Prep Edge Practice Exam Missed Questions

What happens when your client asks you to do something that's against the law?

You must break your duty of obedience.

What is the maximum amount that will be paid out of the Recovery Account per licensee?

$250,000

Which term describes the newly formed land mass built up by the deposits of sediments on a property that belongs to the owner?

Alluvion

A special flood hazard zone is one of the six natural hazards that must be disclosed. How are special flood hazard zones identified?

By the Federal Emergency Management Agency (FEMA)

When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?

Competition

Don and Becky realized too late that the contract they signed for the sale of their home didn't include any language about a rent-back if the home they're building isn't ready in time. What can their listing agent do?

Create a contract amendment with the required language.

Which option best defines an equitable lien?

Created by a court of common law; doesn't give the right to possession of the property

What do you do to determine debt coverage ratio?

Divide net income by debt service

The ______ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks.

Dodd-Frank Wall Street Reform and Consumer Protection Act

What is one advantage of joining a real estate team within a brokerage?

Doing so allows you to specialize.

One of the listing agent's main responsibilities regarding the TDS is to ______________.

Educate the seller regarding the legal responsibility to complete it properly

Which of the following is a true statement about buying one's own listing?

Even when it's legal, some brokerages won't allow their agents to do it.

Which of these is NOT an example of agency coupled with interest?

Gene, a real estate professional, is purchasing a home for his personal use. He negotiates a reduction in the sales price in return for taking no commission from the seller.

The best definition for "effective gross income" is ______.

Income after losses from vacancies and credit losses are deducted from potential gross income

Which of these is an example of conversion of funds?

Monica used funds from the firm's trust account to pay her firm's rent.

Taylor is the owner of a new apartment building. She has 15 units she needs to lease, so she has enlisted Pablo as her agent. Is Pablo required to give Taylor an agency disclosure form?

No, agency disclosure is not required for residential transactions involving five or more units.

Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?

Power of sale

What's NOT true about the Mello-Roos Community Facilities Act?

Property owners pay this assessment as a separate ad valorem tax.

Capital gains fall into which stage of the property ownership life cycle?

Reversion

Which of these does a sponsoring broker owe their associate brokers and salespersons?

Supervision of activities

What is meant by "usable" square footage?

The area occupied by the tenant

Whose responsibility is it to determine escrow instructions in California?

The buyer and seller

Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here?

The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz.

The FHA has helped to significantly improve the mortgage market through ______.

The introduction of the long-term amortized loan

What happens when the termination date of a listing agreement is reached before the property is sold?

The listing expires and is automatically terminated.