Real estate test prep attempt #3

A broker, in an attempt to sell a property quickly, offers a bonus of $500 to the person that submits an acceptable offer on the property. To whom may the broker pay this bonus? a. Any other licensed cooperating broker. b. Any licensed associate broker. c. An unlicensed friend. d. Only to a licensee active with his own firm.

A

A homeowner sells his principal residence for a profit. Under which of the following circumstances may the homeowner avoid paying taxes on the profit realized from the sale? a. By using the tax exempt $250,000 exclusion for a principal residence. b. By claiming the once-in-a-lifetime exemption, if the owner is eligible. c. No taxes are due as long as the profit is reinvested in real estate. d. Always, as profits realized from the sale of a residence are never subject to taxation.

A

A person who has passed the state real estate license exam but wishes to affiliate with a company where he or she will not actively practice real estate is considered by the Real Estate Board as a(n): a. Active agent. b. Inactive agent. c. Referral agent. d. Part-time agent.

A

At the time salesperson Mahle wrote an offer on the Jones property for buyer Smith, she was given a promissory note, payable at closing, as the earnest money deposit. What is Mahle required to do in this situation? a. Indicate this information on the offer. b. Immediately call her broker for instructions. c. Call Jones immediately. d. Tell Smith she cannot accept a promissory note.

A

If a promissory note contains an exculpatory clause, the lender: a. May seek a deficiency judgment b. May not seek a deficiency judgment against the maker c. May not foreclose d. May call the note due and payable in the event of covenant violations

B

Property owner Kilmer, who is living overseas, lists his property with Broker Huff. Later the land is rezoned for a higher use, increasing its value. Huff buys the property herself and sells it six months later. Which of the following is true? a. As long as Huff informs Kilmer of her intent to buy the property before she does so, her action is above reproach b. Huff can buy the property only after informing Kilmer of the zoning change and the effect that it has on the property c. Huff cannot legally act for someone who is overseas d. When Huff resells the property in six months, she has a legal obligation to inform Kilmer

B

When a salesperson terminates affiliation with a broker, what is the salesperson required to do? a. Give the broker all listings acquired during affiliation with the broker. b. Nothing. c. Return all customer cards to the employing broker. d. Mail his or her license to the Board.

B

When will a deed restriction take precedence over a zoning ordinance? a. Never, zoning is statutory b. If the deed restriction is more restrictive c. If the zoning ordinance was adopted after the deed restriction d. If the deed restriction was recorded after the zoning ordinance

B

If the seller of a house agrees to pay the broker a 6% commission on the first $10,000 and 3.5% commission for all money received over that amount, what was the sale price of the house if the broker collected $946.50 in commissions? a. $ 9,900. b. $19,900. c. $15,775. d. $21,550.

B Commission earned on 1st $10,000 = $600.00 ($10,000 X .06). Total commission $945.50 - 600 = $346.50 commission on remainder. $346.50 / .035 = $9,900 + $10,000 = $19,900 sale price.

By including an exculpatory clause in a mortgage contract, the lender? Select one: a. Waives her right to escalate the interest rate. b. Releases the borrower from personal liability. c. Agrees to permit an assumption to a qualified buyer. d. Grants the borrower immunity from foreclosure.

B Releases the borrower from personal liability.

Which of the following is true when there is a possible violation of the Virginia Fair Housing Law? a. All fair housing complaints must be filed with HUD. b. The burden of proof is on the complainant. c. The burden of proof is on the defendant. d. Any licensee who violates the law will have his or her license automatically revoked.

B The burden of proof is on the complainant.

A broker had an agreement with a buyer to find a home for a flat fee of $5,000. The broker found a special home listed by another broker that the buyer liked and purchased. Is the buyer's broker entitled to receive a commission from both the buyer and the seller? Select one: a. Yes, the brokers automatically split the commission b. Yes, if disclosure was made to all parties in writing c. No, it is illegal to have a dual agency d. No, a seller can only legally pay the listing broker

B: Yes, if disclosure was made to all parties in writing

If a motel clerk furnishes a broker with leads to prospective buyers in exchange for a percentage of the commission collected, which of the following would be true? a. The clerk must be a licensed salesperson. b. Neither the broker nor the clerk are in violation of the law. c. The clerk must be licensed as a broker. d. This is considered to be good sales strategy.

C

Which legal instrument is used to convey a tenancy for years from one person to another? a. Deed. b. Land contract. c. Lease. d. Purchase contract.

C

Which of the following agency responsibilities most likely would be limited in dual agency representation? a. Fairness. b. Reasonable care. c. Disclosure. d. Accounting.

C

The truth-in-lending law requires full disclosure of financing terms when certain "trigger" terms are used in ads. Which of the following is NOT considered to be a financing term? a. The APR (annual percentage rate) of the loan. b. Down payment required. c. Miscellaneous closing costs. d. The number, amount and frequency of payments.

C. Miscellaneous closing costs.

If you received a Virginia Real Estate salesperson's license, active or inactive, after December 31, 2003, and this is your first time renewal, then you are required to complete: a. 16 credit-hours of Real Estate Continuing Education. b. 16 credit-hours of Real Estate Post License Education. c. 30 credit-hours of Real Estate Continuing Education. d. 30 credit-hours of Real Estate Post License Education.

D

It has been determined that a complaint should be investigated. All of the following procedures must take place EXCEPT: a. An agent of the Department of Professional and Occupational Regulations interviewing the claimant, respondent, and witnesses. b. The agent of the Department of Professional and Occupational Regulations reporting the facts to the Real Estate Board without comment. c. The Real Estate Board reviewing the report and determining whether the case should be dismissed or carried forward for further investigation. d. The Real Estate Board immediately convening to determining the extent of the violation and to impose sanctions.

D

On the last day of a valid one year lease, the tenant gave the landlord a check for the next month's rent, which the owner accepted. What is created by the actions of the two parties? a. An estate for years. b. An estate at sufferance. c. An estate at will. d. A periodic estate.

D

The most important factor influencing the value of real estate is? a. Availability of loan money. b. Condition of the property. c. Reputation of the builder. d. Location of the property.

D

Which type of agency relationship is specifically designed to address the issues involved in "in-house" sales? a. Independent contractor representation. b. Limited service representation. c. Standard agency. d. Designated agency.

D

Which would NOT be included in a land sale installment contract? a. Monthly payments made to the seller b. Interest to be paid on the loan balance c. Buyer to receive equitable title to the property d. Buyer to receive a deed to the property at closing

D

An exclusive listing agreement in Virginia, must: a. Be in writing to be valid. b. Be in writing to be enforceable. c. Contain a definite termination date. d. All of these choices.

D ALL OF THESE CHOICES

A licensee is obligated to do all of the following for a customer EXCEPT: a. treat the customer honestly b. disclose all material adverse facts about the property c. perform ministerial acts that require no judgement by the agent d. assist with negotiation of a contract

D assist with negotiation of a contract

Two brothers who each own their own real estate companies agree to divide commissions received equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B get? a. $4,500. b. $1,125. c. $2,250. d. None of the above.

Since the brokers agreed to divide the commission equally, each gets $2,250 regardless of what the expenses of each may be. You may have tried to make this more complicated than it is. The correct answer is: C $2,250.

Property was sold and closing was on May 15th. The taxes for the current year had NOT been paid. Annual taxes are $3,096. What is the settlement sheet entry to prorate the taxes between buyer and seller? a. $1,161 debit to buyer; $1,161 credit to seller. b. $1,935 credit to buyer; $1,935 credit to seller. c. $1,161 credit to buyer; $1,935 debit to seller. d. $1,161 credit to buyer; $1,161 debit to seller.

The taxes have NOT been paid; therefore, the seller owes (debit) for the time he occupied the property. Jan 1 to May 15 (4.5 months). Taxes $3,096 divided by 12 = $258 per mo. X 4.5 = $1,161.00. The seller is DEBITED (charged) $1,161 and the buyer receives a CREDIT for the same amount. There must always be offsetting debits and credits whenever you prorate taxes. The correct answer is: D $1,161 credit to buyer; $1,161 debit to seller.

Taxes are $2,100 per year. The tax rate is $3.50 per $100. The assessed value of the property is 40% of the estimated market value. What is the market value of the property? a. $60,000. b. $120,000. c. $150,000. d. $300,000

$2,100 / $3.50 x 100 = $60,000 assessed value and is 40% of market value. Therefore $60,000 / .40 = $150,000 market value. The correct answer is: $150,000.

When a real estate license has expired how long does the licensee have to reinstate the license, without monetary penalty? Select one: a. 15 days. b. 30 days. c. 360 days (1 year). d. Once expired, the licensee cannot be reinstated.

30 DAYS B

A broker has an exclusive-right-to-sell listing, but the owner finds a buyer and sells the property while the listing is still in force. The broker is entitled to: a. A full commission b. 50% of the commission c. Reimbursement for out of pocket expenses d. No commission, because the owner sold the house himself

A

A building badly in need of cleaning, painting and minor repairs is an example of: a. Physical deterioration - curable. b. Physical deterioration - incurable. c. Functional obsolescence - curable. d. Functional obsolescence - incurable.

A

In Fair Housing discrimination cases, the burden of proof is on the claimant. The claimant must be able to prove: a. That discrimination occurred. b. That the act of discrimination was not provoked by the claimant. c. Only that the accused partly intended to discriminate. d. Actual damages resulted from the acts of the accused.

A

The Parol Evidence Rule controls which of the following: Select one: a. An oral agreement leading to a written contract. b. A dispute between cooperating brokers. c. A settlement which occurs while a licensee is imprisoned. d. None of the above.

A

The largest purchaser of home loans in the secondary mortgage market is : a. FNMA b. GNMA c. Freddie Mac d. FHA

A

The owner of a cooperative apartment unit: a. Owns stock in a non-profit corporation. b. Holds fee simple title that may be sold, mortgaged or leased. c. Owns the unit in fee simple with an undivided interest in the common elements. d. Holds title in partnership with unit owners.

A

Upon signing a management contract with an owner, a broker becomes a/an: a. Trustee. b. Receiver. c. Director. d. Agent.

D AGENT

A rental agreement is reached between the landlord and the tenant, however, the tenant never occupies the dwelling. In this situation, the landlord:

May retain all or any portion of the application fee.

All of the following financial records must be kept by the principal broker (as closing agent): 3 things

Name of the person that money was received from; date and amount of money received; and place and date of deposit

Mr. Jones has been out of the country on business. During this period of time his lease with his tenant, Smith, expired. Smith did not renew his lease, but continues to live in his apartment without the consent of Jones. Mr. Smith is considered to be:

Tenant at sufferance

All mortgages are: A. Due on sale B. Liens C. Recorded D. None of the above

b. Liens

The loan contingency clause in a valid sales contract will contain all of the following EXCEPT the: a. Amount of the loan b. Name of the lender c. Date of the commitment d. Interest rate of the loan

b. Name of the lender

Parties to a deed of TRUST are? a. Mortgagor/mortgagee/broker. b. Borrower/lender/broker. c. Trustor/beneficiary/trustee. d. Mortgagor/trustee/mortgagee.

C

A woman lived in a 4 family house and rented rooms to young college students. She would only rent to single white women but she did not care about their religion. Was this permissible? a. Yes, because she had not discriminated because of their religion b. Yes, since she lived in one of the units, she was exempt from the Federal Fair Housing Laws c. No, discrimination based upon sex is always a violation of the Federal Fair Housing Laws d. No, discrimination based upon race is unlawful in all cases

D

Dave and Pat want to purchase the home that is occupied by their grandparents. They want to take title in such a way that will result in the least amount of income tax liability for them. How should a real estate salesperson or broker advise them? a. Advise them to take title as tenant-in-common with their grandparents. b. Advise them to acquire title as joint tenants with each other. c. Advise them to take title as tenants-in-common but each with an equal interest d. Refer Dave and Pat to an attorney or tax advisor.

D

The minimum balance of the Virginia Real Estate Transaction Recovery Fund is: a. $800,000. b. $750,000. c. $600,000. d. $400,000.

D

A seller walked away from closing with $140,023. She had paid settlement costs of $4,220 and a 6% commission. What was the selling price of the property? a. $148,960. b. $152,900. c. $153,180. d. $153,450.

Sales price = commission + (net to seller and expenses). Sales price (100%) = 6% + 94%. 100% = 6% + $140,023 + $4,220 ($144,243). $144,243 (94%) = sell price - 6% commission. $144,243 / .94 = $153,450 sale price. The correct answer is: D $153,450.

A broker is representing a buyer. When the broker is showing property, he may NOT disclose to his buyer: a. The current owner is infected with the HIV virus. b. Information the broker knows about the financial condition of the seller. c. Deed restrictions that might affect the buyer's intended use of the property. d. That the seller will not accept an offer based on VA financing.

A

A broker when showing property, should disclose to the buyer any known latent defects about the property. Which of the following is NOT considered a latent defect? a. Crumbling concrete in the driveway. b. A defective septic system. c. A foundation crack covered with paneling. d. An inoperable garbage disposal.

A

An apartment complex has $450 less rental income per month because it is located next to a busy highway. Using a capitalization rate of 8%, how much is the loss in value? a. $67,500. b. $5,625. c. $5,400. d. $65,700.

A

If the loan-to-value ratio (LTV) is 80% and the buyer puts 20% down and pays $1,000 in cash for 2 points, what is the sales price of the property? Select one: a. $50,000. b. $55,750. c. $62,500. d. $70,000.

A point is 1% of the loan amount. $1,000 paid for points divided by 2% = $50,000 loan amount. Buyer puts 20% down; loan is 80% of sale price $50,000 divided by 80% = $62,500 sales price. The correct answer is: C. $62,500.

One of the responsibilities of the Real Estate Board is to: a. Arbitrate disputes between brokers. b. Approve schools for teaching. c. Standardize listing agreements and sales contracts. d. Establish commission rates.

B

Three people own a piece of property as tenants in common. Two of the owners want to sell the property, but the third party does not. The two owners that want to sell could file a suit, against the third, for: a. Foreclosure b. Partition c. Detachment d. Severance

B

Which of the following is NOT essential to a valid sales contract? a. Competent parties. b. Termination date. c. Consideration. d. Mutual agreement.

B

A two-story office building is 10.5 feet high on each floor, 18 feet wide and 54 feet long. How many cubic yards is in the entire building? a. 10,206. b. 20,412. c. 378. d. 756.

Volume (cubic feet) = Length X Width X Height 54 ft. X 18 ft. X 10.5 ft. x 2 stories = 20,412 cubic ft. 20,412 cubic ft. divided by 27 cu. ft. per cu. yd. = 756 cu. yd. The correct answer is: 756.

A builder selling tracts of land which he owns: a. Must have a broker's license. b. May employ unlicensed people, on a regular salary, to sell the tracts. c. May employ persons to sell the tracts and pay a commission for each tract sold. d. Must register with the Real Estate Board.

B. May employ unlicensed people, on a regular salary, to sell the tracts.

Property taxes on cooperative units are assessed in the form of: a. Individual tax bills for each unit. b. A single tax bill prorated among individual units. c. Annual tax bills based on the type of unit. d. Biannual tax bills based on the type of unit.

B. single tax bill prorated among individual units

Real estate licenses of salespersons, brokers, and firms all expire:

Biennially (every 2years) on the last day of the month in which the license was issued

A real estate licensee could be suspended without investigation if the licensee: a. Engages in acts of brokerage while on inactive status. b. Violates the Virginia Real Property Act. c. Does not pay the Transaction Recovery Fund assessment. d. Sells personally owned property in his or her own name.

C

A tenant may install security equipment at his or her own expense. He or she will be required to provide the landlord with: a. A written request for permission to install equipment. b. A paid invoice. c. Instructions for operation and keys for the equipment. d. A signed agreement to leave the equipment in place on termination of the lease.

C

Acting for more than one client in a transaction without obtaining the consent of all clients is considered to be: a. Dual agency. b. Disclosed dual agency. c. Undisclosed dual agency. d. Subagency.

C

Broker Lange wants to charge a fixed fee commission rather than a percentage of the selling price. To do this, Lange must: a. Get a ruling from the Real Estate Board. b. Ask the local Board of Realtors for permission. c. Establish this in a contract agreement with the client. d. Ask the local bar association for a ruling.

C

Claims filed with HUD for alleged Fair Housing violations must be filed within: a. 90 days. b. 180 days. c. 1 year. d. 2 years

C

Current tenants of a property being converted to a time-share project must be provided with: a. 30 days' notice of intent to convert, 30 days to contract to purchase unit. b. 30 days' notice of intent to convert, 60 days to contract to purchase unit. c. 90 days' notice of intent to convert, 60 days to contract to purchase unit. d. 90 days' notice of intent to convert, 30 days to contract to purchase unit.

C

If a landlord chooses to retain a portion of the security deposit for repairs to damages caused by the tenant, the landlord must provide the tenant with: a. Paid receipts for all work done. b. Estimates for work proposed. c. An itemized list of deductions. d. A full refund of deposit with bill for damages.

C

In the event a person was deemed mentally ill but is later found to be free of any mental illness, this person is: a. Still protected under the Americans with Disabilities Act (ADA) b. Can be discriminated against for other reasons c. Competent and should be treated as any other person d. No longer protected under the Americans with Disabilities Act (ADA)

C

The penalty for engaging in real estate brokerage without a license is determined by the: a. Real Estate Board. b. Association of Realtors. c. Court after action brought by the attorney general. d. Virginia General Assembly.

C

When may a broker remove money from his or her escrow account? a. At the time the buyer occupies the property. b. When directed to do so by the seller. c. When closing is completed. d. Any of the above.

C

Which of the following is (are) true regarding the Multiple Listing Service? a. It can only accept residential listings. b. It can establish minimum and maximum commission rates. c. It can refuse to accept open listings. d. All of these choices.

C

Which of the following items would be considered emblements? a. Animals b. Fences c. Crops d. Machinery

C

The Real Estate Board receives a fair housing complaint on January 1. They must start the formal proceedings by: a. January 10. b. January 31. c. February 28. d. February 15.

B

The client in a listing agreement would be the: a. Salesperson taking the listing b. Seller of the listed property c. Listing broker d. Buyer

B

A nonresident who obtains a license as an active salesperson in Virginia is required to do which of the following? a. Move to Virginia within six months of licensure. b. Post a bond. c. Maintain an escrow account in Virginia. d. Activate with a Virginia licensed broker.

D

An optionee is obligated to do which of the following? a. To rezone a property prior to exercising his option b. To convey further assurance to the optionor c. To exercise the option within 60 days d. To pay consideration for the option right

D

During a listing presentation, a seller asked a salesperson to give them an opinion on the list price, not disclose their pending divorce, contact them at least weekly and give them an opinion on the validity of the title. The salesperson may do all of the following EXCEPT: a. Give them an opinion on the list price b. Not disclose their pending divorce c. Contact them at least weekly d. Give them an opinion on the validity of the title

D

Generally, a property manager may NOT be compensated by receiving: a. A percentage of the gross lease. b. A fee for leasing. c. A fee for supervising repairs. d. Rebates from suppliers unless disclosed to the owner.

D

The legal process of "tacking" relates to an adverse possession claim under:

color of title

a metes and bounds survey will identify

enchroachments

Ownership as tenants in common and ownership as joint tenants have only one thing in common, aside from the fact that there is more than one party involved in each. What is the only common element in these two types of ownership?

possession

A home located in an area where there are factories with much smoke and dust experiences: a. Physical deterioration b. Economic obsolescence c. Locational obsolescence d. Functional obsolescence

B

A seller contacted 3 brokers and asked each to suggest the listing price for his property. Broker A said $78,000. Broker B said $79,000. Broker C said $91,000. The seller listed with Broker C and the house later sold for $76,000. Broker C is guilty of violating which of his or her agency responsibilities? a. Loyalty b. Reasonable care c. Disclosure d. Accountability

B

An owner has entered into a listing agreement with a broker. During the period of the agreement, the owner sells the property himself. The owner is not legally required to pay a commission to the broker. What type of listing agreement did the owner have? a. A net listing b. An exclusive agency c. An exclusive right-to-sell d. A lease contract

B

Gene owns a single-family home that he rents. He sold the property and realized a profit. Gene may defer payment of taxes on the profit: a. By investing 100% of the profits in an IRA account. b. By purchasing another "like-kind" investment property. c. By claiming the once-in-a-lifetime exemption. d. Because profits made on residential investment property are non-taxable

B

Carolyn buys a home for $122,000 agreeing to the lenders terms of a 75% loan and paying two loan discount points. How much money does Carolyn need to bring to settlement? Select one: a. $1,830. b. $30,000. c. $32,330. d. $33,220.

Carolyn has to pay the downpayment plus the points at settlement. $122,000 sale price X 75% = $91,500 loan. $122,000 sale price - $91,500 loan = $30,500 down payment. $91,500 loan X 2% = $1,830 for points. $30,500 down payment + $1,830 points = $32,330. Carolyn has to bring to settlement. The correct answer is: $32,330.

All of the following statements are true with regard to restrictive covenants in a deed EXCEPT: a. The covenant runs with the land. b. The covenant may be removed without legal action. c. The covenant does not need a termination date. d. The covenant may vary with Fair Housing laws.

D. The covenant may vary with Fair Housing laws

A home that has severely peeling paint would be an example of:

Depreciation

After the statutory period has elapsed, what would a person have to do to formally establish clear title through adverse possession

File suit for quiet title