Real Estate Course 1 Exam Prep

Your buyer purchases a property for $120,000. It has an assessed value of $130,000. The annual rate for property taxes is $2.10 per $100 of the property's tax value paid on a semi-annual basis. On the next tax bill, what amount is due?

$1,365

How many square feet are in an acre?

43,560 square feet

Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______.

Accepting liquidated damages

Which of the following would be a description used for real property and a fixture?

In-ground

Which duty requires the client to provide complete, accurate, and timely information to the agent?

Information

One thing that sets the Minnesota broker license apart from the salesperson license is that it allows the license holder to do what?

Own and manage their own business

Customers, lenders, and appraisers are all ______.

Third parties

Which of these statements about voluntary alienation is true?

Voluntary alienation occurs when the property owner decides who will acquire the property.

In which of the following situations can you sell timeshares without a real estate license?

When you're selling your own timeshare

Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title?

Yolanda

Monica is under contract on a home with a sales prices of $235,000, and an appraised value of $242,000. If she obtains an 80% loan, what will Monica's loan amount be?

$188,000

Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria's prepaid interest cost be at closing?

$842.74

As part of its penalty for violating antitrust law, Homes4Cheap, Inc. has been ordered to undergo court-ordered supervision. How long can this supervision last?

10 years

How many feet are in a mile?

5,280

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80%

Minnesota law requires sellers to provide prospective buyers with a written disclosure of material facts related to the property's condition. Which of the following scenarios requires disclosure?

A person is selling his property, which has a septic system, to a newly married couple.

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

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

Which fiduciary duty requires agents to promptly account for all moneys and property their client entrusts to them?

Accounting

Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?

Alda tells Marge that she's hired an inspector to perform a property inspection.

Shannon and Rene are sisters who entered into a contract to buy an income property. The sisters got into a dispute, and Shannon wants out of the deal. However, their uncle Jerry wants to replace Shannon on the contract. Shannon agrees to the substitution so they go ahead and do it. If Jerry fails to live up to his obligations under the contract though, Shannon will be held responsible. Of what is this an example?

Assignment

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

Availability

The four phases of an environmental assessment include investigation, testing, and management. Which phase is missing?

Cleanup

What's the term for someone who has agency representation with the licensee?

Client

Chantal specializes in helping people buy and sell office buildings and shopping centers. What is her area of specialty?

Commercial

Which duty requires the client to pay an agent upon completion of the agent's duties?

Compensation

After agency terminates, which of the following fiduciary duties survives?

Confidentiality

Which of the following is a life estate in a property held by a widower?

Curtesy

Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.

Easement by necessity

Seth owns a property on a small island with six other property owners. Recently, Seth built a fishing pier along the water's edge; however, the pier is actually on his neighbor's property, which Seth has no rights to. What might this be an example of?

Encroachment

Mr. Gray owns property in the city. He passed away, leaving no will, no heirs, and no creditors. The state can acquire the property through which process?

Escheat

Which of these actions is allowed and helps the licensee to avoid illegally practicing law?

Filling in blanks on an association-approved purchase contract

Many parks and golf courses are the sites of ______.

Former landfills

Paulo is a property manager for several large properties. Which type of agent is he in relation to the landlord/client?

General

Your client, Risa, is about to attend her first closing. Which of these activities can she expect to occur on the day of closing?

Her loan funds will be transferred.

With this common loan type, the home is used as collateral and the loan creates a second mortgage if the first mortgage hasn't been paid off.

Home equity

A loan made based on the amount of equity available in an person's home or property is called a ______.

Home equity loan

The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.

Inverse condemnation

Which of the following actions is the Minnesota commerce commissioner NOT empowered to perform?

Investigate a complaint that a licensee acted unethically.

In order for Minnesota homeowners to qualify to homestead their residence, which of the following must be true?

It must be their primary residence.

Janice is a Minnesota landlord who's just accepted a security deposit from Mark on March 16. She places it into an appropriate account. What's true about Mark's security deposit?

It will earn interest on Mark's account as of April 1.

Your client, Eric, is interested in purchasing an industrial property to start a new business. You've recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn't feel these tests are necessary. What should you do?

Keep records of your recommendations and a written response from Eric.

In contract law, a "legally competent" party is a party who has the ______ to enter into a contract.

Legal and mental capacity

What must a licensee do when preparing a CMA (or opinion of price) for a consumer?

Make a statement that the opinion isn't an appraisal.

When are property taxes due in Minnesota?

May 15

Which of these groups of protected classes is included in the NAR Code of Ethics' definition of discriminatory behavior?

Race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity

Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel's mortgage?

Savings and loan

Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure?

September 18

Ted's seller client is adamant that she'll be uprooting and taking most of the fruit trees in the backyard when she sells her home. Ted makes a note to himself that he'll need to include the ______ of the trees in the comments for his listing.

Severance

Billy buys Randy's home, and specifies in the sales contract that the outdoor grill must stay with the home. Randy ends up taking the grill when he moves out. If Billy wants to sue Randy for taking the grill, Minnesota's statute of limitations states that he must do so within ________.

Six years

Radon is found in well water and where else?

Soil

Stacey, a buyer, is working with Rebecca, a licensee, in a state that doesn't recognize or permit implied agency. Rebecca doesn't represent Stacey, however, and is performing only ministerial tasks for her. Which of the following statements about this situation is correct?

Stacey is Rebecca's customer.

Brent and Kathy recently bought a property in a gated community. While doing some landscaping they noticed that their neighbor's shed seems to be over the lot line and on their property. What should they consult to determine if the shed is an encroachment?

Survey

When a city is determining zones, what should be followed?

The comprehensive plan

Which of these statements accurately represents one of the required elements in a deed?

The deed includes an act of conveyance.

Under which of the following circumstances would a mechanic's lien be attached to a property?

The owner fails to pay the builder who added an extra bedroom to the house.

Paula is bidding on a property that's being sold at a foreclosure auction. She's excited about the great deal she's getting on the property after she finds out she submitted the winning bid. What could cause Paula's great deal to turn into a nightmare?

The title to the property may have hidden issues that could cost her a lot of money to clear.

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

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

Which of the following is an example of price fixing?

Two brokerages determine a standard commission rate.

The Minnesota Underground Storage Tank Program regulates what kind of storage tanks?

Underground storage tanks that hold 110 gallons or more

Which of the following is the process the lender uses to evaluate whether to make the loan?

Underwriting