Real Estate Exam
What is the city required to pay for when condemning a property by eminent domain?
"Just Compensation" = Fair Market Value of Property
Abatement
1. A reduction or decrease 2. The removal of a nuisance
Within how many days should a property manger send out tenant's refund check with a receipt of deducted amount (if any)?
21 Calendar Days - A written letter explaining why keeping all or part of the deposit - Itemized list of each of the deductions - Any remaining refund of deposit - Copies of receipts for the charges/deductions, unless repair costs less than $126 or the tenant waived right for receipts
T.T.I.P.
4 Unities of Joint Tenancy T = Time T = Title I = Interest P = Possession
Real Estate Advisory Commission
A 10 member panel appointed by the Real Estate Commissioner, who presides over the meetings. 6 members must be brokers and 4 non-licensed members for the public. They make recommendations to the Commissioner and are not compensated
Constructive Fraud
A breach of duty without intent
Associate Licensee
A broker or salesperson who is employed by or in an independent contractor relationship with a real estate broker
Prepaid Rental Listing Service (PRLS)
A business ran by broker or under the authority of a PRLS license that supplies prospective tenants with property listings on payment of a fee
Subdivided Land Law
A disclosure law enacted to protect buyers of subdivided parcels. A public report is required for subdivisions of 5 or more parcels.
Abstract of Judgment
A full summary by the court of a judgement. It becomes a general lien on all of a debtor's property in the county where it is recorded
Metes-and-Bounds System
A legal description of a parcel of land that begins at a well marked point and follows the boundaries, using directions and distances around the tract, back to the point of beginning
Spectrometer
A scientific device that detects alpha particles that are emitted by radon gas and is considered highly reliable
Mobile Home Dealer
An agent who displays or offers for sale two or more registered mobile homes at the agent's place of business, and requires a license issued by the CA Department of Housing and Community Development
Fixture
An article that was once personal property but has been so affixed to land that is has become real property. Factors of Fixture: - Intention of Parties - Manner of Attachment - Its type and adaptability to property - Served purposed - Relationship to parties
Joint Tenancy
An estate or unit of interest in real estate that is owned by 2 or more natural persons with rights of survivorship. Unity of ownership; title held as one entity. Death of one tenant gives ownership to remaining tenant(s). Can't be transferred by will.
Encroachment
An unauthorized invasion or intrusion onto another's property
Uniform Commercial Code
Codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transactions
Business and Professions Code
Commonly referred to as Real Estate Law is actually Division 4 of the CA Business and Professions Code
Certificate of Status
Document issued by the CA Sec of State showing a corporation's: -place of domicile -date of incorporation -corporate number -name and address of agent for service of process -other information about the corporation
Personal Responsibility and Work Opportunity Act
Effective as of August 1, 1998, Federal Law that requires that certain public benefits be withheld from illegal immigrants, including professional and occupational licenses issued by state agencies.
M.A.R.I.A.
For Fixtures: M - Method of Attachment A - Agreement of Parties R - Relationship I - Intended Purpose A - Association to Land
Reversionary Interest
Interest in a life estate property
Essential Elements of Contact
Lawful Competent Parties Mutual Consent Object Consideration
Lot-and-Block System
Method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision on a recorded subdivision flat map
A, B, C, D Paper
Mortgage Loan Rating System
Timeline of Trustee's Sale
Notice of default --> 3 Months (90 days) Redeed (Pay off)----Reinstatement Period ----(if not) ---> Notice of Sale ---> 20 days Trustee's Sale ---> Reinstate within 5 days ---> Redeem within 20 days
P.E.W.S.
P = Possess E = Encumber W = Will S = Sell
Brokerage
The bringing together of parties interested in making a real estate transaction.
Police Power
The inherent right of the state to regulate human conduct for the purpose of Health, Safety, Welfare, and Morality. Its the basis of zoning, the official map, building codes, and subdivision regulations.
Dominant Tenement
The land that is benefited by an easement
Fee Simple Estate
The maximum possible estate one can possess in real property. It is indefinite in duration and is freely transferable / inheritable. AKA "the fee"
Escheat
The reversion of property to the state or county, as provided by state law, in cases where a descendent dies interstate and there are no heirs capable of inheriting or when the property is abandoned
Leasehold Estate
The right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a land contract. A leasehold is a fixed asset.
Absorption Rate
Total number of vacant sq ft of office space divided by the sq footage leased per year historically. Used to analyze demand of office space in a given market area.
By Prop 13, the annual real estate tax on a parcel of property in CA is limited to: a) 1% of it assessed value b) 1.5% of it assessed value c) 2% of it assessed value d) 2.5% of it assessed value
a) 1% of it assessed value By Prop 13, the annual real estate tax on a parcel of property is limited to 1% of it assessed value. This "assessed value," may be increased only by a max of 2% per year, until and unless the property has a change of ownership
The Alquist-Priolo Earthquake Fault Zoning Act resulted in the establishment of earthquake fault zones. How wide is the "typical" zone boundary? a) 1/4 mile b) 1/2 mile c) 3/4 mile d) 1 mile
a) 1/4 mile
In order for a licensed salesperson of a broker to legally manage the office, initial contracts, and constitute proper supervision, which of the following is required: a) 2 years full-time experience during (immediate) preceding 5 years b) 2 years full-time experience during (immediate) preceding 5 years plus 16 college credits c) 2 years full-time experience during the (immediate) preceding 10 years d) Experience is not required as long as licensed.
a) 2 years full-time experience during (immediate) preceding 5 years
Acquisition of property by its incorporation with other property is known as: a) Accession b) Succession c) Recession d) Commingling
a) Accession The Acquisition of title to additional land or to improvements as a result of the annexation of fixtures or as a result of alluvial deposits along the banks of streams by accretion.
A Gram is what kind of loan: a) Adjustable Rate Mortgage b) Amortized Loan c) Straight Loan d) Partial Loan
a) Adjustable Rate Mortgage
Which of the following would realize the greatest benefit from the Bulk Sales Law? a) Creditors b) Buyers c) Sellers d) Patrons
a) Creditors The major purpose of the Bulk Transfer status is to afford a merchant's creditors an opportunity to satisfy their claims against a merchant who owes them money before the merchant can sell his/her assets and vanish with proceeds of the sale
Gregorian owns an easement in Duran's property/land. Gregorian is not a property owner. What kind of easement is it? a) Easement in gross b) Appurtenant Easement c) Easement by Necessity d) Easement by Prescription
a) Easement in gross Is the limited right of one person to use another's land (servient estate) when such right is not created for the benefit of any land owned by the owner of the easement. In such case, there is no dominant estate, because the easement attached personally to the owner, not the land.
A net leasing agreement would require the lessee to pay his/her share of all of the following EXCEPT: a) Leasing Commission b) Property Taxes c) Property Insurance d) Janitorial Expenses
a) Leasing Commission With a new lease, the lessee not only pays the rent for occupancy but also pays maintenance and operating expenses such as taxes, insurance, utilities, maintenance, and repairs. The lessor (Owner) pays the leasing commission. In a true net lease, the tenant is responsible for expenses relating to the premises as if they were the owner. The rent paid is "net" to the lessor. Popular with investors.
Under law of agency, a broker has what to third parties: a) must be fair and honest b) has no obligations c) needs to disclose material facts only when asked about them d) should disclose the lowest price the seller is willing to accept
a) Must be fair and honest
A statement issued by the authorizing government agency that there will be no impact on the environment significant enough to warrant preparation or an EIR is called a: a) Negative Declaration b) Positive Declaration c) Neutral Declaration d) Go-Ahead Declaration
a) Negative Declaration = No impact
When a fire insurance claim is filed, which of the following is true? The claimant would: a) Neither gain nor lose financially b) Gain financially, but lose value on the property c) Might lose financially, but not lose value on the property d) Might lose financially and lose on the value on the value of the property
a) Neither gain nor lose financially
A subdivider sold five 1-acre lots to Mr.Dalton and optioned five lots to Mr. Bernstein. What course of action does the subdivider have to take as a result of this action? a) Notify the Real Estate Commissioner of a material change b) Nothing, but Mr. Dalton and Mr. Bernstein need to contact the commissioner c) Notify the commissioner of an intent to subdivide d) Report sale now and the option when executed
a) Notify the Real Estate Commissioner of a material change
The Financial Discrimination Act of 1977, aka Holden Act, has to do with which of the following? a) Redlining b) Rentals c) Education d) Subdivision
a) Redlining Holden = Financial Discrimination --> Golden --> $
Which of the following is provided by the purchaser upon resale of a business? a) Resale Certification b) Clearance Receipt c) Disclosure Form d) All of the Above
a) Resale Certification Allows a buyer (Retailer) to purchase inventory without paying sales tax as long as the goods are going to be resold to customers. In the sale of a business, sales tax is not charged on stock-in-trade which was held for resale.
The Real Estate Commissioner's authority to administer and enforce the real estate law is: a) The Commissioner's Regulations b) State Legislation c) Judicial Precedent d) The Civil Code
a) The Commissioner's Regulations
Jones, who does not have a real estate license, is the owner and president of an investment firm. He advertises and sells properties for his clients. Since these transactions involve real estate, who will prosecute him for violating the real estate law? a) The District Attorney b) The State Attorney General c) The RE Commissioner d) The Local Police
a) The District Attorney
Which of the following would be advised to obtain a clearance receipt in the sale of a business? a) The Vendee b) The Vendor c) The Lender d) The Franchise Tax Board
a) The Vendee (Buyer) wants to avoid successor's liability
A real estate licensee offered to rebate part of their commission to the buyer if the buyer would increase his offer to a level that the agent knew would be high enough for the seller to accept. Under that: a) This info must be disclosed to the seller before offer is accepted b) Is a violation of the licensing law and have immediate disciplinary action c) Licensee could be held liable for damage in a civil suit even though this info was given to the seller prior to the seller's acceptance d) All of the above
a) This info must be disclosed to the seller before offer is accepted by the seller. Considered a material fact.
If you went to the city/county to change an electrical requirement of a building, it is called: a) Variance b) Exception c) Estoppel d) Emblement
a) Variance
The CA Contractor's Law applies to all the following EXCEPT: a) Work for less than $300 b) Work for less than $600 c) An owner building/improving own property which he/she agree to sell within 1 year d) Working for relatives
a) Work for less than $300
You are a CA Real Estate Broker. A prospect is referred to you by an out-of-state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under the CA Real Estate Law: a) You may pay a commission to a broker of another state b) You cannot divide a commission with a broker of another state c) You can pay a commission to a broker of another state only if he/she is also licensed in CA d) None of the above
a) You may pay a commission to a broker of another state
A salesman asks a broker, other than his own, for a $100 advance on his next commission. If the broker pays it, he is: a) in violation of the law b) within his rights c) a good friend d) committing conversion
a) in violation of the law
After passing the Real Estate license exam, a person must apply for the license within: a) one year of the examination b) one year of notification of passing c) six months of the examination d) six months of notification of passing
a) one year of the examination
In a new counter offer: a) the counteror becomes the counteree b) the counteror can change the terms of the offer unilaterally c) the counteree can change the terms of the offer unilaterally d) the terms of the offer can never be changed
a) the counteror becomes the counteree
Buyer Frank sued Broker Sam for a misrepresentation in the sale of a single family residence. He was awarded a judgement but Broker Sam was bankrupt and unable to pay the judgement. Buyer Frank appealed to the Real Estate Recovery Account. Assuming the Recovery Account agrees to pay Frank, he will receive a max of ______ for this single transaction: a) $20,000 b) $50,000 c) $100,000 d) $250,000
b) $50,000 $50,000 for single transaction / $250,000 max for any one license
All materials used in obtaining advance fee agreements must be submitted to the Real Estate Commissioner at least _____ before they are used. a) 5 calendar days b) 10 calendar days c) 20 calendar days d) 30 calendar days
b) 10 calendar days
How long after receiving the Transfer Disclosure Statement (TDS) in persona does the buyer have to rescind the contract? a) 2 days b) 3 days c) 5 days d) 7 days
b) 3 days 3 days in person; 5 days in person
A subdivider must give a copy of the commissioner's public report to: a) Anyone who intends to purchase one or more lots b) Any person, at any time on request c) Only purchases of lots just before they sign the purchase contract d) Only their salespeople
b) Any person, at any time on request
Which pairs of terms have closest relationship? a) Take-out / Construction Loan b) Construction Loan / Interim Loan c) Take-out / Interim Loan d) Wrap Around / Construction Loan
b) Construction Loan / Interim Loan Synonymous
Accounts payable of a business would be a(n): a) Asset b) Liability c) Prorated item in escrow d) None of the above
b) Liability
Which of the following must comply with the Subdivision Map Act? a) Noncontiguous units b) Parcels of 160 acres or more c) Leasing commercial office spaces d) None of the above
b) Parcels of 160 acres or more Parcels of any size fall under the Map Act. Parcels of 160 acres or more are exempt from the Subdivisions Lands Law.
To determine ownership, what is the court action taken? a) Partition Action b) Quiet Title Action c) Declaratory Relief d) None of the Above
b) Quiet Title Action
If more than one licensed real estate broker is acting as the agent in a transaction, who is responsible to assure the delivery of the Real Estate Transfer Disclosure Statement (TDS) to the buyer? a) The Broker who represents the seller b) The Broker who has obtained the offer made by the buyer c) The Broker who holds a valid listing agreement with the seller d) The seller is ultimately responsible no matter how many agents are involved
b) The Broker who has obtained the offer
The Subdivided Lands Law is administered by: a) The Federal Government b) The Real Estate Commissioner c) City and County Authorities d) State Government
b) The Real Estate Commissioner Objective is to protect purchases of property in new subdivisions from fraud, misrepresentation, or deceit in the marketing of subdivided lots, parcels, units and undivided interests in CA
A property owner breaks one parcel of land into two parcels. This would fall under regulation of the: a) Subdivided Lands Act b) Subdivided Map Act c) Both (a) and (b) d) Neither (a) nor (b)
b) The Subdivision Map Act
A "key lot" is: a) The most desirable lot on the block b) The least desirable lot on the block c) The corner lot d) the lot which has the best orientation
b) The least desirable lot on the block A key lot is abutted by 3 or more parcels and is considered the least desirable because of loss of privacy and noise
A real estate broker, licensed only in CA, verbally agreed to split a commission with a real estate broker not licensed in CA: a) This is a violation of the CA Real Estate Law. b) This is permissible c) This is permissible, but the broker must first get permission from the RE commissioner d) This is unenforceable in a CA court as the agreement was not in writing as required by the CA Business and Professionals Code
b) This is permissible
A buyer signed a waiver relating to the delivery of the settlement disclosure statement required by the Real Estate Settlement Procedures Act (RESPA). As a result, a settlement statement must be delivered to him/her: a) at the close of escrow b) as soon as possible after close of escrow c) the settlement statement is not required d) the borrower cannot waive his rights
b) as soon as possible after close of escrow
A property is sold for a total of $100k. An existing loan of $60k was assumed. What would the Documentary Transfer Tax be? a) $110 b) $66 c) $44 d) $22
c) $44 Documentary Tax is calculated at a rate of 0.55 cents for each $500 of consideration or fraction thereof. A portion of the total price paid for the property may be exempt because a lien remains on the property. $100,000 - $60,000 (Assumed Loan) = $40,000 $40,000 / $500 = 80 80 x 0.55 = $44.00
Properties built before which year do not need a geological report? a) 1963 b) 1968 c) 1975 d) 1960
c) 1975
In making adjustments to effective gross income for management expenses, on which of the following would an adjustment be made: a) An apartment which is occupied by an owner who is also the property manager b) An apartment which is occupied by an on-site manager who receives no compensation c) An apartment which is occupied by an on-site manager who lives in his/her apartment rent-free in return for their service d) A manger from a neighboring building owned by the same owner
c) An apartment which is occupied by an on-site manager who lives in his/her apartment rent-free in return for their service
In addition to the Subdivided Lands Law and Map Act, there is federal control of subdivisions under the: a) Unruh Act b) Environmental Impact Act c) Interstate Land Sales Act d) None of the above
c) Interstate Land Sales Act Requires developers to file development statement describing the details of a subdivision with the Secretary of Housing and Urban Development. Can be substituted by CA Public Report.
A listing broker wants to give $50 to a buyer and $50 credit against his commission to a buyer or seller who either lists with him or purchases one of his listings. With regard to his actions: a) It is permissible to give $50 to buyer not seller b) It is permissible to give $50 to the seller only c) It is permissible to give $50 to buyer and credit commission to the seller d) It is against the real estate law to give $50 to either buyer or seller
c) It is permissible to give $50 to buyer and credit commission to the seller as long as it is disclosed to both
Jackson leased home to Sullivan with promise to sell to him. Sullivan made improvements based on this. Jackson then changed his mind. Which best describes rights of parties? a) Jackson must sell because he made ostensible agreement b) Sullivan has no right to enforce the verbal agreement c) Jackson must sell because the doctrine of estoppel will apply in this case d) Jackson does not because of Statue of Frauds
c) Jackson must sell because of doctrine of estoppel
Regulation of proper sewage and sanitation construction practices are enforced by the: a) Department of Housing and Urban Development (HUD) b) Department of Sanitation and Disposal c) Local Health Office d) Bureau of Real Estate
c) Local Health Office Drainage, plumbing, water, and sewage are under the control of the state Department of Public Health and are enforced by the local health office.
Community Redevelopment Agencies must set aside a portion of the tax revenue increases generated by the higher valuation created by their development projects in a special fund. The name of this fund is: a) Incremental Fund b) Tax Common Fund c) Low and Moderate Income Housing Fund d) CRA General Fund
c) Low and Moderate Income Housing Fund
On a listing agreement, what is included under "Terms of the Sale?" a) Terms of Sale, Personal Property, and Additional Terms b) Loan Amount, Personal Property, and Compensation to Broker c) Price, Method of Payment, and Personal Property d) Price, Compensation to Broker, and Deposit
c) Price, Method of Payment, and Personal Property
Regarding environment standards, federal law requires the seller of a new home to disclose which of the following to the buyer? a) Type of windows b) Thickness of the walls c) R-Rating d) Type of Foundation
c) R-Rating Seller must disclose in new home sales; the type, thickness, and r-value of the insulation which has been installed.
Which of the following must be kept on file by the broker for three years? a) Loan Broker Statement b) Real Property Security Statement c) Receipt for copy of Public Report d) All of the Above
c) Receipt for copy of Public Report Broker must keep it for 3 years from date signed and make available for the RE Commissioner. Not to be confused with Public Report, which is kept for 5 years.
In the event the commissioner has conducted an audit which reflects commingling or conversion of trust funds in excess of $10,000, the court may: a) Imprison the licensee for not more than 30 days b) Automatically revoke the violator's license without a formal hearing c) Restrain the licensee from doing business pending a formal hearing d) Confiscate any and all commissions earned by that licensee during the preceding calendar year
c) Restrain the licensee from doing business pending a formal hearing
When selling a business, real estate brokers need to know that the term successor's liability involves certain obligation to the: a) Internal Revenue Service b) Bureau of Real Estate c) State Board of Equalization d) Department of Corporations
c) State Board of Equalization The term successor's liability refers to the purchaser's liability for the sales tax collected by the previous owner but not remitted to the state.
When a broker keeps electronic records, the program he would use for record retrieval is: a) RAM b) SCORE c) WORM d) DOS
c) WORM "Write Once Read Many" indicating the record can't be changed
A flood hazard exists when an area floods: a) once a year b) once in 5 years c) more than twice in 10 years d) 3 times in 10 years
c) more than twice in 10 years
A mobile home park is defined as: a) 5 motor homes for rent or sale b) 5 scattered mobile home sites for rent or sale c) 1 site with a mobile home d) 2 contiguous mobile home sites for rent or sale
d) 2 contiguous mobile home sites for rent or sale
The Law of Agency is concerned with the rights and duties between and among the: a) Agent and the principal, whether discussed or undisclosed b) Principal and third parties with whom the agent deals on behalf of the principal c) Agent and third parties with whom the agent deals on behalf of the principal d) All of the above
d) All of the above
Neither the seller nor any listing or selling agent shall be liable for any error, inaccuracy, or omission of any information delivered to the buyer if: a) The seller or agent(s) did not know of the mistake b) That item of information containing a mistake was provided by a public agency or third party professional c) The item of information containing the mistake was a provided by a 3rd person professional but known by seller and agent of seller d) Both (a) and (b) are correct
d) Both (a) and (b) are correct
A licensee was farming a non-integrated neighborhood which was next to an integrated neighborhood by telling the owners that is minority people moved into their neighborhood, their property value would go down. This is an example of: a) Steering b) Panic Peddling c) Blockbusting d) Both (b) and (c)
d) Both (b) and (c) Blockbusting = Panic Selling (Peddling)
In order to alienate property you must: a) Create an easement b) Create a cloud on title c) Record a homestead d) Convey the property
d) Convey the property Alienation: the act of conveying ownership, title, or an interest of estate in real property from one person to another.
In the case of a deceased interstate, property sale commission would be set by: a) Administrator b) Attorney c) CA Code of Civil Procedure d) Court Order
d) Court Order (Probate Court)
As to running a business, which of the following is false? a) Assets - Liabilities = Net Worth b) Income - Expenses = Profit c) Total Sales = Gross Income d) Gross Income - Profit = Net Income
d) Gross Income - Profit = Net Income
Which of the following best describes the period of time in which a 'lis pendens' action is effective: a) Before the trial is held b) Until the lawsuit is dismissed c) Until final judgement d) In any of the above situations
d) In any of the above situations A 'lis pendens' is effective in all of the situations. A 'lis pendens' is a recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court. 'Lis Pendens' = "Action Pending"
Which of the following is a lessor not allowed to deduct from a security deposit? a) Unpaid Rent b) Reasonable Cleaning c) Damage beyond the normal wear and tear d) Rent expenses for storage of personal property left on the premises
d) Rent expenses for storage of personal property left on the premises The Landlord may deduct the first 3 choices. Rental on storage units for tenant's property left in the unit will be paid by the tenant when he/she takes the property out of storage. If the tenant fails to redeem within 90 days, it may be sold.
An agency relationship may be created by all of the following EXCEPT: a) Oral Agreement b) Necessity or Emergency c) Subsequent Ratification d) Subordination
d) Subordination Subordination is bribery
A man bought a mobile home two months ago and moved it to a mobile home park. He then wanted to list it for sale. Which of the following is true? a) It cannot be listed because it is less than two years old b) It cannot be listed unless the mobile home park gives written permission c) It can only be listed if permanently attached d) The mobile home may be listed for sale
d) The mobile home may be listed for sale An agent can take a listing as long as it is denoted as "used," having already been used for 2 months
Which of the following is NOT included in the Natural Hazard Disclosure Statement? a) Fire b) Flood c) Earthquake d) Weather Conditions
d) Weather Conditions
A public report is required if a person is going to subdivide a lot for condominiums into: a) one or more units b) two or more units c) four or more units d) five or more units
d) five or more units
