MA Real Estate Practice Exam Questions

A bank will loan up to 65% LTV for a home loan. The property is under agreement for $1,550,000, and the bank's appraiser has appraised the property at $1,600,000. The bank will loan, at most: A $1,007,500 B $1,040,000 C $1,550,000 D $1,600,000

A $1,007,500 The bank will lend up 65% of the of the sales price or appraised value for a home loan, whichever is LESS. So they will lend up to $1,550,000 x 0.65 = $1,007,500 in this instance.

What is the quarterly tax rate on a $840,000 home that is located in a town with a millage rate of $15 per $1,000? A $3,150 B $4,500 C $6,300 D $12,600

A $3,150 Step 1: $840,000 / 1,000 = 840 Step 2: 840 x $15 = $12,600 tax bill per year Step 3: $12,600 / 4 = $3,150 quarterly tax bill

The effective gross income of a property is $100,000 annually. If the debt service is $20,000, capital Improvements cost $15,000, and the property's operating expense are $10,000, what is the biannual net operating income of the property? A $45,000 B $55,000 C $80,000 D $90,000

A $45,000 NOI is effective gross income - operating expenses. So $100,000 - $10,000 = $90,000. Since NOI is calculated annually, biannual NOI is the annual NOI divided by 2, or $90,000 / 2 = $45,000. Note that neither debt service nor capital expenditures are operating expenses, so they are ignored for this calculation, and do not factor into the property's NOI.

The maximum penalty for acting as an agent without a license is A $500 B $5,000 C $10,000 D $25,000

A $500

Richard is a retired, 64 year old fisherman. He qualifies for a $1,000 tax exemption as a result of his retirement status. His home is valued at $150,000, and assessed at 40% market value. His tax rate is $30 per $1000 of assessed value. What is his payment? A $800 B $400 C $3,500 D $1,800

A $800 Property taxes are calculated on the assessed value of the property, so that's the first place to start: $150,000 x 0.40 = $60,000 assessed value. The tax rate is $30 per $1000 of value, so the property taxes are: $60,000 / $1,000 = 60 x $30 = $1,800. Richard can take a an exemption of $1,000 from this tax bill, so his final tax bill is: $1,800 - $1,000 = $800

A single family home in Middlesex County, MA is currently under agreement for $750,000. Its assessed value is $725,000 and its appraised value is $775,000. What is the annual property tax of this home if the millage rate is 12.50 per $1,000 of value? A $9,062 B $9,375 C $9,687 D $9,985

A $9,062 When calculating property taxes, we always use the assessed value, which is the tax value. $725,000 / $1,000 = 725 x $12.50 = $9,062.50

The northeasternmost section in a township is what number section? A 1 B 5 C 12 D 32

A 1 The northeastern section in a township is always section 1.

Daniel spends $50,000 renovating his basement into a guest suite. The space, which was 300sqft, is now 500sqft with the recent addition. The space is now a fully finished, heated 1 bedroom/1 bathroom with a private entrance. If the upper living area of Daniel's home is 2100sqft, what is the total gross living space of Daniel's newly renovated home? A 2100sqft B 2400sqft C 2600sqft D 2800sqft

A 2100sqft Total gross living area is the amount of finished, heated and above grade space that a home has. In this case, the "in law suite" basement is still not above grade and therefore would not be added to the total gross living area.

Under Massachusetts law, which is permissible? A A buyer's agent recommending an inspector B A set price with the commission being any amount over said price C Referral fees to unlicensed individuals D A landlord refusing to rent to a family in an owner occupied three family home

A A buyer's agent recommending an inspector Exclusive buyer's agents are allowed to recommend specific inspectors to their clients. However, agents representing the seller may not recommend a specific home inspector to the buyer since it is a potential conflict of interest, and instead must provide the state-approved list of all inspectors.

A lis pendens is notification of: A A cloud on title B A lien C A judgment D A pending listing

A A cloud on title lis pendens is a publicly recorded notice that a property's ownership is subject to litigation. It is an issue with property ownership, and is therefore classified as a "cloud on title." It is not a lien, because it is not associated with a specific debt, though it is a financially related limitation on real estate.

Tom hires Chad to sell his home. Tom tells Chad he wishes to sell for $150,000, and anything over that price Chad may keep as his commission. This agreement is: A A net listing, and illegal B net listing, and legal C A fixed listing, and legal D A fixed listing, and illegal

A A net listing, and illegal This is an example of a net listing, which is illegal in Massachusetts. A net listing is a listing where the commission is not specified. Instead, the owner agrees to pay the broker a commission equal to any excess above a fixed, specified sales price, below which the owner refuses to sell.

Which property would REQUIRE a smoke detector certificate in Massachusetts? A A single family home built in 1969 B A four family home built in 1977 C A small apartment building built in 1984 D A two family home built in 2004

A A single family home built in 1969 Properties built before 1975 are required to have a smoke detector certificate under Massachusetts law.

Both General Warranty and Limited Warranty Deeds offer the grantee which of the following protections: A A warranty that the grantor did not cause any issues with title B A warranty that the grantor will take care of any title issues in the future C A warranty that the grantor has title insurance D A warranty that the grantor will be liable for any title claims that originated prior to their ownership

A A warranty that the grantor did not cause any issues with title the grantor states that they did not cause any issues with title when they owned the property. This is the only guarantee that both deeds have in common.

A utility company has the right to run their gas lines through Maeve's property. Maeve's property is most likely subject to A An easement in gross B An easement by prescription C Mineral rights D A betterment:

A An easement in gross This is an example of an easement in gross (a right of way across a piece of land held by someone who does not own an adjoining lot of land). Corporations, like utility companies, are legal persons that can benefit from rights like easements.

A broker, who is the sole proprietor of her firm, dies. Who may receive a temporary broker's license to deal with the affairs of the deceased? A Anyone B Another agent C Another broker D One of the broker's heir

A Anyone In the event of the death of a sole proprietor broker and upon application by a legal representative, the Board may issue a temporary, non-renewable license to the applicant or to someone he or she designates (approved by the Board). The temporary license requires a fee and bond and is effective for not more than 1 year from the date of death.

The major source of Federal monies available to clean up environmentally polluted properties was originally created by: A CERCLA B 21E C EPA D SARA

A CERCLA ERCLA, or the Comprehensive Environmental Response, Compensation, and Liability Act, originally created the federal superfund to clean up contaminated property. SARA, or the Superfund Reauthorization and Amendments Act, only re-authorized the superfund created by CERCLA; it did not originally create it. The EPA administers the superfund, but did not create it. 21E is the Massachusetts Superfund Act, and did not create any federal monies for the cleanup of contaminated properties.

A tenant renting a property under a net lease would pay all of the following EXCEPT: A Debt service B Management fees C Property taxes D Common area utilities

A Debt service A net lease is a lease in which the tenant pays some or all of the building operating expenses. Debt service (or mortgage payments) is not an operating expense, and would not be paid by the tenant.

As a property owner, you have the right to rent or sell your property. This falls under which of your bundle of rights? A Disposition B Alienation C Possession D Exclusion

A Disposition Disposition is the right to sell, rent, mortgage, or will the property to someone else

A P&S that is signed by both buyer and seller is considered: A Executory B Non Binding C Executed D Non Recourse

A Executory Executory is the status given to contracts that have not yet been finished. Although both parties have agreed to terms and conditions of the sale, the P&S has not yet been completed by both parties. Once all the terms and conditions have been met, then it will be considered executed, such as closing day.

A P&S that is signed by both buyer and seller is considered: A Executory B Non Binding Executed D Non Recourse

A Executory Executory is the status given to contracts that have not yet been finished. Although both parties have agreed to terms and conditions of the sale, the P&S has not yet been completed by both parties. Once all the terms and conditions have been met, then it will be considered executed, such as closing day.

Life estates are a type of: A Freehold B Non-freehold C Estate at sufferance D Co-ownership

A Freehold Life estates are freehold (or ownership) interests in real estate.

An investor is purchasing a $400,000 home that rents for $2,000 per month. What rule of thumb method of valuation would most likely be used to quickly determine if this is a good investment? A GRM Cap rate C CoCROI D Replacement cost

A GRM The investor would most likely use GRM (the Gross Rent Multiplier), a quick estimate of value used before a more in depth investment analysis.

Claudia, a real estate agent is at an open house and using the bathroom. Upon exiting, Claudia forgets to shut off the faucet on the sink all the way. Claudia leaves the open house and when the sellers return from vacation three days later, they find that the sink has overflowed and caused damage to the floors in the hallways just outside the bathroom. Which of the following would likely cover this incident so Claudia doesn't have to pay out of pocket? A General Liability Insurance B Errors And Omissions Insurance C Professional Liability Insurance D Corporate Insurance

A General Liability Insurance General liability insurance covers damage done by agents to personal or real property while on showings or at open houses.

A contract would be void because: A It lacked consideration B It lacked consent C One of the parties to the agreement didn't read it D It was not in writing

A It lacked consideration Agreements without consideration (a mutual exchange of value between the parties to the agreement) do not qualify as contracts (legally binding agreements), and are therefore void. Lacking consent renders the agreement voidable, not void. If you don't read a contract it can still be valid, so read your contracts! And finally, not all contracts have to be in writing (and even verbal real estate contracts are unenforceable, not void).

Privity of estate is created by a(n): A Lease B Purchase and sale agreement C Mortgage D Estoppel certificate

A Lease Privity of estate is created by a lease. It is a legal relationship between two people with an interest in the same piece of property.

12 Garden Street is currently rented out for $4,000 a month. It has a monthly debt service of $3,300 per month. With respect to this property, the mortgagor is most likely the: A Lessor B Lessee C Lender D Condominium association

A Lessor The mortgagor is the borrower. In this circumstance, the borrower is most likely the lessor, or the landlord because they are receiving rent.

Which of the following would typically not be considered a trade fixture? A Lighting fixtures B Jewelry display cases C A walk in fridge D A chicken coop

A Lighting fixtures Trade fixtures are property used specifically for a business. Though attached to the real estate, they do not qualify as real property. Lighting fixtures are not specifically for business purposes, and usually would not qualify as trade fixtures.

Antonio is a newly licensed agent and begins making phone calls to fsbo owners that he finds on www.forsalebyowner.com. Before calling any owners, Antonio should be sure that he does which of the following? A Look up the FTC Do Not Call Registry B Make sure the listings aren't expired Ask his Broker if he can make these types of calls D Send emails to the owners first so he doesn't have to call

A Look up the FTC Do Not Call Registry Before making any unsolicted phone calls, agents should check the FTC Do Not Call Registry to see if any of the phone numbers they plan to call are on that list. Fines for calling a number on this list are $40,654 per call.

A plot of land located in Boston, Suffolk County, MA beginning at the intersection of L Street and E. Broadway, running north along E. Broadway 450 feet, east to E. 5th Street more or less, is an example of which type of land survey system? A Metes and bounds B Plat map C Lot and block D Government rectangular survey

A Metes and bounds Metes and bounds is a land survey that contains metes (distances) and bounds (directions) with monuments (markers) and benchmarks (permanent markers), and is the survey system that is described here.

An investor who wants to calculate the NOI on a specific property, will need to take into account all of the following, except: A Mortgage on the property B Electricity for the common areas of the building C Income received from the rented apartments D Any vacancies

A Mortgage on the property NOI or Net Operating Income is calculated by first finding the effective gross income (potential gross income - vacancies = effective gross income) and then substracting the operating expenses (such as day to day maintenance) to get the NOI. Essentially, effective gross income - operating expenses = net operating income. The mortgage is not part of theses equations.

Tom, a real estate agent, sells Tina's house. Tina gives him money to take a vacation in Vermont as thanks for how painless the transaction was. Is this acceptable? A No, any compensation must be accepted by the broker, not the agent B No, it is a conflict of interest C Yes, so long as Tom discloses D Yes

A No, any compensation must be accepted by the broker, not the agent Massachusetts real estate licensing law requires that any compensation payable to a real estate salesperson be accepted on the behalf by their employing broker. Under Massachusetts law, real estate salespersons cannot be paid by their client directly.

A judge rules that a homeowner is at fault in a car accident and as part of the settlement, the home must be sold to pay for the damages. At which type of sale will the home be sold? A Sheriff's Sale B Foreclosure C Bargain Sale D Auction

A Sheriff's Sale A sheriff's sale is when the court takes property and sells it as a result of a lawsuit's verdict. The sale will pay for the damages awarded to the plaintiff.

A listing agent is writing up a property description for a 3 bedroom, 2 bathroom colonial. The home has been updated by the current owners and looks beautiful now, but when they originally bought it in 1975, the home was outdated and had asbestos on the heating pipes, which they had removed properly by a licensed professional. Is the listing agent required to disclose the asbestos that was in the home? A No, because it was removed properly so it is no longer a material defect Yes, because it is a hazardous material C No, because it was built prior to 1978 D Yes, because it's a material defect

A No, because it was removed properly so it is no longer a material defect Material defects are anything that would impact a buyer's willingness to buy a property. In this case, the current sellers have fixed the material defect of the asbestos.

Bob defaults on his loan and eventually the property is foreclosed upon. The lender does not go after Bob as the only security for the loan was the property. What type of a loan does Bob have? A Non-Recourse Loan B Wraparound Mortgage C Purchase Money Mortgage D Adjustable Rate Mortgage

A Non-Recourse Loan A non-recourse loan is a loan in which the borrower is not personally liable for any deficiencies with the loan and the only security for the loan is the property.

You rent an apartment for two years. The landlord sells the building during the first year of the lease term. What effect does the sale have on the lease? A None B Lease may be cancelled C Lease is cancelled D Lease may be renegotiated

A None Leases run with the land, which means that if the landlord sells the leased premises before the lease has ended, the new owner is obligated to honor the lease.

All of the following statements are correct except: A Optionors lose their deposit if they do not exercise their option by the agreed-upon deadline B Real estate agents must bring a ready, willing, and able buyer to be entitled to a commission C The interest rate for FHA insured loans floats based on the interest rates available on the market D CERCLA can create liability for the tenants of contaminated real estate

A Optionors lose their deposit if they do not exercise their option by the agreed-upon deadline This answer choice is false. It is the optionee, not the optionor, that would lose their deposit if they failed to exercise their option by the agreed upon deadline. The optionor would keep the deposit in this instance. All of the other answers are correct.

All of the following loans would likely be sold on the Secondary Mortgage Market, except: A Portfolio Loan B Conventional Loan C Balloon Loan D Fully Amortized Loan

A Portfolio Loan A portfolio loan refers to a loan that banks generally keep in house and do not sell on the Secondary Mortgage Market.

The following provides the least liability for the grantor: A Quitclaim deed B Warranty deed C General warranty deed D Special warranty deed

A Quitclaim deed A quitclaim deed states that the grantor conveys only whatever interest the grantor has at the time of conveyance. No warranties are made, meaning that the grantor is not liable for any claims against titl

Lauren is the listing agent for a $7,500,000 penthouse in the Seaport District. Within the first week there are three interested buyers. Lauren gets a call after the first showing from a buyer's agent named Jill. Jill informs Lauren that her client is meeting at the office at 5pm to write up an offer and she'll get it to Lauren as soon as they are finished. About 4pm, Lauren gets another call from Janet who is also a buyer's agent. Janet informs Lauren that she has a a verbal offer from her client for $7,000,000 with a 30 day closing date and a financing contingency with a 50% down payment. What should Lauren do next? A Relay the verbal offer to the seller, along with the news that there could be a second offer B Tell Janet that she can not relay any verbal offers because they would be non binding so she better put it in writing first C Relay only the written offer to the seller D Tell Janet that there is another offer coming in so she will not inform the seller of the offer, until she has both offers in hand

A Relay the verbal offer to the seller, along with the news that there could be a second offer All offers, verbal or written, must be presented to the client as soon as they come in to the agent. It would be fine for Lauren to tell the seller that another offer might be arriving, but she is still required to relay the verbal offer immediately and not wait on other offers to arrive before contacting the seller.

Louis shares a driveway with Larry. Larry has an easement which gives him the right to walk across Louis' parking spot in order to gain access to his car. In this scenario, Louis owns the: A Servient tenement B Voluntary tenement C Dominant tenement D Involuntary tenement

A Servient tenement The servient tenement is the property that is encumbered by someone else's right (the dominant tenement). In this scenario, Louis is the one who has to allow Larry to walk across his property; therefore, he is the one who is encumbered.

According to the Fair Housing Amendments, the landlord of a 10 unit apartment building would never be able to deny a tenant occupancy based A Sex B Sexual orientation C Salary D Housing assistance use

A Sex The Fair Housing Amendments include the 7 federally protected classes, including sex, but does not include the Massachusetts protected classes of sexual orientation or public assistance status. Salary is not a protected class. Rental properties of 10 units would not qualify for any federal fair housing law exemptions.

According to the Fair Housing Amendments, the landlord of a 10 unit apartment building would never be able to deny a tenant occupancy based on: A Sex B Sexual orientation C Salary D Housing assistance use

A Sex The Fair Housing Amendments include the 7 federally protected classes, including sex, but does not include the Massachusetts protected classes of sexual orientation or public assistance status. Salary is not a protected class. Rental properties of 10 units would not qualify for any federal fair housing law exemptions.

Priya is a Massachusetts attorney and would like to get her real estate license. What would she need to do? A She would need to apply for licensure, pay a licensing fee, be bonded for $5,000 and then be entitled to her broker's license B She would need to take apply for licensure, take a state examination, pay a licensing fee and then be entitled to her broker's license C She would need to apply for licensure, take a state examination, pay a licensing fee and then be entitled to her salesperson's license D She would need to apply for licensure, pay a licensing fee, be bonded for $5,000, and then be entitled to her salesperson's license

A She would need to apply for licensure, pay a licensing fee, be bonded for $5,000 and then be entitled to her broker's license Massachusetts attorneys are entitled to an automatic broker's license, without having to take the course or pass the state exam. They must still apply and pay a licensing fee to the state, plus be bonded for $5,000.

Which of the following is inheritable? A Tenancy in common B Tenancy by entirety C Life estate in reversion D Life estate in remainder

A Tenancy in common Of these answers, only a tenancy in common is inheritable. A tenancy by entirety automatically passes to the surviving spouse on one of the co-owner's deaths, and life estates are not inheritable by definition.

Tom represents Rebecca in the sale of her home. Tom's friend, Nick, submits an offer to buy Rebecca's home. Tom knows that Nick would pay a higher price than he submitted an offer for because of a conversation they had over the weekend. He should tell Rebecca: A That Nick would pay a higher price B That she should accept the offer to help his friend Nick C Nothing, since he has a duty of confidentiality D That he can no longer represent her due to a conflict of interest

A That Nick would pay a higher price Tom should tell Rebecca that Nick would pay a higher price, because he has an obligation to disclose to his client (Rebecca) any information that she would want to know in the transaction. This includes information that the agent finds out about the other party to the transaction, including their willingness to pay a higher price

Where do littoral rights typically terminate? A The accretion line B The mid-point of the waterway C 100 feet from the high tide mark D The middle tide line

A The accretion line Littoral rights typically extend to the accretion line (which is the median high tide line, or the water's edge if the body of water is not tidal).

If Naomi dies intestate and has a 5 carat diamond, antique collection of cars and 45 ft sailboat that must be distributed to heirs, which of the following is true? A The administrator will bequeath the property to the legatees B The executor will devise the property to the legatees C The administrator will bequeath the property to the devisees D The executor will devise the property to the devisees

A The administrator will bequeath the property to the legatees If someone dies without a will, they are said to die intestate. In this case, the judge will appoint an administrator to bequeath the personal property to the legatees, or persons receiving personal property.

A broker must have a $5000 bond for: A The benefit of a person harmed by the broker losing escrow funds B Insurance in the event of a client dispute C To help pay agent commissions in the event of bankruptcy D As a fee for being licensed

A The benefit of a person harmed by the broker losing escrow funds All licensed brokers, including corporations and inactive licensees, must provide the Board with a $5,000 surety bond. This bond is for the benefit of any person harmed by the loss of escrow funds caused by the broker; it is not insurance for the broker.

Who is covered by mortgagor title insurance? A The buyer B The seller C The lender D The age

A The buyer Title insurance insures against losses resulting from undiscoverable title defects. There are two types of title insurance: mortgagor (owner) protection or mortgagee (lender) protection.

Constructive eviction will most likely occur when: A The landlord fails to pay a heating bill B The tenant fails to make a rental payment C The tenant fails to make several rental payments D The landlord begins showing the property to prospective tenants

A The landlord fails to pay a heating bill Constructive eviction is a violation of the landlord's obligations, e.g. a failure to pay a heating bill. It effectively terminates the lease, and relieves the tenant of the obligation to pay rent.

What do real estate licensing laws, zoning, and building codes have in common? A They are all police powers of the government B They are all required to buy and sell real estate C They are all part of eminent domain D They are all under the jurisdiction of The Board

A They are all police powers of the government Police power is the right of the government to enact laws to protect the public. Both real estate licensing laws and zoning and building codes are in place to protect the public from harm.

Franny knows that the sellers of one of her friend's listings, the Smiths, are selling their home because they are getting divorced. One of Franny's clients, Sam, comes to look at the Smiths' property. When Sam asks Franny why the Smiths are selling, Franny should reply that: A They are getting divorced B They are changing school districts C That she can't answer that question, but that she knows that they have to sell fast DThat she can't answer that question

A They are getting divorced If Franny represented the Smiths, she would have had to keep this information confidential. However, Franny represents Sam (the buyer) and not the Smiths (the sellers). This information is therefore confidential information about the other party to the transaction, and she must disclose this information to her client Sam.

Massachusetts Real Estate Board members must meet at least:The MA Board of Registration of Real Estate Brokers and Salespersons is made up of all of the following, EXCEPT: A Three lay people B Three brokers C One chairperson D Governor appointees

A Three lay people two lay people (unlicensed people who represent the public interest).

An ownership interest that is more of an ownership of time is a: A Timeshare B Interest for years C Estate for years D Non-freehold

A Timeshare A timeshare is a form of ownership where the owner only owns the property for a specific period of time during the year in fee simple, along with a shared interest in the common areas.

Why does the U.S. Treasury raise funds?' A To fund U.S. government activities B To stimulate economic growth C To encourage fluidity in the housing market D To offer insurance to homeowners making low down payment

A To fund U.S. government activities The US Department of the Treasury was established in 1789 to manage government revenue and pay the costs of running the federal government. It's three main activities are raising revenue through taxes, borrowing, and printing money.

The case establishing when a real estate agent is entitled to his or her commission in Massachusetts is: A Tristram's Landing v Wait B United States v Causby C Massachusetts v Taylor D Blackmore v Re/Max Tri-Cities

A Tristram's Landing v Wait Tristram's Landing v Wait establishes the criteria for earning a real estate commission in Massachusetts.

A property owner wishes to build a six story office building in an area that limits building heights to four stories. What must they file for in order to build the six story building? A a variance B Non-conforming use permit C Title V permission D Police power exclusion

A a variance A variance is special permission to do something that zoning prohibits. In this example, the property owner would need a variance to build their six story building.

Which of the following verbal contracts would be enforceable in a court of law? A twenty year lease B A listing contract C An offer D A purchase and sale agreemen

B A listing contract A listing contract, such as an open listing agreement, may be oral; however, it is best to put a listing contract in writing. Most real estate contracts must be in writing pursuant to the Statute of Frauds. An offer is not an agreement.

A sum of money to be paid in the event of a breach of contract that is pre-agreed to in a contract is known as: A Damages B Liquidated damages C Estoppel D Specific performance

B Liquidated damages Liquidated damages are damages that are pre-negotiated in a contract, and are paid out in the event of a breach (violation) of that contract.

A condo sale is set to close on October 25th. The seller has already paid their $350 per month condo fee and a $50 electric bill. What does the buyer owe the seller at closing, assuming a 365 day year and that the buyer owns the date of closing A $171 B $90 C $175 D $110

B $90 Because the buyer will own the property from October 25th-October 31st (since the question specifies a 365 day year), proration of the condo fee and property taxes is required to refund the seller for those 7 days. We add the $350 condo fee per month and the $50 electric bill = $400/monthly expenses, of which we need to refund 7 days' worth back to the seller. $400/31 days in the month = $12.90/day x 7 days = $90.32 per day is the total pro-ration due to seller at closing, rounded to $90 in the answer choice.

A property sells for $200,000. This is the: A Market value B Market price C Assessed value D Investment value

B Market price Market price is the amount actually paid for the property. The market value is how much it might sell for. Assessed value is the value for taxes. Investment value is the value to investors.

A condo sale is set to close on October 25th. The seller has already paid their $350 per month condo fee and a $50 electric bill. What does the buyer owe the seller at closing, assuming a 365 day year and that the buyer owns the date of closing? A $171 B $90 C $175 D $110

B $90 Because the buyer will own the property from October 25th-October 31st (since the question specifies a 365 day year), proration of the condo fee and property taxes is required to refund the seller for those 7 days. We add the $350 condo fee per month and the $50 electric bill = $400/monthly expenses, of which we need to refund 7 days' worth back to the seller. $400/31 days in the month = $12.90/day x 7 days = $90.32 per day is the total pro-ration due to seller at closing, rounded to $90 in the answer choice.

The EPA/HUD "Protect Your Family From Lead In Your Home" pamphlet must be provided for all properties built prior to: A 1960 B 1978 C 1979 D 1991

B 1978 The EPA/HUD lead paint pamphlet must be provided for all homes built prior to 1978.

The following is a voidable contract: A A contract without offer and acceptance B A contract with a minor C An illegal contract D A contract lacking consideration

B A contract with a minor Voidable contracts may be voided by a court of law, but they may also be enforced by the party that was harmed by their creation (in this instance, the minor).

Francis bought a house for $100,000. At a minimum, he wants to recoup what he paid when he sells it. He will have to pay $1,100 in attorney's fees, $650 in recording fees, and 5% to a broker. For what price should he sell? A $106,838 B $107,106 C $101, 750 D $96,663

B $107,106 To calculate what Francis should sell for, first add his costs (treating his net profit as a cost, since he must receive it when he sells his house): $100,000 + $1,750 = $101,750. Next, divide the seller's costs by the difference between 1 and the commission to find his sales price: $101,750 / 0.95 = $107,105.27 (rounded up to $107,106).

A multi-family home in Suffolk County sold for $1,121,075. It was assessed at $1,100,450 and appraised for $1,125,000. What did the seller pay in Massachusetts excise stamps? A $5,018 B $5,114 C $5,130 D $5,330

B $5,114 First we must round up to the nearest $500 of value: $1,121,500. Then we divide by $500: $1,121,500 / $500 = 2,243 stamps x $2.28 = $5,114

A multi-family home in Suffolk County sold for $1,121,075. It was assessed at $1,100,450 and appraised for $1,125,000. What did the seller pay in Massachusetts excise stamps? A $5,018 B $5,114 C $5,130 D $5,330

B $5,114 First we must round up to the nearest $500 of value: $1,121,500. Then we divide by $500: $1,121,500 / $500 = 2,243 stamps x $2.28 = $5,114

An income property grossed $10,000 this year. It paid management fees of 10% and paid for a heating system replacement that cost $2,500. What is the Net Operating Income for this property? A $10,000 B $9,000 C $6,750 D $6,500

B $9,000 The capitalization rate is the percentage of the property's value it receives as net operating income (NOI) every year. The NOI is Gross Income less operating expenses. To calculate this property's value based on the capitalization rate, we must first calculate our NOI: $10,000 x 0.1 = $1,000 management fee. $10,000 - $1,000 = $9,000 NOI. We do not include the heating system replacement since it is a capital improvement (an addition to the property), not a maintenance cost.

What document allows a lender to use real property as security for a loan? A Note B Mortgage C Closing disclosure D Loan application

B Mortgage A mortgage allows a lender to use a piece of property as collateral for a loan and provides security for the note.

Allen asks Andre to list his home for sale. Upon signing the listing agreement, Allen asks Andre to take a look around the home to see if there is anything that needs to be repaired before the home goes on the market for sale. Andre notices a small stain on the ceiling of the master bedroom and asks Allen about it. Allen says he has never noticed it before but will be sure to repaint it before any buyers come through the home. Andre lists the home on MLS with an 'as-is' disclaimer and hosts the first open house, which brings 35 excited buyers to the home. None of the buyers notice the stain on the ceiling because it has been repainted and because the home is in such a great location, multiple offers come in on the property. The highest offer at $50,000 over asking is accepted and the transaction ends up resulting in a successful title transfer to the buyer, now new owner. A year after the new owner moves into the home, the master bedroom furniture and floors are damaged by a leak from the ceiling. If the new owner wants to file a Chapter 93A claim to receive damages due to the leak, who would be at fault? A Allen because it was his house. B Andre because he saw the stain and didn't disclose it. C Allen because he tried to cover up the stain. No one because the property was being sold as-is.

B Andre because he saw the stain and didn't disclose it. Andre saw the stain, and he is responsible for disclosing it to any buyers, even if the stain was repainted. If the home owner is trying to cover up a material defect, the agent should not participate in that because it could lead to a Chapter 93A claim under the Consumer Protection Act. Even if a sale is as-is, that doesn't allow the home owner or their agent to not disclose any material defects. Since 93A only applies to businesses, only Andre would be liable under 93A.

If a borrower makes monthly payments that go toward principal and interest and at the end of their 25 yr loan term they will still have a remaining balance of debt that must be paid, what type of financing do they have? A Fully Amortized Loan B Balloon Loan C Straight Loan D Simple Interest Loan

B Balloon Loan A balloon loan has a shorter pay period than amortization period. Even after making monthly payments that go toward principal and interest, the borrower will still have an unpaid balance due at the end of term.

Under MGL Chapter 93A, real estate agents are treated as: A Individuals B Businesses C Realtors D Licenses

B Businesses Under Massachusetts General Law Chapter 93A, also known as the Consumer Protection Act, licensees such as real estate agents are considered businesses. This protects consumers from unfair, deceptive business practices.

The unauthorized use of escrow deposits to pay commissions is called: A Commingling B Conversion C Computation D Conscription

B Conversion This is an example of conversion (the unauthorized use of client money). The use of any escrow monies to pay for commissions must be agreed to in writing by the buyer and seller.

George Washington has been tasked with appraising the White House. What approach should George use to estimate the value of the White House A Sales comparison approach B Cost approach C Income approach D Market data approach

B Cost approach The cost approach is used for unique buildings and improvements that lack adequate sales comparison data. Since the White House is unique and there are no other properties it can be compared to, the sales comparison approach cannot be used. Since the White House also lacks income, the income approach cannot be used either. The cost approach uses construction costs to determine the property value

George Washington has been tasked with appraising the White House. What approach should George use to estimate the value of the White House? A Sales comparison approach B Cost approach C Income approach D Market data approach

B Cost approach The cost approach is used for unique buildings and improvements that lack adequate sales comparison data. Since the White House is unique and there are no other properties it can be compared to, the sales comparison approach cannot be used. Since the White House also lacks income, the income approach cannot be used either. The cost approach uses construction costs to determine the property value.

During month 9 of a 12 month lease that contains an option to purchase, the lease is: A Executory and unilateral B Executory and bilateral C Executed and unilateral D Executed and bilateral

B Executory and bilateral A lease is bilateral (both parties make a promise) and executory (not yet completed). Options may be unilateral, but the lease is still bilateral even if it contains an option.

Fernando verbally hires Rachel to sell his home, located at 17 River Road. He promises to only list the property with Rachel to incentivize her to get top dollar for his listing. Rachel and Fernando's relationship is best described as: A Professional B Fiduciary C Exclusive D Unenforceable

B Fiduciary Rachel has an agency relationship with Fernando, which means this is a fiduciary relationship (a relationship of trust). Their relationship is not exclusive because it is verbal (exclusive listings must be written), and it is an enforceable agreement (listings may be verbal, and are not subject to the Statute of Frauds). "Professional" is not correct because it is not the best answer to the question (watch out for this on the real licensing exam - be sure to read all of the answers!)

Fred is selling the Smiths' house. He knows that the previous owners ran a meth lab in the basement. When a pair of prospective buyers ask if the house was ever used for criminal activity, Fred says "No, never." This is: A Misrepresentation B Fraud C Duress D Acceptabl

B Fraud Fred's statement is an example of fraud (an intentional misstatement of fact).

A lease where a tenant pays a fixed rent, along with the unit's heat, hot water, and electricity costs, is a A Modified gross lease B Gross lease C Net lease D Percentage lease

B Gross lease A net (or triple net) lease is a lease where the tenant pays rent and some or all of the operating expenses of the building. A gross lease is a lease where the tenant pays a fixed rent, and the landlord pays the building operating expenses. Heat, hot water, and electricity for the unit are not operating expenses, since they are specific to the unit, and are not for the whole building. This example is therefore a gross lease.

When asking a client pre qualifying questions before showing a home, it is best to refrain from asking: A If they have spoken to a lender yet B If they have children C If they have a downpayment D If they need to be close to public transportation

B If they have children Asking someone if they have children would be in violation of fair housing law under the protected class of familial status.

A 3 bed 2 bath home would most likely sell for the highest price in a neighborhood where: A Most homes are a similar size B Most homes are larger C Most homes are smaller D Most homes are very different

B Most homes are larger Because of the principal of progression a property's value will be highest when the homes around it are nicer than it, increasing its value through substitution

A 3 bed 2 bath home would most likely sell for the highest price in a neighborhood where: A Most homes are a similar size B Most homes are larger C Most homes are smaller D Most homes are very differen

B Most homes are larger Because of the principal of progression a property's value will be highest when the homes around it are nicer than it, increasing its value through substitution.

Timmy and Tammy are twins. When they are 14, they inherit a piece of land from their grandmother, Tracy. Timmy deeds his portion of Tracy's land to Tammy, and she puts it on the market for sale when she turns 15. Ned, a 31 year old real estate investor, offers to buy Tammy's land for $142,750. Tammy accepts Ned's written offer. What is the current legal status of Tammy and Ned's contract in this scenario? A The contract is unenforceable by either party B Ned cannot force Tammy to sell C Ned can force Tammy to sell D The contract will be void unless Timmy also agrees to the offer in writing

B Ned cannot force Tammy to sell Since Tammy is under 18, Tammy and Ned's agreement is voidable. This means that the contract is valid until a court of law voids it, at the discretion of the party potentially harmed by the creation of the contract (in this case, Tammy). Ned will therefore be unable to force Tammy to sell, since doing so requires going to a court to enforce the contract, and that is where Tammy would then be able have the contract voided. So even though the contract is valid until voided, in practice Ned will not be able to force Tammy to sell the property if she changes her mind later. On the other hand, Tammy can choose to NOT have the contract voided, which means it would remain valid and she could go to court to enforce the contract thus forcing Ned to do what he promised.

Sam tells Dave that he will sell him his house for $100,000. They draft a deed and Sam signs it, granting the property to Dave. Two days later, Sam tells Dave that the deed isn't valid because Dave didn't sign it, and wants him to move out of his house. Is Sam correct? A Yes, because Dave did not sign the deed B No, because Dave does not have to sign the deed C Yes, because Sam also has a 3 day right to cancel D No, because $100k is not enough for his house

B No, because Dave does not have to sign the deed A deed does not need to be signed by a grantee. The only one who is required to sign a deed is the grantor, Sam.

Lizzy is selling her condo for $500,000. Lizzy accepts an offer from Stan for $475,000. Two days later and prior to the execution of the purchase and sale agreement, Lizzy receives an offer from Mary for $500,000. Lizzy tells Stan that she has rejected his offer, and accepts Mary's offer instead. Can Lizzy do this? A Yes, because this happenned prior to the execution of the purchase and sale agreement B No, because she had already accepted Stan's offer C Yes, because Mary's offer was higher and she will obviously accept the highest offer D No, because Lizzy should give Stan a chance to match Mary's offe

B No, because she had already accepted Stan's offer An offer, once accepted, creates a contract. Once Lizzy accepted Stan's offer, a contract was created. Lizzy cannot simply break that contract and accept Mary's offer, even it was higher. Stan could bring a lawsuit against Lizzy to enforce the contract.

A lease creates an interest(s) known as a: A Freehold interest B Non-freehold interest C Non-freehold and rental only interest D Non-freehold, transference, and possession interest

B Non-freehold interest A freehold is an ownership interest, and a non-freehold is a possessory interest (for example, a rental).

The agency created when an agent appears to represent the buyer, even though they legally represent the seller, is: A Dual B Ostensible C Implied D Universal

B Ostensible This is an example of apparent or ostensible agency (agency or authority that appears to exist because of the situation, but does not legally exist).

Which of the following is the best definition of the term "seisin"? A Rental of property B Ownership of property C Mortgaging of property D Conveyance of property

B Ownership of property Seisin is a freehold, or ownership, claim to real estate.

A bill of sale is used to convey what? A Real property B Personal property C Property by will D None of the above

B Personal property Bills of sale (or receipts) transfer ownership of personal propert

The key to a storage locker located in the basement of a condominium building is: A Realty B Personalty C trade fixture D An emblement

B Personalty A key is an example of personalty (aka personal property or chattel) since it is not directly or indirectly attached to land.

A subdivision would have a publicly recorded: A Master plan B Plat plan C Subdivision survey D A conversion survey

B Plat plan A plat plan or plat map is the publicly recorded map of a subdivision, using the lot and block method.

Bob takes out a loan with XYZ Bank. It is a 30 year fixed loan for $300,000 and an interest rate of 5%. Bob is wondering whether he can pay off the loan prior to end of the 30 year term. What will he need to look at to determine if he is able to do that and whether there is any penalty for doing so? A Acceleration Clause B Prepayment Penalty Clause C Due on Sale Clause D Severability Clause

B Prepayment Penalty Clause The prepayment penalty clause would state whether there is any penalty if the loan is paid in full before the end of the term

An ARM typically adjusts based on the: A Teaser rate B Prime rate C Cap rate D Carryover rate

B Prime rate The increase or decrease of that rate is based on the prime rate plus some margin. Loans you encounter as an agent may also use SOFR (or LIBOR for older loans) to determine their interest rate, though the exam will typically use the prime rate.

In Massachusetts, if a seller refuses to sell to anyone who isn't married, the real estate agent must: A Explain to the seller that this is discrimination B Refuse the listing C Do nothing as this is the seller's right D Ask prospective buyers to pretend they are married

B Refuse the listing Refusing to sell to someone because of their marital status is in violation of Massachusetts Fair Housing Law. The real estate agent should always refuse the listing.

Who is legally entitled to hold an escrow deposit? A Buyer B Seller C Agent D Salesperson

B Seller Escrow account deposits are the client's money. Legally, the seller is the ONLY person entitled to hold escrow money, though the seller's broker often holds the deposits with the written consent of both the seller and the buyer.

A listing contract is best described as a(n): A Exclusivity Contract B Service Contract C Bilateral Contract D Realtor Contract

B Service Contract A listing contract is essentially a service contract. The agent is offering services to the seller. It does not have to be exclusive.

Which of the following are both protected classes in federal and Massachusetts state law? A Race, Religion, and Sexual Orientation B Sex, Religion, and Familial Status C Race, Age, and Familial Status D Sex, Age, and Disabilities

B Sex, Religion, and Familial Status : Federal protected classes under fair housing include: race, color, sex, national origin, religion, disabilities, and familial status. MA state protected classes include: race, color, sex, national origin, religion, disabilities, familial status, age, marital status, sexual orientation, public assistance status, gender identity and expression, veteran status, genetic information, and ancestry.

State laws vary on the disclosure of: A Chlordane B Stigmas C Foundation issues D The seller's ethnicity

B Stigmas Property stigmas (information that the property was the site of a death, murder, suicide, criminal activity, or paranormal activity) do not need to be affirmatively disclosed in all states. For example, stigmas do not need to be affirmatively disclosed in Massachusetts, but they must be disclosed in California if they occurred within the past 3 years.

Which of the following would most likely be found on a publicly recorded plat map? A Links B Streets C Home locations D Mercantile lines

B Streets Since a plat map (a publicly recorded plan for a subdivision) divides a property into blocks using streets, streets is the correct answer.

You as a real estate licensee receive an offer to buy a condominium you have listed, but the offeror refuses to give a binder with the offer. You should: A Refuse to submit the offer B Submit the offer C Submit the offer if the offeror will give consideration D Submit the offer only if it is the best offer

B Submit the offer All offers and counteroffers (written, verbal, or otherwise) must be brought to the client. There are no exceptions to this rule, even if the buyer won't give a binder (a deposit.)

Which is a cloud on title? A An emblement B Tax liens C Asbestos D Closing costs

B Tax liens A cloud on title is a problem with the ownership of a piece of real estate. Tax liens give a town or city the right to sell the property for unpaid property taxes. This means that a homeowner could lose their ownership because of the property tax lien (which is a pretty big problem with ownership!

Avery is a licensed real estate agent who is buying a multi family property as an investment. When Avery meets the listing agent, Jack, at the open house, what should be done in order to avoid a potential conflict of interest? A Tell Jack that Avery is the buyer B Tell Jack that Avery is the buyer and write it down on the sign in sheet C Tell Jack only if Avery intends to purchase the property D Tell Jack that the property will not be a primary residence

B Tell Jack that Avery is the buyer and write it down on the sign in sheet Conflicts of interest should always be disclosed in writing. The best thing to do is to tell the listing agent and indicate it in writing to avoid any licensing law violations.

If two people are married, they can choose to co own a property as all of the following, except: A Tenancy in Common B Tenancy at Will C Tenancy by the Entirety D Joint Tenancy

B Tenancy at Will Tenancy at will is a type of lease term and not co-ownership.

Francine refuses to sell her home to an African American couple because of their race. She is not using a real estate agent. She is specifically in violation of A The Civil Rights Act of 1964 B The Civil Rights Act of 1866 C The Fair Housing Act Amendments of 1988 D Shelley v Kraemer

B The Civil Rights Act of 1866 Discrimination on the basis of race is a violation of the Civil Rights Act of 1866.

Francine refuses to sell her home to an African American couple because of their race. She is not using a real estate agent. She is specifically in violation of: A The Civil Rights Act of 1964 B The Civil Rights Act of 1866 C The Fair Housing Act Amendments of 1988 D Shelley v Kraemer

B The Civil Rights Act of 1866 Discrimination on the basis of race is a violation of the Civil Rights Act of 1866.

A homeowner's insurance underwriter would use which of the following when underwriting a property? A The Homeowner's Insurance Almanac B The Comprehensive Loss Underwriting Exchange The Comprehensive Liability and Compensation Authority D The 21E Maps

B The Comprehensive Loss Underwriting Exchange The Comprehensive Loss Underwriting Exchange records past consumer claims, and is used in homeowner's insurance underwriting.

Who owns the building in a cooperative? A The condominium association B The corporation C Individuals D Investors

B The corporation Cooperatives are owned by the corporation. The individual apartment owners own shares in the corporation, which grant them the right to a proprietary lease to their individual unit. They do not directly own their real estate under the cooperative.

All of the following statements are true except: A Freddie Mac was established in 1970 as a secondary mortgage market buyer B The grantee of a special warranty deed will be liable for any title defects arising from their term of ownership C Contracts can be rendered unenforceable by the Statute of Frauds D Property managers can be the general agents of their principals

B The grantee of a special warranty deed will be liable for any title defects arising from their term of ownership All of these are true, except that a special warranty deed renders the grantee liable for any title defects arising from their term of ownership. The grantor, not the grantee, is liable under a special warrantee deed.

A tenant has a lease with a landlord that states that the tenant shall be responsible for snow removal during the winter months. It snows, and the sidewalks outside the property are not shoveled for several days. Who is legally responsible for the snow removal for the rental property? A The tenant B The landlord C The management company D The city or town in which the property is located

B The landlord The landlord is legally responsible for snow removal under the Massachusetts sanitary code, regardless of any lease or management agreements that might be in place.

Under the Massachusetts Rivers Protection Act, who would be the one to approve or deny the proposed building of a property along a riverfront? A The Massachusetts Department of Environmental Protection B The local conservation commission C The Environmental Protection Agency D The local planning board

B The local conservation commission Under the Massachusetts Rivers Protection Act, which amended the Massachusetts Wetlands Protection Act, local conservation commissions have authority over the construction of property in riverfront areas.

In a basic financing arrangement, which of the following is true: A The mortgagee gets a loan from the mortgagor B The mortgagor gives the note and the mortgage to the mortgagee C The mortgagee gives the notes and the mortgagor gives the mortgage D The mortgagor gets a note and the mortgagee gets a mortgage

B The mortgagor gives the note and the mortgage to the mortgagee The mortgagor is the buyer and the mortgagee is the bank, therefore the buyer gives the notes (IOU) and mortgage (evidence of debt) to the bank in a basic financing arrangement.

If a licensed salesperson has signing power over an escrow account, which of the following statements is most accurate? A They are the office manager B Their broker will lose his or her license C Their broker must accept funds for the office D They may accept funds for the office

B Their broker will lose his or her license Salespersons must not have access to client escrow accounts; this would subject both the salesperson and employing broker to possible loss of their license. Even though it's true that only the broker may access and control the escrow account (answer choice C), answer choice B is more accurate and specific to this question.

The appraisal principal of balance states that properties achieve their maximum value when: A Their design is in alignment with consumer expectations B Their municipality is providing the right amount of services C Their use is consistent with the highest and best use of the property D Their value is expected to rise over time

B Their municipality is providing the right amount of services The appraisal principal of balance states that properties achieve their highest possible value when the local municipality is providing services in balance with the needs of the local community.

Broker Jim, a sole proprietor, dies. What is true about his replacement? A They must be a broker B They may be anyone C They must have real estate experience D They must be related to Jim

B They may be anyone If a sole proprietor (a broker working for him or herself without a corporation) dies, the Board of Registration may issue a temporary broker's license to anyone named by a representative of the deceased. The temporary licensee does not need to have any real estate experience, or be related to the sole proprietor.

A broker is advertising a listing in the local newspaper. "Sunny and spacious 1 bedroom apartment with many convenient amenities." Their ad is not working well, and they find out that this is because the neighborhood has a large Spanish speaking population, and many of its residents do not speak english. They pull their ad from the paper, and begin advertising the listing on local Spanish websites instead. Which of the following is most correct about this situation? A This is a violation of fair housing because targeting the Spanish speaking population is discriminatory advertising B This is not a violation of fair housing because the broker did not mention a protected group in their ad C This is a violation of fair housing because it is block busting D This is not a violation of fair housing because foreign language ads are exempt under the Fair Housing Act and amendments

B This is not a violation of fair housing because the broker did not mention a protected group in their ad Nothing about fair housing law requires, or prohibits, ads in any particular language or publication. So long as the broker does not target or exclude a protected class in the content of their ads, the ads are legal, regardless of the language or publication they are presented in.

All of the following are included in the four unities of joint tenancy, except: A Unity of time B Unity of measure C Unity of interest D Unity of possession

B Unity of measure The four unities of joint tenancy are time, interest, possession, and title.

Joan signs an offer to purchase a property. After signing, Joan finds out that her salesperson/agent was fired the day before she signed the offer. What is the status of Joan's offer? A Void B Valid C Executed D Unenforceable

B Valid Agency relationships have no effect on an offer. Joan's offer is therefore valid (but not yet executed, since she has not yet purchased the property).

Bob the Broker wants to put a for sale sign on his newest listing. What must he procure from the principal? A Nothing B Written permission C A written listing agreement D Procuring cause

B Written permission Massachusetts law requires written permission to place a for sale sign on someone's property (though you do not need a written LISTING agreement, since the listing could be an open listing).

Sam has fallen on hard times and is unable to pay his property tax bill of $10,000. The town puts a property tax lien against Sam's house. The town sells Sam's house to Rick through a tax sale. A week after the tax sale, Sam wins $25,000 through a scratch ticket and wants to get his house back. Can he do so? A No, because the house was sold to Rick B Yes, because he can redeem the home by paying off the tax debt plus interest and costs C No, because Sam now owes more than $25,000 D Yes, because since Sam has fallen on hard times and so his house cannot be sold through a tax sale

B Yes, because he can redeem the home by paying off the tax debt plus interest and costs If a property owner doesn't pay their taxes, the town or city in which the property is located will put a property tax lien against the house, and it may then sell the rights to that house subject to a right of redemption. If the owner pays off the taxes prior to the foreclosure of the right of redemption (meaning the end of their right to buy it back), the owner can get their property back.

Captain Hook wants to buy Wendy's house, but Wendy doesn't want to sell to him. Captain Hook tells her that she will have to walk the plank and plunge into the ocean below if she doesn't sell her house to him. Wendy decides to sign a contract to sell her house to Captain Hook for reasonable market value. Has a contract been formed? A Yes, because Wendy signed the contract to sell B Yes, but Wendy may ask a judge to void the contract if she wants C No, because Captain Hook threatened Wendy and essentially forced her to sign the contract D No, because the contract lacks consideration

B Yes, but Wendy may ask a judge to void the contract if she wants A contract that was created under duress is considered to be voidable. Captain Hook's threat of having Wendy walk a plank in order to get her to sign a contract would be an example of duress. Therefore, at Wendy's option, the contract may be voided or enforced.

Blockbusting causes: A Trust busting B Panic peddling C Blind advertising D Redlining

B. Panic Peddling Blockbusting causes panic peddling (also known as panic selling), where homeowners quickly sell their homes for fear of a drop in home values due to the entry of a protected class into their neighborhood.

Donna lives in a luxury building called 300 Main Street LLC. Donna lives in the penthouse and pays a monthly fee towards the building's common area expenses, property taxes, mortgage, and full service amenities. Donna likely owns which type of property? A A condominium B A mixed use development C A cooperative D A subdivision

C A cooperative A cooperative is a type of ownership where originally a corporation, often an LLC., was formed in order to provide housing to its shareholders.

Donna lives in a luxury building called 300 Main Street LLC. Donna lives in the penthouse and pays a monthly fee towards the building's common area expenses, property taxes, mortgage, and full service amenities. Donna likely owns which type of property? A condominium B A mixed use development C A cooperative D A subdivision

C A cooperative A cooperative is a type of ownership where originally a corporation, often an LLC., was formed in order to provide housing to its shareholders. In this type of housing, the owners own shares in the corporation and have a proprietary lease to their unit, instead of a unit deed, as seen in condominiums. The co-op fees pay for common area expenses, maintenance, and the building's mortgage and tax bill.

If a lender charges 3 points to create the loan for a borrower, what will the borrower pay in points if the purchase price of the home is $600,000 and the borrower is putting 10% down? A $5,400 B $6,000 C $16,200 D $18,000

C $16,200 Points are always charged on the loan amount. So in this case, 10% downpayment on $600,000 home is $60,000. $600,000-$60,000 = $540,000 loan amount. Each point is equal to 1% of the loan amount, so 3 pts = 3% of $540,000. $540,000 x .03 = $16,200.

A seller wants to net a profit of $305,000 after paying a 4% commission. What should the property sell for? A $317,200 B $317,508 C $317,708 D $317,900

C $317,708 $305,000 / .96 = $317,708

Jane owns a home located at 1776 Old Colony Way. She purchased the home five years ago with a mortgage for $440,000. She has paid the principal down on that loan to $319,414.87 when she decides to sell her home. Jane sells 1776 Old Colony Way to Manuel, who uses a wraparound mortgage for $570,500 to purchase the property. Manuel then takes advantage of a bank promotion to obtain a HELOC for $11,000 to redo 1776 Old Colony Way's kitchen. Unfortunately, Manuel falls ill, and is unable to pay his bills. His contractor, Rob, is not paid, and places a mechanic's lien against 1776 Old Colony Way for $8,754.19 of unpaid work. If Manuel is foreclosed on, what amount will likely be paid first? A $8,754.19 B $11,000.00 C $319,414.87 D $570,500.00

C $319,414.87 A wraparound mortgage is a type of seller financing where the seller extends the buyer a second mortgage to purchase the home, and the seller's original first mortgage stays in place. Since the first mortgage remains in place, in the event of a foreclosure that first mortgage would have priority, and would be paid first. Thus, the original mortgage's outstanding principal of $319,414.87 is most likely to be paid first in the event of a foreclosure.

A beach cottage in Essex County, MA sells for $975,000. It's assesssed at 80% of it's value and was recently appraised for $985,000. What will this seller pay in recording stamps to the state? A $2,223.00 A $2,223.00 B $3,556.00 C $4,446.00 D $4,492.00

C $4,446.00 For Massachusetts recording stamps, we use the sold profit value so in this case, $975,000. To figure out what we owe in recording stamps on this number, first we divide by increments of $500: $975,000 /$500 = 1,950 stamps and each stamp is worth $2.28 per $500: 1,950 x $2.28 = $4,446.

A seller needs to make a profit of $514,000 on a sale in order to discharge their existing loan. They have costs of $5,000, back taxes of $7,600, and are paying a commission of 4.5%. How much should they sell for? A $538,220 B $550,820 C $551,414 D $555,325

C $551,414 To calculate the sale price, first add the seller's costs (treating their net profit as a cost, since they must receive it when they sell their house): $514,000 + $7,600 + 5,000 = $526,600. Next, divide the seller's costs by the difference between 1 and the commission to find their sales price: $526,600 / 0.955 = $551,413.61 (rounded up to $551,414 in the answer).

Joshua has a gross annual salary of $50,000 and his current debts amount to about a $500 monthly payment. What is Joshua's current debt to income ratio? A 1% B 25% C 12% D 10

C 12% In this case, Josh has monthly debt payments in the amount of $500 versus a monthly income of about $4,166 ($50,000/12) Therefore Josh's DTI is about 12% which we get from dividing 500 / $4,166.

A septic system has been pumped annually. Under Title V, how long prior to sale does it have to pass inspection? A 1 year B 2 years C 3 years D 6 mont

C 3 years Title V requires septic systems to pass inspection within 2 years prior to sale (3 if pumped every year), or 6 months after the sale.

A septic system has been pumped annually. Under Title V, how long prior to sale does it have to pass inspection? A 1 year B 2 years C 3 years D 6 month

C 3 years Title V requires septic systems to pass inspection within 2 years prior to sale (3 if pumped every year), or 6 months after the sale.

A property that fails Title V inspection must be brought up to code within: A 60 days B 90 days C 6 months D 2 years

C 6 months Properties that fail Title V inspection for septic systems must be brought up to code within 6 months, unless given an extension (which can be up to 2 years).

A lease longer than how many years must be recorded in Massachusetts? A 1 B 5 C 7 D 99

C 7 Any lease longer than 7 years in Massachusetts must be recorded in the county registry of deeds. The maximum term for a lease is 99 years.

The N1/2 of the SW1/4 section would be how many acres? A 20 B 40 C 80 D 160

C 80 One quarter in a rectangular survey is 160 acres, so 1/2 of a quarter is 80 acres.

In a metes and bounds survey, an apple tree is likely an example of: A A Mete A Bound C A Monument D A Benchmark

C A Monument A monument is a marker on the metes and bounds survey so an apple tree or concrete post would be an example of this

Appraisers: A Dictate market value B Establish market value C Estimate market value D Determine market value

C Estimate market value Appraisers estimate market value - an appraisal is an opinion or estimate of the value of a property, not its actual value. The buyer determines the actual market value of the property.

Errors and ommission insurance would cover which of the following: A A fair housing fine B A consumer protection lawsuit C A lost offer deposit D A broken heirloom of a client

C A lost offer deposit Errors and ommissions insurance is liability insurance that will cover mistakes made by a broker or their agents. E&O will not cover fair housing or consumer protection lawsuits. General liability insurance would cover personal property being broken, such as the client's heirloom.

An example of an operating expense is: A A mortgage payment B A replacement of the HVAC system C A property management fee D A roof replacement

C A property management fee Operating expenses are repeatable expenses to keep a property up and running. These expenses can include property taxes, insurance premiums, utilities, maintenance fees, and management fees. A property management fee would be an example of an operating expense.

Which of the following would be a reason for actual eviction? A Hazardous materials on the premises B The transfer of a property to a new owner C A tenancy at sufferance D A violation of quiet enjoyment

C A tenancy at sufferance Actual eviction is when the tenant is in violation of the lease. A tenant at sufferance, or holdover tenant has stayed past the expiration date on their lease and now the landlord must go through the eviction process in order to remove the tenant.

During the months of September and October, strong winds end up adding an extra 6 feet of sand to Leslie and Ben's beachfront home. This is an example of: A Erosion B Avulsion C Accretion D Reliction

C Accretion Accretion is the increase of property by the gradual, natural action of wind or water.

Which of the following activities would a salesperson be able to perform? A Take listings B Deposit client money C Advertise listings D All of the above

C Advertise listings Salespersons are never allowed to handle client money or technically take listings, since the listings belong to the brokerage. The broker is the one who takes the listing and the salesperson may work to advertise, sell and negotiate the terms as an extension of the broker

The real estate Board is made up of the following EXCEPT: A Two lay people B Three real estate brokers C An annually selected chairperson D Governor appointees

C An annually selected chairperson The Massachusetts Real Estate Board is made up of three real estate brokers with at least seven years of experience and two unlicensed persons ("lay people") who represent the public. One of the members is appointed the chairperson. All members of the Board are appointed by the governor and have five year terms, including the chairperson. The chairperson is NOT selected annually.

The boot in a 1031 like kind exchange is: A The replacement property held in trust during the exchange B The deferred taxes from the sale of replaced property C Any unreplaced property value in an exchange Any personal property converted to real property for the purpose of an exchange

C Any unreplaced property value in an exchange The boot in a 1031 like kind exchange is unreplaced property value. It is subject to capital gains tax

When a bank is assessing if lending on a particular property is risky, which type of value are they MOST concerned with? A Assessed Value B Investment Value C Appraised Value D Market Value

C Appraised Value Appraised value is the estimate of value that an appraisal gives to a particular property. A bank hires an appraiser to give this formal estimate of value and compares that to the offer price that the buyer is willing to pay to ensure that they are not lending above what the property is worth.

Tenant fee disclosures must be provided to the tenant: A With the lease B When applying for an apartment C At the first personal meeting D On the advertisement

C At the first personal meeting Tenant fee disclosures must be provided to prospective tenants on the first personal meeting between the agent and prospective tenant.

Andrew Carnegie borrows money from J.P. Morgan and uses one of his homes as collateral. Andrew Carnegie agrees to make payments for 10 years, but on the 10th year, agrees to pay back the remaining balance along with interest as if he were paying the loan back for 30 years. What kind of a loan is this? A Home equity line of credit B Reverse annuity mortgage C Balloon mortgage D Blanket mortgage

C Balloon mortgage A balloon mortgage is a loan with an amortization period that is longer than its payment period (e.g. a 10 year loan whose payments are calculated on a 30 year amortization schedule). The monthly payments on the loan are lower than would be necessary to pay off the loan by the end of the payment period, which makes the payments affordable. However, there will also be a large unpaid balance that will most likely need to be refinanced. In this case, Andrew Carnegie will need to pay off the remainder of the loan after 10 years in a large lump sum payment, which is a balloon payment.

Property disclosure statements should be provided, at the latest: A At closing B Within three days of signing the purchase and sale agreement C Before signing the purchase and sale agreement D Within three days of closing

C Before signing the purchase and sale agreement Property disclosures must be provided before the signing of the purchase and sale agreement, at the very latest (and ideally should be provided as an attachment to the listing on MLS, and should be provided at the signing of the offer if a written offer is made).

A mortgagee has which of the following? A Indefeasible estate B Defeasible estate C Conditional title D Absolute titl

C Conditional title A mortgage conveys conditional title to the lender (mortgagee) in order to secure repayment of the debt described in the note.

The defeasance clause in a mortgage will: A Result in foreclosure due to non-payment B Increase the rate of interest on the loan C Discharge the mortgage upon successful payment of the loan D Prevent assumption of the loan

C Discharge the mortgage upon successful payment of the loan A defeasance clause defeats the mortgage. It removes the bank's claim to a piece of real estate (the mortgage) when the loan is repaid.

The TRID integrated disclosure was established under: A RESPA B TILA C Dodd Frank D The Federal Housing Act

C Dodd Frank The TILA-RESPA integrated disclosure rule (TRID) was established under the Dodd Frank act

The TRID integrated disclosure was established under: A RESPA B TILA C Dodd Frank D The Federal Housing Act

C Dodd Frank The TILA-RESPA integrated disclosure rule (TRID) was established under the Dodd Frank act.

A Purchase and Sale agreement was agreed to and signed by both buyer and seller on August 15th, with a closing scheduled for September 15th. From the 15th of August till the 15th of September, what is the best description of this contract's status? A Executed B Voidable C Executory D. Valid

C Executory An executory status means that the promises in the contract have not yet been fulfilled, even though the contract has been signed and accepted.

Which of the following acts as an insurer? A FNMA B Fannie Mae C FHA D GNMA

C FHA The Federal Housing Administration (FHA) is a government program that insures lenders that make loans with more than 80% loan-to-value ratio (LTV) for homebuyers. These loans are meant to make homeownership more easily achievable for American homebuyers.

Massachusetts Real Estate Board members must meet at least: A Once per year B Twice per year C Four times per year D Six times per year

C Four times per year Massachusetts Real Estate Board members must meet at least 4 times per year, and a minimum of at least 3 Board members must be present.

An option must be signed by the: A Grantee B Agent C Grantor D Optionee

C Grantor An option is a type of contract between an owner and a potential buyer or lessee to buy or lease in the future at specified terms. The owner granting the option is the grantor or optionor; the person receiving the option is the optionee.

Fannie Mae was founded by the U.S. government to: A Insure lenders to increase home ownership B Provide housing for veterans C Inject liquidity into the credit market D Police lending practice

C Inject liquidity into the credit market Fannie Mae is a secondary market loan buyer. It is one of three major entities on the secondary mortgage market, and was established by the U.S. government to encourage lenders to make borrower friendly loans and to inject liquidity into the market, which makes loans more readily available.

Gina grants Tim a life estate in remainder. Tim then rents that property to Helen. What happens if Tim dies while Helen's lease is still in effect? A Gina must compensate Helen B Lease remains binding on the remainderman C Lease is terminated D Helen cohabitates with the remainderman

C Lease is terminated ife estates automatically transfer upon the death of the life tenant (Tim in this example). Unlike an ordinary sale, with a life estate, anything the life tenant (Tim) sets up ends when the life tenancy ends, including leases. In practice this would be a bit more complicated because of state eviction laws, but the exam doesn't get into state laws, so that's the rule to remember for the exam!

Which of the following is a non-freehold interest? A Fee simple defeasible B Pur autre vie C Leasehold D Life estate

C Leasehold Non-freehold interests are possessory interests that don't include ownership. A leasehold is a common example of a situation where someone holds the right to possess a piece of property, but does not own it.

George is hired to pave Martha's driveway. After George finishes his work, he and Martha have a disagreement about the work that was done, and Martha refuses to pay him. George files for a lien against Martha's property to secure payment. This encumbrance is a: A Attachment lien B Judgment lien C Mechanic's lien D Contractor's lien

C Mechanic's lien A mechanic's lien is a lien placed on real estate by someone who contributed to real property improvement, in order to secure payment for their work.

An example of an involuntary lien is a(n): A Mortgage B Lawsuit C Mechanic's lien D Lis pendens

C Mechanic's lien A mechanic's lien is a monetary claim against a property for work done on real property that has not paid for. It is a protection for contractors who are owed money, and is involuntary (not willingly taken on by the property owner). Any lien on a property can hinder its transfer, and therefore can affect its value in the marke

Sal is a listing agent who is holding an open house. Beth comes by the house and is a potential buyer who would like to put in an offer. She asks Sal to recommend a home inspector. Sal recommends Harry who lives a few blocks away. Has Sal done the right thing? A Yes, he can recommend a home inspector to Beth B Yes, he can recommend Harry but he also needs to provide to Beth the names of 3 other home inspectors C No, because Sal cannot recommend a specific home inspector D No, because Sal can only freely recommend a home inspector if he also provides a list of home inspectors

C No, because Sal cannot recommend a specific home inspector Agents representing the seller may not recommend specific home inspectors . They are only permitted to provide a statewide list of all inspectors, since it is a potential conflict of interest.

Laura is looking for a roommate to rent the extra bedroom in her single family home, so that she can offset her monthly mortgage payments. She posts an ad reading, "Female roommate seeking female housemate." Is this legal? A No, because she cannot discriminate based on sex B Yes, because she is eligible for the owner occupancy exemption C No, because she cannot state this preference in an ad D Yes, because roommates are not covered by discrimination laws

C No, because she cannot state this preference in an ad Laura's ad is illegal because although she is permitted to discriminate with regards to preferred sex of the roommate, it can not be advertised that way.

Which has a predefined time limit? A Fee simple ownership B Ownership in severalty C Ownership subject to life estate D Tenancy at will

C Ownership subject to life estate A life estate is a freehold estate, the duration of which is measured by the life of a natural person - either by the life of the person holding the estate or pur autre vie.

Rick gets approved for a 10 year loan and buys an office building. A few years later, Rick wins the lottery and decides to pay off the loan. Rick orders a payoff statement and finds out that he will need to pay a large fee in addition to the principal and interest that is owed on the loan. What kind of a clause does Rick most likely have in the note? A Power of sale clause B Subordination clause C Prepayment penalty clause D Acceleration clause

C Prepayment penalty clause A prepayment penalty clause in a note requires the borrower to pay a penalty for prepayment of a loan. It is used to guarantee that the lender gets paid the interest on the loan. Prepayment penalty clauses are uncommon in residential loans, but are common in commercial loans

MGL 93A would not cover: A dry cleaning business B A broker's office C A real estate salesperson D A for sale by owner

D A for sale by owner MGL 93A only applies to businesses (including real estate licensees); private sales, like a for sale by owner property, are not covered under the law.

Jeanie works for Mansion Realty and specializes in helping sellers and marketing mansions for sale. June runs Mansion Realty and hires licensees to help buyers and sellers. James is Jeanie's assistant who is unlicensed and answers phones and manages her schedule. What is Jeanie's agent relationship to June. A Special Agent D Subagent C Salesperson D Listing agent

C Salesperson At Mansion Realty, June is the special agent and Jeanie is her agent. If the question referred to a client or principal, then Jeanie would be considered a subagent, but because the relationship is between the broker and the agent, the answer is salesperson.

A real estate salesperson and a broker of record can both do which of the following activities: A Take listings B Deposit checks C Send contract forms D Hire a part time agent

C Send contract forms A salesperson can send out contracts, such as listing forms, offer forms and leases, however they may not perform any of the other tasks.

Real property can become personal property by which process? A Fiduciary B Annexation C Severance D Hypothecation

C Severance The act of severance makes real property become personal property; an example is digging up a tree.

Tax sales include a right of redemption for the foreclosed owner for: A Indefinitely B On a case by case basis C Six months from the sale D One year from the sale

C Six months from the sale In Massachusetts, property owners have an equity right of redemption, or the right to pay their debt and regain ownership of their home, that extends six months from the date of sale at foreclosure.

Mountaintown has recently experienced a burst in it's growth. Buyers are paying over the list price on the homes in the area, new businesses are opening up every month and the town has increased the services it offers to the community. What is the next likely stage for the properties in this town once the values stop growing? A Decline B Revitalization C Stability D Regression

C Stability This is an example of the four stage life cycle that all properties go through. The growth stage is followed by stability

A developer and a listing agent disagree on the listing price of 2 homes in a newly created subdivision. The developer believes that one of the homes which was designed as a "premier home" and includes marble floors throughout the house, real gold fixtures in the kitchen and a finished game room in the basement, complete with pool table should be worth a lot more money. The listing agent shows the developer that similar homes in the area do not have these lavish upgrades and buyers won't want to pay significantly more when they can have a home of similar size, that's also beautifully renovated for much less money. This is an example of which principle of value? A Contribution B Balance C Substitution D Anticipation

C Substitution Substitution is the principle of value that says a buyer won't pay more for something than it costs to purchase something of similar quality.

A broker is unlicensed, and as a result, a salesperson in the office is not paid by their client, who claims they do not have to pay their commission. The salesperson should: A Sue the buyer B Complain to the Real Estate Board C Sue their broker D Prevent the sale from taking place to secure payment

C Sue their broker Salespersons are owed their commissions by their broker. The salesperson's best recourse in this instance is thus suing their broker. While complaining to the Real Estate Board might also be prudent, they only handle licensing conflicts; they would not handle a dispute about payment.

All of the following statements are true except: A Fannie Mae was established in 1938 in order to introduce liquidity into the secondary mortgage market B Any verbal agreement to sell real estate is automatically an open listing C The gradual deposit of detrital material by action of wind is know as alluvion D The government's ability to take property for the public good is carried out by condemnation

C The gradual deposit of detrital material by action of wind is know as alluvion Alluvion is the gradual deposit of land by action of water, not wind. All of the other statements are correct.

Howard wants to sell his mother's home after she has passed away. Because she died intestate, what will likely happen with the house? A The house will escheat to the state B The house will have to pass through probate and an executor will need to be assigned C The house will have to pass through probate and an administrator will need to be assigned D Howard will be able to sell the house because he is her immediate blood relative

C The house will have to pass through probate and an administrator will need to be assigned Because Howard's mother died intestate, this means she died without a will and therefore, her property will have to go through probate. The judge will then assign an administrator to handle the estate. The property will not escheat to the state because the deceased does have heirs.

Mary leases her home to Ben for 24 months. Ben's lease contains an option to renew the lease for another 24 months at the end of his initial lease term. Ben is: A The lessee and optionor B The lessor and optionee C The lessee and optionee D The lessor and optionor

C The lessee and optionee Ben is the lessee (tenant) and optionee (recipient of the option).

All are true about modular homes except: A They are largely built in factories B They involve standardized design processes C Their construction standards differ from stick built homes D They are often less expensive than traditionally constructed homes

C Their construction standards differ from stick built homes Modular homes are subject to the same construction standards (or building code) as traditional, stick built homes.

When using the cost approach, an appraiser would not need to consider: A Depreciation B Land Value C Vacancies D Cost of Materials

C Vacancies The cost approach looks at the cost of construction plus land value and deducts any depreciation in order to come up with an estimate of the value. It would not need to account for vacancies.

Which of the following advertisements would violate fair housing law? A Private outdoor space B No elevator access C Walk-in closet D Easy access to the highway

C Walk-in closet "Walk-in closet" is an example of discriminatory advertising directed toward those with a physical disability. A better choice of words would be "spacious closet" or "large closet."

Which of the following properties would be required to have CO detectors in Massachusetts? A A three family home with electric heat B An eight story apartment building with a detached garage C A two family home with induction cooktop stoves D A single family home with a gas fireplace

D A single family home with a gas fireplace CO detectors are required in all homes with either 1) an attached garage or 2) gas burning equipment (e.g. a gas fireplace).

Tom Brady gives Jimmy Garoppolo the right to his home so long as Jimmy is alive. However, once Jimmy passes away, the property will revert back to Tom. Jimmy throws wild parties and destroys the house. Tom brings a lawsuit against Jimmy in order to get him to leave. Under what cause of action would Tom bring his lawsuit? A Quiet title B Failure to pay rent C Waste D Partition

C Waste Waste is a cause of action that future interest holders can bring against a life estate tenant when that tenant causes damage to the property.

Sarah wants to sell her home, but she's afraid that no one will buy it because of its history of paranormal activity. When she asks her Realtor, Beth, if she needs to disclose this, Beth replies A We only have to disclose it if we can prove it B We only have to disclose it if the sellers asks C We only have to disclose it if a buyer or their agent asks D We only have to disclose it if we receive an offer

C We only have to disclose it if a buyer or their agent asks A home with a history of paranormal activity would be considered a stigmatized property and therefore falls under the "might have to disclose" category. Only if a buyer or their agent asks does a seller or their agent have to disclose it.

What must an agent have in order to place a for sale sign on a client's property? A The listing B A hiring contract C Written permission from the client D A broker's license

C Written permission from the client Agents and brokers need written permission from the client to list a client property on MLS and to place a for sale sign on the seller's property.

Rory verbally agrees to sell Bill's house. Bill states that he must receive at least $400,000 for the sale of his home, and will pay Rory anything over that amount as the commission. Has Rory risked his license? A Yes, because verbal listings are not allowed B No, because verbal listings are permitted C Yes, because of the commission structure D No, because commissions are negotiable

C Yes, because of the commission structure This is an example of a net listing, where the commission is any amount over some agreed upon price. It is illegal in Massachusetts, so Rory has indeed risked his license.

A facebook advertisement for a members-only studio residence at a private men's club lists, "only suitable for a single gentleman." Is this discriminatory advertising? A Yes, because the club is discriminating against women, which is a protected class under fair housing law B No, because it's a men's club; therefore, only men are allowed C Yes, because the club is advertising discrimination against women, and sex is a protected class under fair housing law D No, because private clubs are exempt from fair housing la

C Yes, because the club is advertising discrimination against women, and sex is a protected class under fair housing law A private club may discriminate against women under the fair housing law exemption for private clubs, but it may not advertise that discrimination, which is why answer C is correct. Private clubs are exempt from fair housing law (except race) when they offer housing only to their members for non commercial use. However, in this case, the club made a public facebook advertisement and therefore, they lose their ability to be exempt from fair housing law, and the advertisement is discriminatory.

A landlord is renting out a small 400 square foot studio apartment and places an ad on Facebook that states single occupancy only even though state fire code says two occupants could live in the property. Is this a violation of the Federal Fair Housing Act of 1968 and amendments? A Yes, because the landlord has discriminated against marital status B No, because the apartment is a small studio, and the landlord must inform prospective renters of this fact to avoid misrepresenting it C Yes, because the landlord's single occupancy requirement is discriminatory D No, because the landlord did not mention a protected class in the advertisement

C Yes, because the landlord's single occupancy requirement is discriminatory This advertisement would be in violation of familial status protections in the Fair Housing Act of 1968 and its amendments. Only fire codes can dictate how many occupants can live in a certain space, and a studio apartment this size may not legally be limited to just one occupant (single occupancy means one occupant). This limitation prevents people with children from renting the unit, and is illegal. Marital status is not protected by the Fair Housing Act of 1968, and thus is not relevant to the question

You are a seller's broker. The buyer asks for a home inspector recommendation. Which is true? A You may recommend an inspector B You have to provide at least 3 options for home inspectors from the state approved list C You should give them the entire state approved list of inspectors D You should demur

C You should give them the entire state approved list of inspectors Agents representing the seller may not recommend a specific home inspector, since it is a conflict of interest. They must instead give buyers the state-provided list of all inspectors. Exclusive buyer's agents may recommend specific home inspectors to their clients.

You are a seller's broker. The buyer asks for a home inspector recommendation. Which is true? A You may recommend an inspector B You have to provide at least 3 options for home inspectors from the state approved list C You should give them the entire state approved list of inspectors D You should demur

C You should give them the entire state approved list of inspectors Agents representing the seller may not recommend a specific home inspector, since it is a conflict of interest. They must instead give buyers the state-provided list of all inspectors. Exclusive buyer's agents may recommend specific home inspectors to their clients.

A sale-leaseback typically provides what for the seller? A Favorable tax treatment B Capital C Relief from debt service D All of the above

D All of the above A sale-leaseback occurs when an owner sells their property to an investor, and simultaneously rents it back (often for a long term). It provides all of the benefits listed as answers.

Contracts are only valid if: A They last no more than 5 years B They are made in writing C Their deadline for performance is no more than 4 years from the date of acceptance D None of the above

D None of the above None of these answers are true regarding valid contracts. Valid contracts are those contracts that satisfy the essentials of contracts.

The sale price for a property was $450,600 in Worcester County. How much does the grantor pay in tax stamps? A $0 B $450.60 C $2,054.73 D $2,056.56

D $2,056.56 $450,600 rounds up to the nearest $500. $451,000 / $500 (stamps are calculated in increments of $500) = 902 stamps x $2.28 per stamp (you need to know this!) = $2,056.56 in stamps.

Adele has 5 lots, each a flat 65ft. x 75ft. plot. If Adele plans to sell each plot at $10/sqft, what would be her gross profit? A $48,750.00 B $53,750.00 C $150,750 D $243,750

D $243,750 Each lot is 65ft x 75ft which is a total of 4,875sqft. If she sells each lot for $10sqft, then we would multiply $4,875 x $10 = $48,750 to give us the gross profit she would make per lot. She has 5 total so $48,750 x 5 = $243,750 total gross.

A seller wishes to net $450,000 from a sale. She has closing costs of $1,200, and is paying a broker's commission of 6%. What price should she sell for? A $451,200 B $468,750 C $491,500 D $480,000

D $480,000 To calculate the sale price, first add the seller's costs (treating her net profit as a cost, since she must receive it when she sells her house): $450,000 + $1,200 = $451,200. Next, divide the seller's costs by the difference between 1 and the commission to find her sale price: $451,200 / 0.94 = $480,000

Acting as a broker without being licensed as such is punishable by: A $10000 fine B $1000 fine C $5000 fine D $500 fine

D $500 fine The maximum fine for operating without a real estate license is $500.

A home is sold for $152,121 in Suffolk County. At recordation, the grantor will pay how much in transfer stamps? A $693.12 B $0 (grantee pays) C $347.70 D $695.40

D $695.40 Recording stamps are paid in increments of $2.28 per whole $500 of value transferred. So, to calculate the cost of the grantor's payment, we must first round the price up to the nearest $500 increment: $152,500. Next, we divide this number by $500 to find the number of stamps necessary: $152,500 / $500 = 305 stamps x $2.28 per stamp = $695.40.

Which two dates are property tax due dates in MA? A 8/1 and 4/1 B 11/ 1 and 4/1 C 4/1 and 7/1 D 11/1 and 5/1

D 11/1 and 5/1 Property taxes are payable on 8/1, 11/1, 2/1, and 5/1 in Massachusetts.

Sara owns 15 acres of land. The township in which the land is located requires a minimum lot size of 50 by 50 feet. What is the maximum number of lots Sara can make out of her property? A 272 B 261 C 13,608 D 15

D 15 The first thing we need to know to solve this problem is how big an acre is: 43,560 square feet. We can use this to convert the acres to square feet by performing the following calculation: 43,560 x 15 = 653,400 square feet. Each lot Sara will build is 50 by 50 feet, so each lot is 50 x 50 = 2500 square feet. She can therefore build: 653,400 / 2500 = 261 lots.

The statute of limitations for a federal fair housing lawsuit is: A 90 days B 180 days C 1 year D 2 years

D 2 years Federal fair housing lawsuits must be brought within 2 years of the alleged date of discrimination

An agent is paid $125,000 this year. They are paid 1% on all property sales up to $5,000,000, and some percentage on the sales above that amount. They sold $8,500,000 in real estate this year. Their commission over $5,000,000 was: A 2.01% B 1.51% C 3.52% D 2.14%

D 2.14% In this case, the agent cannot earn more than 1% on their first $5,000,000 in sales, so we calculate that first: $5,000,000 x 0.01 = $50,000. The agent earned $125,000, so we have not yet calculated the remaining commission: $125,000 - $50,000 = $75,000 of commission. This amount is the commission on the remaining amount sold ($8,500,000 - $5,000,000 = $3,500,000), so the agent's commission on the amount over $5,000,000 was: $75,000 / $3,500,000 = 0.02143, rounded off to 2.14% (answer).

The Wetlands Protection Act permits minor alterations of property bordering wetlands after how many feet? A 150 feet B 100 feet C 75 feet D 50 feet

D 50 feet The Wetlands Protection Act is a Massachusetts state law requiring a development buffer zone of 100 feet from wetlands, with minor changes permitted after 50 feet, subject to approval

How many recording stamps would you need if you were buying a house in Boston and the value of the property is $400,125? A 401 stamps B 505 stamps C 800 stamps D 801 stamps

D 801 stamps When a property is being transferred in MA and you wish to record the deed, you will need to pay for recording stamps, which cost $2.28 for every $500 of value (unless you're in Barnstable County, where it's $3.24). If the amount is over a $500 increment, you would round up. Therefore, you would round $400,125 to $400,500 and divide by $500 (400,500 / 500 = 801). You would need 801 recording stamps to record this deed.

Who may never recommend a specific home inspector? A The buyer's agent B An appraiser C The seller D A dual agent

D A dual agent A dual agent may never recommend a specific home inspector since they represent the seller, and Massachusetts licensing law forbids sellers' AGENTS from recommending a specific inspector. The seller him or herself, however, may make a recommendation since they are not covered by licensing law.

Which of the following activities would a salesperson be able to perform? A Take listings B Deposit client money C Advertise listings D All of the above

D All of the above Salespersons are never allowed to handle client money or technically take listings, since the listings belong to the brokerage. The broker is the one who takes the listing and the salesperson may work to advertise, sell and negotiate the terms as an extension of the broker.

Which of the following is not a bilateral contract? A A purchase and sale agreement B A lease agreement C A loan agreement D An option agreement

D An option agreement An option is a unilateral contract (where one party makes a promise, without the other party necessarily making any promise). An option agreement is therefore not a bilateral contract

Mortgagee protection under a title insurance policy would cover which of the following? A An unrecorded easement B A change in zoning laws C A deed error D An outstanding loan balance

D An outstanding loan balance Mortgagee protection means lender protection. The lender's title insurance policy covers an outstanding loan balance in the event of any title issues.

The final payment of a loan that has not been fully amortized is the: A Adjustable payment B Installment sales payment Graduated payment D Balloon payment

D Balloon payment The balloon payment is the final payment on a loan that has not been fully amortized during its payment period (a "balloon" loan).

What deed implies, but does not warrant, that the grantor holds title to the property being granted? A Warranty B Special warranty C Quitclaim D Bargain and sale

D Bargain and sale A bargain and sale deed implies an interest or rights to convey property, but it does not warrant (promise) title to it.

Jill lists her home for sale for $350,000, with a notice that the seller (Jill) will assume responsibility for paying an unpaid sewer bill that is owed to the town. Bob submits an offer to buy Jill's home for $325,000 with the seller assuming responsibility for payment. Jill makes a counter-offer at $365,000, with the buyer responsible for payment. Bob makes a final counter-offer of $350,000, with the buyer responsible for payment. If Jill accepts Bob's final counter-offer, who will be responsible for payment of the unpaid sewer bill? A Jill, because she advertised the seller as responsible B Bob, because any unpaid bills run with the land and are therefore the buyer's responsibility when they buy the house C Jill, because the seller has to pay them to sell her home D Bob, because his final counter-offer said the buyer is responsible

D Bob, because his final counter-offer said the buyer is responsible The counter-offer voids the original offer. So, in this situation, Jill's original listing advertisement doesn't impact the final deal. Because Bob's final counter-offer stated that the buyer would be responsible for the unpaid sewer bill, Bob is responsible if Jill accepts his final offer.

Tom is basing his decision to purchase a particular investment property on a rate of return after estimated mortgage payments for the property. His investment analysis is most likely using what method? Capitalization rate A Capitalization rate B Gross rent multiplier C Investment cash flow analysis D Cash on cash

D Cash on cash Tom is most likely using the cash on cash method to analyze his investment. The cash on cash method finds a rate of return based on a property's cash flow before taxes (CFBT), which is the property's income less expenses, vacancy, debt service, and capital expenditures.

Tom is basing his decision to purchase a particular investment property on a rate of return after estimated mortgage payments for the property. His investment analysis is most likely using what method? A Capitalization rate B Gross rent multiplier C Investment cash flow analysis D Cash on cash

D Cash on cash Tom is most likely using the cash on cash method to analyze his investment. The cash on cash method finds a rate of return based on a property's cash flow before taxes (CFBT), which is the property's income less expenses, vacancy, debt service, and capital expenditures.

If a real estate developer asks you, their real estate agent, what type of financing they should use in order to purchase a 20 acre parcel of land that they could separate into lots for 10 houses and be able to pay off as they sold each home, what would you recommend? A Construction Mortgage B Blanket Mortgage C Wraparound Mortgage D Consult a mortgage banker or broker

D Consult a mortgage banker or broker As real estate agents, we are not licensed mortgage bankers or brokers so to recommend a specific loan program to our clients would be operating outside our scope of expertise. If a client asks for specific financing information, you should recommend that they consult an expert in the field.

In which of the following forms of ownership does the owner receive a lease to real estate, rather than a deed? Condominium A Condominium B Fee simple C Life estate D Cooperative

D Cooperative In a cooperative property, owners receive shares in the cooperative, and proprietary leases to their individual units. The actual real estate is owned by the cooperative itself (which is often an LLC or other corporate entity).

Which real estate is owned in severalty? A Estate in common B Interest in entirety C Estate for years D Cooperative

D Cooperative Real estate owned in severalty has one owner. In a cooperative, the corporation owns the property, and the occupants of the property own shares in the corporation. The real estate in a cooperative is therefore owned in severalty (it has one owner, the corporation).

Grant, a broker and sole proprietor, wishes to advertise his brokerage as Grant's Homes. What must he file with the board to do this? A Articles of incorporation B Nothing C Written notice D DBA certificate

D DBA certificate Under Massachusetts law, brokers operating under a trade name ("Grant's Homes," in this case) must file a Doing Business As (DBA) certificate with the Board of Registration. That way the Board knows who is responsible for the trade name's real estate activities if they receive a complaint.

A life tenant enjoys the entire bundle of rights except for the right to: A Mortgage B Demise C Transfer D Devise

D Devise A life estate is a freehold (ownership) interest that lasts as long as the grantee is alive. As long as the life tenant does not harm the property, they will enjoy the entire bundle of rights except for the right to leave the property in their will (to "devise" the property).

The highest form of ownership is: A Estate for years B Pur autre vie C Fee simple defeasible D Fee simple indefeasible

D Fee simple indefeasible Fee simple indefeasible is the most complete form of ownership without limitations on rights of ownership, aside from any public or private restrictions. A fee simple defeasible estate is qualified in some way, and may have certain limitations or conditions to title.

Generally speaking, contingencies that rely on a third party should: A Require final approval by the seller B State the approved third parties C Have long deadlines D Have short deadlines

D Have short deadlines To avoid unnecessary delays, it is a good rule to have short deadlines for any contingencies involving third parties (e.g. a home inspection).

If a licensee meets a customer at an open house, it is required that which of the following be given? A Loyalty B Confidentiality C Reasonable Care D Honesty

D Honesty The fiduciary responsibilities of OLDCAR are not required when someone is a customer. A customer is a person who has not hired a licensee to represent them. Licensees are still required to act fairly and honestly with customers and provide necessary disclosures.

All of the following are true of the impact of competition in the real estate market, except: A It eventually increases supply B It's initially fueled by demand C It eventually decreases profit D It's initially fueled by utility

D It's initially fueled by utility Competition begins as a high demand for something which then causes more supply which eventually decreases profit

John is the listing agent and Steve is a potential buyer. Steve is not represented and he asks John if he could recommend a home inspector. What can John tell Steve? A John can provide the name of a home inspector he often works with DJohn can recommend a home inspector but only if he recommends at least three C John cannot provide any information to Steve about any home inspectors D John can only provide the state list of licensed home inspectors

D John can only provide the state list of licensed home inspectors A listing agent can provide the state list of home inspectors, but cannot recommend a specific home inspector to the buyer.

Under which statute do the Massachusetts protected fair housing classes fall under? A MGL Chapter 93A B MGL 203K C MGL Chapter 40B D MGL 151B

D MGL 151B MGL 151B is the statute that includes all protected classes in Massachusetts that fall under fair housing law.

A listing contract containing a provision that gives a broker the right to advertise a property's availability to other brokers is a(n): A Open listing clause B Co-listing clause C Foreign listing clause D Multiple listing clause

D Multiple listing clause A multiple listing clause permits the listing broker to advertise the property to other brokers on the MLS.

Mark signs an offer to sell his home to Mary. This is most similar to: A Offer B Recordation C Performance D Mutual Assent

D Mutual Assent Mutual assent (also called meeting of the minds, mutual agreement, or offer and acceptance) is an agreement between two parties (usually evidenced by signature or offer and acceptance). Mark signing the offer signifies an agreement, and is therefore most similar to mutual assent (meeting of the minds).

Benita purchases a parcel of land from the owner, Betty for $250,000 in Andover, MA. Betty advertised that the lot was a total of 5 acres. Benita plans to build 5 new homes on the land, each with an acre of property, however when she applies for her town zoning permits, she is informed that her land is only 3 acres and therefore she can only build 4 of her homes per zoning rules. Can Benita send Betty a 30 day demand letter requesting damages of up to $600,000 for the loss in profit due to the home that she can not build? A Yes, because Betty misrepresented the total acreage B No, because there is a $250,000 limit on damages requested in a 30 day demand letter C Yes, because Benita will suffer monetary damages due to the false advertising D No, because Betty is not a business or licensee

D No, because Betty is not a business or licensee 30 day demand letters are used to request monetary damages when a consumer has been wronged by a business or licensee, such as a real estate agent, under MGL Chapter 93A. Because Betty is simply a home owner and not a business or licensee, Benita would need to file a civil suit if she wanted to recover the loss in profit due to the misrepresentation of the acreage.

A facebook advertisement for a members-only studio residence at a private men's club lists, "only suitable for a single gentleman." Is this discriminatory advertising? A Yes, because the club is discriminating against women, which is a protected class under fair housing law B No, because it's a men's club; therefore, only men are allowed C Yes, because the club is advertising discrimination against women, and sex is a protected class under fair housing law D No, because private clubs are exempt from fair housing laws

D No, because private clubs are exempt from fair housing law Private clubs are exempt from fair housing law (except race) when they offer housing only to their members for non commercial use. However, in this case, the club made a public facebook advertisement and therefore, they lose their ability to be exempt from fair housing law, and the advertisement is discriminatory.

Alex, a real estate salesperson, has access to the office escrow account. Is this allowed? A Yes, so long as Alex has permission to access the account B No, because brokers must keep client money in the operating account C Yes, because Alex is a real estate salesperson and is allowed to handle client funds D No, because salespersons must not have access to the escrow account

D No, because salespersons must not have access to the escrow account

Teddy Roosevelt owns a mansion on a piece of land which borders a national park. Teddy decides to build a guest house, half of which will be in the park. After 20 years, Teddy decides to adversely possess the property in the park where the guest house sits and brings a lawsuit to confirm that he owns that piece of land. Has Teddy Roosevelt adversely posssessed a portion of the national park? A Yes, because he built the guest house partly on park land and did so openly, continuously for 20 years, and adversely B No, because he did not get permission C Yes, because he is now bringing a lawsuit to do so and will probably win D No, because you cannot adversely possess property that has been dedicated for public use

D No, because you cannot adversely possess property that has been dedicated for public use Land that has been designated for public use cannot be adversely possessed.

Franny lives in an owner-occupied 2 family home in Newburyport, Massachusetts that was built in 1842. She is renting out her top floor apartment, and plans to avoid renting the apartment out to families with children under the age of six, because she cannot afford the cost of de-leading the unit. She is going to rent the unit herself, without using a real estate agent. This is: A Permissible, because owner-occupied 2 family homes are exempt under Massachusetts Fair Housing Law, so long as the owner rents the unit him or herself B Permissible, so long as Franny discloses the lead paint to prospective renters with the lead paint disclosure form C Not permissible, because under Massachusetts Fair Housing Law, age is a protected class D Not permissible, because Massachusetts Fair Housing Law exemptions don't apply in this instance

D Not permissible, because Massachusetts Fair Housing Law exemptions don't apply in this instance

Katie is the owner of a 3 family property in Boston, MA and wants to rent out her 1st floor unit. Because Katie lives on the 3rd floor of her home, she would have the Fair Housing exemption to do what? ARefuse to rent to more than one person B Refuse to rent to families with children C Refuse to rent to someone of a different religion than her D Nothing

D Nothing The owner-occupied fair housing law exemption only applies to 2 family properties in Massachusetts. Katie would not be able to utilize any of the exemptions if she owns a 3 family.

Darnel is selling his house which has a septic tank. The septic tank passed inspection one year ago. What needs to be done at this point when transferring the house to the buyer? A The septic system will need to pass inspection again as the inspection is only valid for one year. B The septic system will need to pass inspection within 6 months of the transfer to the buyer. C The septic system will need to be replaced as they only last for one year. D Nothing needs to be done at this time.

D Nothing needs to be done at this time. To be in compliance with Title V, the septic system will need to pass inspection within two years of the sale of the property, or pass inspection within 6 months of the sale. In this case, the septic system passed inspection a year ago so nothing further needs to be done.

You are a real estate agent. Harry, your client, asks you to recommend a listing price for his home. You should: A Recommend that Harry hire an appraiser B Ask your friend what to list the property for C Determine the average capitalization rate for similar properties in the area D Perform a comparative market analysis

D Perform a comparative market analysis You should perform a comparative market analysis, which is a real estate agent's assessment of the value of a property based on recent sales prices in the area. Capitalization rate would not be particularly helpful for valuing Harry's property, since it is a home and not an income property, and an appraiser is generally hired by the lender, not the seller.

A well maintained home's value will be brought down by a dilapidated home next door because of the principle of: A Balance B Conformity C Depreciation D Regression

D Regression Regression is the idea that properties with low values will negatively impact the value of other properties surrounding them.

What type of value is most important to an insurance company? A Market value B Investment value C Assessed value D Replacement cost

D Replacement cost Insurance companies will typically focus on the cost to replace the improvements on a piece of property and not so much on the value of the land.

Under the Fair Housing Act of 1968 and amendments, it is lawful to discriminate based on: A Religion B Children C National origin D Sexual orientation

D Sexual orientation While sexual orientation is protected under many state's fair housing laws, it is not a protected class under the Fair Housing Act of 1968 and amendments

Sarah buys a 1980s ranch home and then adopts a 5 year old child. What are her requirements under Massachusetts lead paint law? A She has to delead within 90 days B She has to test the home for lead paint within 90 days C She doesn't have to delead, but she does have to encapsulate within 90 days D She doesn't have to do anything

D She doesn't have to do anything Because the home was built after 1978, Sarah does not have to test or delead her home, because there is no danger of lead based paint

The listing agent of a 3 bedroom home is showing the property to a pregnant homebuyer and mentions that the location of the home is just 2 miles from downtown, and has lots of outdoor activities because of its proximity to the Big Bear Preservation Park. The listing agent lists the newer features such as a roof, chef's kitchen and an additional bedroom upstairs that would be perfect for a nursery. The agent discloses that there was mold in the basement that was remediated, but does not mention the ghost living in the attic. The buyer asks about crime or if there are any criminals in the area, and the agent states that they cannot provide that information. How could the agent have conducted the tour without running into risky fair housing behavior? A The listing agent should not have mentioned the "active" community B The listing agent should have informed the buyer of any area crime rate information that they are aware of C The listing agent should have disclosed the ghost in the attic D The listing agent should not have mentioned that the additional bedroom would make a perfect nursery

D The listing agent should not have mentioned that the additional bedroom would make a perfect nursery The listing agent gave the proper information about the listings and handled the questions about crime appropriately. However, mentioning that the additional bedroom would make a perfect nursery is bordering on making assumptions about familial status and should be avoided.

Which of the following would require an appraisal report by a licensed appraiser? A The cash purchase of a mid century modern home B The purchase of a multi family home with a purchase money mortgage C The transfer of a beach cottage to a family trust D The purchase of a condo with a FHA financing

D The purchase of a condo with a FHA financing Licensed appraisers are required for all federally related real estate transactions.

An installment sales contract is considered which type of lien? A Involuntary and Specific B Voluntary and General C Involuntary and General D Voluntary and Specific

D Voluntary and Specific An installment sales contract is essentially a 'rent to own' contract and is voluntary, because you enter it willingly and specific, because the lien only covers property and nothing else, such as your car or bank account.