2022 Practice Exam Questions

Is crossing out part of a printed contract allowed and legally enforceable? A. Yes, legally enforceable, if both parties agree, but it must still be readable. B. Yes, legally enforceable, as long as the acting broker signs the changes. C. Yes, but only on sales contracts. D. No, that's an illegal action.

A. A bit of a trick question. Crossing out part of a printed contract is actually allowed and legally enforceable as long as both parties and the original text is still readable.

The owner of a secluded area adjacent to the ocean noticed that people from the local town walked along the shore in front of his property. The owner learned that the local citizens had been walking along this beach for half a century. The owner went to court to try to stop people from walking along the water's edge in front of his property. The owner is likely to be: A. Unsuccessful because the owner's property extends only to the high-water mark and the public can use the land beyond this point. B. Unsuccessful because the locals have been doing this for over 5 years (statute of frauds). C. Successful because the locals have been doing this for less than 100 years (statute of frauds). D. Successful because the owner's property extends 100ft into the ocean per his riparian rights.

A. A landowner of land which borders a navigable waterway owns the property up to the high-water mark at the water's edge. The government owns the water and land beneath it, and the public has an easement right to travel on the water. The owner would be unsuccessful because the owner's property extends only to the high-water mark.

Even after an offer has been accepted and signed (by all parties), the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? A. The buyer finds another property they prefer. B. A title defect is discovered that will take months to clear. C. A fire causes damage to the property that requires extensive repairs. D. The buyer is unable to obtain financing that meets the terms of the contract's financing contingency.

A. All of the options would be justifiable reasons to insist on a mutual release except the buyer finding another property they prefer.

A buyer of a home was not informed that his house was on a septic tank system. The buyer has the right to: A. Rescind the contract B. Sue the broker for his license C. Sue the title company for failure to discover the problem D. Nothing, if the contract is signed

A. An agent must reveal all property facts and defects known at the point of sale. A failure to disclose this information may allow the buyer to rescind the contract.

Which of the following would NOT apply to the income approach in the valuation process? A. Depreciation B. Capitalization C. Gross Income Multiplier (GIM) D. Gross Rent Multiplier (GRM)

A. Depreciation. Only the Cost Approach valuation process uses depreciation.

The fifth and fourteenth amendments of the U.S. Constitution permit the government to exercise its power of eminent domain. Eminent Domain is commonly used for: A. Infrastructure B. Property Tax Deflation C. Financing Loans (Mortgages) D. Development of Privately Owned Property

A. Eminent Domain is a term used to describe the right of the government to takeover privately owned real estate usually despite the owners' wishes. This often happens for land that is required for infrastructure like highways, major pipelines, railroads etc. The fifth and fourteenth amendments of the U.S. Constitution permit the government to exercise its power of eminent domain

Three identical properties in a suburban neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which property would have sold for the lowest price? A. First property sold B. Second property sold C. Third property sold D. The properties would all sell for the same price

A. First property sold would have sold for lowest price bc when supply of houses goes down, the price goes up

Who or what determines the amount of an earnest money deposit? A. The agreement between the parties B. The state real estate licensing statutes C. The broker's or agents' preference on the matter D. The minimum percentage via the sales tax comparison formula (purchase price divided by tax rate)

A. It is customary but not required for a buyer to provide a deposit when making an offer to purchase. This deposit is referred to as earnest money. The amount is completely up to the agreement between the parties. There is no law stating an earnest deposit has to be a certain amount.

Which situation is legal under the Federal Fair Housing Act of 1968? A. The insistence of a widowed woman on renting her spare bedroom only to another woman. B. The intentional neglect of with holding certain property's to your clients to buy for yourself. C. The refusal of a property manager to rent an apartment to a Catholic couple who are otherwise qualified. D. The ability to buy a property with the intent to resell it to your mother in law for double the price.

A. The Federal Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. You cannot have a listing that states looking for white people only. Or looking for married couples without children only. The interesting thing is though you can put language referring to sex. For example "Seeking female roommate." However, it's only in cases of finding someone to share living spaces with. The "Mrs. Murphy" exemption provides that if a dwelling has four or fewer rental units and the owner lives in one of those units, that home is exempt from the FHA. "Mrs. Murphy" is the hypothetical elderly widow who has converted a portion of her home into a rental apartment to supplement her limited income.

Who appoints or selects the California State Real Estate Commissioner? A. The Governor B. The Districts Representative C. The National Real Estate Commission D. The Citizens of California; its voted on every term.

A. The Real Estate Commissioner is appointed by the Governor, and serves as the chief executive of the Department of Real Estate.

Which act amended the comprehensive environmental response, compensation, and liability act (also known as CERCLA)? A. SARA B. SDWA C. CWA D. EPA

A. The Superfund Amendments and Re-authorization Act of 1986 (SARA) was passed when the original act, CERCLA, expired in 1985. It amended the comprehensive environmental response, compensation, and liability act. The big change had to do with liability. When a property owner has been innocent of all involvement with a hazardous waste site, under certain circumstances, he may claim immunity from responsibility. In plain terms it allows truly innocent landowners to have immunity from legal liability. SARA also required EPA to revise the Hazard Ranking System to ensure that it accurately assessed the relative degree of risk to human health and the environment posed.

What is the government issued plan to guide the long-term physical development of a particular area? A. The master plan. B. The zoning plan. C. The ordinance plan. D. The private property plan.

A. The comprehensive plan, aka, master plan is a document that is prepared by local government to guide growth and development. It is generally a plan looking 10 to 20 years into the future for the area. These plans can be found at many levels, from neighborhoods, to cities and counties on up to the state level, all across the US.

The execution date or date executed is the day a contract is signed. The effective date is what? Choose the best answer. A. The day the contract goes into effect. In some cases the execution date and effective date are the same B. The day the contract goes into effect. In ALL cases the execution date and effective date are the same. C. The day the contract begins its extension. D. The day the contract ends officially

A. The execution date or date executed is the day the contract is signed. The effective date is the day the contract goes into effect. Both dates can both be found in a contract. In many instances, the execution and effective dates are the same; however, that is not the case in some circumstances. You might sign a lease today to move into an apartment, but you won't be able to move in until the following week. The execution date might be today, but the effective date will be when you move into your brand new home. Many times, the execution date and effective date are the same, but again not always.

What specific formula would be used to estimate the value of a property using the income approach? A. Net Operating Income / Capitalization Rate = Market Value B. Net Operating Income x Capitalization Rate = Market Value C. Capitalization Rate - Net Operating Income = Market Value D. Capitalization Rate / Net Operating Income = Market Value

A. The income approach is a real estate valuation method that uses the income the property generates to estimate fair value. It's calculated by dividing the net operating income by the capitalization rate.

In California, the concept that a husband and wife are equal partners, and that any property acquired is considered to be obtained by mutual effort, is called A. Community property B. Combined Property C. Mutual Property D. Joint Property

A. The states that have community property laws are: Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. Community property is property acquired that is considered to be obtained by mutual effort. The concept is that a husband and wife are EQUAL partners.

Which of the following is NOT a main element of a valid real estate contract? A. The contract must have monetary consideration. B. The contract must be legal or hold a legal purpose. C. The contract must hold mutual consent or be agreed upon by both parties. D. The party must be the legal age of 18 or older and deemed legally competent.

A. This is a bit of a trick question. There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. Monetary consideration is optional. Consideration is a main element, but it doesn't necessarily have to be money. Remember, consideration is anything of legal value, it could be a promise or promise to perform an action.

Which of the following statements is TRUE about trusts and trustors? A. A trustor is the one who transfers a property upon the trustee. B. A trustee is the one who transfers a property upon the trustor. C. A trustor must be an individual not an organization, per federal law. D. A trustor must be a financial institution such as a bank, per federal law.

A. Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust works as it follows: the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustor can be an individual or organization.

During a standard residential transaction, verifying ingress and egress rights is an essential part of the: A.Due Diligence Process B. Appraisal Process C. Closing Process D. Open House

A. Verifying ingress and egress rights is an essential part of the due diligence process when purchasing property for both real estate agents and buyers. If one of your clients is planning to buy landlocked property, don't assume anything. Check records. Have the land surveyed, if necessary. Due diligence is the process of examining the details of a transaction to make sure it's legal. When the deal satisfies both aspects of due diligence, the two parties can finalize and correctly price the transaction.

Which of the following statements about water rights is true? Choose the best answer. A. Water rights are appurtenant. B. Water rights are transferred exclusively in quitclaim deeds. C. Water rights are double taxed similarly to how corporations are taxed. D. The two basic forms of water rights are ocean rights and lake rights.

A. Water rights are appurtenant, meaning they run with the land and not with the original owner. In other words, if an oceanfront property is sold, the new owner gains the littoral rights and the seller relinquishes his or her rights

Who dictates trust accounts and when to deposit earnest money or other trust funds? A. State Specific License Law B. The Brokerage Firms C. Federal Law D. County Law

A. Each state determines the rules for brokerage firm trust accounts and how earnest money must be deposited.

According to the Do Not Call list and Established Business Relationship (EBR) Rules, how many months does a real estate professional have to call an expired listing client to solicit new business (referral)? A. 18 months B. 6 months C. 3 months D. Indefinitely

A. In this example the answer is 18 months. Established business relationship means a relationship between a seller and a consumer based on..... " the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months." Per 16 CFR 310.2

Which of the following are the main participants in real estate markets? A. Users, owners, renters, developers, renovators, and facilitators B. Players, buyers, sellers, renovators, and facilitators C. Buyers, sellers, investors, and facilitators D. Buyers, sellers, and investors

A. Users, owners, renters, developers, renovators, and facilitators are the main participants in real estate markets.

During your time as agent you will run into many different types of people from areas across the world. Closing is called many names depending on which region of the U.S you are from. Which of the following is NOT a legal name for closing? A. settlement and transfer B. exchange and transfer C. passing papers D. closing

B.

Which of the following best describes a blind offer? A. A purchase contract that was made by an unlicensed individual or without the authorization of a real estate professional. B. A purchase contract written by a buyer without seeing the property. C. An offer that includes restrictive covenants. D. An offer without earnest money.

B. A blind offer in real estate is a purchase contract written by a buyer without seeing the property. This is common in commercial properties such as apartment complexes, and it's not uncommon in multi-family homes such as duplexes and fourplexes. It's not typical in single-family homes or apartments.

In an offer to purchase property, the buyer states, "If we cannot obtain a mortgage loan for 4.5 percent or less, we will not purchase the property and expect the earnest money to be refunded in full." This is an example of what? A. An option B. A contingency C. An Addendum D. An amendment

B. A contingent property means an offer for the property has been accepted but there is a condition or "contingency" that is written into the contract and it must be met before the sale can go through. In order for the contract to be legally binding, the contingency must be met.

Which type of property would an appraisal use a depth table to estimate the property value? A. Government owned property B. Commercial property C. Special use property D. Residential property

B. A depth table is used to estimate the value of commercial properties. A depth table is a table used by real estate appraisers to show land values in percentages based on variations in the depth of the lot.

Upon passing the California State License Examination the applicant has how long to apply for their real estate license? A. Two Years B. One Year C. Six Months D. 3 Months

B. After you pass the examination, and if you have not filed a License Combo Application: You will be sent a Salesperson License Application (RE 202) or Broker License Application (RE 200). This form must be completed and returned along with the appropriate fee within one year after passing the examination.

An appurtenant easement has several ways of legal termination. Which of the following is NOT a valid way to terminate an easement? A. Expiration of the easement B. Revocation by the servient owner C. Release by the dominant tenement owner D. A merger of both the servient and dominant parcels

B. Easements are appurentent meaning generally pass along with ownership changes in real estate, but there are several ways of legally terminating them. Expiration, release, merging, and abandonment of the easement are all ways to legally terminate the applicable easement. The servient estate serves the dominant estate and cannot terminate the easement even through revocation.

A property owner acquired the ownership of land that was deposited by a river running through his property by what? A. Succession B. Accretion C. Reliction D. Avulsion

B. In real estate, the increase of the actual land via a stream, lake or sea by the action of water which deposits soil upon the shoreline is accretion.

The cost of public services is distributed among real estate owners through what? A. Personal property tax B. Real property tax C. Special assessment D. Sales tax

B. Property tax is an ad valorem tax assessed on real estate by a local government and paid by the property owner. Public services for real estate owners are paid by real property tax.

The fact that land has a number of important uses is the basis for what essential element of value? A. Demand B. Utility C. Scarcity D. Transferability

B. Remember DUST and your essential elements of value. Demand: This means the desire to buy and an ability to pay. Utility: The item satisfies a human need or desire; such as shelter, income, or recreation. Scarcity: Limited in supply, as supply diminishes, value increases. Transferability: Able to transfer from one owner to another.

Restrictive covenants, are also known as A. deed restrictions B. CCR's C. bonds D. CDO's

B. Restrictive covenants, are also know as CCR's(conditions, covenants, and restrictions). The main purpose of the CCR's is to maintain the look and feel of the community. CCR's limit the use of a particular property, a condominium, or a subdivision. Such restrictions are either written in the deeds to the property or into the bylaws for the subdivision, which the deeds will reference. In real estate transactions, restrictive covenants are binding legal obligations written into the deed of a property by the seller.

At the very minimum advertising property or services by real estate professionals, should include what? A. The license number of the broker B. The brokerage firms name C. The office phone number D. The service listed

B. States may require additional information, but federally at the minimum, all advertising for property or services must include the broker firm's name. This is all for all advertising, social media included.

Which of the following is a private land-use control? A. Zoning B. Building codes C. Deed restrictions D. Taxation

B. The primary public land-use control is zoning. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally bound forever.

The statute of frauds, applies to A. all real estate contracts of any sort. B. all real estate sales agreements C. bilateral contracts only D. all contracts

B. The statute of frauds is a common law concept that requires written contracts for certain agreements to be legally binding. The statute applies to land sales and most purchases of goods over $500 (this includes real estate sales agreements). This is a bit of a trick question. There are some circumstances in real estate where a written contract is not required, so it is not ALL real estate contracts, but it is ALL real estate sales agreements

Used in connection with CERCLA and the creation of The Superfund; Retroactive liability means: A. all previous owners are not held accountable for the hazardous waste site. B. all previous owners also can be held accountable for the hazardous waste site. C. the last two previous owners also can be held accountable for the hazardous waste site. D. the last three previous owners also can be held accountable for the hazardous waste site.

B. The term retroactive liability is used in connection with CERCLA and the Superfund. It means that all previous owners also can be held accountable for the hazardous waste site.

Economic life is the length of time during which a piece of property may be put to profitable use. Economic life is usually: A. neither shorter or longer than physical life. B. shorter than physical life. C. the same as physical life. D. longer than physical life.

B. When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life. Economic life usually is shorter than physical life, as a structure generally will still physically exist but not be viable in the marketplace.

Richard is renting property from Becky. Richard is on a month to month lease agreement. This past month he did not pay his rent. Richard's interest would be classified as: A. Estate at Will B. Estate at Sufferance C. Estate of Periodic Tenancy D. Estate for Years

B. A tenant who continues to occupy property after his or her rights have expired is said to occupying the property under an Estate at Sufferance.

At the very minimum advertising property or services by real estate professionals, should include what? A. Licensed number of the broker B. Brokerage firms name C. Office phone number D. Service listed

B. States may require additional information, but federally at the min, all ads for property or services must include the broker firm's name. A blind ad or advertisement is one in which the advertiser does not disclose their name or license status in the advertisement

What is the outcome when a purchaser signs a purchase agreement and gives the seller's broker a large check? A. This transaction is considered a contract. B. This transaction is considered an offer. C. This transaction is considered invalid. D. This transaction is an amendment.

B. When a purchaser signs a purchase agreement and gives the seller's broker a large check it is considered an offer. When a potential buyer is found, the agent must help them prepare an offer to purchase the property. The form itself is usually pre-drafted or preprinted. Forms vary from state to state. It is customary but not required for a buyer to provide a deposit when making an offer to purchase. This deposit is referred to as earnest money. It's important the buyer understands the document as it becomes legally binding as soon as they sign it.

Using a trust typically has advantages and disadvantages. One of the main advantages of Land Trusts are: A. renters are taxed less. B. the land remains in the government's hands. C. that the actual property owner can remain anonymous. D. the land is granted park level and can be tax deductible on a 1099.

C. A land trust is a legal agreement in which a property owner transfers the title to a property to a trustee. The property owner is typically the beneficiary and directs the trustee in all matters relating to the management of the property, as outlined in the trust agreement or deed. The property owner also retains all property rights including the freedom to develop, rent and sell the property. One of the main advantages of this trust is that the actual property owner remains anonymous. Land trusts can not only bring some legal protection, but it can also help the property owner negotiate prices if he or she is particularly wealthy and wants to remain anonymous.

What best describes an agency relationship where an agent has legal authority to act on behalf of the principal? A. A special agency B. A general agency C. A universal agency D. An exclusive agency

C. A universal agent in real estate is an agent who can act on behalf of a principal. This form of agency has unlimited power.

Typically a warranty deed contains how many covenants? A. two to three B. three to four C. five to six D. eight to nine

C. A warranty deed can include six forms of covenants for title. A warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). The general warranty deed offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land. Typically a warranty deed has five to six covenants.

A buyer and seller entered into a contract, they negotiated the sale of the side lot at the same time as the transfer of the home. What is the second document called? A. An option B. A contingency C. An addendum D. An amendment

C. An addendum is an attachment to a contract that modifies the terms and conditions of the original contract. An example of an addendum being used would be if the parties wanted to add something to the original document. For instance, an individual who is purchasing a house may not want to purchase all of the furniture that is being left behind. However, after thinking about it further, he changes his mind.

What is a legally enforceable obligation that arises from one or more parties due to the parties actions, conduct, or circumstances? A. An executed contract B. An express contract C. An implied contract D. An option contract

C. An implied contract is a legally enforceable obligation that arises from one or more parties due to the parties actions, conduct, or circumstances. It has the same legal effect as an express contract, a contract between two or more parties that is willingly entered into and agreed upon verbally or in writing. An implied contract is presumed to exist but does not require written or verbal confirmation.

By statute, California and other states have modified the potentially summary and abrupt conclusion of certain estates like estates at will. How many days does California require notice for an estate at will? A. 7 days B. 15 days C. 30 days D. 60 days

C. By statute, California and certain other states have modified the potentially summary and abrupt conclusion of such estates to require advance 30-day notice of termination by either party.

A claim that has the appearance of having valid title, but in reality, the person either does not hold actual title, or there is a significant defect in the written documents supporting title, that makes it invalid. This an example of which legal concept: A. Falsifiable Action B. Intangible Title C. Color of Title D. Clerical Title

C. Color of title refers to a claim to title that appears to be legally valid but may be defective. This legal concept is often discussed in adverse possession claims. If adverse possession is claimed under color of title, usually the claims are met sooner or in an easier fashion. Read More Here

Which of the following would be an example of a deed restriction? A. loan type B. tax rate C. house color D. closing date time frame

C. Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally binded forever. Some common examples of deed restrictions are: Type and number of trees you can remove from the property, house color, window size, overall style, color, and construction materials used in a renovation.

What is the total quantity that buyers are willing to buy at a given time at certain prices? A. Price B. Supply C. Demand D. Buyers total

C. Demand is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service (holding all other factors constant).

While the economy is experiencing inflation, interest rates typically: A. Drop and housing prices rise B. Rise and housing prices drop C. Rise and housing prices rise D. None of the above

C. Housing prices tend to rise with inflation. While the economy is experiencing inflation, interest rates typically rise and housing prices rise. There is a correlation between inflation and house prices. In fact, there are correlations between inflation and any good with a limited supply. When interest rates are low, buying homes can be more affordable and increase the demand for homes. If the supply of homes remains constant and the demand increases, then the prices of homes will increase

Mrs. Jane lives in a small residential neighborhood. 100- year old trees surround her home, and her neighbor Mr. Joe claims the trees are on his property and is planning on cutting them down. Mrs. Jane tries to reason with Mr. Joe, but he refuses to listen. Mrs. Jane files a lawsuit that includes a court order for Mr. Joe to stop his actions until they can work something out. What type of court order is this? A. Temporary protective order B. Authorized dispute order C. Injunction D. Easement

C. If a dispute is pending, court will likely issue an injunction preventing Mr. Joe from cutting down the trees until they are entirely resolved. Injunctions can be used to prevent a harmful action, stop ongoing or repeated conduct, or force a defendant to take action to prevent harm

If a legal description is too long to include in the body of a sales contract, a real estate professional should do what? A. Ask their broker to verify to description because it should be short B. Write a second offer with just the legal description on it C. Attach it to the contract and make reference to it D. Just use the street address

C. It is permissible to attach legal descriptions to the contract rather than writing them into the contract itself, but they must be attached. This is common with sales contracts with extensive and detailed legal descriptions.

Mortgage points, also known as discount points, are A. discounts on interest rates granted from the government. B. discounts on down payments granted from the government. C. fees paid directly to the lender at closing in exchange for a reduced interest rate. D. fees paid directly to the lender at closing in exchange for a reduced down payment.

C. Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. The interest rate decreases not the down payment. They are a great option for someone who knows they will be owning a specific property for a long time. Mortgage points are directly paid to the lender or bank at closing.

What is the maximum paid out (per judgment) from the California Consumer Recovery Account? A. $25,000 for each transaction; and $100,000 for any one licensee. B. $25,000 for each transaction; and $200,000 for any one licensee. C. $50,000 for each transaction; and $250,000 for any one licensee. D. $70,000 for each transaction; and $300,000 for any one licensee.

C. Per California License law the maximum paid out of the Real Estate Recovery Fund is $50,000 for each transaction; and $250,000 for any one licensee.

What type of court handles the analysis and transfer of real estate or general estate assets of a deceased person (without a will)? A. Injunction B. Escheat C. Probate D. Estate

C. Probate is the analysis and transfer administration of estate assets previously owned by a deceased person. When a property owner dies, his or her assets are commonly reviewed in a probate court if they do not have a will.

Which of the following is a common example of real estate police power? A. parking tickets B. speeding tickets C. zoning D. ballooning

C. Real estate police power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare. The most common example of real estate police power is zoning.

Mrs Thompson hired a broker to find her a 100+ unit apartment complex for sale. Upon finding one she liked, she made an offer for $2.5 million to include all the personal property as well. In order to include all the personal property Mrs Thompson needs a/an: A. Investment Unit Loan B. Amortized Loan C. Package Loan D. Balloon Loan

C. Since the offer includes all the personal property as well, Mrs Thompson is required to do a package loan. A package loan is a real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a fully furnished condominium.

A non licensed buyer negotiated the purchase of a house. During a conversation with the seller, the seller agreed to include both the washer and the dryer, in the sale, and this was included in the sales contract. In this situation, if the seller takes the appliances, what recourse (if any) does the buyer have? A. The buyer can declare the principle of performance, and trade any assets he has for the assets he wants. B. The buyer has no recourse because he negotiated the sale himself. C. The buyer may sue the seller for specific performance D. They buyer may sue the seller for partial performance

C. Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. In our instance since the washer and dryer were included in the contract, the buyer may sue the seller for specific performance.

Steve (a real estate agent of five years) was at his local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. What should Steve do? A. Excuse himself from the discussion, as this could constitute a violation of The Equal Credit Opportunity Act. B. Excuse himself from the discussion, as this could constitute a violation of the Fair Housing Act. C. Advise the other agents this could constitute a violation of the Sherman Antitrust Act. D. Listen carefully so he can be more competitive in the market.

C. Steve should advise the other agents this could constitute a violation of Sherman Antitrust Act. The Sherman Antitrust Act prohibits price-fixing. Real estate agents and brokers should understand that any discussion about commission could constitute a violation of the laws even if only implied.

The purpose of the California Consumer Recovery Account is to enable A. sellers to recover lost money on sales agreements. B. widows to gain money if their spouses passed away. C. people to get recourse of uncollected judgement against licensees. D. sellers to recover escrow money that banks have handled improperly.

C. The Consumer Recovery Account is funded from a portion of the fees paid by licensees. It enables a person who has been defrauded or had trust funds converted by a real estate licensee in a transaction requiring that license, and who satisfies specified requirements (California Business and Professions Code Section 10471 et seq.) to recover at least some of his or her actual loss when the licensee has insufficient personal assets to pay for that loss.

The majority of homes before _______ used lead paint. A. 1950 B. 1972 C. 1978 D. 1993

C. The Residential Lead-Based Paint Hazard Reduction Act was established in 1996. Real estate agents must be aware of this federal law providing homes before 1978 the following: an agreement of sale/lease with lead warning statement and statement allowing prospective buyers 10 days obtain certified inspection/assessment before purchase obligation or must disclose info. about existing lead paint to purchaser AND provide purchaser federal gov't prepared lead hazard brochure.

A seller tells the listing agent that her home was treated for termites five years ago, and that there are no termites now. Before listing the property, the agent should A. Tell the seller not to disclose the information since it's been past two years. B. Tell the seller not to disclose the information since it's been past four years. C. Tell the seller to disclose the termite treatment on the property disclosure. D. Contact the zoning department for local termite laws and ordinance.

C. The agent should tell the seller to disclose the termite treatment on the property disclosure. Whether legally required or not (depending on which state you live in), you should always tell the seller to disclose termite damage. Regardless of the legality, letting buyers know about pest issues upfront protects anyone from a lawsuit down the line. Even with an "as is" sale, you'll need to disclose any known termite damage on the property.

A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of A.Highest and Best Use. B. Contribution. C. Anticipation. D. Balance.

C. The principle of anticipation in appraisal is the principle that the value of property today is the present value of the sum of anticipated future benefits. It's also worth noting that the principle of anticipation doesn't always refer to monetary gain. It could also be emotional or mental gain.

Title III of the Americans with Disabilities Act (ADA) impacts which type of property? A.Residential B. Industrial C. Privately owned housing D. Commercial and public accommodations

C. Title III prohibits discrimination on the basis of disability in the activities of places of public accommodations. Public accommodations are businesses that are generally open to the public such as restaurants, movie theaters, and schools. Title III also prohibits discrimination for commercial facilities like privately owned, nonresidential facilities such as factories, warehouses, or office buildings. Point being, Title III impacts commercial and public accommodations and makes sure they comply with the ADA Standards.

What is the difference between void and voidable contracts? Choose the best answer. A. They are one in the same. The two terms can be used interchangeably. B. Voidable contracts are only used on residential property while void contracts can be used in any real estate related transaction. C. Void contracts are not contracts, while voidable contracts have the necessary elements to be enforceable, but can be rejected by one party. D. Voidable contracts are not contracts, while void contracts have the necessary elements to be enforceable, but can be rejected by one party.

C. Void contracts are not contracts because they lack an essential element of a contract and are thus unenforceable. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects.

A lease agreement where the tenant has the right to buy the property within a specified period of time is called what? A. Purchase Option B. Option Contract C. Lease Option D. Option Lease

C. A lease option is when a lease is combined with an option contract.

In common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring title to property. Within deeds, covenants are: A. types of property B. forms of money or payment C. agreements or promises D. property listings or values

C. Covenants are agreements or promises within deeds. For example, a warranty deed can include six forms of covenants. Those six are a series of legally binding promises and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land.

By which of the following can you not lose title to your property involuntarily? A. Adverse possession B. Foreclosure C. Dedication D. Avulsion

C. Dedication in property law means the donation of your land. Dedication would be considered voluntary, while the others are all involuntarily.

An agent took a listing and later discovered that her client had previously been declared incompetent by the court. The listing is now A. unaffected because the agent was acting as good faith as the owner's agent. B. unaffected because her client took the listing making it a verbal contract. C. of no value to the agent because the contract is void. D. renegotiable by both parties.

C. In order for a contract to be valid a few things must occur: -The party must be at least 18 years old and of sound mind. -A contract must be legal. For example, there cannot be a contract to kill, steal or anything illegal. -The contract must hold a clear and definite consideration. -There must be mutual consent of the contract. Since the client has been declared incompetent by the court. The listing is now void.

Appraiser Leo was hired to prepare a feasibility study for a 12-unit apartment complex in which the owner is considering putting in a swimming pool. Which basic principle of appraising should Leo use? A. Condemnation B. Reconciliation C. Contribution D. Closing

C. Leo should use Contribution. Contribution is most commonly applied to determine how renovation and property changes may affect the property's overall cost. In this case, since the owner wants a feasibility study, contribution would need to be used. Swimming pools are a common contribution example. It's worth noting the cost doesn't always equal the value to the home. For example, a pool could add $5000 to the value of a home but cost $10,000 to build.

Most real estate sales contracts include contingency clauses, making them what? A. Void B. Valid C. Voidable D. Executed

C. Most real estate sales contracts include contingency clauses, making them voidable. A voidable contract is a legal agreement between two parties that may be unenforceable for any number of reasons. If a contract has a contingency it's voidable. It still can be considered valid but only after the contingencies are met or no longer exist.

Complete the statement and make it factually accurate. "In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states: A. banks or mortgage lenders also retain title." B. foreclosure occurs through non-judicial proceedings." C. banks or mortgage lenders never retain title to the property." D. banks or mortgage lenders hold the title of a property until it is 25% paid off."

C. The correct statement is: "In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states, however, banks or mortgage lenders never retain title to the property." In lien theory states banks or mortgage lenders never retain title to the property. Instead, the mortgage lender holds a lien against the property.

What is the biggest difference between private and public land use controls? A. private land use controls are written in the constitution while public are up to the local governments. B. public land use controls are written in the constitution while private are up to the local governments. C. the government does not write or enforce private land use controls but it does impose and enforce zoning. D. the government writes or enforces private land use controls but it does not impose and enforce zoning.

C. The primary public land-use control is zoning and issued by the government. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. The biggest difference is that the government does not write or enforce private controls but it does impose and enforce public controls like zoning.

Usually, the appraiser is hired by the: A. Buyer B. Seller C. Lender D. real estate agent

C. Usually, the lender or financing organization will hire the appraiser. Technically the seller pays for the appraiser since it comes out of the final sales price, however the hiring aspect is almost always done by the lender.

As a listing agent, what obligations do you owe to an unrepresented buyer? A. None. B. Loyalty. C. Confidentiality D. Honesty and fairness.

D. Agents or brokers function under certain legally mandated duties called fiduciary duties. Fiduciary duties include: Loyalty, confidentiality, disclosure, obedience, reasonable care and diligence, accounting and more. Honesty and fairness must be given to an unrepresented buyer.

A man named Troy lives in California, but owns property across the U.S. He owns property in cities like Pittsburgh, Philadelphia, and D.C. Troy decides he wants to sell his property in D.C. Instead of traveling all the way to D.C. to complete all the paperwork, he calls up his buddy Tony. Troy authorizes Tony, who lives in D.C., to sell his property for him. Troy gives Tony a/an: A. Affidavit B. Attorney in fact C. Promissory Note D. Power of attorney

D. An attorney-in-fact is someone authorized to act on behalf of another person, the legal document that authorizes that person is called a power of attorney

A collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. A. Civil Rights and Business Laws B. Business and Ethics Laws C. Civil Rights Laws D. Antitrust Laws

D. Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. In retrospect, antitrust laws protect the consumer and are healthy for a stable economy. It's important to know and understand the ones that deal with real estate as they directly relate to how you function as an agent.

California state law requires that copies of purchase agreements, be kept by the broker for at least A. Six months B. One year C. Three years D. Five years

D. California state law requires that copies of purchase agreements (and all related records whether or not the transaction ever closed), be kept by the broker for at least five years

What hazardous substance is an odorless, colorless gas that can cause death within hours of inhalation? A. Radon B. Chlorine C. Formaldehyde D. Carbon monoxide

D. Carbon monoxide is an odorless, colorless, gas created from burning fuels. If the system is used correctly and with proper ventilation, gas is controlled. However, if not there can be immediate and serious health risks. If inhaled, causes red blood cells to deprive the body of oxygen. Extreme exposure cuts off oxygen and cause death within 30 mins or less. It's a good rule of thumb to use a CO Detector on every floor, especially with floors with an open flame.

Compliance with zoning ordinances is monitored through the issuance of A. buffer zones B. CCR's C. covenants D. zoning permits

D. Compliance with zoning ordinances is monitored through the issuance of zoning permits; where the property owner or developer cannot substantially alter the use of the property without getting a zoning permit, which will not be issued unless the proposed development conforms to the zoning ordinance. Zoning permits are usually required before building permits can be issued.

Which of the following best describes the term "emblements?" A. A use of property in any legal manner. B. A use of the property in any means deemed legal. C. A thing used to make property look more attractive. D. Annual crops produced by cultivation legally belonging to the tenant.

D. Emblements are annual crops cultivated by a tenant that is treated as the tenant's personal property.

Fee packing, equity stripping, and balloon payment abuses are all examples of what? A. Fixing B. False Disclosure C. Civil rights laws violation D. Predatory lending practices

D. Fee packing, equity stripping, and balloon payment abuses are all examples of predatory lending practices. Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. While these practices are wrong, unfortunately sometimes they are perfectly legal.

Which of the following would not be considered real property? A. A fixture B. An easement C. Mineral rights D. A mortgage

D. Fixtures, easements, and mineral rights are all examples of real property - a mortgage is not. Real Property is all things attached to the land and all the legal rights to it. Real property is usually things that are immovable such as the home itself or the buildings within the property line. There are some exceptions of items that can be moved but are still real property, like for businesses. Business-related items like mineral rights, or if you own a farming business it would include crops, barns, and stables. Those are all considered real property because it is part of the business.

In California, redlining is prohibited by which state specific law? A. Transfer and Settlement Act B. Unruh Civil Rights Act C. Fair Housing Act D. Holden Act

D. In California, the Holden Act prohibits discrimination related to housing financing. The Holden Act is state specific. Within this Act are additional requirements that licensees who provide financing services post a fair lending notice within public view and also provide a copy of that notice to financing applicants.

A seller named Joan gave a buyer named Bob an option for thirty days to purchase her property for a consideration of $750. There is no anti-assignment clause in the contract. Which of the following statements is NOT true? A. Joan is the optionor. B. Bob is the optionee. C. Bob can assign the option to a third party. D. Joan can force Bob to purchase the property.

D. Joan is the optionor, and Bob is the optionee. And Bob can assign an option if he wants. Joan cannot force to purchase the property. Remember, a seller cannot force a buyer to buy the property with an option to purchase. It's worth noting that they can in a lease to purchase, but in the question, it specifies it's an option contract.

What determines who pays for what and how much at closing? A. government B. seller C. buyer D. proration

D. Proration is the allocation or division of money items at the closing. Proration mainly comes into play when a seller prepays their home taxes for the year. Bc they paid for the full year and are selling the property, the buyer will then owe the seller the remaining months of taxes

Which answer includes 3 actual types of business structures? Choose the best answer. A. CERCLA, LLC, AARP B. General Partnership, Joint Corporation, Sole Company C. Sole Proprietorship, Joint Partnership, Share Partnership D. Corporation, Sole Proprietorship, Limited Liability Company

D. The five most popular types of businesses are Sole Proprietorship, General Partnership, Limited Partnership, Corporation, and Limited Liability Company (LLC). From the question above; "Corporation, Sole Proprietorship, Limited Liability Company" are all real business structures. Here are the definitions: Corporations may be formed for profit or nonprofit purposes. A corporation is managed and operated by a board of directors. A Sole Proprietorship is one individual or married couple in business alone. Lastly, an (LLC) is a hybrid legal entity that has certain characteristics of both a corporation and a partnership or sole proprietorship.

Which of the following real estate contract clauses establishes order of priorities of financial claims (liens)? A. Release Clause B. Habendum Clause C. Acceleration Clause D. Subordination Clause

D. The subordination clause in real estate establishes order of priorities of financial claims (liens). The subordination clause effectively makes the current claim number 1 to any existing claims that have already been recorded.

If a minor signs a contract to buy real estate, the resulting contract is legally what? A. Valid B. Invalid C. Void D. Voidable

D. There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. If a minor signs the contract it is considered voidable.

California Real Estate Law describes several prohibited practices (Commissioner's Regulation 2780). Which of the following are NOT prohibited practices listed in the regulation? A. Discriminating in the terms, conditions, or privileges of sale, rental, or financing the purchase of property. B. Representing to any person that property is not available for inspection, sale, or rental when such property is in fact available. C. Soliciting sales, rentals, or listings of real estate from any person, but not from another person within the same area because of differences in a protected characteristic. D. Selling more than fourteen properties within your six month agent limit.

D. There is no limit to the number of properties you can sell in California. While the rest of the following are prohibited practices.

Which of the following would NOT be covered under a builder's new home warranty? A. Poor workmanship B. Disheveled masonry C. Dysfunctional carpentry D. Structural damage caused by flooding

D. Weather-related issues and normal wear-and-tear are generally not included in a builder's home warranty. Other items that a builder's warranty may not cover include: Household appliances. Defects resulting from work conducted by the homeowner or anyone else after the builder's work is completed. No warranty covers damages caused by natural disasters.

A real estate contract can be rescinded because of what? A. Misrepresentation B. Mistake C. Fraud D. All of the following

D. All of the following. Rescission or rescinding a contract is when a contract is rendered null and void and is no longer recognized as legally binding. Rescinding a contract is an option if there is proof that there was evidence of fraud, errors or mistakes, lack of legal capacity, fraud, and more.

The type of easement that is a right-of-way for a utility company's power lines is what? A. An easement by prescription B. An easement appurtenant C. An easement by necessity D. An easement in gross

D. An easement in gross is basically selling rights to the land to another person, but without giving them legal ownership. An example of an easement in gross is an easement to a utility company to run a power line across a burdened piece of property.

A property owner wishes to build a neighborhood grocery store in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission to build the store? A. A novation B. An amendment C. Approval of surrounding property owners D. A conditional use permit or zoning variance

D. An individual seeking to be excused from the requirements of a zoning ordinance needs a variance. Or a conditional use permit. A conditional use permit is a zoning exception that allows you to use your property in non-conforming ways. A variance is a request to deviate from current zoning requirements.

The owner of a condominium has the use of many facilities there, including a pool. Under the typical condominium arrangement, the facilities are owned by A. the corporation in which each of the owners hold stock. B. the association of homeowners in the condominium. C. some of the condominium owners in the form of divided interests. D. all the condominium owners in the form of percentage undivided interests.

D. Condominium often shortened to condo, is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. The answer is all the condominium owners in the form of percentage undivided interests because all condominium owners legally own a portion of all the facilities there.

An example of an antitrust violation is A. selling more than one hundred houses in a taxable year B. buying a house in another state C. an equity loan D. price fixing

D. Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Typically agencies set their commission rates depending on the price of the property. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws.

A property owner enters into a listing agreement with an agent. The seller obtains a buyer for the house, but the agent receives a commission. The listing agreement between the agent and the property owner was probably A. An open listing. B. A closed listing. C. An exclusive agency listing. D. An exclusive right to sell listing.

D. In an exclusive right to sell listing the agent gets paid no matter who sells the property, regardless of whether it's the agent or the seller. Knowing this, it's safe to assume this was an exclusive right to sell listing.