Test Questions 1

A contract breach will excuse the wronged party's duty to perform under the contract depending on whether or not the breach is: Minor or material Compensatory or punitive Practical or theoretical Monetary or non-monetary

Correct answer is (a). A material breach is substantial enough to excuse the innocent party from performing and provide him with the right to sue for damages. A minor breach, also referred to as partial breach, gives the non-breaching party the right to seek damages but does not usually excuse him from performance.

A subdivision is a: housing development created by dividing a parcel of property into individual lots houses in the same neighborhood that resemble each other in style and size property divided in half by a subway line None of the above

Correct answer is (a). A subdivision is one piece of land divided into two or more pieces of land, which are called lots or parcels.

When a mortgage debt is paid in full, releasing the property from a lien, the mortgagor must provide the mortgagee with a: certificate of discharge sheriff's deed documentation of release pay-off bonus

Correct answer is (a). Another name for the certificate of discharge is "satisfaction of mortgage." The mortgagee must record this discharge certificate within 30 days or incur a $500 penalty.

If an offer to buy a property is accepted by an owner who then, before the close of escrow, decides not to sell, then the buyer can: pursue a legal action against the owner for specific performance file a criminal action for fraud against the owner acquire the property anyway under the doctrine of adverse possession None of the above

Correct answer is (a). Compelling specific performance is one of the remedies for breach of contract.

To hold real property as a tenant in common, parties must: have undivided interests be married to each other have equal interests inhabit the property

Correct answer is (a). For two or more persons to hold title to the same property as tenants in common, they are required to hold an undivided interest. An undivided interest means not specifying the interests of each party by percentage or description of a portion of the real estate. property, you cannot designate which one-third of the property you own.

A landlord and lessee agree on terms of a 2-year lease for an apartment rental. The landlord signs the lease and sends it to the lessee who receives it, moves in to the apartment, sends the landlord three months rents, but never sign the lease. Upon the completion of three months, the tenant decides to disregard the terms of the lease and move out. Given this scenario, a court will likely decide that: The tenant is bound by the lease because he moved in and paid rent in advance Since the tenant never signed the lease, he is not bound by it and can move out when he pleases. The tenant is bound by the lease because only a lessor, the landlord, need sign a lease None of the above

Correct answer is (a). If a lessee either takes possession or pays rent in advance, he does not have to sign a lease to be bound by its terms. If assignment is not specifically prohibited in the terms, though, the tenant can find someone to take over the rest of the lease

The following statements are true about VA loans, except: A veteran's VA loan is assumable only by another veteran A veteran's particular guaranteed loan amount is called her "entitlement" A veteran's guaranty rights are re-instated if he sells the property with the VA loan then repays the loan in full from the proceeds of the sale VA underwriters rely on the debt-to-income ratio to assess if a veteran meets qualifying standards for a loan

Correct answer is (a). If a non-veteran assumes a VA loan, the original owner remains responsible for the loan in the event of bankruptcy or foreclosure. But if the new buyer is a veteran, they can transfer their VA status to the seller so that the seller can be cleared to purchase another home, using the VA status.

As a real estate term, "devise" means: Testamentary gift of real property Plan a will Testator's signature Notarization of a will

Correct answer is (a). In common usage, "devise" refers to making a plan. In traditional real estate language, "devise" means a conveyance of real property in someone's will.

Which law mandates informing the public about the sexual offender data base: Megan's Law Mello-Roos Act Unruh Act Sex Offender Disclosure Act of 2002

Correct answer is (a). Megan's Laws are state and federal statutes that require convicted sex offenders to register with local police. In 2004, the California Legislature enacted a law requiring that certain registered sex offenders be posted on a Megan's Law Internet site maintained by the Department of Justice.

The front-end-ratio is calculated: as monthly housing expenses divided by monthly gross income, expressed as a percentage. as the monthly income necessary to meet future projected household expenses as the amount of money needed by someone to purchase the front-end of a property Both A & C

Correct answer is (a). Monthly gross income is annual income divided by 12 months. The ratio demonstrates what portion of an individual's income can be use make to make mortgage payments. Lenders utilize the front-end ratio along with the back-end ratio to evaluate mortgage applications.

To commit a misrepresentation, a party must have made an untrue assertion of fact or __________, which is the equivalent of an assertion of fact. Non-disclosure Affirmation Declaration Educated prediction

Correct answer is (a). Nondisclosure is the failure to volunteer required information. Disclosure is required when a party has offered some facts but further information is needed to provide an accurate description for the other party; or a relationship of trust and confidence exists between the parties; or, a party has access to information not available to the other party.

Once an option contract has been agreed upon, the following parties can decide whether to exercise the option: Optionee Optionor Both A & B Broker

Correct answer is (a). Only the optionee (buyer) has the power to make a decision whether to exercise the option. The option agreement does not compel him to perform any action.

All of the following would be considered a capital asset, except: inventory structures land factory machinery

Correct answer is (a). Permanent assets used to generate income are classified as capital assets, while assets sold to customers in the regular course of business — such as inventory — are not.

The main goal of secured transaction laws is to: To provide notice to future lenders To insure creditors take speedy possession of collateral To regulate tax collection on real estate transactions To educate debtors on their rights versus the lending industry

Correct answer is (a). Secured transactions rules function as a notice system for any subsequent investor that the first lender has pre-existing rights in a piece of collateral which would take priority over their's.

John and Cheryl each own single-family houses; John currently lives in his house, while Cheryl rents hers to a tenant. John and Cheryl trade houses, with each one planning to rent out the new properties to generate income, which means: Cheryl can negotiate a tax-free exchange John can negotiate a tax-free exchange Both John and Cheryl can negotiate tax-free exchanges Neither party can negotiate a tax-free exchange

Correct answer is (a). Since both Cheryl's former and new properties generate income, she can qualify for a tax-free exchange (also called a 1031 Exchange). John's original home was not an income property, so he does not likewise qualify.

Oliver and Nora operate a business together and are considering incorporating it. Which type of corporation would enable them to avoid double taxation: S Corporation Joint partnership corporation Closed corporation Foreign corporation

Correct answer is (a). The S Corporation was created to as a compromise between the limited liability aspects of a full corporation and the tax obligations of a partnership. Like a partnership, an S corporation is not taxed on its profits, but each shareholder is liable for taxes on the distribution of funds paid to them by the corporation.

A 50-year-old residential property and a new residence are on comparable lots. The cost approach would be more efficient in appraising the: New residence Old residence Either residence The cost approach can not be used for residential properties

Correct answer is (a). The cost approach is more efficient for the the new residence than the 50-year-old one because of having to calculate the depreciation for the older property.

All leases include an implied covenant of quiet enjoyment and possession. This covenant refers to the: Tenant's possession clear of disturbance from the landlord or anyone else with paramount title Landlord's right to make the tenant quiet down any loud disturbances Landlord's right of possession free from judgement liens Tenant's protection from liability for damages done to adjoining properties

Correct answer is (a). The covenant implies the landlord's promise not to disturb the tenant from lawfully exercising his right of possession under the terms of the lease.

During escrow, if the escrow instructions are in conflict with the deposit receipt then the: Escrow instructions are to be followed Deposit receipt is to be followed Seller can withdraw his offer A new agreement between the parties must be executed

Correct answer is (a). The escrow instructions prevail over the deposit receipt contract. By signing the escrow agreement, the parties signify their reliance on that later document to state their transaction terms.

Wayne owns a home in suburban Sacramento, with the boundary of his property bordered by the city street. A large palm tree at that end of Wayne's property has rotted and, during a particularly stormy day, falls onto the road crashing into Norman's car as he drives by and seriously injuring him. If he sues Wayne for damages, Norman will likely: Win, because Wayne should have removed the rotted tree from his property Win, because Norman was seriously injured Lose, because Wayne did not know the tree was rotted Lose, because the storm causing the tree to fall was an act of God, not Wayne's fault

Correct answer is (a). The general rule regarding duties owed to persons outside the owner's land is that the owner has no duty of care with respect to natural conditions such as trees or rocks or other naturally- existing objects. However, this general rule only applies to rural areas. Here, Wayne's land was in an urban setting, so he owed Norman a duty to keep him safe from naturally-existing conditions on his land.

When an appraiser looks at income from a neighborhood's rental properties for its highest and best use, the income being analyzed is: Economic rent Maximum rent Developed rent, with broker's commission subtracted High rent

Correct answer is (a). The rent being charged for similar apartments in the neighborhood is economic rent. If the apartment leases are long-term, the appraiser will use contract rent.

Elaine, George and Owen are siblings who own a home as joint tenants. George sells his share to Jerry. Jerry is now a: tenant in common with Elaine and Owen tenant in the entirety with Elaine and Owen tenant at will with Elaine and Owen joint tenant, with the same property interest possessed by George

Correct answer is (a). The unities of time, title, interest and possession are required for a joint tenancy to be established and maintained. When George sold his property share to Jerry, the unity of time and title was broken. While Elaine and Owen remain joint tenants, Jerry becomes a tenant in common with the two of them.

Jordan agrees to trade her diamond ring for a vacant lot owned by Aaron. This will be considered: a contract supported by valid consideration not a contract because no money for consideration was exchanged not a contract because two unlike items can not be traded None of the above

Correct answer is (a). There is no requirement that consideration on both sides be of equal value for a contract to be made.

Surveys show that classified ads are most commonly used by people ________ as their primary method for finding real estate properties. In their 50s In their 30-40s In their 20s In all age groups

Correct answer is (a). Those under 50 are more likely to rely primarily on the Internet in search of properties.

When a new party is substituted for an existing party in an agreement, it is called a(n): Assignment Novation Liquidation Contract dischargement

Correct answer is (a). Unlike assignment, novation cannot be performed without the consent of all the parties.

When a seller provides credit on the basis of a note and trust deed, it is called a: purchase money trust deed land contract wrap around mortgage soft money loan

Correct answer is (a). Usually, a seller will be unable to obtain a deficiency judgment against the buyer if the seller forecloses on a Purchase Money Trust Deed and the foreclosure sale of the property nets less than enough to pay off the note. So, a seller cannot sue for the balance under a Purchase Money Trust Deed.

Warhol promises to pay Wyeth $2,000 if Wyeth paints Warhol's house. Midway through the job, the house is destroyed in an earthquake. If Warhol sues Wyeth for payment, Warhol will likely: Win, according to the legal doctrine of restitution Win, according to the legal doctrine of reliance Lose, because it is not Wyeth's fault that the house was destroyed Lose, because the subject of the painting contract -- the house -- has been destroyed.

Correct answer is (a). Usually, restitution is awarded in situations where one party has provided a benefit to another party under a contract and that contract turns out to be unenforceable, as when the contract subject matter is destroyed. Restitution is used to pay the party providing the benefit for its reasonable value.

The legal term that is only used to describe personal property left in a will is: devise bequest discharge All of the above

Correct answer is (b). "Devise" traditionally referred only to the transference of real property under a will, but now refers to the inheritance of personal property as well; "bequest" only refers to personal property.

California requires a resident manager or responsible person on the premises of any apartment complex with: 5 units or more 16 units or more 25 units or less and/or a pool 100-plus units

Correct answer is (b). A resident manager generally oversees maintaining the property and grounds as well as collecting rent and handling communication with the tenants.

The horizontal piece supporting wall studs, to which the studs are nailed, is termed the: Floor joist Soleplate Sub flooring Crossbar

Correct answer is (b). A soleplate or wall plate is a horizontal, structural, load-bearing member used in wooden building framing.

A sworn statement in writing made before an official authorized to administer an oath is a(n): Declaration Affidavit Acknowledgement Testimony

Correct answer is (b). An affidavit is a verified statement, meaning it is given under oath or penalty of perjury, and used in court and other legal proceedings to help establish or disprove a fact. While testimony is also orally delivered after taking an oath, an affidavit is in writing.

Private property that has been confiscated by the government for non-payment of taxes can be sold at public auction by the county tax authorities: Upon public notification of the impending sale Upon public notification of the impending sale and mailing the notice to the property owner in arrears Without notice After posting a "For Sale" sign on the property

Correct answer is (b). By law, the tax collector must complete both steps before the public sale: public notice (customarily done by publishing in the newspaper) and mailing the notice to the property owner who has failed to pay his taxes

The majority of electrical outlets in homes supply _______ volts of power. 50 110 500 1000

Correct answer is (b). Certain outlets designed for major appliances like ranges, water heaters, and dryers supply 220 volts.

One of the key elements of determining the value of a property is demand. But for demand to exist it must be accompanied by: Professional appraisal Purchasing power Financing Staging

Correct answer is (b). Demand is related to the number of those wanting the property. However, without the power to purchase a property, demand will have a weak effect on value.

Which of these expenses would not be included in the Uniform Settlement Statement form provided to the parties after a RESPA-covered transaction closes: Appraisal fee Finder's fees paid to a lender by a broker Title insurance fee Pest inspection cost

Correct answer is (b). Finder's fees are illegal under RESPA.

On a construction loan, the lender's last payment usually will not be made until: the building is completed after the expiration of the lien period the close of escrow it is listed by a broker

Correct answer is (b). For general contractors, mechanics liens must be filed within 60 days of the filing of a notice of completion and within 90 days if no notice is filed. Lenders like to wait until such lien rights have passed before releasing the final payment

Broker Andy represents both seller and buyer in a real estate transaction. Although Andy disclosed this dual agency in a written disclosure form provided to both parties before the sale closed, he did not mention anywhere in the form that the seller was an old college friend. In this situation, Andy is: not liable for any wrongful behavior because he notified the parties in writing regarding the dual agency liable for disciplinary action from the Real Estate Commissioner not liable if both parties consented in writing to the dual agency Either A or C

Correct answer is (b). For residential real property purchases and sales, both principals must be provided with a written disclosure statement by the licensee informing them of the dual agency. Consent to the dual agency by both buyer and seller must be in writing, as well. But it is not enough to merely disclose the dual representation, the licensee must also disclose all facts which would reasonably affect the judgment of each party in permitting it (such as having gone to school with one of the parties.)

Once a tenant has vacated leased premises, his security deposit should be returned by the landlord in: 10 days 21 days A month There is no deadline for returning the deposit

Correct answer is (b). If the deposit, or portion of the deposit, is not returned, the landlord must send the ex-tenant a written explanation as to why.

A court-issued writ of possession provides a landlord with the right to have the sheriff remove a from a rental unit. The deadline for the tenant to leave voluntarily is: 24 hours Five days A week There is no grace period, the tenant must leave immediately.

Correct answer is (b). If the tenant does not leave by the end of the fifth day, the writ of possession authorizes the sheriff to physically remove and lock the tenant out, and seize any belongings left in the rental property. The landlord can not take possession of the property until the tenant is removed.

The seller's warranty in a listing agreement should include all of the following guarantees, except the: Seller's right to sell the property according to the agreement terms Seller not being obligated to pay a commission Property not coming with any undisclosed liens against it Seller's description of the property being accurate

Correct answer is (b). Listing agreements include sellers' warranties which concern the property itself, not payment arrangements regarding its sale.

The current chairperson of the Federal Reserve Board, the Fed, is: Ben Bernanke Janet Yellen Paul Volcker Warren Buffet

Correct answer is (b). Ms. Yellen succeeded Mr. Bernanke in February 2014.

Acting on behalf of more than one party involved in a transaction is: Illegal Permissible, if properly disclosed Unethical Renders the transaction voidable

Correct answer is (b). Note, that failing to disclose such a dual agency violates the Real Estate Law.

Junior loans are usually secured from: insurance companies private lenders FHA commercial banks

Correct answer is (b). Private lenders, which commonly back a second trust deed when owners sells their homes, are the providers of most junior loans.

A historical society hires Appraiser Andrew to gauge the value of its majestic domed meeting house, built in 1876. In applying the cost method of appraisal, Andrew is most likely to use the building's: reproduction cost replacement cost Both A & B None of the above

Correct answer is (b). Replacement cost is the current cost of building a property with utilities equal to the subject property, i.e. a building usable in the same way as the subject property. Reproduction cost relates to what it would cost to build an exact duplicate of the subject property at current prices. If the subject property is a new home, then reproduction cost and replacement cost may be the same; if, as in this case, the building is older and was elaborately constructed with expensive materials, reproduction cost is not an unreliable indicator of value.

A broker must retain copies of his real estate accounts and records prepared or obtained by her, including listings and deposit slips, for a minimum of: one year three years five years for the duration of his brokerage career

Correct answer is (b). The Business and Professions Code Section 10148(a) states that a broker must retain such records for three years and have them made available for inspection by the Real Estate Commissioner upon proper notice.

A home is being shown to a potential buyer where, unfortunately, a person died of AIDS four years earlier. The broker showing the home has: A duty under the California Civil Code to disclose it as a material fact No duty to disclose it, because it happened more than three years ago No duty under any circumstances to disclose it None of the above

Correct answer is (b). The California Association of Realtors recommends that, regarding affliction or death from AIDS on a property, no matter when it occurred, does not have to be voluntarily disclosed to a buyer. However, in response to a direct question about it, a seller's agent may not intentionally misrepresent the facts. An agent can simply respond that discussing such information is an invasion of privacy.

Which of the following elements are NOT required in a lease with a six-month term: Description of the property A signed writing Legally competent properties Amount of rent and the method of payment

Correct answer is (b). The California Civil Code states that an oral lease of less than one year is valid.

Which of the following is not a tool used by the Fed to regulate the economy: Manipulating interest rates Regulation of the secondary mortgage market Open market operations Reserve requirements

Correct answer is (b). The Fed has no power to regulate the secondary mortgage market. However, by raising or lowering interest rates, the Fed can slow or stimulate economic activity and control inflation. Open market operations relate to the Fed buying or selling Treasury bonds to increase or decrease the total supply of money and also affect interest rates. Reserve requirements determine the level of reserves a bank must hold in comparison to deposit liabilities; this affects how banks make loans, a key element of the economy.

Which of the following may not be a blanket encumbrance as it applies to subdivisions: Deed of trust Tax lien Mechanic's lien All of the above

Correct answer is (b). The Real Estate Law prohibits tax liens to be blanket encumbrances. Lots in the subdivision are considered individually regarding such taxing obligations.

Generally, all modern building foundations are made with: Wood sheathing Reinforced concrete Insulated copper Drywall

Correct answer is (b). The reinforcement is usually with steel reinforcing bars (rebar) embedded in the concrete before it sets.

The elevators in a high-rise apartment building stop working, and the landlord fails to make timely repairs. The renters who live have the right to move out without liability for further rent, under the concept of: fraud constructive eviction inconvenience punitive malfeasance

Correct answer is (b). The tenants can sue to recover possession or for damages based on the landlord's breach of the covenant of quiet enjoyment.

A court would likely find fraud had been committed if: The buyer purchases property based on the seller's unintentional mistake of fact. The buyer purchases property based on the seller's lie The seller's agent informs the buyer if he does not go ahead with the purchase the agent will ruin the buyer's business All of the above

Correct answer is (b). The unintentional use of false information by the broker in (a) is considered misrepresentation, not fraud. The agent's threat to the buyer in (c) is an example of duress.

Josh is a board member of two corporations which both make and market motor oil. He does not disclose this dual membership to anyone. If Josh is subsequently sued for breaching his fiduciary duties, the court would likely base its ruling on the: Antitrust rules Duty of Loyalty Duty of Fair Dealing Duty of Implied Impartiality

Correct answer is (b). Under the Duty of Loyalty, a corporate director should behave in a manner demonstrating his complete dedication to the company which employs him. Whether or not Josh is sharing information between the two competing companies, his simultaneous membership on the boards of both sets up the appearance of impropriety that violates his fiduciary responsibilities.

A property that is transferred between parents and their children is exempt from: property taxes for a year after the date of sale reassessment of its property value for tax purposes being taxed on its objective value being taxed on its subjective value

Correct answer is (b). When a transferred property is not being sold for profit, state law exempts such transactions from reassessment of property value. So, the property's assessed value remains unchanged.

Which type of bankruptcy filing provides a firm with the opportunity to reorganize its debt and to try to re-emerge as a healthy organization: Chapter 7 Chapter 11 Master reorganization filing None of the above

Correct answer is (b). While Chapter 7 is used by firms which are past the reorganization stage and must simply liquidate their assets to pay off creditors, companies in Chapter 11 will contact their creditors in an attempt to change the loan terms such as the interest rate and dollar value of payments. Both Chapters 11 and 7 require that a trustee be appointed; however, in Chapter 11, the trustee supervises the assets of the debtor and allows business to continue.

Personal property is transferred through a: purchase agreement personal services contract bill of sale deed

Correct answer is (c). A deed transfers real property. A bill of sale is used for personal property.

What kind of property listing requires the owner to pay a commission to a broker in the event of a sale, even if the owner sells the property on his own: Open listing Exclusive agency listing Exclusive right to sell listing Internet listing

Correct answer is (c). According to the terms of exclusive right to sell listings, the broker receives a commission even if the owner sells the property by himself.

In the U.S. Government Survey and Township system method of land description, townships are: five miles in diameter the length of the base line meridian multiplied by its width 36 square miles The amount varies from county to county

Correct answer is (c). Also called the rectangular survey system, this method of property description uses grids of squares called townships which are measured and numbered in each direction from the point of intersection of the baseline and meridian. Each township is six miles by six miles; 36 square miles.

An open-end provision in a mortgage would benefit a borrower who wishes to: Gain a discounted interest rate Allow a subsequent purchaser to assume the loan Borrow additional funds Secure the loan with several different properties

Correct answer is (c). An open-end mortgage enables a borrower who has repaid a specific portion of the loan to borrow more money without having to re-apply.

Information from a Chapter 7 bankruptcy are kept on credit records for _________. Five years Seven years 10 years Forever

Correct answer is (c). Chapter 13 bankruptcy information remains on credit reports for seven years.

The following are requirements for the forming of an easement by implication: It must be necessary for the enjoyment of the property There should be an obvious prior use Both A & B Neither A nor B

Correct answer is (c). Easement by implication is an unwritten form of easement, originating from the subdivision of land for continual, obvious use of the adjacent land, such as access to a road, or to a water source.

While an estate for years automatically terminates when the agreed term expires, the lease can be ended before its expiration date with the tenant's consent. Such early termination is called a: Tender Demise Surrender Reliction

Correct answer is (c). Estate for years is also called a term tenancy. The surrender must be in writing.

The conforming loan limit for California counties is: $33,000 $100,000 $417,000 There are no limits on conforming loans.

Correct answer is (c). Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the conforming loan limit. Loans above this limit are known as jumbo loans.

A voidable contract remains in force until it is: Modified Conformed Rescinded Notarized

Correct answer is (c). If legal action to withdraw from the contract is not taken within a stipulated time, the court may declare the contract as ratified. In cases where the injured party desires to continue with the contract, he may ratify it.

Under the UCC, in contracts for the sale of goods, the test for deciding whether a buyer has the right to specific performance is if the items being sold are: Expensive Readily available Unique Both A & C

Correct answer is (c). If the buyer purchases a unique item from the seller and the seller breaches, specific performance will be awarded and the seller will have to produce the item for the buyer to have.

The following would be factors affecting economic obsolescence in a particular area, except: Zoning changes Over-supply of properties Inadequate number of electrical outlets in a home Recession

Correct answer is (c). Loss of value from causes within the property involve functional obsolescence. The other answers relate to economic obsolescence, factors stemming from beyond the property.

roposition 58 excludes from tax reassessment property that transfers between _______________. Government agencies government and privately owned businesses parent and child public universities

Correct answer is (c). Proposition 193 provides protection similar to Prop 58 for property transferred between grandparents and grandchildren. These propositions allow the new property owners to avoid property tax increases when acquiring property from their parents or children or from their grandparents.

California's financial disclosure laws include the following, except: Mortgage Loan Broker Law Seller Financing Disclosure Law Truth in Lending Act None of the above

Correct answer is (c). The Truth in Lending Act, otherwise known as Regulation Z, is a federal law.

No two pieces of property are exactly alike, which is one of the reasons the courts devised the legal concept of _____________. estoppel easements specific performance lis pendens

Correct answer is (c). The fact that one piece of land cannot be substituted for another (which also makes monetary damages impractical) is the primary basis for courts to command specific performance, which compels a party to execute a contract according to the agreed-upon terms. Specific performance grants the plaintiff what he actually bargained for in the contract ra

If a purchaser with a land contract is paying taxes and insurance premiums into an impound account, those payments can not be disbursed for a different purpose without the consent of the: Seller Beneficiary Payor Tax assessor

Correct answer is (c). The person paying those impound amounts — the payor — is the only one who can order a differing use for those funds.

The safety clause in most exclusive listing agreements entitles the broker to a commission if the property is sold even after the listing term expires, provided: The broker used his best efforts to procure a buyer during the listing term The broker had showed property to at least five potential buyers during the listing therm The broker had negotiated with the eventual purchaser during the listing term All of the above

Correct answer is (c). The purpose of this clause is to protect the broker from parties who try to avoid paying the commission by waiting for the listing term to expire and then make the purchase deal.

The U.S. Treasury issues short-term securities maturing in one year or less which are called: Treasury notes Treasury bonds Treasury bills Treasury interest-bearing instruments

Correct answer is (c). Treasury bills are sold at a discount or at par (face value). When a bill matures the investor receives the face value, the difference between the purchase price and the face value equaling the interest earned.

A prospective borrower applies for a loan to buy a property in a poor neighborhood. Although the loan applicant has excellent credit scores and a steady income, and the property has excellent potential for renovation, the local lender turns down the loan app. The lender is probably: justified, because the property is in a disadvantaged neighborhood in violation of the Rumford Act in violation of the Holden Act. likely to have its license revoked by the Comptroller of the Currency

Correct answer is (c). Under California's Holden Act, the lender must make lending decisions based on the worthiness of the borrower and the security property, not on the property being in a certain neighborhood. It is against public policy to refuse mortgage loans or to impose stricter loan terms due to neighborhood characteristics. Another state law, the Rumford Act, prohibits discrimination based on the applicant's race, color, religion, gender, sexual orientation, and other protected groups. According to the Holden Act, it is against public policies of California to refuse mortgage loans or to impose stricter terms on loans due to neighborhood characteristics that are unrelated to the creditworthiness of the borrower or the value of the property. The Rumford Act outlaws

The most commonly-used type of home construction material is: Corrugated metal Stucco Wood frame Granite

Correct answer is (c). Wood is preferred due to its low cost, ease of construction, and design flexibility.

What happens to the agency relationship created by a broker accepting a listing if the broker dies? The listing remains effective. A new broker chosen by the broker's agency will assume the listing and the agency. Both A & B The agency immediately terminates.

Correct answer is (d). A listing agreement is considered a personal services contract since a broker agrees to provide services for a seller. Since an agency is a contract for personal services, death or incapacity of the client or broker terminates the agency relationship.

The duties of a property manager include: creating an operating budget collecting rent conducting evictions All of the above

Correct answer is (d). A property manager is a third party hired by the owner to handle the daily operations of a real estate investment.

The term "megalopolis" refers to: Cell phone providers Large states, like California or Florida Utility companies, like Southern CA Edison or PG&E A group of cities and its surrounding suburbs

Correct answer is (d). A real estate term defined as an urban region, comprising several large cities and suburbs that adjoin each other. Los Angeles and its suburbs are a prime example.

An appraiser would use which of the following for a Comparitive Market Analysis (CMA): Current listings Homes recently sold Listings recently expired All of the above

Correct answer is (d). Also called a Competitive Market Analysis, the CMA is prepared by agents for home sellers to help establish the fair market sales price of a property. It takes into account recent property sales, currently listed properties, and properties that have gone off the market -- all within the same neighborhood, with similar characteristics to the client's property.

A buyer can choose to work with agents in the following types of representation(s): Exclusive buyer agent Non-exclusive agent Dual agent All of the above

Correct answer is (d). Dual agents must disclose their agency and obtain the consent of all parties involved.

Which of the following is considered an advantage of FHA loans over conventional loans: FHA loans usually have a higher loan-to-value (LTV) ratio than conventional loans FHA loans do not have to be paid back until at least four years after the loan is made FHA loans are more likely to have lower interest rates than conventional loans Both A & C

Correct answer is (d). Due to FHA loan's higher LTV, an FHA loan typically requires less cash put down at closing than with conventional loans. And, because FHA insurance lessens the lenders risk, they can charge lower interest rates.

All of the following is true about counter-offers, except: The offeror becomes the offeree The original offer is terminated Since the counter-offer is a new offer, it is best to use a separate form for it The original offer is merely amended by the counter-offer, and still remains in force

Correct answer is (d). If a counter-offer is accepted, it creates a contract; if rejected, the party making the counteroffer cannot revert to the original offer and accept it. Issuing the counteroffer terminates the original offer.

The longest length of time a lease will be valid for is: 51 years for a farm property 99 years for an urban property 50 years for either farm or urban properties Both A & B

Correct answer is (d). Leases for oil, mineral or gas production also cannot exceed 99 years.

Listing agreements can be recorded with a title company if: both parties agree the broker has a signed agreement with the title company the owner fails to file a written objection within 30 days of signing the listing agreement Listing agreements are not recorded

Correct answer is (d). Listing agreements can not be recorded at a title company, or other agency.

A contract obtained by a party committing a fraudulent act is: modifiable valid automatically canceled voidable

Correct answer is (d). Misrepresentation of a fact to someone who takes the misrepresentation as a truth in deciding to enter into an agreement is called a fraud or fraudulent act. The party injured by the fraud has the choice whether to void the agreement, so it is voidable.

Brian, a potential buyer, offered to purchase the home of Oscar, the owner, sending a written offer to Oscar's listing broker. Oscar decided to accept the offer, while changing the amount of the good faith deposit from $10,000 to $15,000 by writing in the higher number on the offer form. He then communicated his acceptance of the offer by signing it and sending it back to the broker, who properly notified Brian, the buyer. The acceptance of the offer is: Binding upon Brian because Oscar only changed one of the terms Binding upon Oscar since he signed the offer Binding upon Brian, but for the original deposit amount Non-binding upon any of the parties

Correct answer is (d). Once a party changes a term of the offer, it automatically terminates it, while a counter-offer is created.

One big difference between a real estate option and a regular contract of sale, is the option's: Automatic expiration period of one year Irrevocability Mutuality of obligation Lack of mutuality of obligation

Correct answer is (d). Only one party is bound by a real estate option contract. The party holding the option — the optionee — can decide whether or not to accept the offer to purchase the optioned property; the optionor lacks the power to revoke the offer. There is no automatic one-year time limit for option contracts.

The following is true about open mortgages: has overdue payments and is available for foreclosure by the lender at any time describes a loan secured by a property that can be paid off without penalty at any time before the loan's maturity date Read more: http://www.businessdictionary.com/definition/open-mortgage.html#ixzz2tRHjgiGy has a very low threshold of creditworthiness needed to "open" it, so almost any borrower can quality for it. Both A & B

Correct answer is (d). Open mortgages customarily come with higher interest rates than ordinary mortgages.

In 1925, a subdivision had a restriction enacted prohibiting property purchasers from ever re-selling the property to members of the Jewish faith. Presently, the restrictions: Enforceable, if a new purchaser agrees to follow it Enforceable, if a majority of the current owners in the subdivision have agreed to follow it Enforceable, but if an an owner dies, the property can be left in a will to anyone Unenforceable under any circumstances

Correct answer is (d). Restrictions — also known as CC&Rs or covenants, conditions and restrictions — based on race and religion are illegal.

A developer who wishes to sell subdivided lots from his subdivision located in the middle of a city must first: provide buyers with a copy of the Real Estate Commissioner's final report on the subdivision obtain a signature from the buyer verifying his receipt of the report provide the city with a his financial statements dating back 10 years Both A & B

Correct answer is (d). The Subdivided Lands Law requires, among other things, that the Commissioner's report be furnished to customers, with their signatures verifying receipt. The Law does not apply to subdivisions located in a city if the subdivision has no common area, nor does it apply to subdivisions located in unincorporated areas.

An escrow officer is generally authorized to: Recommend the best financing options to the buyer Suggest to the seller that he re-consider the payment arrangements as they seem unfair Hire the new home security company for the property Prepare the estimated closing statement

Correct answer is (d). The escrow officer is a neutral third party, hired to simply carry out the escrow instructions. As such, he can not make any changes to the escrow instructions, favor one party's interests over the other, or make hiring decisions.

The major difference(s) between the exclusive authorization and right to sell listing and the exclusive agency listing is: With the exclusive agency listing, the broker is entitled to a commission even if the owner sells the property himself. With an exclusive authorization and right to sell listing, the broker is entitled to a commission even if the owner sells the property himself. With the exclusive agency listing, the broker is NOT entitled to a commission if the owner sells the property himself. Both B & C

Correct answer is (d). The exclusive authorization and right to sell agency listing is clearly the more desirable arrangement for the real estate professional since it renders disputes irrelevant regarding who was the procuring cause of the sale.

Which corner is usually considered the most advantageous location for a retail establishment: Northeast Southeast Northwest Southwest

Correct answer is (d). The southwest corner is generally the most desirable positioning for a business that partially relies on foot traffic, because it is offers the most shade to pedestrians.

A broker becomes aware that his listed property has large structural damage due to an that occurred four years ago. While showing the property to a prospective purchaser, the broker: must tell the buyer because the broker has a duty to disclose all material facts does not have to telll the buyer because his duty to disclose does not extend to the buyer does not have to tell the buyer because the house is being sold "as is." does have to tell the buyer about the earthquake if the buyer is not aware of it, but not about the damage

a

A tenant with a lease to reside in an apartment building asks the landlord to repair the furnace that provides heat for all the units in the building. The landlord ignores the tenant's repeated requests. It is winter time and very cold in the building. In reaction, the tenant decides to stop paying his monthly rent until the landlord does the repairs. The tenant is: Legally in the right Legally in the wrong Authorized to check into a hotel and have the landlord pay the bill None of the above

a

While working with a subdivided property for which the Commissioner's Preliminary Public Report has been issued, a real estate agent can: Accept a listing for the property Accept a purchase offer and take a deposit Lease the property without selling it Accept an exclusive listing without a termination date since it is uncertain how much time will be needed to sell all the lots

a

Under the Civil Rights Act of 1968, someone who feels they have been discriminated against while seeking housing may: pursue an action only in federal court pursue an action in federal or state court file criminal charges in state court file criminal charges in federal court

b

A house's second-floor balcony juts out from the building into the airspace of the adjoining property. It is called a(n): license easement in gross encroachment fixture

c

Four properties owned by an individual are secured by one trust deed, which is known as a(n): all-inclusive trust deed subordinate trust deed blanket trust deed summary loan

c

A joint tenant is legally able to: Lease their interest Sell their interest Encumber their interest as security for a mortgage loan All of the above

d