision development? A. State and local codes B. Developer C. Federal Housing Administration D. Permanent lender
The correct answer is B. Deed restrictions are provisions that are placed in deeds to control future uses of the property. Deed restrictions in new subdivisions are usually set by the developer.
149. Which of the following deed restrictions is NOT enforceable? A. Property may only be used for religious purposes B. Property may not be conveyed to other than Caucasian people C. Property may not be conveyed for more than $1.00 D. Property may not be conveyed for at least 10 years
The correct answer is B. Deed restrictions can be used to restrict use or occupancy, such as specifying property be used for residential or business purposes. Restrictions can also be placed on the character, cost, and location of buildings. Deed restrictions prohibiting use on the basis of race, color, sex, religion, ancestry, national origin, age, disability, sexual orientation, material status, familial status or source of income are not enforceable. "B" is the best answer choice because it is quite obviously an unenforceable restriction based on race. Answer choice "A" may be enforced because it does not require use by a specific religion.
113. What is "selling agency? " A. It is illegal in California B. When an agent represents only the buyer C. When a buyer represents himself or herself D. When a broker caters to buying homes rather than selling homes
The correct answer is B. In a selling agency, the agent represents the only the buyer.
121. Nolan, a tenant in an apartment building owned by Paulson, agrees to do repairs at Paulson private residence. Despite repeated promises, Nolan never performs the repairs. Paulson writes a contract whereupon Nolan will be evicted if he does not perform the repairs and compels Nolan to sign it. The contract is: A. Void B. Voidable C. Enforceable D. Illegal
The correct answer is B. Nolan was compelled to sign the contract which is the same as saying he was forced to sign the contract. Since Nolan was forced to sign the contract, the contract is voidable.
139. A general property tax supports general functions of government and a supplemental tax is: A. The same as general tax B. Supports specific improvements C. N/A D. N/A
The correct answer is B. Supplemental assessments are made when property changes ownership or there is new construction that changes the value of a property. The supplemental assessment becomes the new base year value of the property. Special assessments support specific improvements, such as a park, that will benefit the residents in a specific area.
122. The relationship of an escrow holder to the parties in a real estate transaction is most commonly: A. Advocate B. Agent C. Independent contractor D. Employee
The correct answer is B. The escrow holder is an agent for the parties to carry out the provisions of their agreement.
106. A licensee is applying for a renewal license but is on a list of obligors who have not complied with a court-ordered payment of child support. Which of the following is likely to happen? A. The licensee will be renewed as suspended unless the obligation is satisfied B. The license will be renewed for 150 days (temporary license) until a release is given by the DA C. The license will be renewed for one year only unless the obligation is satisfied D. No renewal license will be issued until the obligation is satisfied
The correct answer is B. The license is renewed for 150 days and if the licensee makes the required payments within that time, the license will be renewed for the full or remainder of the license term.
138. Where would you find the purpose statement for an appraisal? A. In the summary B. With the property description C. In the valuation analysis D. N/A
The correct answer is B. The purpose statement of an appraisal indicates the appraiser's objective, whether to appraise a property for insurance, taxation, or market value, etc. The purpose statement is generally included after the property identification and before the descriptions of the site, neighborhood, and zoning.
150. Property is sold on May 21, 2013. Taxes from the 2013/2014 tax year: A. Become the sole responsibility of the seller B. Become the sole responsibility of the buyer C. Are shared equally by buyer and seller D. N/A
The correct answer is B. The tax year runs from July through June. Since the buyer purchased the property before July 1, 2013 he or she is responsible for all taxes for the 20013/2014 tax year. Additionally, the buyer is responsible for the taxes from May 21, 2013 through June 30, 2013.
105. A buyer in a land contract has: A. Possessory interest B. Equitable title C. Security interest D. Legal title
The correct answer is B. Under a land contract the buyer has equitable title and full legal title is given to the buyer only after the final payment is received.
124. A pamphlet describing the mortgage brokering services offered by a licensee was prepared by an unlicensed assistant. All of the content was read and approved by the licensed broker. Which of the following would make preparation by an unlicensed assistant a violation? A. The pamphlet states the APR B. The pamphlet lists government program C. The pamphlet lists the name and phone number of the assistant D. The pamphlet states the monthly payment for a specific loan
The correct answer is C. All advertising must identify the creditor and/or the broker arranging the credit.
101 Which of the following terminates an agency relationship? A. Lis pendens B. Estoppel C. Completion D. N/A
The correct answer is C. An agency relationship can be terminated by the completion of the agency, death or incapacity of either party, destruction or condemnation of the property, expiration of the terms of agency, mutual agreement, renunciation by the agent or revocation by the principal, or bankruptcy of the principal.
119. Grant was hired by a prospective purchaser to appraise a commercial lot with some improvements. It was difficult to determine the legal status of the improvements because of their nature. In the appraisal report Grant should: A. Include the items located on the lot because they will be transferred with the lot B. Disregard all items that he cannot specifically state to be a part of the property C. Estimate the legal significance of any attached items that he is uncertain about and give his reasons D. Tell the buyer that he cannot complete the assignment and return all the money received
The correct answer is C. An appraiser should provide as much information as possible. Since he is unsure whether the items are real or personal property, he should value them separately and give his best reasoning why they would be real or personal property
136. A tract developer instructs his salespeople to 1) encourage sales to woman, especially working women, and 2) make sales equally between Caucasian, Black, Hispanic, and Asian people. Which of the following instructions is NOT likely to be approved by the FHA? A. Instruction 1 B. Instruction 2 C. Both 1 and 2 D. Neither 1 nor 2
The correct answer is C. Any quotas or preferences are discriminatory and therefore illegal.
141. Which of the following is NOT considered constructive eviction? A. Attempting to rent the same apartment to a different party B. Failing to maintain the property in a livable manner C. Bringing a court action D. Turning off utilities
The correct answer is C. Constructive eviction takes place when the landlord makes the property unsuitable in such a way that the tenant is forced to move but the tenant still has certain rights. For example, the tenant can sue for damages because the landlord interfered with the tenant's right to quiet enjoyment. By bringing a court action, the landlord is starting a legal process to remove the tenant.
132. Which of the following is sufficient for identifying an agent or broker in a published ad for real estate? A. agent B. broker C. Either D. Neither
The correct answer is C. Either agent or broker is sufficient for identifying that the ad is being placed by an agent or broker.
148. Who can list for sale land belonging to the State and Federal government? A. Any licensed agent who was approved through a bid process B. All listings must be signed off by the Department of Justice C. Any duty licensed agent D. Only people employed by the department that controls the land in question can list it for sale
The correct answer is C. Property is first put to bid but if the bids do not equal the appraised value, the Department of Finance may authorize the employment of a licensed Real Estate Broker.
114. If a seller of real property inquired of his broker concerning the ethnic background of a prospective buyer, the broker: A. Should secure the permission of the buyer's broker before revealing such information B. Is obligated by fiduciary duty to disclose all material facts and therefore must disclose the requested information C. Violates the California Fair Housing Act if he gives the seller the requested information D. Can give the seller the information as long as it is pointed out that the information may not be used to discriminate against the buyer
The correct answer is C. Race, creed, or color is not a material fact and should not be disclosed even if requested by the principal.
103. A brokerage chooses to use an electronic filing system. Which of the following is required? A. The broker must submit files to the CalBRE in the State's electronic format on request B. The broker must make a 3-year backup every month C. The broker must submit paper copies at the broker's expense D. The broker must keep paper copies for at least one year
The correct answer is C. The broker must submit paper copies to the CalBRE upon request.
125. The debits and credits in the sellers and buyers closing statements: A. Must be the same B. Can be the same C. Must be different D. none of the above
The correct answer is C. The buyer and seller are each responsible for different fees and closing costs. The debits and credits columns of the buyer's statement must be balance and the debits and credits columns of the seller's statement must balance, but the totals on the buyer's statement will be different from the seller's statement and from the purchase price.
102 A negative impact report was filed according to the standards of the California Environmental Quality Act (CEQA). Which of the following statements is NOT true? A. The local planning commission puts the negative impact report together after a preliminary study B. Developers generally prefer negative impact reports C. Negative impact reports are affidavits gathered from neighbors to the proposed development D. A negative impact report means that there are no perceived or anticipated adverse effects to the environment from the proposed project
The correct answer is C. The first step in evaluating a new project is the initial study of the potential effects on the environment. If there are no perceived threats to the environment, the city or county will write a negative declaration before making a decision about the project. If there are some potential problems, the city or county will write an Environmental Impact Report and the project must then go through a period of public review.
108. Which of the following can be performed by an unlicensed assistant ONLY if bonded? A accept deposits for the broker's trust account B make notations in the trust account records C withdraw funds from the broker's trust account D. N/A
The correct answer is C. The unlicensed assistant must be authorized in writing by the broker and be covered by a fidelity bond equal to the maximum amount of funds accessible to the employee.
137. Luis gave his farm to his three sons. Miguel, Javier, and Jose as joint tenants. Jose sells his interest to Robert who takes title as tenant in common. Miguel dies and leaves his interest to his son, Carlos. Ownership of the farm would be: A. Javier, Robert and Carlos as tenants in common, each with 1/3 interest B. Robert as tenant in common and Javier and Carlos as joint tenants C. Robert and Javier as joint tenants D. Javier and Robert as tenants in common, Javier with 2/3 interest and Robert with 1/3 interest
The correct answer is D. A joint tenant may sell his or her interest but may not will it. When Jose sold his interest to Robert, and Miguel and Javier held title as joint tenants each with 1/3 interest and Robert held title as tenant in common with 1/3 interest. Javier, as surviving joint tenant, automatically acquires title to Miguel's 1/3 interest when Miguel dies.
107. When can a broker also act as an escrow agent? A. When there are no appropriate escrow officers available B. When someone really wants them to C. When the broker has the opportunity to earn some money from the deal D. When the broker is already involved as an agent in the transaction
The correct answer is D. An Escrow holder can be: 1) A corporation, 2) an attorney, or 3) a real estate broker who acts as a real estate agent in the transaction
118. A real estate licensee may legally do all of the following except: A. Accept an open listing that has no termination date B. Receive a fee for servicing a loan that was not negotiated by him C. Sell his own property and claim a commission as an expense for income tax purposes D. Claim a commission on an exclusive listing which does not include a specific termination date
The correct answer is D. Both exclusive agency and exclusive right to sell listings must have a termination date. An open listing generally has no termination date.
143. Which of the following is always true of a broker's trust account? A. Must have the same name of the broker and the beneficiary B. Must look for an account with the highest interest rate C. Must have a fidelity bond for the amount in the account D. Must be designated with the lending institution as a trust account
The correct answer is D. Designating the account as a trust account offers certain protection to the owner of the funds. Funds that are designated as held in trust cannot be "frozen" pending litigation or during probate if the account holder becomes incapacitated or dies. The bank does not require the name or signature of the principal for a broker's trust account because the broker is required to keep the records for each individual. A trust account is not usually interest-bearing. The owner of the funds must request an interest-bearing account and other requirements must also be met. A fidelity bond is only required if the broker designates an unlicensed employee to make withdrawals.
145. Broker Bob is selling a property on which he holds an option. Broker Bob is under legal obligation to inform the buyer that the broker is acting as: A. A dual agent B. A trustee C. An optionor D. A principal
The correct answer is D. In this instance, the broker is acting as a principal. The implication is that the broker intends to exercise the option and turn around and sell the property to the purchaser.
142. Which of the following must contain a notice that the commission rate is negotiable? The correct answer is D. A joint tenant may sell his or her interest but may not will it. When Jose sold his interest to Robert, and Miguel and Javier held title as joint tenants each with 1/3 interest and Robert held title as tenant in common with 1/3 interest. Javier, as surviving joint tenant, automatically acquires title to Miguel's 1/3 interest when Miguel dies. A. Commercial lease B. Listing for a business opportunity C. Listing agreement for a commercial building D. Listing agreement for a residential property with 1-4 units
The correct answer is D. Listing agreements for residential property with 1-4 units or a mobilehome must contain a notice, in 10 point boldface type, that the commission rate is negotiable. A broker is not required to include a notice with other types of listing but it is sometimes recommended.
109. When an owner acquires land with riparian rights appurtenant thereto, such rights: A. Give the purchaser absolute ownership of adjacent waters B. Must be expressed in the deed C. May be determined accurately from an examination of public records D. Are only available to land adjacent to a stream and within the watershed
The correct answer is D. Riparian rights "run with the land," so they are automatically transferred with the property and are not specified in the public record. Riparian rights do not convey absolute ownership, but only the right to a reasonable amount.
133. A FICO score is normally used for which of the following? A. Establishing underwriting standards for private mortgage insurance B. Calculating depreciation on commercial property C. Determining which loans qualify for GNMA special assistance D. Reporting the credit history for a prospective borrower
The correct answer is D. The FICO score is a measure of the applicant's credit history or credit worthiness.
115. When a broker decides to use a fictitious business name, before soliciting business using that fictitious business name the broker must: A. File a fictitious business name statement with the city in which the broker's main office will be located. B. Register the fictitious business name with the California Secretary of State C. Public the fictitious business name in a newspaper of general circulations D. Hold a license from the Bureau of Real Estate bearing that fictitious business name
D" is the best answer choice of those listed here. A broker can operate under a fictitious business name only after the CalBRE issues a license bearing the fictitious name. Before the CalBRE will issue the license, the fictitious name must be filed with the county in which the broker will operate. The name must also be published in a newspaper of general circulation as a condition of filing. While choice "C" is technically a correct answer, "D" is a better choice because it is more specific. Simply publishing the fictitious business name is not sufficient; the CalBRE must also issue a license bearing the fictitious business name.
104. What is the advantage of a broker hiring salespeople as independent contractors? A. The broker does not have to pay for workers' comp B. The broker does not incur liability for salesperson wrongdoing C. The broker gains income from desk rents D. The broker does not have to withhold Social Security
The correct answer is D. The IRS will consider a Real Estate Salesperson to be an independent contractor if the salesperson is licensed, compensation is based solely on sales and not on hours worked, and there is a written contract that states that the salesperson will be treated as an independent contractor for tax purposes. Social Security is usually paid by both the employee and the employer. A broker is not required to contribute to the Social Security accounts or withhold income tax for salespersons who are considered independent contractors by the IRS. Salespersons are required to pay the entire Social Security contributions and file their own estimated tax returns. Under normal circumstances you are not required to provide workers' comp for independent contractors but it is usually recommended that the broker obtain workers' comp insurance for all salespeople, even those who are considered independent contractors, in order to reduce the broker's liability.
117. All of the following terminates an agency relationship except: A. Mutual agreement B. Renunciation by the agent C. Expiration of the subject property D. Renunciation by the principal if the agent has an interest in the property
The correct answer is D. The principal cannot revoke agency if the agent has an interest in the property. The right to earn a commission does not create an interest in the property. In general agency can be terminated by: Mutual agreement; Renunciation by the agent; Revocation by the principal (if the agent does not have an interest in the property); Expiration of the terms; Completion; Extinction of the subject; Death or incapacity of the principal or agent; Also note that if agency is terminated early, there may be a claim for monetary damages.