Legal Aspects of Real Estate
The Fair and Accurate Credit Transactions Act of 2003 allows consumers to request and obtain a free credit report once every __________ from each of the three nationwide consumer credit reporting companies--Equifax®, Experian®, and TransUnion (A) 12 months (B) 6 months (C) 3 months (D) month
(A) 12 months Hint: The Fair and Accurate Credit Transactions Act of 2003 allows consumers to request and obtain a free credit report once every 12 months from each of the three nationwide consumer-credit reporting companies--Equifax®, Experian®, and TransUnion®.
Jeff and Marian sign a real estate purchase agreement by which Jeff agrees to buy Marian's house. The contract states that Jeff will deposit $1,000 into escrow upon execution of the agreement and that if the parties are unable to conclude the sale for any reason, Marian will retain the $1,000 as liquidated damages, less the escrow costs to that point. If the results of the termite inspection show that there is damage to the property and Jeff cancels the sale as a result, how is a court likely to treat the $1,000? (A) A court would likely find that the $1,000 payment to Marian is a valid liquidated damages provision. (B) A court would likely find that the $1,000 is invalid as a penalty or forfeiture. (C) A court is likely to split the $1,000 between Jeff and Marian regardless of what their contract says. (D) A court would likely order that the full $1,000 be returned to Jeff because he acted reasonably based on the results of the termite inspection.
(A) A court would likely find that the $1,000 payment to Marian is a valid liquidated damages provision. Hint: Because contract damages are sometimes difficult to ascertain, many contracts include a provision for liquidated damages. Liquidated damages are a sum set forth in a contract that the parties agree in advance will be their maximum exposure if one party or the other breaches the contract. Courts assume that such clauses give the parties certainty regarding their potential legal liability if either side breaches the agreement and consequently usually uphold them.
What is another term for a coterminous owner? (A) Adjoining landowner (B) Encroacher (C) Tenant in common (D) Trespasser
(A) Adjoining landowner Hint: Sometimes adjoining owners are called coterminous owners.
Under the per stirpes distribution provided for under California law, the children: (A) of a deceased person have the right to receive a portion of an estate by right of representation. (B) of a deceased person are never allowed to receive a portion of an estate by "right of representation." (C) of a predeceased spouse always have a claim for the property of an estate. (D) follow per capita distribution; whereas grandchildren follow per stirpes.
(A) of a deceased person have the right to receive a portion of an estate by right of representation. Hint: California uses the per stirpes method of distributing property. Therefore, the issue of a later generation are entitled to receive a share of an estate by right of representation
An agent that makes an exaggerated statement of opinion regarding a property that he or she is listing for sale is an example of: (A) puffing. (B) innocent misrepresentation. (C) disclosure. (D) respondeat superior.
(A) puffing Hint: Puffing is an exaggerated statement of opinion about property that is not factual
An independent contractor receives compensation for the: (A) results of his or her services. (B) hours involved in completing the task. (C) days spent on the task. (D) months spent completing the task.
(A) results of his or her services. Hint: If someone is an independent contractor, then that person receives compensation for the results of his or her services and not for the time involved in completing the task.
Under a __________ power of attorney, the agent has authorization to perform specific tasks. (A) special (B) general (C) durable (D) flexible
(A) special Hint: A special power of attorney authorizes the agent to do certain specific acts. The agent is then known as an attorney-in-fact under a limited power of attorney
A(n) __________ cannot receive compensation for acts that require a real estate license. (A) unlicensed person (B) real estate broker (C) real estate salesperson (D) individual with a salesperson license
(A) unlicensed person Hint: An unlicensed person may not receive payment for any act requiring a real estate license
Voidable means: (A) valid unless set aside by one of the parties. (B) illegal. (C) unconditionally enforceable by either party. (D) valid but unenforceable by either party.
(A) valid unless set aside by one of the parties. Hint: If an agreement is voidable there may be some barrier to the formation of the contract that does not appear on the face of the agreement itself, but that will not make the agreement unlawful under all circumstances. Until one party exercises its right to disaffirm the contract, it is presumptively valid and can be performed
A person with a real estate salesperson license has delinquent child support payments and is an obligor on the California Department of Child Support Services list. If the child support remains unpaid when the salesperson renews his or her license, what type of license will the DRE issue? (A) 90-day Restricted License (B) 150-day Temporary License (C) 4-year Salesperson License (D) Suspended License
(B) 150-day Temporary License Hint: The California Department of Child Support Services prepares a list of people, called obligors, who owe child support payments. A child support obligor may receive a 150-day temporary license. During the 150 days, a person must show the DRE proof that the delinquency is cleared and that he or she has been removed from the list, so that a permane
The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit. What is the time limit to file an action on any written contract? (A) 2 years (B) 4 years (C) 5 years (D) 10 years
(B) 4 years Hint: The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit. The time limit to file an action on any written contract, which includes most real estate contracts, is 4 years.
Oliver made Brad an attractive offer to sell property that Brad was interested in buying. Brad was uncertain whether to accept, so he paid Oliver $100 to keep his offer irrevocable for ten days. What is the arrangement between Brad and Oliver? (A) An open contract (B) An option contract (C) A unilateral offer (D) A bilateral offer
(B) An option contract Hint: An option comes about when one party has made an offer that the other party believes is attractive but is unsure whether to accept it or to reject it immediately. Rather than doing either one immediately, the offeree may instead suggest paying the offeror separate consideration for the right to accept or reject the offer at some time in the future.
Which of the following must be disclosed under TILA and is the relative cost of credit expressed as a yearly rate? (A) Finance charge (B) Annual percentage rate (C) Payment terms (D) Total amount financed
(B) Annual percentage rate Hint: TILA requires disclosure of the finance charge, the annual percentage rate, and certain other costs and terms of credit. The annual percentage rate (APR) is the relative cost of credit expressed as a yearly rate. Expressed as a percentage, it is the relationship of the total finance charge to the total amount financed.
Which federal law prohibits race discrimination in the sale of commercial real estate. (A) Fair Employment and Housing Act. (B) Civil Rights Act of 1866. (C) Fair Housing Act. (D) Civil Rights Act of 1968.
(B) Civil Rights Act of 1866. Hint: Both the property owner, as the principal in a principal-agent relationship, and the real estate broker, as the one committing a discriminatory act, are liable to the victim of discrimination for violation of both state and federal fair housing laws. The owner's only recourse would be to bring a cross-complaint against the broker or agent within the same lawsuit for failing to comply with the owner's instructions.
Which function of the deposit receipt is described by a buyer and a seller agreeing to mediation by a neutral mediator? (A) Acceptance of offer (B) Dispute resolution (C) Joint escrow instructions (D) Reaffirmation of agency
(B) Dispute resolution Hint: The buyer and seller must agree to mediation by a neutral mediator in the attempt to resolve disputes.
What is the commonality of unilateral rescission, specific performance, and reformation? (A) Assignment of a contract (B) Equitable remedies for breach of contract (C) Laches as it pertains to contracts (D) Legal remedies for breach of contract
(B) Equitable remedies for breach of contract Hint: If the assignor wants to be released entirely from any obligation or secondary liability for the contract, it may be done by novation. Novation is the substitution, by agreement, of a new obligation for an existing one, with the intent to terminate the original contract.
What is the commonality of accretion, erosion, and reliction? (A) Gain of riparian land (B) Gradual changes to land (C) Loss of riparian land (D) Sudden changes to land
(B) Gradual changes to land Hint: They are all gradual changes. Both accretion and reliction result in a gain of land. Erosion results in a loss of land
Which will does not require two witnesses? (A) Codicil (B) Holographic Will (C) Statutory Form Will (D) Witnessed Will
(B) Holographic Will Hint: Unlike a regular will, a holographic will does not require witnesses. Both a witnessed will and a statutory form will require at least two witnesses.
In which way is an agency not terminated? (A) Mutual agreement (B) Incapacity of the listing salesperson (C) Full performance (D) Revocation by the client
(B) Incapacity of the listing salesperson Hint: An agency relationship can be terminated by full performance, expiration of its term, mutual agreement, revocation by the client, renunciation by the broker, or by operation of law. Listings belong to the broker, so incapacity of a salesperson will not affect the agency relationship.
A lender refuses to make loans to real property in a certain part of a city. Which of the following statutes has the lender likely violated? (A) The Truth in Lending Act (B) The Real Estate Settlement Procedures Act (C) The Federal Trade Commission Act (D) The Holden Act
(D) The Holden Act Hint: The Holden Act bans the consideration of race, color, religion, sex, marital status, national origin or ancestry, as well as trends, characteristics, or conditions in the neighborhood or geographic area where a house is located, with regard to the making of a real estate loan. In particular, the act forbids redlining--the practice of disapproving real estate loans in economically or physically blighted
If a seller refused to accept a full-price offer that met all terms of an exclusive authorization and right to sell listing, which of the following legal actions would most likely result from this? (A) The broker could sue for specific performance. (B) The buyer could sue for specific performance. (C)The buyer could sue for monetary damages. (D) The broker could sue for his or her commission.
(D) The broker could sue for his or her commission. Hint: In the listing agreement, the seller promises to pay a commission upon presentation of a ready, willing, and able buyer who meets all the terms of the listing. Once the broker has done so, the broker is entitled to his or her commission; it does not matter that the seller ultimately decides not to go through with the sale, because the broker is hired only to find a ready, willing, and able buyer.
Which of the "four unities" is the only one that a joint tenancy and a tenancy in common both share? (A) Unity of time (B) Unity of title (C) Unity of interest (D) Unity of possession
(D) Unity of possession Hint: The only one of the four "unities" that joint tenancy and tenancy in common share is unity of possession--because in either cotenancy, the cotenants have the same entitlement to the full use of the property, subject only to the right of the full use of the property by the cotenant or cotenants
Henry and Wanda are married and hold the property as husband and wife. Unbeknownst to Wanda, Henry leaves "all my property" to Sheryl in his will. When Henry dies, what will happen to the property? (A) Sheryl and Wanda will become joint tenants. (B) Wanda will get ½ as community property; Sheryl will get half of the remaining ½, so that she will end up with a ¼ interest, and Wanda a ¾ interest. (C) Wanda will own all of the property. (D) Wanda and Sheryl will each own a ½ interest as tenants in common.
(D) Wanda and Sheryl will each own a ½ interest as tenants in common. Hint: When a husband or wife dies, the surviving spouse is entitled to one-half of any community asset upon the death of the other spouse. However, unless the property is held in joint tenancy, the deceased spouse can transfer the other half of the community property to whomever he or she chooses.
Art wants to transfer his interest in the real property that he owns to Betty. The transaction is handled through a real estate broker and an escrow officer working for the title insurance company prepares the majority of paperwork. The escrow officer drafts the deed and has Art sign it and takes care of getting the payment for the purchase from Betty's loan to Art. At the conclusion of the transaction, Art's deed to Betty is recorded. Has Art's deed conveyed his interest to Betty? (A) Yes, but only if it can be proven later that Art and Betty were in the room together at some point during the transaction. (B) No, because Art never delivered the deed to Betty. (C) No, because Betty never formally accepted the deed from Art. (D) Yes, because recording the deed at the conclusion of the transaction created a presumption that the deed was both delivered and accepted.
(D) Yes, because recording the deed at the conclusion of the transaction created a presumption that the deed was both delivered and accepted. Hint: Although recording a deed is not necessary for title to pass, recording a deed creates a presumption that a deed was delivered and accepted. A presumption is a legal substitute for formal proof of fact. Most real property transactions, in fact, do not involve the grantor physically handing the deed to the grantee; rather, the grantor delivers the deed to the escrow officer (or executes a deed prepared by the escrow company), which is later recorded at the conclusion of the transaction.
A real estate broker license allows the broker to: (A) employ other brokers. (B) employ salespeople. (C) perform acts that require a real estate license. (D) do all of the above.
(D) do all of the above. Hint: The broker license legally permits the broker to perform any acts for which a real estate license is required. A real estate broker is also an independent businessperson who can employ someone who holds a salesperson or a broker license
Under the Fair Housing Act, lenders are prohibited from:(A)refusing to make a mortgage loan. (B) imposing different terms or conditions on a loan. (C) setting different terms or conditions for purchasing a loan. (D) doing any of the above.
(D) doing any of the above. Hint: One of the most noteworthy features of the Fair Housing Act is that it specifically prohibits, by definition if not by name, a number of practices that had informally amounted to discrimination. These practices include: (1) refusing to make a mortgage loan; (2) refusing to provide information regarding loans; (3) imposing different terms or conditions on a loan, such as different interest rates, points, or fees; (4) discriminating in appraising property; (5) refusing to purchase a loan; (6) setting different terms or conditions for purchasing a loan; and (7) redlining.
Patrick wants to operate a new use on a parcel in the California city where he owns property. The city planning department's staff report for his project concludes that there will be no environmental impacts and no one appears at the city hearing to oppose his project. His project will probably require a(n): (A) categorical exemption. (B) environmental impact report. (C) environmental impact statement. (D) negative declaration.
(D) negative declaration. Hint: A negative declaration required by CEQA analyzes a project's anticipated environmental impacts and explains why the project, as proposed or with changes, will not have the potential to cause significant impacts to the environment
A broker can violate the antitrust laws relating to real estate, by participating in any of the following, except:(A)dividing the market. (B) group boycotting. (C) price fixing. (D) tithing.
(D) tithing Hint: The laws prohibit businesses from forming a monopoly and restrict the way businesses interact with their competitors and customers. Many specific actions are covered by these laws, including price fixing, boycotting, dividing the market, and tying.
Andy has a parcel with an elevation that is substantially lower than most of the neighboring properties. In order to have the same view as neighboring parcels, a house built on his parcel will have to be 18 feet higher than the height limit for the zoning district. If he is to build such a house, he will need: (A) an amendment to the zoning district. (B) to have the property re-zoned. (C) to obtain a conditional use permit. (D) to obtain a variance.
(D) to obtain a variance. Hint: A variance is a local land use decision allowing a use not strictly in compliance with local zoning or building regulations because of unique conditions of the property in question such as its size, topography, shape, etc., to which the strict application of a zoning ordinance would deprive the property of privileges enjoyed by other property in the vicinity.
Which of the following is true about a change in zoning that makes a use nonconforming? (A) Such a zoning change would be illegal. (B) California courts will always award the owner monetary compensation. (C) The owner will be allowed to continue the use if it is not a nuisance. (D) The owner of the property has an absolute right to expand the use.
(c) The owner will be allowed to continue the use if it is not a nuisance. Hint: Nonconforming uses that existed prior to the adoption of the current zoning that were lawful when established and are not nuisances are normally allowed to continue indefinitely, but cannot be expanded
The statute of frauds, which requires that a contract be in writing to be enforceable, applies to a. all real estate sales agreement b. all real estate contracts of any sort c. all contracts d. bilateral contracts only
A. The statute of frauds requires certain types of contracts to be in writing to be enforceable. By statute, agreements of sale for real estate and certain lease agreements must be written
Which deed has only two implied warranties of title? (A) Contract for deed (B) Grant deed (C) Quitclaim deed (D) Warranty deed
B) Grant deed Hint: A grant deed has two implied warranties of title.
An applicant for a real estate license who lives outside the state of California: (A) must complete a reciprocity application. (B) may obtain a waiver from the Department of Real Estate. (C) must meet the state's licensing requirements. (D) may waive the licensing requirements.
C) must meet the state's licensing requirements. Hint: A person does not have to live in California in order to possess a license in the state, but the applicant must take the appropriate written examination in California and meet all other requirements. California has no reciprocity with any other state to allow a waiver of any of the requirements to obtain a license
What is one of the risks of a broker using a net listing? (A) The broker will have to establish that he or she was the procuring cause of the sale. (B) It creates the potential for a conflict of interest if the offer for the property comes in at or just above the seller's minimum sales price. (C) The owner can decide to take the property off the market before the broker finds a seller. (D) The broker might not get a fee if the owner finds a buyer himself or herself.
(B) It creates the potential for a conflict of interest if the offer for the property comes in at or just above the seller's minimum sales price. Hint: With a net listing, instead of the broker being entitled to a percentage of the sales price, the seller and broker agree to a minimum amount the seller wants and the broker is entitled to anything that the broker can negotiate above that price. If the buyer's offer comes in at or near the seller's minimum price, the broker may be tempted to reject it without getting the client/seller's permission, constituting a breach of the broker's fiduciary duty to the client.
The court case ______________ prohibits discrimination based on race by upholding the 1866 Civil Rights Act and the 13th Amendment to the U.S. Constitution, which prohibits slavery. (A) Easton v. Strassburger (B) Jones v. Mayer (C) Ragin v. New York Times Co. (D)Span v. the Avenel Corporation
(B) Jones v. Mayer Hint: Jones v. Mayer prohibits discrimination based on race by upholding the 1866 Civil Rights Act and the 13th Amendment to the U.S. Constitution, which prohibits slavery.
Which of the following is not a federal fair housing law? (A ) Civil Rights Act of 1866 (B) Jones v. Mayer (C) Civil Rights Act of 1968 (D) Fair Housing Amendments Act
(B) Jones v. Mayer Hint: The Civil Rights Act of 1866, the Civil Rights Act of 1968 and the Fair Housing Amendments Act are all federal laws. Jones v. Mayer is a Supreme Court Case (not a federal law) that supports and upholds a federal law (1866 Civil Rights Act) and the 13th Amendment to the U.S. Constitution
Which of the following are among the mandatory elements of a general plan? (A) Parks and recreation, noise, and water use (B) Land use, housing, and public safety (C) Open space, water use, and seismic safety (D) Housing, public utilities, and roads
(B) Land use, housing, and public safety Hint: All general plans must have seven mandatory elements: land use; circulation; conservation; housing; noise; public safety; and open space.
Which of the following is NOT an uninvited interference with a person's rights in real property? (A) Encroachment (B) License (C) Nuisance (D) Trespass
(B) License Hint: Nuisance, trespass, and encroachment all interfere with another person's rights in real property.
Which of the following is one of the Do Not Call Rules? (A) Licensees may use caller ID blocking. (B) Licensees must identify themselves before making the solicitation. (C) Sender must have voluntarily received recipient's fax number. (D) Transactional e-mail messages are excluded from the Act.
(B) Licensees must identify themselves before making the solicitation. Hint: The federal Truth in Lending Act (TILA) is Title 1 of the Consumer Credit Protection Act of 1968.
Discrimination on the basis of which of the following characteristics is prohibited by California's Fair Employment and Housing Act, but not by the federal Fair Housing Act? (A) Religion. (B) Sexual orientation. (C) Handicap. (D) National origin.
(B) Sexual orientation. Hint: The Fair Employment and Housing Act, insofar as it applies to housing discrimination, is broader than the federal law because it applies to certain kinds of discrimination that are not covered by federal law. The California statute prohibits discrimination on the basis of sexual orientation, medical condition, and source of income, none of which are prohibited by federal law.
What happens to an original offer if a counteroffer is made? (A) The original offer will stand until there is mutual consent. (B) The person making the original offer is no longer bound by it. (C) If the original offer is in writing, it must remain in effect. (D) None of the above.
(B) The person making the original offer is no longer bound by it. Hint: After a counteroffer, the person making the original offer is no longer bound by that offer, and may accept the counteroffer or not.
When analyzing whether an agent relied on reasonable skill and competence in a real estate transaction, the courts use __________ to make this determination (A) loyalty (B) a standard of care (C) written examinations (D) confidentiality
(B) a standard of care Hint: The courts use a standard of care to decide whether an agent has used reasonable skill and care in a disputed transaction
When a salesperson is discharged for a violation of any of the provisions of the Real Estate Law, the employing broker must immediately file a __________ with the Commissioner. (A) certified copy of salespersons license (B) certified written statement of the facts (C) complaint notification (D) registered complaint
(B) certified written statement of the facts Hint: When a salesperson is discharged for a violation of any of the provisions of the Real Estate Law, the employing broker must immediately file a certified written statement of the facts with the Commissioner
The Civil Rights Act of 1968 expanded protected classes to include not only race, but also: (A) color, handicap, sex, and national origin. (B) color, national origin, religion, and sex. (C) familial status, sex, handicap, and color. (D) national origin, familial status, color, and religion.
(B) color, national origin, religion, and sex. Hint: In the financing, leasing, or selling of residential property, the Civil Rights Act of 1968 provided anti-discriminatory protection to five protected classes of people based on race, color, religion, sex, and national origin.
The commonality of party walls, division fences, and line trees is that they are considered: (A) common areas. (B) common boundary improvements. (C) common interest developments. (D) common nuisances.
(B) common boundary improvements. Hint: Common boundary improvements that indicate the property boundary line include party walls, division fences, and line trees.
The Comprehensive Environmental Response, Compensation, and Liability Act is also known as the Superfund because it: (A) consists of three trust funds for the cleanup of properties. (B) consists of two trust funds used for cleaning up properties. (C) establishes one large account funded by wealthy philanthropists. (D) establishes one large account from property tax collections.
(B) consists of two trust funds used for cleaning up properties. Hint: It is called Superfund because it establishes two trust funds to help finance the cleanup of properties that are impacted by the release of hazardous wastes and substances.
Seller Fred listed a vacant lot with a broker at $115,400. Prospective buyer Dan submitted an offer of $115,000 that was to expire in three days. The next day, Fred made a counteroffer of $115,200. When Dan did not respond within the three-day period, Fred signed an acceptance of Dan's $115,000 original offer and instructed the broker to deliver it to Dan. Dan told the broker that he had decided not to purchase the property, but Fred insisted they had a deal. Based on these circumstances, there is: (A) a valid contract. (B) no contract. (C) an invalid contract. (D) an enforceable contract.
(B) no contract. Hint: Fred's counteroffer terminated the buyer's original offer
When a person gains a benefit from a previously unauthorized act of an agent and does not deny the authority to act after learning about it, this constitutes an agency created by: (A) agreement. (B) ratification. (C)estoppel. (D) power of attorney.
(B) ratification Hint: Agency by ratification is created when a person gains some benefit from a previously unauthorized act of an agent and the person, upon learning of the act, does not deny that the agent had the authority to perform the act
A broker who represents only the buyer or seller in a real estate transaction is known as a(n) __________ agent (A)simple (B) single (C) dual (D) exclusive
(B) single Hint: When a broker represents only the buyer or the seller in the transaction, it is called single agency.
Paul, Ted, and Donna purchase a parcel of real property. Because Paul contributed $10,000 to the purchase price while Ted and Donna each contributed $5,000 apiece, Paul holds a 50% share while Ted and Donna hold a 25% share apiece. Without knowing anything more, it is clear that they hold title as: (A) joint tenants. (B) tenants in common. (C) tenants by the entirety. (D) community property.
(B) tenants in common. Hint: If two or more persons have unequal shares of a parcel of real property, then by definition it must be as tenants in common; tenancy in common is the only form of co-ownership that allows for unequal interests in the property.
A person holding only a salesperson's license who inserts complicated clauses that require legal expertise to form contracts might well be committing: (A) a lack of due diligence. (B) the unauthorized practice of law. (C) a felony. (D) acts that require a real estate broker's license.
(B) the unauthorized practice of law. Hint: Licensees should use care not to try to write specialized contract terms for the contract. This activity can constitute the unauthorized practice of law (a misdemeanor under Business and Professions Code §6125).
A federal agency that wants to undertake an activity on federally-owned property in California: (A) can do so immediately without environmental review, because of the Supremacy Clause of the Constitution. (B)must comply with the procedures under the National Environmental Policy Act. (C) must comply with the procedures under the California Environmental Quality Act. (D) is exempt from complying with the procedures under the National Environmental Policy Act.
(B)must comply with the procedures under the National Environmental Policy Act. Hint: NEPA requires that federal agencies and other entities undertaking activities on federal property conduct an environmental analysis of the proposed project
Which of the following, taken together, constitute the Fair Housing Act? (A) 1866 Civil Rights Act and Jones vs. Mayer (B) Civil Rights Act of 1968 and 1866 Civil Rights Act (C) Civil Rights Act of 1968 and the Fair Housing Amendments Act (D) 1866 Civil Rights Act and the Thirteenth Amendment
(C) Civil Rights Act of 1968 and the Fair Housing Amendments Act Hint: Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together, constitute the Fair Housing Act
The Truth in Lending Act is Title 1 of the: (A) 1866 Civil Rights Act. (B) Civil Rights Act of 1968. (C) Consumer Credit Protection Act of 1968. (D) Equal Credit Opportunity Act.
(C) Consumer Credit Protection Act of 1968. Hint: The federal Truth in Lending Act (TILA) is Title 1 of the Consumer Credit Protection Act of 1968.
Angela, Bruce, and Caroline buy some property and hold title in joint tenancy. Without Angela's or Caroline's permission, Bruce sells his share to David. What is the status of David's share after the sale? (A) Angela, Caroline, and David are now all joint tenants. (B) Bruce's sale to David is invalid because he failed to get permission from Angela and Caroline. (C) David is a tenant in common as to the joint tenancy between Angela and Caroline. (D) Angela, Caroline, and David are now all tenants in common.
(C) David is a tenant in common as to the joint tenancy between Angela and Caroline. Hint: One joint tenant can convey his or her interest to a third party without the knowledge or permission of the remaining joint tenant or tenants. The portion of the property conveyed "out" of the joint tenancy is thereafter held as an undivided interest in common with the remaining owner or owners. However, if there are more than two joint tenants, the conveyance by one joint tenant to a third party does not affect the status of the remaining joint tenants.
The __________ establishes procedures for correcting mistakes on a person's credit record and requires that a consumer's record only be provided for legitimate business needs. (A) Rights to Financial Privacy Act (B) Fair Trade Commission Act (C) Fair Credit Reporting Act (D) Home Equity Loan Consumer Protection Act
(C) Fair Credit Reporting Act Hint: The Fair Credit Reporting Act establishes procedures for correcting mistakes on a person's credit record and requires that a consumer's record only be provided for legitimate business needs.
Which of the following would be considered a tree encroachment? (A) Excessive shade (B) Falling leaves (C) Intrusive roots (D) Pine needles
(C) Intrusive roots Hint: Falling leaves, pine needles, and sap can be annoying to rake or clean out of gutters, but they do not constitute a trespass, nuisance, or encroachment. Most of the problems with trees are about overhanging branches, intrusive roots, or trees that block sunlight and views
Which of the following statements about RESPA is not true? (A) It applies to all federally related home loans used to purchase or refinance real property. (B) It protects consumers by eliminating kickbacks and referral fees that increase settlement service costs. (C) It only applies to FHA-insured loans. (D) It helps consumers get fair settlement services by requiring the advance disclosure of key service costs.
(C) It only applies to FHA-insured loans. Hint: The Real Estate Settlement Procedures Act (RESPA) applies to almost all home loans and lenders, not just FHA-insured loans
Which statement is correct regarding a California landowner's right to sunlight and air circulation or to a view over adjoining lands? (A) Every landowner has an absolute right to sunlight and air circulation or to a view over adjoining lands. (B) Landowners have an absolute right to sunlight but not for a view over adjoining lands. (C) No landowner has an absolute right to sunlight and air circulation or to a view over adjoining lands. (D) The absolute right to sunlight and air circulation or to a view over adjoining lands only belongs to landowners of five or more acres.
(C) No landowner has an absolute right to sunlight and air circulation or to a view over adjoining lands.Hint: However, in California, no landowner has an absolute right to sunlight and air circulation or to a view over adjoining lands.
In which court case did the property owner successfully challenge the restrictive conditions on development imposed by the public agency? (A) Easton v. Strassburger (B) Euclid v. Ambler Realty Co. (C) Nollan v. California Coastal Commission (D) Zellers v. State of California
(C) Nollan v. California Coastal Commission Hint: The homeowners in Nollan v. California Coastal Commission won their case in the U.S. Supreme Court.
What document should an assignor use to be released entirely from any obligations or secondary liability? (A) Assignment (B) Cancellation (C) Novation (D) Revocation
(C) Novation Hint: If the assignor wants to be released entirely from any obligation or secondary liability for the contract, it may be done by novation. Novation is the substitution, by agreement, of a new obligation for an existing one, with the intent to terminate the original contract.
The Real Estate Commissioner appoints a __________ for consultative purposes on issues involving the Department of Real Estate. (A) local real estate attorney (B) city official (C) Real Estate Advisory Commission (D) real estate consultation firm
(C) Real Estate Advisory Commission The Commissioner appoints a Real Estate Advisory Commission for consultation and advice on matters pertinent to the DRE.
Which is not one of the four powers of government that affects private ownership of real estate? (A) Eminent domain (B) Escheat (C) Replevin (D) Taxation
(C) Replevin Hint: All private ownership of real estate is subject to the legitimate powers of government, which includes eminent domain, taxation, escheat, and police power. Replevin is a legal remedy for a person to recover goods unlawfully withheld from his or her possession
Which is not an example of an express agreement? (A) Al sells his car to Fred for $5,000 and both "shake hands" on the deal. (B) Donna finances the purchase of phone system for her office and signs loan papers. (C) Sally orders a pizza to be delivered. (D) Ted signs a 6-month lease for an apartment.
(C) Sally orders a pizza to be delivered. Hint: In an express contract, the parties declare the terms of the agreement and put their intentions in words, either orally or in writing. When a contract is implied, the agreement is demonstrated by conduct rather than by words.
Which state law requires the preparation of a public report for all major subdivisions? (A) Interstate Land Sales Full Disclosure Act (B) State Housing Law (C) Subdivided Lands Law (D) Subdivision Map Act
(C) Subdivided Lands Law Hint: The Lands Law requires the preparation of a public report for all major subdivisions.
The __________ declares that real estate contracts can be electronically written and signed. (A) statute of frauds (B) Statute of Electronic Documents (C) Uniform Electronic Transactions Act (D) Electronic Real Estate Document Act
(C) Uniform Electronic Transactions Act Hint: The California Uniform Electronic Transactions Act (UETA) codified California Civil Code; Division 3; Part 2, Contracts; Title 2.5, Electronic Transactions Cal. Civ. Code §§1633.1-1633.17 became effective January 1, 2000. This act provides that documents establishing contracts and agreements in a real estate transaction may be electronic
Which of the following is not an element of a valid contract? (A) Consideration (B) Competent parties (C) Unilateral agreement (D) Mutual consent
(C) Unilateral agreement Hint: The elements of a valid contract are mutual consent, consideration, competent parties, and a lawful object
Paula tells her rental agent, Tom, not to violate the fair housing laws. Tom nevertheless wrongfully discriminates against a prospective tenant because he is Hispanic. A court would likely determine that (A) Paula is liable for Tom's conduct even though Tom is not. (B) Tom is liable for his conduct, but Paula is not. (C) both Paula and Tom are liable for Tom's act of discrimination. (D) neither Paula nor Tom are liable.
(C) both Paula and Tom are liable for Tom's act of discrimination. Hint: Both the property owner, as the principal in a principal-agent relationship, and the real estate broker, as the one committing a discriminatory act, are liable to the victim of discrimination for violation of both state and federal fair housing laws. The owner's only recourse would be to bring a cross-complaint against the broker or agent within the same lawsuit for failing to comply with the owner's instructions.
A statement of fact that is required by law is known as: (A) misrepresentation. (B) puffing. (C) disclosure. (D) obedience.
(C) disclosure. Hint: Disclosure refers to any statement of fact that is required by law
In a broker/associate agency relationship, the agreement that specifies the supervision of licensees, duties, and compensation is the __________ agreement. (A) listing (B) buyer representation (C) employment (D) dual agency
(C) employment Hint: The employment agreement is an agreement that specifies the important aspects of the employment relationship, including the supervision of licensed activities, licensee's duties, and the compensation arrangement.
Intentionally dumping refuse on another person's property is known as an: (A) abatement. (B) encroachment. (C) indirect trespass. (D) injunction.
(C) indirect trespass. Hint: An indirect trespass can occur by one person dumping refuse on another person's property, or by neighbors allowing their animals to wander across another person's property. Other examples of indirect trespass include leaving personal property or household hazardous waste on real property belonging to another person.
Pat is an intern at a real estate brokerage while he studies for his license exam. Pat may perform all of the following tasks, except: (A) answer and route phone calls throughout the company. (B) deliver funds and documents to the escrow company. (C) negotiate a month-to-month lease for a single-family home. (D) proofread newspaper and print advertising for a salesperson.
(C) negotiate a month-to-month lease for a single-family home. Hint: A real estate license is required to solicit buyers, sellers, tenants or rentals. It is also required to negotiate sales, leases, loans, promissory notes secured by real property, or exchanges
A private entity that owns property that is specifically designed to provide products or services to the public is a: (A) citizen suit provision. (B) conciliation. (C) public accommodation. (D) state action requirement.
(C) public accommodation. Hint: A public accommodation is a private entity that owns, operates, leases, or leases to, a place designed to provide products or services to the public.
Bill has an auto parts business on property zoned commercial. The city's zoning for commercial properties allows the sale of auto parts as a matter of right, but states that the city has authority to approve or deny the repair of automobiles on the same premises. If Bill wants to start an auto repair business on the same lot, he must: (A) have the property re-zoned. (B) obtain a variance. (C) seek a conditional use permit. (D) sue the city, arguing that the restriction amounts to a "taking."
(C) seek a conditional use permit. Hint: A conditional use is a use that is not allowed as a matter of right, but that might be allowed if the owner gets a special permit, also known as a conditional use permit (CUP).
Recording protects __________ against prior unrecorded interests (A) appointed administrators (B) former vendors (C) subsequent bona fide purchasers (D) unauthorized trespassers
(C) subsequent bona fide purchasers Hint: Recording serves the function of protecting subsequent bona fide purchasers (BFP) and lien creditors against prior unrecorded interests.
Ownership in severalty would most likely involve. (A) a fee simple defeasible estate. (B)ownership with other parties. (C)sole ownership. (D) tenancy in common.
(C)sole ownership. Hint: When property is owned by one person or a single entity, whose rights to the property are not shared with any other person, this form of ownership is legally known as ownership in severalty
Which of the following could defeat an adverse possessor? (A) Giving the adverse possessor a license (B) Fencing the property and keeping gates locked (C) Posting a notice at 200-foot intervals along the perimeter pursuant to Civil Code Section 1008 (D) All of the above
(D) All of the above Hint: Each of these should be sufficient to defeat an adverse possession claim.
What elements does the agreed-boundary doctrine require? (A) Uncertainty as to the boundary line (B) An agreement between the owners as to the boundary line (C) Five years acceptance of the agreed boundary line (D) All of the above
(D) All of the above Hint: The elements of the agreed-boundary doctrine require uncertainty as to the boundary line, an agreement between the owners as to the boundary line, and five years acceptance of the agreed boundary line.
What are the legal remedies to obtain relief from a private or public nuisance? (A) Abatement (B) Injunction (C) Money damages (D) All of the above
(D) All of the above Hint: The legal remedies to obtain relief from a private or public nuisance include abatement or a civil action. [C.C. §3491].
Which of the following is a type of agency law? (A) Common law agency (B) Statutory law agency (C) Contractual agency (D) Both (a) and (b)
(D) Both (a) and (b) Hint: Two types of laws are used for guidance regarding agency relationships: common law agency and statutory law agency
The payment of non-collectable court judgments against licensees who committed fraud misrepresentation, deceit, or conversion of trust funds in a transaction is assured by the: (A) Commissioner's Consumer Account. (B) National Real Estate Public Fund. (C) Real Estate Regulatory Fund. (D) Consumer Recovery Account.
(D) Consumer Recovery Account. Hint: The Recovery Account assures the payment of otherwise non-collectable court judgments against licensees who have committed fraud, misrepresentation, deceit, or conversion of trust funds in a transaction
The formation, operation, and dissolution of partnerships, corporations, limited liability companies, and limited partnerships in the State of California is governed by the California: (A) Administrative Code. (B) Business and Professions Code. (C) Civil Code. (D) Corporations Code.
(D) Corporations Code. Hint: The California Corporations Code governs the formation, operation, and dissolution of corporations, limited liability companies (LLCs) partnerships, limited partnerships (LPs), and limited liability partnerships (LLPs) in the State of California.
Paul sends Gary a letter that states, "I offer to purchase your house for $290,000, closing to take place by December 31." Gary writes back, "I accept your offer, but escrow must close before November 30." Which of the following is true? (A) Gary's letter is a counteroffer creating a binding contract (B) Gary's letter is an acceptance creating a binding contract (C) Gary's letter is a revocation that Paul can accept or reject. (D) Gary's letter is a counteroffer that Paul can accept or reject
(D) Gary's letter is a counteroffer that Paul can accept or reject Hint: In order for a contract to be formed, the offeree must accept the offer without making any changes to it. If he does make a change, then the purported "acceptance" has really become a counteroffer.
What is the legal process to determine creditors' claims and beneficiaries' interests in an estate upon the owner's death? (A) Bankruptcy (B) Foreclosure (C) Inverse codemnation (D Probate
(D) Probate Hint: Probate is the legal process to prove that a will is valid. Probate proceedings are held in the superior court to determine creditors' claims and beneficiaries' interests in an estate upon the owner's death.
Steve, a broker, finds a buyer for a property and convinces the person to buy the property. The listing agreement expires before the sale is completed. However, the buyer whom Steve located eventually does complete the transaction and Steve was entitled to a commission. Which of the following allowed Steve to collect the commission? (A) Contra proferentem clause (B) Definite termination date (C) Net listing (D) Safety clause
(D) Safety clause Hint: A safety clause is a provision entitling the broker to a commission even after the listing for a given property has expired if the seller consummates a sale within a stated period of time, the ultimate buyer is someone with whom the broker negotiated, and the broker disclosed this to the seller. The assumption underlying a safety clause is that the broker's efforts should be rewarded even though the listing technically had expired
Who owns navigable non-tidal waters in California? (A) Adjacent landowners (B) Federal government (C) Private landowners (D) State of California
(D) State of California Hint: Navigable non-tidal waters are owned by the state of California.
Why did Congress rely on the Commerce Clause instead of the Fourteenth Amendment as the basis for the Fair Housing Act? (A) Real estate discrimination is not specifically mentioned in the Fourteenth Amendment. (B) The Fourteenth Amendment was not in effect when Congress passed the Fair Housing Act. (C) The Fourteenth Amendment was repealed by the Twenty-Second Amendment. (D) The Fourteenth Amendment has a state action requirement, which means it generally cannot be the basis for legislation against private acts of discrimination.
D) The Fourteenth Amendment has a state action requirement, which means it generally cannot be the basis for legislation against private acts of discrimination. Hint: The U.S. Supreme Court has interpreted both the Due Process Clause and the Equal Protection Clause as having a state action requirement. While Congress can pass laws prohibiting various government entities or their employees from committing acts of discrimination, the Fourteenth Amendment does not empower Congress to do anything about private discriminatory conduct. However, the Commerce Clause gives Congress broad power to regulate businesses, which are private entities, including to prohibit private discriminatory acts
A real estate licensee is accused of violating the law. After the hearing, an administrative law judge gave recommendations to the Commissioner for discipline. The Commissioner may: (A) accept the penalty. (B) reduce the penalty. (C) reject the penalty. (D) do all of the above.
D) do all of the above Hint: The Commissioner may accept, reject, or reduce the proposed penalty from the administrative law judge and makes an official decision.
The characteristic of perpetual succession pertains to a: (A) corporation. (B) general partnership. (C) limited partnership. (D) sole proprietorship.
(A) corporation Hint: The corporation can continue with or without any of its shareholders or employees
A statutory nonemployee is considered self-employed and receives compensation for the: (A) number of sales closed and commissions earned. (B) hours involved in completing the task. (C) days spent on the task. (D) months spent completing the task.
(A) number of sales closed and commissions earned.
Jim is in the market for a new house and visits a listed property owned by Alice. After his tour of the property, he sends her a written offer to buy for a few thousand dollars less than her listing price. Alice looks it over and decides that it is a reasonable offer and mails her acceptance to Jim. When she hears nothing for two weeks, she calls him and he tells her, "I never received your acceptance. And I've decided to revoke my offer to buy your house." Alice, however, has a copy of her letter stating her acceptance and the certified mail receipt. The postal service has no record that the letter was delivered, however, even though Alice can prove she mailed it. Do they have a contract? (A) Alice's mailed acceptance created a binding contract even though Jim never received it, according to the "mailbox rule." (B) Alice's mailed acceptance did not create a binding contract because Jim never received it, according to the "mailbox rule." (C) Alice's mailed acceptance did not create a binding contract because too much time has elapsed from the date of mailing. (D) The parties do not have a binding contract, because Jim told Alice he was revoking his offer.
(A) Alice's mailed acceptance created a binding contract even though Jim never received it, according to the "mailbox rule. Hint: The acceptance or a rejection of an offer is deemed to be complete at the moment it is deposited in the mail. The actual receipt of the communication is not required; even if the letter communicating the acceptance or rejection is lost, it is still effective (assuming that the offeree can establish that the acceptance was deposited in the mail and when that deposit took place).
RESPA requires that borrowers receive disclosures at various times. Which of the following disclosures usually is not made at the time of the loan application? (A) Annual Escrow Loan Statement (B) Good Faith Estimate of Settlement Costs (C) Special Information Booklet (D) Loan Servicing Statement
(A) Annual Escrow Loan Statement Hint: When a potential homebuyer applies for a home loan, the lender must give the buyer a Special Information Booklet, Good Faith Estimate, and a Mortgage Servicing Disclosure Statement
If the boundary is a road, where is the boundary line situated? (A) Center of the road (B) Left side of the road (C) Right side of the road (D) Side nearest the largest parcel holder
(A) Center of the road Hint: If the boundary is a road, the boundary line usually is the center of the road.
Which type of CID is characterized by fee ownership of the dwelling unit with a tenant in common interest in a portion of real property? (A) Condominium (B) Community apartment project (C) Cooperative (D) Planned development
(A) Condominium Hint: The underlying land and virtually all of the rest of the structure that houses the condominium unit, along with any common ground, lawns, recreational facilities, and the like are owned in tenancy in common with other owners in the development
How should real estate licensees protect themselves when handling real estate transactions? (A) Document and disclose material facts (B) Only conduct business as an LLC (C) Not to engage in any real estate transactionswhatsoever (D) Waive any responsibility for seller's or buyer's decisions
(A) Document and disclose material facts Hint: The only option for those professionals who wish to press forward and succeed in their chosen vocation is to do their utmost to protect themselves. One way that this is performed is to document the disclosure of material facts--namely, those items that would affect the value or desirability of the property
Charlotte and Vanessa, both unmarried, enter into a purchase of real estate as joint tenants. Which of the following events would convert that into a tenancy in common? (A) If either one conveys to herself as a tenant in common. (B)The marriage of either one. (C)The death of either one. (D)If one of them sold her complete share to the other.
(A) If either one conveys to herself as a tenant in common. Hint: If someone is holding property in joint tenancy and no longer wants the disposition of the property to be governed by survivorship, that person should make a "straw person" conveyance of that person's share of the joint property. That person should execute and record a deed from that person to that same person. The parties will go on as cotenants as before, but as tenants in common instead of as joint tenants.
The parol-evidence rule refers to which of the following? (A) It is a rule that bars the introduction of most evidence regarding the oral negotiations of the parties that occurred prior to the execution of a written contract. (B) It is a rule of evidence that prohibits someone who was a party to a contract in which the other party has died from testifying about the meaning of the terms of the agreement. (C) It is a rule that prohibits someone in prison, on probation, or parole from entering into most contracts. (D) It is a rule that prohibits someone who has committed a felony from testifying about why that person entered into a contract.
(A) It is a rule that bars the introduction of most evidence regarding the oral negotiations of the parties that occurred prior to the execution of a written contract. Hint: "Parol evidence" refers to the oral discussions that precede the parties' reduction of those discussions into a written agreement.
Which is not one of the three tests used by the Federal Trade Commission to determine if something constitutes an unfair business practice? (A) The practice causes an insignificant consumer injury. (B) The harm of the injury outweighs a countervailing benefit. (C) The practice causes a substantial consumer injury. (D) The consumer could not reasonably avoid the injury.
(A) The practice causes an insignificant consumer injury. Hint: The FTC Act's three tests of unfair business practices are (1) the practice causes a substantial consumer injury, (2) the harm of the injury outweighs a countervailing benefit, and (3) the consumer could not reasonably avoid the injury.
A person with a salesperson license who wishes to perform the acts requiring a real estate license must: (A) be employed by an active broker. (B) be insured by a nationally-recognized insurance company. (C) have a degree from an accredited 2-year college. (D) have all of the above.
(A) be employed by an active broker. Hint: A salesperson license is required for people employed as salespeople under the supervision of a licensed broker. A salesperson without an employing broker may not perform acts requiring a license.
While the parties are domiciled in California, all property acquired by either spouse from earnings, profits, or other income is presumed to be __________ property. (A) community (B) quasi (C) separate (D) spousal
(A) community Hint: While the parties are domiciled in California, all property acquired by either one from earnings, profits, or other income is presumed to be community property