Practice Exam

A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent. 1. $225.00 2. $162.50 3. $150.00 4. $112.50

1. $225.00

A buyer wants to purchase a home for $60,000. The lender appraises the home for $58,000 and offers to finance it with an 80% loan-to-value loan, charging a loan origination fee of 1.5 points. How much will the buyer's loan origination fee be? 1. $696. 2. $720. 3. $870. 4. $900

1. $696.

A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? 1. Agency coupled with an interest. 2. Specific agency. 3. General agency. 4. Exclusive agency.

1. Agency coupled with an interest.

Why was the Jones vs. Mayer decision of 1968 important? 1. By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing. 2. By upholding the Civil Rights Act of 1866, the Supreme Court held that individual homeowners are exempt from antidiscrimination laws. 3. It added persons with disabilities to the list of classes who are protected by Fair Housing laws. 4. It added discrimination based on gender to the list of prohibited types of discrimination covered by Fair Housing laws.

1. By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing.

The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should they give the prospective buyer? 1. Counteroffer. 2. Novation. 3. New listing contract. 4. Contingency.

1. Counteroffer.

For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? 1. Mortgage loan interest, local property taxes, mortgage loan origination fees. 2. Mortgage loan interest, homeowner's insurance premium, local property taxes. 3. Cost of essential repairs, mortgage loan origination fees, local property taxes. 4. Homeowner's insurance premium, mortgage loan origination fees, mortgage loan interest.

1. Mortgage loan interest, local property taxes, mortgage loan origination fees.

A buyer made an offer on an apartment building. The offer was not acceptable to the seller. When the buyer refused to accept the seller's counteroffer, the seller agreed to accept the original offer. What MUST happen now? 1. Nothing; by making a counteroffer the seller released the buyer from the original offer. 2. The seller is obligated to pay the broker's commission regardless of whether or not the transaction is completed. 3. The buyer must complete the transaction because the original offer is still valid. 4. The seller must draft a new counteroffer.

1. Nothing; by making a counteroffer the seller released the buyer from the original offer.

Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? 1. The buyer finds a better property for better terms. 2. A title defect that will take months to clear is discovered. 3. A basement fire causes damage that requires extensive repairs. 4. The buyer is unable to obtain financing that meets the terms of the contract's financing contingency.

1. The buyer finds a better property for better terms.

Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price? 1. The first sold. 2. The second sold. 3. The last sold. 4. Cannot tell from the information given.

1. The first sold.

A broker did NOT have a written independent contractor agreement with his salesperson. While showing homes to a family, the salesperson was involved in a car accident in which a child in her car was injured. Could the broker be held liable in this situation, and why? 1. Yes; the lack of an independent contractor agreement may classify the salesperson an employee and an employer may be held liable for the torts of an employee. 2. No; the broker is not liable as all real estate agents are independent contractors and therefore responsible for their own actions. 3. Yes; the broker may be held liable, however this should not present a problem as the errors and omissions policy will cover it. 4. No; the broker may not be held liable for the torts of the salespersons under his supervision under any circumstances.

1. Yes; the lack of an independent contractor agreement may classify the salesperson an employee and an employer may be held liable for the torts of an employee.

An agency relationship between a property owner and a property manager is usually created by 1. a management agreement. 2. payment of a management fee. 3. an exclusive agency agreement. 4. an independent contractor agreement.

1. a management agreement.

A real estate salesperson is representing only the buyer in a transaction. Which of the following actions would be a violation of the salesperson's agency duties to the client? 1. disclosing the price the seller originally paid for the property 2. disclosing the highest price the buyer is willing to pay 3. preparing a competitive market analysis 4. identifying latent property defects

1. disclosing the price the seller originally paid for the property

An equal housing opportunity notice MUST be 1. displayed in the brokerage office. 2. included in all written advertisements. 3. specified in all listing agreements and offers to purchase. 4. given to all prospective clients.

1. displayed in the brokerage office.

When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should 1. have short deadlines. 2. be discouraged by the broker. 3. be stated as briefly as possible. 4. be limited to mortgage arrangements.

1. have short deadlines.

The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that 1. he is no longer the listing agent. 2. he will set up an appointment for showing the home. 3. he will leave the key under the door mat. 4. the house is currently off the market.

1. he is no longer the listing agent.

Several salespersons have asked a broker for his permission to use a personal web site for real estate advertising of specific properties for sale. Before giving permission the broker should first 1. review the sites and all proposed advertising for compliance with state laws. 2. request that brokerage information be included on the web sites. 3. demand "back end" access to the web sites. 4. review the web sites for possible Truth-in-Lending violations.

1. review the sites and all proposed advertising for compliance with state laws.

A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should 1. tell the seller that the buyer will pay more. 2. not disclose that the buyer will pay more to ensure fair treatment of all parties. 3. try to negotiate a fair compromise between what the seller is asking and what the buyer is offering. 4. encourage the seller to delay accepting the offer.

1. tell the seller that the buyer will pay more.

A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with 1. the builder. 2. the buyers. 3. the builder and the buyers. 4. neither the builder nor the buyers.

1. the builder.

A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as 1. void. 2. voidable. 3. valid. 4. unenforceable.

1. void.

An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than 1. $100,000. 2. $250,000. 3. $500,000. 4. $1,000,000.

2. $250,000.

A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) 1. $141 2. $407 3. $526 4. $548

2. $407

Which of the following events would AUTOMATICALLY cancel a listing agreement? 1. Property owner's marriage. 2. Property owner's death. 3. Salesperson's relocation to another agency. 4. Salesperson's retirement.

2. Property owner's death.

A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes maintenance of value over profitability? 1. An individual entrepreneur who owns several apartment buildings. 2. The Department of Housing and Urban Development. 3. The investment division of a bank. 4. A corporate Real Estate Investment Trust.

2. The Department of Housing and Urban Development.

Which of the following real estate contracts is a service contract? 1. a purchase agreement 2. a listing agreement 3. an option contract 4. a mortgage

2. a listing agreement

A broker is teaching newly hired salespersons the correct way to complete a listing agreement form. The broker is attempting to show the value of putting the correct property address on the listing. The BEST visual aid to help them learn how to do so accurately would be 1. a city map. 2. a subdivision plat. 3. township and section boundaries. 4. township, range and section boundaries.

2. a subdivision plat.

A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to 1. confiscate the borrower's personal assets. 2. demand immediate payment of the entire note. 3. report the borrower to the Federal Housing Administration. 4. force the borrower to vacate the premises.

2. demand immediate payment of the entire note.

In an effort to improve his brokerage a broker decides to streamline his handling of escrow/deposit funds. This streamlining can BEST be achieved by 1. ceasing to hold deposit/escrow funds and directing salespersons to give earnest money directly to the sellers. 2. following state law but having as few individuals as possible handle the funds before they are deposited. 3. allowing individual salespersons access to the company accounts and directing them to make deposits and withdrawals as needed to keep the funds flowing. 4. directing salespersons to have sellers sign promissory notes for the amount of the deposit/escrow, rather than dealing with deposits.

2. following state law but having as few individuals as possible handle the funds before they are deposited.

A gross lease can be best defined as one where the tenant pays, as a part of the rent, 1. all property changes excluding utilities. 2. no operating expenses of the leased space. 3. outside maintenance and property taxes only. 4. all property expenses except the interest on the owner's mortgage.

2. no operating expenses of the leased space.

In MOST states, foreclosed property is sold through 1. sealed bids. 2. public auction. 3. deficiency judgment. 4. right of redemption.

2. public auction.

A competitive market analysis is MOST often used for 1. estate tax purposes. 2. setting a listing price. 3. divorce proceedings. 4. property tax assessment.

2. setting a listing price.

Real property can be converted to personal property by 1. annexation. 2. severance. 3. accession. 4. extension.

2. severance.

A potential buyer is interested in the residential property of your client. The buyer earns a living by making crafts and selling them from home and caring for children in the late afternoons. In this situation, you should 1. not show the property. 2. suggest the buyer check the zoning ordinances. 3. apply for a zoning change. 4. warn the buyer about caveat emptor.

2. suggest the buyer check the zoning ordinances.

A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if 1. it satisfies or exceeds all terms included in the counteroffer. 2. the owner withdraws the counteroffer before it is accepted. 3. the owner gives the first buyer notice that another offer was received and an opportunity to revise the bid. 4. the first buyer is informed, in writing, of the owner's intent to accept another offer.

2. the owner withdraws the counteroffer before it is accepted.

A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that 1. the case will be more thoroughly reviewed. 2. there is no dollar limit on damages paid. 3. only a district court judge can order that the property be sold to the complaining party. 4. only a district court judge can order jail time for the guilty party.

2. there is no dollar limit on damages paid.

Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with property, or all water rights are controlled by the state under the doctrine of prior appropriation. The doctrine of prior appropriation is MOST likely to be followed in states where 1. water is plentiful. 2. water is scarce. 3. waterways are important to commercial traffic. 4. there are severe water pollution problems.

2. water is scarce.

A home buyer is obtaining a fully amortized loan in the amount of $140,000. The savings and loan will give him the loan for 15 years at 5% or for 30 years at 6%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) 1. $74 2. $87 3. $267 4. $342

3. $267

On January 15, a seller paid $960 in annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. 1. $120 2. $160 3. $800 4. $840

3. $800

A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor? 1. An easement by necessity. 2. A variance. 3. A license. 4. A life estate.

3. A license.

A broker is developing a checklist to be used by licensees during the time period between writing a contract and closing. Which of the following items should be included in the "Property Inspections" section? 1. Directions for purchasers who wish to make their own repairs. 2. The names of the broker's preferred inspectors, listed by specialties. 3. A place to list repairs, who will pay, and when repairs are to be completed. 4. Instructions to direct sellers to select certain inspectors, and to make and pay for all repairs.

3. A place to list repairs, who will pay, and when repairs are to be completed.

While touring a new listing a broker detects a very pronounced moldy odor. Upon inspection, the broker finds that all closets located on a particular wall in the vacant residence are extremely moldy. The mold growths are heavy, multi-colored and cover the lower back walls and part of the side walls and flooring of the closets, and the other associates on the tour are experiencing sneezing and watering eyes. The broker has already accepted the listing. What immediate action should the broker take regarding the listing status? 1. Institute a new policy that no future listing of a vacant building will be accepted without first making a personal inspection of the premises. 2. Reprimand the listing salesperson for not noting and reporting the presence of mold, remove that salesperson as listing agent and personally take over the listing. 3. Inform the sellers in writing that there is a possible health hazard that should be inspected and, if necessary remediated, and the listing will be removed from the active list until such action is taken. 4. Confer with the listing salesperson regarding the seller's possible attitude about spending the money needed to remediate the mold problem. If the sellers will object, wait until an offer is made to recommend an inspection.

3. Inform the sellers in writing that there is a possible health hazard that should be inspected and, if necessary remediated, and the listing will be removed from the active list until such action is taken.

A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the couple's needs? 1. Lease option. 2. Rental lease. 3. Month-to-month lease. 4. Lease purchase.

3. Month-to-month lease.

What critical aspect of the property inspection process MUST licensees convey to prospective buyers? 1. Difficulty of finding competent inspectors. 2. Appropriate fee splitting between inspectors and brokers. 3. Need for inspections to be completed within the time stated in the contract. 4. Likelihood that the inspection will generate a list of items sellers must repair.

3. Need for inspections to be completed within the time stated in the contract.

A broker is showing a buyer one of his residential listings. The buyer says he wants to establish a day care center for seniors in the property. The property has been used as a day care center for no more than five children. How should the broker advise this buyer? 1. Check the zoning and be sure this use would be allowed, then advise the buyer of the findings. 2. Assure the buyer that since the property is already a day care center there will be no problem. 3. Provide the buyer with contact information for the local planning and zoning office to confirm the zoning and determine whether it permits his use. 4. Tell the buyer that a senior day care center could be a violation of discrimination laws so the buyer should check with the local fair housing office before proceeding.

3. Provide the buyer with contact information for the local planning and zoning office to confirm the zoning and determine whether it permits his use.

Which of these Federal laws regulates the advertisement of a lender's credit terms (rates, payment, etc.)? 1. Real Estate Settlement Procedures Act. 2. ECOA. 3. Regulation Z. 4. Federal Fair Housing Act of 1968.

3. Regulation Z.

A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so? 1. The person must obtain prior written approval by a licensed psychiatrist or psychologist. 2. The person must be capable of understanding the transaction. 3. The person appointed by the court to act for the disabled person must contract on his or her behalf. 4. The person may enter a contract under any conditions, because the law prohibits discrimination against persons with disabilities.

3. The person appointed by the court to act for the disabled person must contract on his or her behalf.

A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable? 1. The seller cannot write and sign with an "X". 2. The listing contract specifies that no other broker may show the house. 3. The seller is heavily under the influence of alcohol at the time of signing. 4. The listing contract specifies that a commission will be paid only if the house is sold within 3 weeks.

3. The seller is heavily under the influence of alcohol at the time of signing.

Refer to the scenario below. You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card. The Martins come to your office and explain that neither Mary nor her supervising broker are available. They insist you immediately write an offer for the house. How should you proceed?Select the best answer. 1. Write the offer after entering into a buyer's broker agreement with them. 2. Write the offer after explaining they may owe Mary's broker a commission. 3. Write the offer after trying to contact Mary's broker yourself. 4. Refuse to write an offer and explain that doing so would be unethical. 5. Refuse to write an offer since it would be illegal. 6. Refuse to write the offer and tell the Martins to contact another Salesperson in Mary's office.

3. Write the offer after trying to contact Mary's broker yourself.

What is the duration of a home warranty's coverage? 1. the expected life of the purchaser 2. the expected life of the product or system covered 3. as disclosed in the contract that offers the warranty 4. a minimum of 5 years or the duration of the purchaser's ownership, whichever is shorter

3. as disclosed in the contract that offers the warranty

In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT 1. closing costs may be lower. 2. loan originator has knowledge of the underwriter's policies. 3. more variety of loan programs available. 4. originator and lender are part of same company.

3. more variety of loan programs available.

A real estate brokerage company has developed standardized policies regarding the inventory of properties to be shown to prospective buyers, the company's standards for qualifying buyers, and documentation of all conversations and showings. These policies can help the firm defend itself in the event of an accusation of discrimination, but only if the policies 1. are posted conspicuously in the brokerage firm's office. 2. appear in all contract forms the firm uses for listings and offers. 3. require every licensee in the firm to follow them consistently. 4. are approved in advance by the state fair housing agency.

3. require every licensee in the firm to follow them consistently.

An example of a contract terminated due to inability to perform would be one in which the 1. purchaser had suffered financial reverses so that she could not make payment as required by the contract. 2. seller had died after the contract became binding but before the closing. 3. seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. 4. property had been severely damaged by fire after the contract became binding but before the closing.

3. seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant.

A broker hires a salesperson as an independent contractor. In order for the salesperson to be considered an independent contractor for federal income tax purposes, the broker's written contract with the salesperson MUST specify 1. no conditions except for the number of hours the salesperson will work per week. 2. that the broker will have strict control over the salesperson's hours and activities. 3. that the salesperson will not be treated as an employee for federal income tax purposes. 4. that the broker will withhold Social Security taxes from income earned by the salesperson.

3. that the salesperson will not be treated as an employee for federal income tax purposes.

A distinguishing characteristic of owning property by land trust is that 1. lower tax assessments usually result. 2. corporate tax rates are applied to profits. 3. the identity of the legal owner is kept confidential. 4. building permits are more easily obtained.

3. the identity of the legal owner is kept confidential.

Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising? 1. "Nonsmoker preferred." 2. "Military discount." 3. "Seniors welcome." 4. "Catholics preferred."

4. "Catholics preferred."

An owner lists her home at a 7% commission rate and wants to net $45,000 after paying the mortgage balance of $68,000 and the broker's commission. To the nearest dollar, what should the selling price be to net her $45,000? 1. $105,090 2. $110,753 3. $120,910 4. $121,505

4. $121,505

If conditions for property use are included in a deed and these conditions are violated, what is the most severe potential penalty? 1. A court may issue an order enforcing compliance. 2. The purchaser's mortgage lender may accelerate the loan. 3. The original owner may sue the purchaser for breach of contract. 4. A court may order the return of the property to the original owner.

4. A court may order the return of the property to the original owner.

Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? 1. The contract on the first house is not enforceable. 2. Neither contract is enforceable. 3. Only the first contract is valid. 4. Both contracts are valid.

4. Both contracts are valid.

A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? 1. Deed amendment. 2. Approval of surrounding property owners. 3. Inclusionary zoning. 4. Conditional use permit or zoning variance.

4. Conditional use permit or zoning variance.

At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? 1. Credit seller $300; credit buyer $300. 2. Debit seller $300; debit buyer $300. 3. Credit seller $300; debit buyer $300. 4. Debit seller $300; credit buyer $300.

4. Debit seller $300; credit buyer $300.

A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have? 1. The buyer has no recourse because he negotiated the sale himself. 2. The buyer may declare the sales contract invalid. 3. The buyer may sue the seller for partial performance. 4. The buyer may sue the seller for specific performance.

4. The buyer may sue the seller for specific performance.

Refer to the scenario below. You are the supervising broker of a real estate company. On August 1, one of your licensees listed a house owned by an investor client. On August 10, a full-price offer was received from the buyer?s agent, a licensee with a cooperating real estate company, and accepted by the seller. The buyer?s agent indicated that the buyer is a transferee. The sale is to close on September 10, but on September 5, the buyer?s agent informs the seller?s agent that his client is not going to close and wants the earnest money refunded. Your firm is holding the earnest money. Which information is the most critical to be obtained? 1. The amount of transactions the buyer's agent has completed. 2. The number of times the buyer's agent met with the buyer before making the offer. 3. The reason why the buyer is not closing. 4. Verifying if there is a clause in the purchase agreement regarding the disbursement of earnest money following default. 5. What the source of the earnest money is. 6. If the buyer's agent tried to sell the buyer something else.

4. Verifying if there is a clause in the purchase agreement regarding the disbursement of earnest money following default.

The FHA functions MOST like 1. a bank or savings and loan association. 2. a mortgage company. 3. an investment group. 4. an insurance company.

4. an insurance company.

A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of 1. substitution. 2. contribution. 3. conformity. 4. anticipation.

4. anticipation.

For a buyer, a DISADVANTAGE of a partially amortized or balloon payment loan is that 1. foreclosure occurs at the end of the term. 2. it involves negative amortization. 3. the amount of the monthly payment increases over time. 4. at the end of the term, all remaining principal must be paid in a single large payment.

4. at the end of the term, all remaining principal must be paid in a single large payment.

An exception to title insurance coverage is 1. forged documents. 2. defects found in public newspapers. 3. incorrect records of marital status. 4. defects that clearly appear in the title search.

4. defects that clearly appear in the title search.

In the property condition disclosure form under "Asbestos", a broker reviewing an associated licensee's listing sees that the property owner reported that the asbestos siding on his building was not removed but was professionally encapsulated ten years ago. Documentation of this professionally applied process is attached. The broker should 1. be satisfied with this evidence that the asbestos problem, if any, has been handled. 2. instruct the listing agent to request that the owner have the siding re-inspected. 3. immediately call a licensed and bonded asbestos inspector to re-inspect the property. 4. have the listing agent verify the license of the firm that performed the encapsulation process. 5. research the issue to be sure that the process used for encapsulation would normally be expected to remain effective for 10 years or more. 6. have the listing agent prepare the owner for the likelihood that there are other asbestos-containing materials in the house that may be noted by a buyer's inspector.

4. have the listing agent verify the license of the firm that performed the encapsulation process.

A licensee has entered into a dual agency agreement. In this situation, it is critical that all parties understand that it is impossible for the licensee to fully perform for either party the traditional common-law agency duty of 1. accounting. 2. care. 3. disclosure. 4. loyalty.

4. loyalty.

According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the 1. cash price or amount of the loan. 2. amount of down payment required. 3. number, amount, and frequency of payments. 4. prepayment penalties and rebates.

4. prepayment penalties and rebates.

Antitrust laws prohibit competing brokers from all of the following EXCEPT 1. boycotting other brokers in the marketplace. 2. dividing the market to restrict competition. 3. agreeing to set sales commissions and management rates. 4. receiving compensation from both the buyer and the seller.

4. receiving compensation from both the buyer and the seller.

The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, 1. will no longer lend or guarantee loans on these older properties. 2. require evidence of testing for and disclosure of any type of lead contamination before they will lend or guarantee loans on such properties. 3. require funds to be escrowed for lead abatement as a condition of lending or guaranteeing loans on such properties. 4. require the buyer to acknowledge disclosure of the presence of any known lead paint.

4. require the buyer to acknowledge disclosure of the presence of any known lead paint.

Tenants are still in their rental property even though their lease has expired. The landlord has given them written notice to quit and refused to accept rent. They are 1. periodic tenants. 2. tenants by reversion. 3. tenants in common. 4. tenants at sufferance.

4. tenants at sufferance.

A seller signs a listing agreement with a broker. The seller can cancel the listing at any time without legal liability if 1. an offer has not yet been accepted. 2. an offer has not yet been presented. 3. the broker is given at least 48 hours notice. 4. the broker violates the terms of the contract.

4. the broker violates the terms of the contract.

MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and 1. buyer name(s) and social security number(s). 2. the property financing. 3. the mortgage lender's name and address. 4. the sale price.

4. the sale price.

Refer to the scenario below. You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card. The first thing on Monday morning, Mrs. Martin calls and indicates they have tried to reach Mary and cannot. They indicate they have a written buyer's agent agreement with Mary's broker. They are afraid someone else is going to buy the house. Which of the following should you do?Select the best answer. 1. Seek advice from your supervising broker. 2. Tell them to come to your office. 3. Ask them to bring the buyer's agency agreement to you for your interpretation. 4. Tell them to be patient and continue trying to reach Mary. 5. Tell them to call Mary's supervising broker or branch manager. 6. Tell them you are really sorry, but there is nothing you can do.

5. Tell them to call Mary's supervising broker or branch manager.

A broker learns that one of the licensees under his supervision, and the owners of a listed property, have worked out a scheme to withdraw a property from the market whenever a showing is requested by any buyer who seems to be from a foreign country. What is the most important action for the broker to take in this situation? 1. learn all the details of the scheme. 2. identify potential buyers who were affected and show them the property. 3. put the licensee on probation and require her to take a fair housing class. 4. terminate the licensee's association with the firm. 5. terminate the listing agreement. 6. develop stringent policies for the firm, establishing the criteria that may be used to determine which properties are shown to prospects.

5. terminate the listing agreement.