CA Real Estate Exam Pt. 2
Broker Jones, who is not a member of any trade origination, has been using a new advertising slogan: "A new breed of Realtor." Concerning this practice: (A) It is grounds for revocation or suspension of his/her real estate license (B) It is permissible, providing the word "realtor" is not capitalized (C) It is acceptable as long as he/she is not licensed in more than one state (D) It is a violation of the Fair Housing Laws
Answer: (A)
In July, Hall bought Welch's home through the listing broker, Cruz. In November, when the first rain came, the tile roof leaked badly in many places. Hall sued Welch and Cruz for the cost of the necessary new roof. Testimony in court showed that Welch had mentioned the need of a roof to Cruz, but Cruz had not mentioned it to Hall because "he had not asked about it." The most likely to result was: (A) Hall was successful in the suit against Welch, who was entitled to recover damages, in turn, from Cruz (B) Hall recovered from Welch, but Cruz was not liable to Welch (C) Cruz was liable to Hall, but Welch was not (D) On the basis of "caveat emptor," Hall is not entitled to recover from either Welch or Cruz
Answer: (A)
In which of the following years did the U.S. Supreme Court prohibit all racial discrimination when real property is sold or rented? (A) 1962 (B) 1968 (C) 1974 (D) 1982
Answer: (A)
It is common procedure to record all of the following instruments, except: (A) Alisting (B) A grant deed (C) A trust deed (D) None of the above
Answer: (A)
Jones, who does not have a real estate license, is the owner and president of an investment firm. She advertises and sells properties for her clients. Since these transactions involve real estate, who will prosecute her for violating the real estate law? (A) The District Attorney (B) The State Attorney General (C) The Real Estate Commissioner (D) The local police
Answer: (A)
When a licensee is the buyer's agent, the licensee will tell others: (A) As soon as possible (B) After the offer has been presented and accepted (C) When the loan is funded (D) After the licensee receives his/her commission
Answer: (A)
Which of the following is authorized to manage property for the general public? (A) A licensed real estate broker (B) One holding the Certified Property Manager designation (C) Any affiliate member of the California Association of Realtors (D) Any of the above
Answer: (A)
Which of the following would be fiduciary duty of the agent of the buyer according to the law of agency in the civil code? (A) Acting with the utmost care, integrity, loyalty, and honesty when dealing with the buyer (B) Giving the buyer advice about how to hold title (C) Telling the buyer which escrow company to use (D) Being a sub-agent
Answer: (A)
The Real Estate Commissioner would not permit which of the following mortgage loan advertisements? (A) "Call our toll free number 1-800-FORALOAN" (B) "Income, equity, and credit must be verified" (C) "We loan up to 75% of market value based on our staff appraiser's report" (D) "First trust deeds available-10% per annum"
Answer: (A) Need to explain background of the loan
Which of the following is not essential to the creation of an agency relationship? (A) Agreement to pay a consideration (B) Agreement of the parties to the agency (C) Competency on the part of the principal (D) A fiduciary relationship
Answer: (A) An agent could represent either seller or buyer, and compensation is not a requirement. For example, a broker could be asked by a buyer to help arrange a loan.
Denise Daly, who is a broker, has a listing on 40 homes in the area. Broker Daly dies and her heir Phyllis, who has a broker's license, inherits the business. Which of the following is true? (A) Phyllis will have to interview each owner to obtain new listings on the properties (B) Phyllis can notify the owners that she is now their broker (C) The listings belong to the new broker because she inherited the business (D) None of the above
Answer: (A) Death of a broker cancels that broker's listings.
When must the listing agent give the "Agency Disclosure and Confirmation" form to the seller: (A) Before entering into a listing contract (B) Before showing the property to a prospective buyer and after entering into a listing contract (C) Before placing the listing in the MLS (D) As soon as practical after entering into a listing contract
Answer: (A) Fact of Law
Broker Daniel has an exclusive agency listing to sell a $65,000 home to Owner Jones. Before the listing expires, the home was sold through Jones' own efforts to a friend, and Daniel was refused payment of commission. Daniel is legally entitled to receive from Jones: (A) No commission (B) One-half of a commission (C) All expenses that Daniel incurred when advertising the property (D) A full commission
Answer: (A) In an exclusive agency listing, the owner retains the right to sell it him/herself without being obligated to pay the broker a commission.
Which response incorrectly completes this statement? A subdivider who is not a licensee of the Department of Real Estate: (A) May employ a licensed salesperson to sell lots in his/her subdivision (B) May sell all of the lost in the subdivision him/herself (C) May not sell any lots before the public report is issued (D) May make any improvements prior to receiving the public report
Answer: (A) Licensed real estate salespersons may be employed only by the real estate brokers to sell real property. Answers (B), (C), and (D) all completely complete the statement.
Which of the following would justify the hiring of a specialist in property management? (A) Absentee ownership (B) Vacancy factor higher than normal (C) Urbanization (D) Technological advances in building concepts
Answer: (A) Of the choices given, absentee ownership would most justify the hiring of a specialist in property management. Absentee ownership indicates that the owner of the income producing property is living distance away from the property and is not able to survive it adequately.
In Paragraph 1 through 5 of the Exclusive Authorization and Right to Sell form, as written, the seller has set forth the conditions of sale and has promised: (A) To pay the broker a commission if he/she sells the property during the period of listing (B) To sell the property to any ready and willing buyer the broker may produce who is willing to assume the balance of the existing first trust deed (C) To convey clear title if the broker can produce a buyer willing to assume the balance of the existing first trust deed (D) In Paragraph 5B, not to give the listing to any real estate broker for a full period of 60 days after Broker Murphy's listing expires
Answer: (A) Paragraph 1 through 5 of the listing form makes this a contract in which the seller agrees to pay a commission if the broker can sell the property under the given conditions.
A written agreement between the broker and salesperson is required: (A) By the regulation of the Real Estate Commissioner (B) By the NAR Code of Ethics (C) Only if the parties consider it necessary (D) By Real Estate Board Rules
Answer: (A) Statement of fact
A broker, who was selling vacant lots in a new but slowly-developing commercial subdivision, told a prospective buyer, "Buy this lot now; it is a gold mine, I guarantee you can sell it for four times the purchase price in two years." The prospective buyer purchased the lots and four years later found that he could not sell it for the purchase price because the broker was still seeing similar lots for less than the original purchase price. The broker: (A) May be subject to civil penalties as well as disciplinary action by the Real Estate Commissioner (B) Was simply "puffing the value of the property" and is subject only to discipline by the Real Estate Commissioner (C) Cannot be held accountable because the Statute of Limitations has run out (D) Is not liable for his statement because real estate is speculative
Answer: (A) The Real Estate Commissioner could discipline the broker for false promise; the buyer could bring civil suit to recover the loss.
A real estate broker negotiated and closed a transaction involving a newly executed deed of trust. In the absence of an escrow and written instructions by the beneficiary, what is the maximum time permitted by law for the broker to cause the trust deed to be recorded? (A) 1 week (B) 1 month (C) 3 months (D) It is not the broker's responsibility
Answer: (A) The real estate law requires that in the absence of an escrow and written instruction, a broker has one week, maximum, in which to cause a new trust deed to be recorded.
A real estate broker generally acts as an agent with which authority? (A) Limited (B) Special (C) Privileged (D) Unlimited
Answer: (A) Although the broker is a special agent, he/she has limited authority.
A dual agency is legal if: (A) All parties are told before the close of escrow (B) The buyer and seller consent to it (C) The broker and the escrow company agree to it (D) All parties are told after they sign the contracts
Answer: (B)
In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except: (A) Exclusive agency (B) Exclusive authorization and right to sell (C) Open listing (D) Non-exclusive listing
Answer: (B)
When a licensee negotiates a loan secured by real property, the licensee must deliver a mortgage loan disclosure statement to the borrower: (A) Within 3 days of the time the borrower signs it (B) When it is signed by the borrower (C) Within 24 hours of the time the borrower signs it (D) When escrow closes
Answer: (B)
Which of the following state agencies would receive complaints concerning fair housing laws? (A) Department of Real Estate (B) Department of Fair Employment and Housing (C) Department of Community Development (D) None of the above
Answer: (B)
A salesperson tells his broker he is quitting and going to work for another broker. His present broker should: (A) Notify the Real Estate Commissioner and hold the license until further notice from the Commissioner (B) Give the salesperson his license and notify the Real Estate Commissioner immediately (C) Request cancellation of the salesperson's license (D) Call the other broker to confirm the change
Answer: (B) A fact of law
Assume that you are a real estate licensee who has just shown several houses to a young couple. Together you find "just the right place for them". However, even with the best loan available, the down payment seems to be beyond their means. They discuss selling several items including their car. In this way, they would not be able to come up with the down payment. They seek your advice. Which of the following would probably be a synopsis of a proper response? (A) Advise against the purchase (B) Indicate that the decision is up to them but point out the pitfalls of their proposed financing (C) Encourage them wholeheartedly because this is the property they want (D) Inform them that inflation trends will undoubtedly increase the. value of their interest in the property
Answer: (B) As a professional in real estate, a licensee should treat his/her customer, or prospects, fairly and honestly. He/she should point out the pitfalls of their proposed financing but should indicate that the final decision is up to them.
A complaint about a violation of the Rumford Act must be filed with the Department of Fair Employment and Housing within: (A) 30days (B) 60 days (C) 90 days (D) 120days
Answer: (B) Complaints occurring discrimination in housing are filed with the California Department of Fair Employment and Housing (formerly known as the Fair Employment Practices Commission) within 60 days of the occurrence of the action.
A real estate broker took a net listing on a property for $30,000 for a three-month term. After the broker has spent $250 advertising the property, a prospect wants to make an offer of $30,200 for the property. Under these circumstances: (A) The broker does not have to submit the offer to the seller (B) The broker must submit the offer to the seller (C) If the offer is accepted, the seller must pay the broker a 6% commission (D) The broker could be disciplined by the Real Estate Commissioner
Answer: (B) Even though this is a net listing and the broker will only earn $200, the seller must submit all offers.
If an African-American buyer called you about a house he had seen in an African-American neighborhood, what would you think? (A) He wanted to buy a house in an African-American neighborhood (B) He wanted to buy a house of that architectural styling (C) He wanted to purchase a house in that price range (D) All of the above
Answer: (B) Inasmuch as the prospective buyer had only seen the house and the question does not make any mention of price, you would assume he liked the architectural styling and wanted to buy a house like it.
A seller grants the broker an "Exclusive Right to Sell" and the broker agrees to "diligence in endeavoring to obtain a purchaser". This is an example of a: (A) Limited contract (B) Bilateral contract (C) Purchase contract (D) Term contract
Answer: (B) It is a bilateral contract, as both parties agree to perform (a promise for a promise).
A licensed real estate broker took an exclusive agency listing from an owner for a 90-day term. After the broker had expended considerable time and expense in trying to locate a buyer, the owner sold it himself during the listing period. Under these circumstances, the broker was entitled to: (A) A full commission (B) No commission (C) Half of the agreed commission (D) His advertising expenses
Answer: (B) On an exclusive agency listing the owner reserves the right to sell the property him/herself without being obligated to pay any commission. Therefore, the broker would have no right to collect commission.
A licensed real estate salesperson placed a "blind ad" in a local newspaper. A "blind ad" does not properly: (A) Give the address of the property (B) Identify the broker (C) Identify the seller (D) Give the seller price
Answer: (B) Statement of Fact
The buyer and seller decide to go directly to escrow, and the buyer made out a check to the escrow company and handed it directly to the escrow clerk. As concerns the brokers trust account records: (A) Broker must record the check in his/her trust account records (B) Only records of trust funds that pass through the Broker's hands for the benefit of a third party need be recorded (C) The buyer cannot make out the check directly to escrow (D) The escrow company should forward the check to the broker for deposit in the trust account
Answer: (B) Statement of Fact
When Jones subdivided a 50 acre parcel of land into 50 lots in 1981, he included the following in every deed: "The ownership, use, and/or occupancy of this property is limited to a person of the Caucasian race." This deed restriction is: (A) Prohibited by local, state, and federal statues and by rules and regulations of Real Estate Commissioners in all states (B) Unenforceable because it violates the U.S. Constitution (C) Valid, but only as long as William's lives (D) Enforceable as a privately imposed equitable servitude
Answer: (B) Subdivision racial restriction of this type have been found enforceable as per a United States Supreme Court case, Shelly vs. Kraemer, which is based on the Fourteenth Amendment to the United States Constitution. However, the deed is still valid but the restriction is not.
The United States' Attorney General would most likely act to enforce the Federal Open Housing Law whenever: (A) State statutes are not enforced by the state officials (B) A conspiracy exists to practice resistance to the Federal Open Housing Law (C) A complaint is filed with the Secretary of Housing and Urban Development (D) Subject matter of a complaint is filed by an aggrieved party indicated a violation by an owner of more than four units
Answer: (B) The United States' Attorney General has authority to enforce the Federal Open Housing Law especially in an area where there is evidence that a conspiracy exists to resist the Fair Housing Law.
An agent has as much authority as: (A) Third parties dealing with him believe he has, event hough he has restricted authority (B) The principal actually or ostensibly confers upon him (C) He chooses to accept, except when involved with persons who have actual or constructive notice of restrictions upon his authority (D) He chooses to accept or believe she possesses under a contract
Answer: (B) The agent's authority is that which the principal confers upon him, either in actuality, or which he knows the agent is claiming and does not deny.
A broker, who is hired by an owner to sell his property, must reveal all significant and material information to the principal. Which of the following would be considered material information and must be revealed: (A) The new leader will require the buyer to maintain an impound account (B) Agent's knowledge that a better offer to purchase is imminent (C) The prospective buyer is of oriental descent (D) None of the above
Answer: (B) The existence of an imminent better offer could very well be a material fact to the seller. It would probably influence his decision on a present offer.
A real estate agent acting under an exclusive agency agreement signed by the seller owes a fiduciary obligation to: (A) The buyer (B) The seller (C) Both the buyer and the seller (D) Primarily to seller and partially to buyer
Answer: (B) The real estate agent's fiduciary obligation is to the seller. He/she does have the responsibility to reveal material facts to the buyer, but his/her loyalty and the fiduciary relationship is owed to the seller.
Mr. Jones owns three apartment houses in various parts of the city. He hires Mr. Smith to manage the three properties. Mr. Smith resides in one of the apartment houses and receives free rent as part of his compensation. Mr. Smith: (A) Must have a salesperson's license (B) Must have a broker's license (C) Is not required to have a real estate license (D) Must have an apartment manager's license
Answer: (B) The tenant would not qualify as a resident property manager, as he is collecting from three apartment houses. Since the owner is not a broker, the tenant cannot be a salesperson, as a salesperson receives compensation only from his/her broker. Therefore, a broker's license would be required.
Under the "Foreign Investment in Real Property Act" (FIRPTA), to avoid withholding 10% of the amount realized by the seller, the buyer must obtain: (A) A release of liability form from the IRS (B) A "Certificate of Non-Foreign Status" from the seller (C) The buyer must always withhold the 10% (D) A copy of the seller's latest tax return showing he/she has paid their taxes
Answer: (B) This is the name of the form required by the IRS to avoid withholding of monies form the seller's proceeds.
A broker advertises the sale of "Mega Bucks Trust Deeds" in a newspaper. In the advertisement he offers a specific yield which he arrives at by looking at his yield for the past year. Which of the following is true concerning this advertising? (A) This is illegal according to the Truth-in-Advertising law (B) It is legal if the Department of Real Estate has confirmed the yield that is stated (C) It is legal if he also gives the actual interest rate specified in the note and the discount from the outstanding principal balance (D) There is no law covering this subject
Answer: (C)
A real estate licensee has a practice that when members of minority groups who want to be shown property approach her, she avoids showing them property in integrated areas. This would be an example of: (A) Redlining (B) Blockbusting (C) Steering (D) Proper conduct
Answer: (C)
According to the regulations of the Real Estate Commissioner, the broker must have a signed employment agreement with each of his/her salespersons. According to these regulations, a copy of the agreement must be kept both parties for: (A) One year from date of termination (B) Two years from date of termination (C) Three years from date of termination (D) Five years from date of termination
Answer: (C)
Broker Smith took a listing on a 10-unit apartment house and wrote up a financial analysis showing a 12% yield on the investment. In the analysis, Smith did not allow for a vacancy factor, maintenance expenses, or reserves for a replacement of furniture and equipment. Smith showed this analysis to Jones who bought the property. Which of the following describes the above as possible violation of the Real Estate Law? (A) There is no violation of the law (B) Vacancy, maintenance expenses, or reserves are not taken into consideration in a financial analysis (C) Broker Brown misrepresented the property to the buyer, in that 12% yield was based upon an incomplete analysis of the expenses involved (D) Brokers are not competent to preset such information
Answer: (C)
Real estate broker Peters gives Loring an offer on his property at 10:00 a.m. one day. Loring asks for 24 hours to consider it. At 6:00 p.m., the same day, Peters receives two more offers from a salesperson. Peters believes Loring will reject all three offers. He should: (A) Hold the two offers (B) Submit the offers to Loring in the order in which his salesperson received them (C) Submit both offers to Loring as soon as possible (D) Do none of the above
Answer: (C)
What is the best way to create an agency relationship? (A) By actions (B) By being considerate (C) By written agreement (D) By coopering with other brokers
Answer: (C)
When budgeting for a real estate office, the phrase "company dollar" means: (A) The money required to establish an office and run it for a given period of time (B) The income of an office after all expenses are subtracted (C) The income of an office after all commissions are subtracted (D) None of the above
Answer: (C)
In practice, the services of a broker on behalf of his/her principal are defined as all of the following except: (A) An agency relationship (B) A fiduciary relationship (C) An Attorney-in-fact relationship (D) A broker/client relationship
Answer: (C) A broker does not normally have a power-of-attorney.
The fundamental basis for fair housing throughout the United States stems from the: (A) National Association of Licensed Law Officials (B) First Amendment to the United States Constitution (C) Thirteenth Amendment to the United States Constitution (D) Rumford Fair Housing Act
Answer: (C) According to the Supreme Court, Constitutionally of the Civil Rights Act of 1968 is based on the Thirteenth Amendment of the Constitution.
Moran listed his home with Omar Realty for $30,000. He agreed to carry a note secured by a trust deed for $30,000 with 9% interest. The note was to be payable over a 20 year period. Fran, a salesperson with Omar Realty, received an offer on these exact terms. However, before the offer was submitted to the seller, Tim, another salesperson in the office, brought in an offer for $28,000 cash. Which of the following is true? (A) Only the offer received by Fran must be presented since it meets the terms of the listing. (B) The offer received by Fran must be submitted first (C) Both offers must be submitted to the seller (D) The offer received by Fran must be presented first because the offer was written before the offer by Tim was written
Answer: (C) All offers must be submitted immediately. The agent is the fiduciary of the principal and must inform the principal of all facts so that he/she can make an intelligent decision.
'Open house' most nearly means: (A) A model house in a subdivision development (B) Prevention or elimination of discrimination in housing (C) Time in which a house may be inspected by prospective purchasers (D) Properties sold under cooperative housing contracts
Answer: (C) An open house is when the agent representing the principal is present at the property.
When a Principal employs an Agent, this action creates: (A) An agency relationship (B) A fiduciary relationship (C) Both A and B (D) Neither A nor B
Answer: (C) Both A and B are correct
An agency relationship creates a fiduciary relationship between principal and agent. Which of the following relationships illustrates a fiduciary relationship? (A) Real estate broker to his/her client (B) Trustee to a beneficiary (C) Both A and B (D) Neither A nor B
Answer: (C) Both A and B require a fiduciary responsibility as both are acting as agents for their principal.
A dress factory is being built in an area. It will employ mostly women. The owner of a real estate office told his employees to do the following: (1) Direct their advertising to appeal to women who are married and have no children; (2) Charge more rent to certain ethnic and religious groups than to others. Which of these instructions is in violation of the Fair Housing Laws? (A) 1 only (B) 2 only (C) Both 1 and 2 (D) Neither 1 or 2
Answer: (C) Both of these acts are in violation of the Fair Housing Laws.
Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodation in California because of race, color, gender, national origin, or ancestry? (A) Real Estate Commission (B) Labor Commission (C) Department of Fair Employment and Housing (D) Division of Labor
Answer: (C) Complaints involving violations of the Fair Housing Laws are submitted to the Department of Fair Employment and Housing and are investigated by its staff members.
A broker takes a listing on a residence. The seller tells the broker she is selling because a freeway is planned nearby. The freeway is not scheduled to be completed for five years. The path of the freeway might affect the desirability of the property in the future. The broker: (A) Need not disclose the planned freeway because the broker owes a responsibility to the seller (B) May disclose the planned freeway if the buyer specifically asks (C) Must disclose the planned freeway whether asked or not (D) The statute of limitations is three years, so the broker does not need to disclose since the freeway is scheduled for five years
Answer: (C) Disclosure law requires the broker to disclose all facts affecting the value or desirability of the property
A broker may act as legally as the agent for both buyer and the seller, but only if: (A) The broker has the valid listing contract with the seller (B) The buyer is a relative of the broker (C) The broker informs and has the consent of both parties (D) The broker notifies the seller before entering into a listing contract
Answer: (C) Fact of law
Richards agree to list his property for sale with Broker Jones. In using a standard listing form, Richards deletes the provision, which says, "Agency is hereby authorized to accept on my behalf a deposit toward the purchase price in any amount." If Broker Jones produced a buyer: (A) She cannot accept an offer for Richards before accepting a deposit (B) She must get oral permission from Richards before accepting a deposit (C) If she accepts a deposit, she hold sit as agent of the buyer until the offer is accepted by the seller (D) If she accepts deposit from the buyer and the buyer rescinds the offer prior to acceptance by the seller, she is entitled to one-half of the deposit
Answer: (C) If the broker is not authorized to accept a deposit and she does so, she becomes the agent of the buyer for that one act.
A broker used the following clause in her exclusive listing contract: "In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser." This clause: (A) Is superfluous and unnecessary in current contracts (B) Is necessary for the creation of a unilateral contract (C) Is important to the creation of a bilateral contract (D) Requires that the broker advertise the property
Answer: (C) In a bilateral contract, both parties promise to perform. This statement obligates the broker.
The personal assets of each principal may be looked to be creditors in which of the following organizations? (A) Limited partnership (B) Corporation (C) Partnership (D) None of the above
Answer: (C) In a partnership, the personal assets of each principal may be claimed by a creditor.
A homeowner may use an open listing and employ several brokers. The brokers: (A) Will equally share commission if any of them sell the property (B) Will equally share the commission if the owner sells the property (C) Will have an opportunity to earn the entire commission (D) Each have the option to purchase the property with the time limit of the listing
Answer: (C) In an open listing, the owner pays the entire commission to the broker who is the procuring cause of the sale.
All of the following statements regarding option are true, except: (A) Some consideration must pass from optionee to optioner (B) In a lease option, provisions of the lease are themselves sufficient consideration to support the opinion (C) The option binds the optionee to performance (D) Option rights do not give the optionee any 'rights in the land'
Answer: (C) In the common use of options, the owner gives an option to a prospective buyer to buy property. The prospective buyer would be the optionee since he/she received the option. The prospective buyer does not have to perform and buy the property if he/she does not wish. He/she will, of course, lose the consideration he/she gave up if he/she does not purchase the property.
Article 2 of the Civil Code, sections 2079-2079.5 became effective January 1, 1986. This law makes it the duty of the Broker in a sales transaction of one to four dwelling units to conduct a reasonably competent and diligent visual inspection of accessible areas of the property and disclose to the prospective buyer: (A) The estimated economic life of the property and disclose to the prospective buyer (B) The probability of the property to increase in value based on the latest economic forecast (C) All facts affecting the value or desirability of the property revealed by the broker inspection (D) None of the above are required by law
Answer: (C) Is the correct response. (A) would be applicable to income property and is used in the appraisal process; (B) The broker should not make statements to the buyer as to what the property might be worth in the future; (D) It is the law to disclose any fact that the Broker funds.
When a broker shows a client's property to a prospective buyer that is listed with the broker under an open listing, the broker should: (A) Make up an office memorandum (B) Confirm the showing to the buyer (C) Notify the seller as to the property's identity (D) Notify the local Real Estate board
Answer: (C) Notifying the seller establishes the broker's right to collect a commission as a 'procuring cause'. Answer C provides the only effective way of establishing that right.
The agency of a real estate broker is usually established by: (A) Employing contract (B) Estoppel of arbitration (C) Express contract (D) Ratification
Answer: (C) The agency of a broker is usually created by means of a listing, which is an express contract. A listing is an employment contract, buy this is a case of picking the best answer.
As part of the terms of a listing, an owner specified that the existing first trust deed was to be assumed. The broker found a buyer who was willing to buy the property on the exact terms of the listing, except that he/she wanted to take the property subject to the loan. The seller refused the offer. The broker would be: (A) Entitled to a commission (B) Entitled to one-half commission (C) Entitled to no commission (D) A broker/client relationship
Answer: (C) The broker is entitled to no commission, because he/she did not produce a buyer who would meet the exact terms of the listing.
When dealing with the public, a broker may not: (A) Delegate any of his/her duties to other people (B) Reject a listing on a real property in the area in which he/she is active (C) Remain silent concerning material facts about property known only to him/herself (D) Do any of the above
Answer: (C) The broker may delegate his/her duty to another agent, may decline a listing for a variety of reasons, but may not remain silent concerning material facts.
A broker must obtain a copy of a mortgage loan broker disclosure statement which he prepared and had the borrower sign for at least: (A) Two years (B) Three years (C) Four years (D) Five years
Answer: (C) The law requires that loan documents must be kept for four years
Jones made an offer on the purchase of a vacant residence and gave cash deposit with the offer. The offer was presented through Broker Green. The seller accepted the offer. Prior to the close of the transaction, Jones requested permission from Green to enter the house for the purpose of painting and making minor repairs. Which of the following is true? (A) If Jones signs a rental agreement, Green may give permission (B) Jones is an equity owner and doesn't need to obtain permission from anyone (C) Green should obtain written approval of Jones' request from the owner (D) In order for Jones to do this, there must be a written agreement signed by the buyer and seller setting forth the limits of the repairs to be made
Answer: (C) The seller remains the owner of the property until the close of escrow and, therefore, the seller's written approval must be obtained before anything is done to the property
Jane Jones after carefully reading and before signing the Exclusive Authorization and Right to Sell form, decided the words, 'or by me' as found in Paragraph 5A of the aforementioned form. Such words were struck through, dated and initialed by all concerned parties. This deletion would have which of the following effects? (A) None, as the form cannot be altered because to do so violates California law (B) Seller has created an Exclusive Right to Sell listing (C) Seller has retained the right to sell the property herself without being obligated to pay a commission
Answer: (C) The seller, by retaining the right to sell the property herself has created an Exclusive Agency rather than an Exclusive Authorization and Right to Sell.
"Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization." This quotation is most likely to be found in: (A) United States Constitution (B) Commissioner's regulations (C) NAR Code of Ethics (D) Appraiser's Code of Ethics
Answer: (C) This is part of the NAR Code of Ethics
A broker goes to list a church in 1975 by an unincorporated group. To be sure that the proper party signs the listing, he/she should: (A) Ask the lending institution that lent the money to build the church (B) Ask two former officers of the church (C) Check the bylaws or the charter to see who has authority (D) Ask to see the minutes of the Board of Director's meeting
Answer: (C) This is the proper procedure when dealing with property owned by an unincorporated group.
A broker's ad in a local newspaper says that if a buyer or seller will bring this ad to his office and either lists or buys a property through him, that he will give that person $50. Which of the following is true? (A) The broker cannot give $50 to the buyer or seller (B) The broker cannot give $50 to the buyer (C) This would violate the real estate law because he would be compensating unlicensed persons for performing real estate acts (D) The broker can give $50 to the buyer or seller
Answer: (D)
A seller was found guilty of discrimination. The aggrieved buyer may: (A) Buy the house or the property if it is still available (B) Buy another property that the seller is selling (C) Collect damages up to $1,000 (D) All of the above
Answer: (D)
In which of the following ways could an agency relationship not be created? (A) Implied contract (B) Oral contract (C) Written contract (D) Voluntary offer by the agent
Answer: (D)
On September 10th, a prospective buyer gave an offer to purchase to a broker that included a check for a $200 deposit. The offeror requested that the offer and the deposit not be submitted until September 25. Concerning the $200 deposit, the broker: (A) Must submit it to the principal immediately since he/she is working as his/her agent (B) May not accept the deposit (C) May deposit the check into his/her operating account until September 25th (D) May hold the check un-cashed until he/she submits the offer
Answer: (D)
Ray Vester, a new real estate salesperson made strong efforts to obtain listings in a non-integrated neighborhood next to an integrated community. He found success by insinuating to property owners that should minorities move into the area, the value of their homes would decrease. Which of the following best describes the activities of Salesperson Vester? (A) Steering (B) Panic peddling (C) Blockbusting (D) Both B and C
Answer: (D)
The creation of a valid agency relationship requires: (A) A power of attorney (B) Oral agreement (C) Written contract (D) None of the above
Answer: (D)
The owner of a single-family home gave a listing to salesperson Grove, providing Grove's broker, Mr. King would appraise the property to verify the listing price. Which of the following best describes the activity performed by Broker King? (A) Broker King can appraise the property only if he is a licensed appraiser (B) Broker King cannot legally appraise the property unless he charges an additional fee for doing so (C) Broker King must provide a narrative appraisal report (D) Broker King is acting within the law since no claim of being an expert appraiser was stated or insinuated
Answer: (D)
The sellers feel that the wording of the Exclusive Authorization and Right to Sell form is too harsh and insist that they will not sell to minorities, so they delete it and date and initial the deletion. In this case: (A) The broker is accepting a unilateral contract and therefore must prove that he is 'procuring cause' before the will be entitled to commission (B) Such a deletion would have no real legal effect, because such a deletion is common practice in California. (C) The broker should accept that agreement with the aforementioned deletion as he is obligated by law to follow the instruction of his principals and he would be looking out for their best interest. (D) Such a deletion would be discriminatory in nature and the broker should not accept the listing under these conditions as he could be subjecting both his principals and himself to legal action
Answer: (D) A broker cannot accept a listing in which the principal insists on discriminating.
A broker would not be required to maintain trust records in which of the following transactions? (A) A check promptly delivered to escrow (B) A check promptly delivered to seller (C) A check promptly delivered to the seller that was given as the deposit in an offer to purchase containing a contingency clause (D) None of the above
Answer: (D) A broker is always required to maintain trust records. He/she is not required to maintain a trust fund account
If a real estate licensee misrepresents a property to a buyer while he/she is acting as an agent, he/she may subject him/herself to: (A) Disciplinary action by the licensing authority (B) Civil action (C) Criminal action (D) All of the above
Answer: (D) A licensee is subject to three separate and distinct bodies of authority: (1) Real Estate Commissioner's Rules and Regulations; (2) California Civil Codes; and (3) California Criminal/Penal Codes
A licensed real estate broker has his office in his home in the country 25 miles from the nearest city. He used a separate entrance for customers with a large sign, which says "John Jones, Realtor". He pays a high school student as a trainee for bringing in new listings. He belongs to no organizations and very seldom cooperates with other brokers. He employs no salesperson licensees. Because of the distance, he deposits any money received only once a week in the bank and keeps it in a safe in his office meanwhile, separated from his personal funds. Which of the following is Mr. Jones doing that would not subject him to disciplinary action? (A) Using the term "Realtor" on his sign (B) Using a high school student to solicit listings (C) Making his deposits weekly (D) Using his home for an office
Answer: (D) A real estate broker may use his home for his office provided doing so does not conflict with local zoning ordinances. However, he may not use the term "Realtor" unless he belongs to the National Association of Realtors. He may not pay an unlicensed person to solicit listings. He must deposit his funds in his trust account, if he places them there, by the next business day after he receives them.
A person who has a California real estate salesperson's license is prevented by law from engaging in which of the following activities? (A) Negotiating a lease for a period of less than one year (B) Negotiating a mortgage loan for a fee (C) Negotiating in California for the sale of a ranch located in Nevada (D) None of the above
Answer: (D) A salesperson can engage in all of the activity choices provided he or she is employed by a broker.
An implied agency is created by: (A) Written contract (B) Board of Realtors regulations (C) Broker's acceptance of the agency confirmation (D) Conduct of the parties
Answer: (D) Agency can be created by the action/s of the parties even though no express written contract has been effected. This is known as "Ostensible of Implied Agency."
A house was sold "as is". While the transactions were still in escrow, the broker noticed that there was extensive damage caused by termites. Which of the following is true? (A) The broker need not mention the problem since it was sold "as is" (B) The broker need not tell the buyer because the buyer did not ask (C) The broker should tell the buyer (D) The broker would tell the buyer and the seller
Answer: (D) All material facts should be revealed to all parties.
The Transferor of real property improved with one to four dwelling units must provide the transferee with a written disclosure statement pertaining to the property. Which of the following items must be included in the disclosure? (A) Soil problems (B) Structural defects (C) Flooding or drainage problems (D) All of the above
Answer: (D) Although these are not all of the items required to be disclosed, they are all included and required to be disclosed by the buyer.
Which of the following types of transactions would most frequently allow the real estate agent to collect a commission from more than one party: (A) Long-term open-ended listing (B) Business opportunity sales (C) Short-term leases (D) "Tax-free"exchanges
Answer: (D) An exchange might reasonably involve a commission from more than one party, since each seller might well have contracted to pay a commission in the original listing.
When a real estate broker acts as agent for, and collects a commission from, both the seller and buyer in the exchange of real property, and does not disclose his dual capacity to both parties, he may: (A) Provide grounds for either party to rescind the sale purchase contract (B) Prevent himself for recovering commissions from either party regardless of his honesty or fairness (C) Provide the Real Estate Commissioner with the cause to suspend or revoke his license (D) Any of the above
Answer: (D) Any of the consequences listed in (A), (B), or (C) may fall on the broker who does not disclose his dual capacity as agent for more than one party.
Termination of an agency may be accomplished in which of the following ways? (A) The acts of one or both of the parties, or by law (B) Expiration of its terms (C) Death or incapacity of either party (D) Any of the above
Answer: (D) Fact. There are other ways, such as by agreement or revocation, but these probably fall under A (the acts of one or both parties).
What type of real estate activity is exempt from displaying an Equal Housing Opportunity poster? (A) Broker's place of business (B) A model house in a development (C) A real estate subdivision (D) A private dwelling which is for sale by owner
Answer: (D) Federal law does not control the activities of a private owner selling his/her dwelling without the assistance of a real estate licensee if he/she does not advertise in a discriminatory manner.
A real estate broker's license could be revoked or suspended by the Real Estate Commissioner for any of the following reasons, except: (A) He/she has failed to supervise his/her salesperson (B) He/she has demonstrated negligence or incompetence in performing a real estate act (C) He/she has been convicted of fraud in a court suit levied against him/her for the loss (D) Two reliable witnesses have given sworn testimony that the broker is mentally ill
Answer: (D) Mental illness must be certified by a court before the Real Estate Commissioner will suspend the license.
By means of the Federal Fair Housing Law, Congress established a national policy of fair housing throughout the United States. This policy applies to which of the following? (A) Single family residences that are individually owned and that are offered for sale through a real estate broker (B) Single family residences owned by private individuals who own more than three such residences (C) All type family dwellings of five units where the owner occupies one of the units (D) All of the above
Answer: (D) The Civil Rights Act of 1968 applies to all of the foregoing circumstances.
A Chicano prospective purchaser asks to be shown homes but does not specify that he wants to see homes located in a neighborhood where there are no Chicanos. How should a licensee decide what properties to show him? (A) The licensee has no obligation to show homes in non-Chicano neighborhoods to the prospect (B) The licensee could assume that the prospective buyer is not interested in such homes (C) The licensee does not need to provide service for the prospect at all (D) The licensee may select homes for showing as he would for any other prospect
Answer: (D) The Fair Housing Laws and the Commissioner's Regulations insist that real estate licensees treat all customers and clients in an equal manner.
It is proper business practice for real property managers to be compensated in all of the following ways, except by: (A) Percentage of gross receipts (B) Commission on new leases (C) Commission on major repairs or alterations (D) Receipt of discounts on purchases or supplies
Answer: (D) The Institute of Real Estate Management (IREM) recommends that property managers refrain from taking discounts or commissions arising out of purchases, contracts or other expenditures of clients' funds, unless such income is fully disclosed to the property owner and accepted with his/her permission.
Which of the following is the reason that a real estate agent must keep his/her principal informed of material facts concerning a pending real estate transaction? (A) The agent is the conservator of his/her principal's estate (B) Provisions for this responsibility are found in the listing agreement (C) The agent's commission should be adjusted up or down as circumstances change (D) The agent is a fiduciary
Answer: (D) The agent's responsibility to keep the principal informed of all material fact is a fiduciary obligation.
Upjohn and Fletcher, individual real estate brokers, wish to enter into a joint venture to purchase an office building. In this transaction: (A) A permit from the California Corporations Commissioner would be required (B) A partnership license would be required (C) The real estate broker licenses they now have would be used (D) No license or permit would be required
Answer: (D) Upjohn and Fletcher will be acting principals and thus no licenses are required.
The state sales tax on furniture and fixtures of a business opportunity sale should be: (A) Included in the payment made by the buyer to the seller (B) Included by the seller in his/her final sales tax return (C) Remitted to the State Board of Equalization (D) All of the above
Answer: (D) When a business is sold, the buyer should pay the sales tax on the furniture and fixtures to the seller; the seller pays the tax to the Board of Equalization. The buyer, to protect him/herself, should obtain a copy of the receipt issued by the State Board of Equalization.
If an agent discloses to his/her principal the race, creed, or color of a prospective buyer or tenant, he has committed a discriminatory act: (A) No. Because an agent is obligated to disclose to his/her principal all material facts that might influence the principal's decisions concerning any real estate transaction. (B) Yes. However, that disclosure violates only a state law. (C) No. Because a fiduciary relationship exists between the agent and the principal and the agent must exercise good faith in working for the principal's best interest.(D) Yes. An opinion of the California Attorney General states that race, creed, or color is not a material fact and should not be disclosed, even though the owner requests the information.
Answer: (D) Yes. An opinion of the California Attorney General states that race, creed, or color is not a material fact and should not be disclosed, even though the owner requests the information.
Ms. Jones listed a vacant lot with Broker White for $50,000. A prospective buyer named Smith submitted an offer at a purchase price of $45,000 with the offer to expire in thirty days. The next day Ms. Jones made a counteroffer with the sales price to be $47,000. When informed of the counteroffer, Smith would not accept it. Three days later, Ms. Jones delivered the Broker White a signed acceptance. Smith told him he had decided not to buy the property. Based on the foregoing actions, there is: (A) A voidable contract (B) A void contract (C) An enforceable contract (D) No contract
Answer: (D) Any counteroffer terminates the original offer, so there is no offer.