Real Estate Exam 1
Rudiger purchases a home for $200,000, and receives an 80% loan from his bank. He has to pay three discount points to receive the loan. He is also responsible for a 1% origination fee and a $300 appraisal. The seller paid a 6% commission to the listing brokerage. What is the amount of the discount points that he paid? A. $4,800 B. $6,000 C. $6,400 D. $7,500
A. $4,800
For which of the following people would an adjustable-rate loan not be a good idea? A. A person about to retire B. A person planning to refinance after several years C. A person who will live in the house only a short time D. A person whose income is expected to go up soon
A. A person about to retire
To be valid, a listing agreement may be signed by: A. An attorney in fact B. The buyer C. The designated broker only, with the owner's authorization via telephone D. The licensee only
A. An attorney in fact
Erin entered into a lease that begins on February 1, and is set to end on January 31 three years later. This leasehold is a/an: A. Estate for years B. Tenancy at sufferance C. Periodic tenancy D. Estimate from year to year
A. Estate for years
Ben receives a life estate in a property, with his nephew Will designated as the remainderman. When Ben dies, what kind of interest does Will receive? A. Fee simple estate B. Life estate C. Remainder interest D. Reversionary interest
A. Fee simple estate
Which of the following is an advantage of using private mortgage insurance, from a borrower's perspective? A. It allows for a smaller downpayment B. It protects against default C. It protects the buyer's title against other claimants D. It reimburses a borrower for property damage from problems like fire or flooding
A. It allows for a smaller downpayment
An advertisement for a house includes only the following phrase about financing: "Assume the owner's original loan with only a $1,000 downpayment!" What is wrong with this advertisement? A. It doesn't also include the loan's annual percentage rate and other financing terms B. It doesn't also include the loan's original balance C. It doesn't give the brokerage firm's name as licensed D. Nothing, so long as it is the real estate licensee's own property
A. It doesn't also include the loan's annual percentage rate and other financing terms
A prospective tenant asks a licensee to show him only properties that do not allow children. How should the licensee respond? A. Say that only bona fide retirement communities may exclude children B. Say that the law requires that all available properties must be shown C. Say that to do so would be steering, and therefore illegal D. Show properties that are billed as "adults only"
A. Say that only bona fide retirement communities may exclude children Explanation: The Fair Housing Act forbids "adults only" apartment complexes. There is, however, an exemption for properties that qualify as "housing for older persons," such as those intended for and solely occupied by persons 62 or older.
The best description of the boundary lines for a property found in a subdivision would be found on: A. a plat map B. the deed C. the mortgage D. the purchase and sale agreement
A. a plat map Explanation: Subdivided property is usually described in deeds and purchase and sale agreements by reference to a map of the subdivision and a particular lot. The map, known as a plat map, describes the boundaries of the lot and is prepared by a surveyor.
All of the following are requirements for a valid deed, EXCEPT: A. acknowledgment B. adequate legal description C. signature of grantor D. words of conveyance
A. acknowledgment Explanation: Acknowledgment is not a requirement for a valid deed. Acknowledgment is necessary for the deed to be recorded, but a deed that is not recorded may still be valid.
A licensee hears that a religious group will be opening a commune in a neighborhood. He begins contacting neighbors and telling them about this, encouraging them to list their properties with him before property values decline. This is: A. blockbusting B. redlining C. steering D. legal
A. blockbusting
An independent contractor relationship between a real estate brokerage firm and a licensee requires that the: A. brokerage and licensee must enter into a written agreement B. brokerage must consider the licensee an employee for tax purposes C. brokerage must set the licensee's daily work schedule D. licensee must be paid primarily based on number of hours worked rather than commission
A. brokerage and licensee must enter into a written agreement Explanation: The Internal Revenue Service will consider a real estate licensee an independent contractor only if the brokerage firm and the licensee have a written contract saying that the licensee will not be treated as an employee for federal tax purposes. In addition, substantially all of the licensee's compensation must be based on commission rather than hours worked.
On a settlement statement, an earnest money deposit that will be held by the brokerage firm until closing is a: A. credit to the buyer B. credit to the seller C. debit (charge) to the buyer D. debit (charge) to the seller
A. credit to the buyer Explanation: The earnest money has already been paid and will be applied to the purchase price at closing, so it appears on the settlement statement as a credit for the buyer.
A homeowner has been sharing with a friendly neighbor the use of a driveway that crosses both of their properties. However, the neighbor is about to move out, and the remaining homeowner would like to make sure that she can continue to use the driveway even if the new neighbor is not amenable to that. The homeowner should request a/an: A. easement B. encumbrance C. license D. profit
A. easement
A primary advantage of owning a property in severalty is: A. flexibility B. inheritability C. joint occupancy D. shared risk
A. flexibility Explanation: Property owned by only one person ("in severalty") gives that owner more flexibility to use or dispose of the property than she would have if she shared ownership. By definition, ownership in severalty doesn't involve joint occupancy or shared risk. And properties held in fee simple are generally inheritable whether there's only one owner or more than one.
A type of lease that allows the lessor to share in the increasing sales generated by a retail property is a/an: A. percentage lease B. graduated lease C. index lease D. net lease
A. percentage lease Explanation: Percentage leases are frequently used in shopping centers and with other retail properties. They enable the landlord to share in the tenant's profits as part of the rent.
The seller listed the property for $95,000. Assuming that their listing agreement is typical, the broker would NOT be entitled to a commission if the seller: A. rejected a $90,000 offer from a financially qualified buyer B. accepted a $90,000 offer from a financially qualified buyer C. accepted a $95,000 offer, but his title turned out to be unmarketable D. rejected a $95,000 offer from a financially qualified buyer
A. rejected a $90,000 offer from a financially qualified buyer Explanation: A broker isn't entitled to a commission if the seller rejects an offer that doesn't meet the terms in the listing agreement, such as a below-listing-price offer as in answer A. Since the question is asking about when a commission is not due, answer A is the right choice. If an offer meets the seller's terms in the listing agreement and the buyer is financially able to buy, the broker is entitled to a commission even if the deal falls through—provided the transaction failure is the seller's fault (such as here, where the seller failed to clear the title).
The market price of a property would be best defined as: A. the amount paid to obtain the property B. the initial basis, plus capital improvements and minus depreciation C. the price that the property would likely bring in a sale under normal circumstances D. the value of the property to a particular owner Explanation:
A. the amount paid to obtain the property
A property's net operating income is $12,000 per year. If an investor wants a 12% rate of return, how much is the property worth to him? A. $1,440 B. $100,000 C. $144,000 D. $1,000,000
B. $100,000 Explanation: Use the capitalization formula (Income ÷ Capitalization Rate = Value) to find the property's value: $12,000 net income ÷ 0.12 rate of return = $100,000 value.
Closing is set for August 1. The seller has already paid the property taxes for the year, totaling $6,000. How much of that amount is the buyer's responsibility? A. $2,000 B. $2,500 C. $3,000 D. $3,500
B. $2,500
A tenant has already paid his $1,200 rent for the month for a single-family property. The property's owner sells it to a new buyer, with closing occurring on the 15th of June. The parties decide the seller is entitled to rent for the closing date. On the settlement statement, the prorated rent will appear as a: A. $600 debit for the buyer and a $600 credit for the seller B. $600 debit for the seller and a $600 credit for the buyer C. $1,200 credit for the buyer D. $1,200 credit for the seller
B. $600 debit for the seller and a $600 credit for the buyer
A rural lot runs 500 feet east/west along its northern boundary, and 600 feet east/west along its southern boundary. Its eastern boundary runs 200 feet due north/south, while its western boundary runs 224 feet in a diagonal northeast/southwest direction. The cost of the land is $6 per square foot. What is the cost of this lot? A. $600,000 B. $660,00 C. $672,000 D. $720,000
B. $660,000
Zoning requirements state that a lot must be at least four times the size of the building located on the lot. An architect draws up plans for a building that is 20,000 square feet. At least how many acres does the lot need to be? A. 1 B. 2 C. 3 D. 4
B. 2 Explanation: Multiply the building size by four to find the minimum square footage of the lot (20,000 square feet x 4 = 80,000 square feet). There are 43,560 square feet per acre, so in order to exceed the required 80,000 square feet, you would need a two-acre lot (43,560 square feet x 2 = 87,120 square feet).
A buyer purchases a rental home that is fully furnished. The document used to transfer title to the furniture is a: A. Quitclaim deed B. Bill of sale C. Special warranty deed D. General warranty deed
B. Bill of sale
Which of the following best describes the difference between building codes and zoning regulations? A. Building codes control the use of real property; zoning regulations affect improvements on the property B. Building codes affect improvements on the property; zoning regulations control the use of real property C. Building codes are enforced by municipalities; zoning regulations are enforced by the state D. Building codes are enforced by the state; zoning regulations are enforced by municipalities
B. Building codes affect improvements on the property; zoning regulations control the use of real property Explanation: Building codes protect the public from unsafe or unworkmanlike conditions, through the building permit system. Zoning regulations, by contrast, regulate the use of properties, dividing communities into zones for specific types of uses. Both are enforced at the city or county level.
A buyer asks the buyer's agent to write an offer on terms that don't match the listing agreement. The buyer's agent refuses to write the offer and then, in writing, unilaterally terminates the agency relationship with the buyer. Which is true? A. Buyer's agent will be subject to disciplinary action B. Buyer's agent is permitted to unilaterally terminate the agency relationship C. Buyer's agent is allowed to terminate the agency, but must write the offer before terminating D. Buyer's agent is not permitted to write such an offer
B. Buyer's agent is permitted to unilaterally terminate the agency relationship
A former mansion has been divided into three apartments. The best approach to finding the property's value is: A. Cost B. Income C. Reconciliation D. Sales comparison
B. Income
An appraiser is trying to estimate depreciation when valuing an older residential rental property, but is finding it difficult because no comparables have sold recently. However, the appraiser can find sufficient data on rental rates in the same market, and a capitalization rate can be supported. Which approach to value should the appraiser use? A. Cost B. Income C. Market data D. Sales comparison
B. Income Explanation: If comparable sales aren't available and the accrued depreciation is difficult to estimate (which is generally true for older properties), but the data necessary to use the income approach are available, then it's appropriate to use the income approach.
Which of the following is true about a building designated a historical landmark? A. All lead paint must be removed immediately B. It may not be willfully destroyed without permit C. It may only be sold to a family member D. It must comply with all local ordinances
B. It may not be willfully destroyed without permit
A small house is situated on a large lot in a mixed-use neighborhood. The city decides that the area will, in the future, be zoned commercial. What will most likely happen to the property's value? A. It will decrease, because of fears of new business being built nearby B. It will increase, in anticipation of the changing uses C. No effect, since the house is a nonconforming use D. No effect, until the change actually occurs
B. It will increase, in anticipation of the changing uses
An offer is dated June 4. The offer is accepted on June 7. The buyers are approved for a loan and satisfy the financing contingency on June 9. The transaction closes on June 28. The date of the contract is: A. June 4 B. June 7 C. June 9 D. June 28
B. June 7
A couple with children would like to buy a house that was built in 1950. The home was recently remodeled, with completely new paint and plumbing. In this situation, what does the agent always have to do? A. Ensure that the paint used during the remodel is lead-free B. Make sure the buyers receive a pamphlet on lead-based paint C. Provide them with a copy of a recent lead inspection repot D. Nothing; the house remodeled so lead-based paint rules don't apply
B. Make sure the buyers receive a pamphlet on lead-based paint
Usury laws fix which of the following? A. Minimum interest rates B. Maximum interest rates C. Length of time for repayment of loans D. Loan-to-value ratios
B. Maximum interest rates Explanation: State usury laws set maximum interest rates for certain types of loans.
A property manager of a ten-unit building shows an apartment to a woman who uses a wheelchair. The woman says that she would need to make some modifications, such as adding grab bars in the shower and removing carpeting in the bedroom. The landlord: A. Can refuse to rent to the tenant because of the tenant's proposals B. Must allow the tenant to make the modifications at her own expense, but can require her to restore the property at the end of the lease C. Must allow the tenant to make the modifications at her own expense, but cannot require her to restore the property at the end of the lease D. Must make the modifications and pay for the expenses himself
B. Must allow the tenant to make the modifications at her own expense, but can require her to restore the property at the end of the lease
A licensee locates what seems like a ready, willing, and able buyer. However, the deal falls through at closing because the buyer can't obtain necessary financing. At the same time, though, the seller turns out to be unable to provide marketable title. Does the seller still owe a commission to the listing agent in this case? A. No, because the sale didn't close B. No, because there was no ready, willing, and able buyer C. Yes, because the licensee saw the transaction through to the closing date D. Yes, because the seller has an absolute duty to provide marketable title at closing
B. No, because there was no ready, willing, and able buyer
A real estate agent shows a listing to two different buyers. One buyer decides in the early morning to make an offer on the property for less than the listed price. The agent writes up the offer and plans to meet with the seller later in the day. The other buyer then contacts the agent and says that she'd like to make a full price offer. What should the agent do? A. Meet with the sellers but present only the first offer, and then present the second offer only if the first offer is rejected B. Present both offers to the seller at the same time C. Tell the second buyer that her offer is invalid because there is already an offer on the property D. Tell the second buyer that he can only offer to the seller, but he'll present her offer if the first one is rejected
B. Present both offers to the seller at the same time
Under which of the following circumstances would a listing be terminated? A. Real estate agent who took the listing dies B. Seller dies C. Property is rezoned after listing is signed D. Listing agent goes to work for another firm
B. Seller dies Explanation: According to agency law, if either the principal (in this case the seller) or the agent dies, the agency is terminated. However, the agent in a real estate agency relationship is the real estate firm, not the individual who took the listing; so the listing is still in effect even if the individual real estate agent dies or moves to another firm.
Mineral rights associated with real property are always: A. Conveyed along with the surface rights to the property B. Separable and divisible C. Sold separately from the property D. An interest in personal property
B. Separable and divisible
The IRS issues rules that determine when a real estate agent is an employee and when he is an independent contractor. Which of the following statements on that topic is FALSE? A. The brokerage may allow an independent contractor to place her own ads but must conform with the firm's advertising rules B. The brokerage may require an independent contractor to have a cell phone C. The brokerage will take taxes from an employee's paycheck D. The brokerage will tell an employee when to work certain hours
B. The brokerage may require an independent contractor to have a cell phone
A residential property manager should inform prospective tenants about: A. A neighbor who is an alcoholic B. The planned removal of a swimming pool C. The property's appraised value D. The racial composition of the tenants
B. The planned removal of a swimming pool
W, age 17, enters into an installment contract to purchase a five-year-old car from S, an adult. From a legal point of view, the contract is: A. void B. Voidable by W only C. Voidable by S only D. Voidable by either S or W
B. Voidable by W only
The protected class of "familial status" in the federal Fair Housing Act refers to the presence of: A. adult children of tenants living on the property B. children under the age of 18 living on the property C. persons over the age of 65 living on the property D. unmarried persons living on the property
B. children under the age of 18 living on the property
A purchase and sale agreement is for $150,000, with 80% financing, closing in 30 days with possession at closing, and a rent provision for possession after closing. This is an example of a/an: A. acceptance B. contract with contingencies C. counteroffer D. unilateral contract
B. contract with contingencies Explanation: This is a question that is best answered by the process of elimination. Answer A is too vague to be a good answer. There is no mention of a counteroffer so C doesn't apply. Nor does D since a purchase and sale agreement is a bilateral contract, not a unilateral contract. Therefore, you can conclude that B is correct and financing is a contingency here.
Tests to distinguish a fixture from personal property include all of the following, EXCEPT: A. method of attachment B. cost of the item C. intent of the annexor D. adaptability
B. cost of the item
Bronson agreed to sell his house to the Hatchers. Closing is scheduled for May 15. Bronson already paid the taxes for the entire year, but the Hatchers are assuming responsibility for the taxes as of the closing date. The settlement statement will prorate the taxes as a: A. credit to the buyer, and debit to the seller B. debit to the buyer, and credit to the seller C. debit to the seller D. credit to the buyer
B. debit to the buyer, and credit to the seller
Property management for residential property is different from property management for commercial property, in that a manager would be more concerned about: A. a written lease for a residential tenant than for a commercial tenant B. future space needs of a commercial tenant than of a residential tenant C. the credit rating of a commercial tenant than of a residential tenant D. the security deposit of a commercial tenant than of a residential tenant
B. future space needs of a commercial tenant than of a residential tenant
The term "meeting of the minds" is associated with: A. full performance of a contract B. offer and acceptance C. execution D. tender of an offer
B. offer and acceptance
A promissory note that is secured by a mortgage is: A. a defeasance agreement B. primary evidence of the debt C. a guarantee of payment D. security for the loan
B. primary evidence of the debt
An investor is interested in purchasing a multi-family dwelling. He would most likely want to look for a: A. property that will offer a low rate of return B. property where the rents are similar to comparable properties in the same area C. property with a high vacancy rate D. rent-controlled property Explanation:
B. property where the rents are similar to comparable properties in the same area
An agent shows his customer, who is an Asian-American, homes only in neighborhoods that are predominantly Asian-American. This is called: A. panic selling B. steering C. blockbusting D. redlining
B. steering
A legal action brought in court to compel a party to fulfill the terms of a contract because the land is unique and money damages would not adequately compensate the party victimized by a breach is called a/an: A. partition action B. suit for specific performance C. quiet title action D. injunction
B. suit for specific performance Explanation: The legal premise that no two properties are alike justifies a suit for specific performance (asking the court to order the seller to deliver the deed to the buyer), rather than simply pay money damages. Injunctions are also court orders, but are generally prohibitory, requiring an action be stopped, making B the better answer here.
A seller wants to net $60,000 from a transaction, but will have to pay off a mortgage and other fees, at a total cost of $181,800. The seller will also need to pay a 7% commission. What will the property need to sell for? A. $241,800 B. $258,726 C. $260,000 D. $276,060
C. $260,000
A warehouse is listed at 60 feet long by 90 feet wide, with 15-foot ceilings. The building rents for five cents per cubic foot per month. What is the amount of the monthly rental payment? A. $270 B. $2,700 C. $4,050 D. $405,000
C. $4,050
A metes and bounds description reads as follows: "Start at the intersection of Route 120 and Wells Lane. Proceed due south 1,815 feet, then due east 1,200 feet. Proceed due north 1,815 feet, then return west to point of beginning." How many acres is this property? A. 5 B. 20 C. 50 D. 100
C. 50
Which of the following persons could be eligible to receive a VA loan? A. A veteran or a deceased veteran's children B. A veteran or a deceased veteran's children or unremarried spouse C. A veteran or a deceased veteran's unremarried surviving spouse D. Only a veteran him or herself
C. A veteran or a deceased veteran's unremarried surviving spouse Explanation: A veteran's surviving spouse may be eligible for a VA loan if he or she has not remarried, and the veteran was killed in action or died of service-related injuries.
Under Title VIII of the Civil Rights Act of 1968, certain transactions are exempt. Which one of the situations below would be exempted and not a violation of the act? A. A church-owned apartment complex where language is the lease restricted tenancy to members of a specific national origin B. Members of a certain ethnic group are denied lodging in facilities operated by a private club for commercial purposes C. An unlisted home that is for sale by owner, where the only advertising is a sign in front of the property that reads simply, "For Sale" and the owner owns only one other home D. An absentee owner who rents in a four-plex without the help of a real estate agent
C. An unlisted home that is for sale by owner, where the only advertising is a sign in front of the property that reads simply, "For Sale" and the owner owns only one other home
A homeowner bought his home for $150,000. Ten years later, he refinanced his mortgage and borrowed $100,000. Which of the following is true for this type of property? A. Interest on the difference between the original amount and the refinanced amount is not deductible B. Interest on only half of the difference between the original amount and refinanced amount is deductible C. Interest on loans such as this one for the purchase or refinance of a principle residence is deductible D. Interest deductibility will depend on the borrower's tax bracket
C. Interest on loans such as this one for the purchase or refinance of a principle residence is deductible
A mortgage that uses both real and personal property to secure the borrower's debt is a: A. reverse equity mortgage B. Budget mortgage C. Package mortgage D. Deed of trust
C. Package mortgage
Which of the following is most likely to be considered a fixture? A. Draperies B. Lamp C. Plumbing D. Washing machine
C. Plumbing
A federal law requires lenders to give a booklet about shopping for a home loan to all prospective borrowers within three business days of loan application. What law is this? A. Fraud Enforcement and Recovery Act B. Home Loan Disclosure Act C. RESPA D. Truth in Lending Act
C. RESPA
A buyer's agent has repeatedly seen sales collapse at the last minute because the buyers weren't able to obtain financing. How could he best limit this in the future? A. Qualify all prospects himself B. Refer buyers to a specific lender C. Require prospects to be approved first D. Show lower-priced properties
C. Require prospects to be approved first
Price fixing (including setting commission rates in a community) is prohibited by the: A. State Usury Act B. Federal Regulation Z C. Sherman Antitrust Act and state antitrust laws D. Federal Real Estate Settlement Procedures Act
C. Sherman Antitrust Act and state antitrust laws
A buyer's purchase and sale agreement contained a financing contingency. The buyers applied for a loan with a local lender, who verbally informed them that their loan application was denied. The buyer's agents should: A. Ask the seller to provide a purchase money loan instead B. Have the sellers extend the contingency deadline C. Tell the buyers about their high to receive the dental in writing D. Terminate the agency relationship
C. Tell the buyers about their high to receive the dental in writing
In a bilateral contract: A. A duty will be performed by one party only B. One party can restrict the performance of another party C. Two parties have exchange promises, and both parties are obligated to perform D. All parties have fully performed their duties
C. Two parties have exchange promises, and both parties are obligated to perform
A homeowner has an unpaid hospital bill for $20,000. The hospital files suit and wins a judgment for the full amount. Is the homeowner's home (which he owns free and clear) at risk? A. No, because the debt must be at least $25,000 to force a sale B. No, because the debt must exceed the value of the homestead C. Yes, but he may be partly or fully protected by state homestead laws D. Yes, a court may always force a sale to fulfill a judgment
C. Yes, but he may be partly or fully protected by state homestead laws Explanation: Homestead laws are state-level laws that give limited protection against foreclosure of judgment liens. Generally, foreclosure is not allowed unless the net value of the property exceeds the homestead exemption amount.
An apartment building is right where a new city park is going to be built. The city condemns it. Can the city terminate the leases of the building's tenants? A. No, because this is a violation of the Federal Fair Housing Act B. No; if the government forces a landlord to breach a contract with a tenant, it is violating the Landlord-Tenant Act C. Yes, if notice is provided to the tenants and they receive relocation assistance D. Yes, if the tenants receive just compensation from the city
C. Yes, if notice is provided to the tenants and they receive relocation assistance
When part of the land is removed, but generally the boundaries of a property stay the same, it is known as: A. accretion B. adverse possession C. avulsion D. partition
C. avulsion
When a borrower makes payments on a fully amortized loan, her debt service payments will cover: A. only principal on the loan B. only interest on the loan C. both principal and interest on the loan D. principal, interest, taxes, and insurance
C. both principal and interest on the loan Explanation: A fully amortized loan is repaid through regular payments that include both a portion of the principal and interest. The final payment will pay off the principal balance, leaving no need for a balloon payment. (Most home purchase loans are budget mortgages, which include taxes and insurance in each payment, but this is not a characteristic of all fully amortized loans. Note also that the question refers to debt service payments only.)
An investor would like to invest in real estate, but without being involved in management or subjecting himself to any personal liability. He should invest in a: A. general partnership B. joint venture C. limited partnership D. sole proprietorship
C. limited partnership Explanation: In a limited partnership, the limited partners are not personally liable for the partnership's debts and obligations. Limited partners are commonly passive investors who aren't directly involved in managing the business.
An investor rents a property to a tenant. For tax purposes, depreciation on this property is based on: A. market value, plus capital improvements, minus land value B. market value, plus rental income, minus land value C. price, plus capital improvements, minus land value D. price, plus rental income, minus land value
C. price, plus capital improvements, minus land value
The deed that states that there is a conveyance of interest, if any, is the: A. grant deed B. bargain and sale deed C. quitclaim deed D. special warranty deed
C. quitclaim deed Explanation: When signing a quitclaim deed, the grantor is saying, "I hereby quitclaim, remise, and release whatever interest I have in the property, if any."
A seller's agent, upon meeting with a prospective buyer, becomes concerned that the buyer is unlikely to be financially qualified. The agent should: A. perform a full examination of the buyer's finances B. refuse to accept that buyer's offer C. relay those concerns to the seller, who will decide D. withdraw from the listing
C. relay those concerns to the seller, who will decide
Net listings are strongly discouraged because they are likely to be unfair to the: A. broker B. buyer C. seller D. All of the above
C. seller Explanation: In a net listing, the seller agrees to accept a certain amount of money from the sale and the listing broker receives any surplus beyond that. This arrangement is likely to be unfair to an uninformed seller. The broker could end up collecting a far larger commission than a broker who charges an ordinary percentage-based commission would have (while performing no extra work to justify the higher amount).
A life estate will last until: A. economic conditions render it unfeasible B. the death of the grantor C. the death of the recipient D. the recipient moves out
C. the death of the recipient Explanation: A life estate lasts until the death of the measuring life. In most cases, the life tenant (in other words, the recipient of the life estate) is also the measuring life, and therefore the life estate ends upon the life tenant's death, so that's the best answer here.
A local ordinance states that no sign can extend more than two feet above the roofline. The Morgans want to put a sign on their roof, but the sign is six feet high. To install their sign legally, the Morgans must apply for a: A. sign clearance B. nonconforming use permit C. variance D. residual
C. variance Explanation: A variance would enable the Morgans to make a minor deviation from zoning requirements. It will be granted only if the Morgans face undue hardship because of the zoning law, and if the variance will not change the neighborhood's essential character.
Jesse, Kim, and Diane own a home together as joint tenants. If Jesse dies, her property interest: A. will be inherited by her children according to the provisions of her will B. must be bequeathed to Kim and Diane in her will C. will be automatically devised to her heirs D. will be automatically transferred (conveyed) to Kim and Diane
D. will be automatically transferred (conveyed) to Kim and Diane
A mortgage often includes a clause requiring the lender's consent before another borrower may assume the mortgage. This clause is called a/an: A. Power of sale clause B. Subordination C. Defeasance clause D. Alienation clause (due-on-sale-clause)
D. Alienation clause (due-on-sale-clause)
An appraiser needs to be state-certified to perform which of the following appraisals? A. Appraisal of a residence valued at $200,000 B. Appraisal of a residence valued at $500,000 C. Appraisal related to a loan that will be issued by a federally insured lender D. Appraisal related to an FHA loan
D. Appraisal related to an FHA loan
An investor wants to invest $250,000 in the development of a shopping mall by taking out a loan secured by a residential property that he owns. Will the Truth in Lending Act apply to this transaction? A. Yes, because the loan is less than $500,000 B. Yes, because the loan is secured by residential property C. No, because the loan is more than $50,000 D. No, because this is a commercial transaction
D. No, because this is a commercial transaction
John, Kevin, and Lyle own a property as tenants in common, but only Kevin and Lyle live on the property. John would like to see the property for redevelopment, but Kevin and Lyle refuse. What is John's best option? A. Charge Kevin and Lyle rent B. Create a trust to manage the property C. Evict Kevin and Lyle D. Obtain a court order to sell the property
D. Obtain a court order to sell the property
Chin, a home seller, is talking to his real estate agent. He mentions that he rents the backup generator; it doesn't belong to him. The generator would be considered: A. A fixture B. A natural attachment C. A trade fixture D. Personal property
D. Personal property
The Real Estate Settlement Procedures Act (RESPA) applies to: A. Contracts for deed B. Seller-financed transactions C. Commercial and residential mortgages D. Residential first mortgages
D. Residential first mortgages
Gerald engages a licensee to list his property and find a buyer for it. In this context, the licensee is acting as a: A. General agent B. Power of attorney C. Property manager D. Special agent
D. Special agent
To avoid tenant problems, a landlord is best off using a standardized lease form that includes: A. A copy of the Uniform Landlord Tenant Act B. A warranty of quiet enjoyment C. A tenancy at will provision D. Specific rules and regulations
D. Specific rules and regulations
To be enforceable, a contract for the sale of real estate must be in writing and signed by the parties. This is true because of which law? A. Real Estate License Law B. Uniform Commercial Code C. Real Estate Settlement Procedures Act D. Statute of Frauds
D. Statute of Frauds
Allen begins providing construction services on May 2 and records a construction lien on May 5. Bart begins providing services on May 3 and records a construction lien on May 4. On May 10, a judgment lien against the property is recorded. The property's owner also receives notice on May 10 that he is in arrears on his property tax payments. Which lien has lien priority? A. Allen's lien B. Bart's lien C. Judgment lien D. Tax lien
D. Tax lien
An apartment building was built in 1960. An apartment is being rented to a couple with no children. Which of the following is true? A. The rules on lead-based paint don't apply unless the tenants have children B. The rules on lead-based paint don't apply to the tenants, only purchasers C. The tenants must receive a ten-day window in order to test for lead-based paint D. The tenants should sign the lead-based paint disclosure and receive a pamphlet on lead-based paint
D. The tenants should sign the lead-based paint disclosure and receive a pamphlet on lead-based paint
Which of the following is true about surveys? A. They determine placement of improvements on a property B. They identify setback lines from property boundaries C. They protect against easements by prescription D. They reveal encroachments not of public record
D. They reveal encroachments not of public record
A home inspection revealed that black mold is present in a home. What should the buyer's agent tell the buyer? A. That black mold is toxic, and that the buyer should not buy the house. B. That mold is commonplace, and can be cleaned up with bleach C. To require the seller to remedy the problem D. To seek expert advice
D. To seek expert advice
Carl is housebound and never goes outside. Neighbor Salvador plants a vegetable garden on a corner of Carl's property that is not visible from the main house. After the required period of time, Salvador claims a prescriptive easement over this portion of Carl's land. This easement is: A. Not valid, because Salvador had a duty to inform Carl of his intended use B. Not Valid, because Carl didn't know of the use and had no chance to formally object C. Valid, because Salvador's vegetable garden is a productive use of land D. Valid, because the use was open, and Carl's knowledge of the use isn't considered
D. Valid, because the use was open, and Carl's knowledge of the use isn't considered
What information does an appraiser need in order to calculate a capitalization rate? A. Price and gross income B. Price and net income C. Value and gross income D. Value and net income
D. Value and net income
A movie theater was built ten years ago. If the neighborhood is now zoned entirely residential, the movie theater: A. Will have to be torn down B. Must be remodeled to better conform to the neighborhood's intended use C. Will be allowed to continue if the owner obtains a conditional use permit D. Will be allowed to continue since it was built before the new zoning law went into effect
D. Will be allowed to continue since it was built before the new zoning law went into effect
A contract specifies that "time is of the essence." This means that: A. the seller must fulfill her contractual duties by the date set forth in the contract, but the buyer does not have to B. the buyer must fulfill her contractual duties by the date set forth in the contract, but the seller does not have to C. the agent must fulfill his contractual duties by the date set forth in the contract, but the buyer and seller do not have to D. all contractual duties must be fulfilled on or before the date set forth in the contract
D. all contractual duties must be fulfilled on or before the date set forth in the contract Explanation: A time is of the essence clause means that all parties to the contract are legally required to meet all deadlines set in the agreement. Failure to meet any deadline by either party is a breach of contract.
The police powers of the government include: A. defeasance B. foreclosure C. lis pendens D. building codes and zoning regulations
D. building codes and zoning regulations Explanation: The government's police power is its authority to adopt laws that are necessary for the protection of the public's health, safety, morals, and general welfare. Land use laws such as building codes and zoning regulations are based on the police power.
A seller's agent knows that the seller intentionally failed to disclose on the property disclosure statement that the basement leaks during heavy rains. The seller's agent must: A. complete a new property disclosure statement himself B. inform the local housing authority C. inform the Department of Licensing D. inform the prospective buyer that there is misrepresented information on the disclosure form
D. inform the prospective buyer that there is misrepresented information on the disclosure form Explanation: A real estate agent has the duty to disclose known material facts to the parties in a transaction, even when the agent's principal would prefer not to have the information disclosed. A leaking basement is a latent defect and certainly qualifies as a material fact.
While preparing a competitive market analysis, an agent finds four comparables to choose from. Comparable 1 sold for $180,000 13 months ago under normal conditions. Comparable 2 sold for $190,000 14 months ago under normal conditions. Comparable 3 sold for $175,000 10 months ago as a foreclosure. Comparable 4 sold for $180,000 16 months ago as a foreclosure. The agent should use: A. the oldest one B. the newest one C. all four D. none of them, because they are all older than nine months
D. none of them, because they are all older than nine months
Exaggeration about a property's positive characteristics would be considered: A. fraud B. misrepresentation C. overstating D. puffing
D. puffing Explanation: Puffing is a term for sales patter that emphasizes desirable aspects of a property, but merely contains opinion and not factual statements, and doesn't rise to the level of misrepresentation.
A property is listed for $275,000. The buyers offer $265,000, and insist that the gourmet six-burner stove remain with the property. When the signed offer is presented to the sellers, the sellers accept the price, but want to take the stove with them. They cross out the item about the stove, sign the form, and return it to the buyers. Under these circumstances: A. there is now a valid contract that has been signed by all parties B. the offer has been invalidated and the buyers will need to begin looking for a new property C. the sellers can turn around and accept the original offer, if the buyers won't go along with giving up the stove D. the original offer is terminated, and the sellers have made a counteroffer
D. the original offer is terminated, and the sellers have made a counteroffer
A judgment lien: A. applies only to personal property B. applies only to real property C. takes first lien position D. when paid off, requires a satisfaction of judgment to be recorded to clear the record
D. when paid off, requires a satisfaction of judgment to be recorded to clear the record Explanation: When a judgment lien has been paid off, it is advisable for the judgment debtor to record a document known as a satisfaction of judgment so that there is constructive notice that the lien has been released.
Buyer Bob and Seller Sam decide to wait until Sam's listing agreement with XYZ Real Estate Agency has expired, to avoid paying a commission. Does the firm (and, by extension, the individual listing agent) have any legal recourse? A. Yes, the listing agent can pursue criminal charges B. Yes, the listing agent can sue Bob under the listing agreement C. Yes, the listing agreement can sue Sam under the listing agreement D. No, the listing agent has no further recourse
No, the listing agent has no further recourse