National Exam Practice Test 15
Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria's prepaid interest cost be at closing? A) $842.74 B) $871.80 C) $896.97 D) $927.90
A) $842.74
Generally, what's the common range for loan origination fees? A) 1% to 3% B) 1% to 5% C) 2% to 5% D) 3% to 5%
A) 1% to 3%
Which of the following is the best definition of a township? A) A 36-square-mile square formed when using the rectangular survey system B) A one-square-mile square formed when using the rectangular survey system C) A permanent reference point used in the measurement of elevations D) The point of beginning used in a metes and bounds survey
A) A 36-square-mile square formed when using the rectangular survey system
Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request? A) Addendum B) Amendment C) Annotation D) Appendix
A) Addendum
Christina purchased a house from Thomas. When did she officially gain ownership of the property? A) After the appraisal was completed B) Prior to closing after approving the Loan Estimate C) When actual notice of the deed was given to the mortgage company D) With the transfer of deed from the seller to the buyer
D) With the transfer of deed from the seller to the buyer
Savvy's buyer client made an offer on a property but is having second thoughts. Savvy tells her client that she'll ask the seller's agent for an extension on the inspection period "to gather more bids," and use that time to look at other properties to avoid losing out on the current property. Savvy's client found a property she liked better, so they made an offer. The offer was accepted, so Savvy contacted the first property's agent to terminate that offer. Is this wrong? A) No, she acted in her client's best interest. B) No, she fulfilled her duty of loyalty to her client. C) Yes, she broke a contract. D) Yes, she did not treat the other party honestly, or act in good faith.
D) Yes, she did not treat the other party honestly, or act in good faith.
Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title? A) A trustee B) Victor C) Victor's beneficiary D) Yolanda
D) Yolanda
What type of police power allows cities to identify specific uses for an area? A) Condemnation B) Eminent domain C) Escheat D) Zoning
D) Zoning
Almanzo is buying a horse farm for $695,000 and put down 15% in earnest money. His closing costs and down payment total $139,000. How much will he need to bring to closing? A) $20,850 B) $29,750 C) $34,750 D) $39,000
C) $34,750
The lender will charge a one-and-a-half-point origination fee and two loan discount points. What will be the total due for points on a $115,000 loan? A) $1,725 B) $2,300 C) $4,025 D) $575
C) $4,025
How might the lengthy purchase process for a short sale or foreclosure impact a buyer's financing? A) An existing interest rate lock may expire before the transaction is ready to close. B) Lenders won't lock in an interest rate because of the distressed nature of the sale. C) The lender may not be willing to finance a short sale or foreclosure. D) The purchase price may increase over time.
A) An existing interest rate lock may expire before the transaction is ready to close.
Shane's buyers learned during the inspection that there was water damage around the fireplace and that the chimney needed new flashing and to be repointed. To whom must Shane disclose that information? A) Any party to the transaction B) Only the listing agent C) Only the sellers D) Only the sellers and the lender
A) Any party to the transaction
How does the lender determine whether the property is worth the sales price? A) Appraisal B) Demographics of the area C) Prior history with borrower D) Style of home
A) Appraisal
Buyer Ed is reviewing the Loan Estimate he received from the lender he's working with. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, which of the following does Ed do? A) Ask the lender if there are other options available that would not involve a prepayment penalty. B) Check with his real estate agent to make sure that the penalty shown is typical. C) Laugh and throw the Loan Estimate in the trash. D) Resolve to not try to pay the loan off early.
A) Ask the lender if there are other options available that would not involve a prepayment penalty.
Mary agreed to buy her mother's house when her mother planned to move to a senior living community. They signed a purchase agreement, but when Mary had to move because of work, she signed her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario? A) Assignment B) Breach C) Novation D) Performance
A) Assignment
Why would a buyer want to know if any easements or encroachments exist on a property? A) Both easements and encroachments affect the property's lot size, enjoyment, and use, which can affect a property's value. B) Both easements and encroachments are illegal. The buyer could end up in court. C) The buyer may need this information to provide evidence for litigation. D) The buyer will have to remove these before the property can be re-sold.
A) Both easements and encroachments affect the property's lot size, enjoyment, and use, which can affect a property's value.
Mariah was appointed to a two-year term on Garden City's planning board. She's looking forward to meeting her fellow board members and working collaboratively on issues that affect their town. She's been told that the first order of business is a revision of the document that outlines the community's long-term needs and provides guidance on capital budgeting for those needs. What is this document called? A) Comprehensive master plan B) Environmental impact study C) Special use permit D) Zoning ordinance
A) Comprehensive master plan
What's the biggest security issue with using social networking sites to market your listings? A) Criminals may use social networking sites to identify properties that are vacant or have high-end possessions. B) It may not be effective since you're casting a wide net rather than targeting potential buyers. C) People may misinterpret your listing information and hold you responsible for their misunderstanding. D) People you don't know will have your name and contact information.
A) Criminals may use social networking sites to identify properties that are vacant or have high-end possessions.
Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?" A) Demand B) Scarcity C) Transferability D) Utility
A) Demand
Seth is a licensee representing seller Dora. Which of these items is Seth required to disclose to prospective buyers about the property? A) Dora doesn't use the back door because the steps leading to the yard are rotted. B) Dora keeps sunflowers planted in the back yard because the local birds can eat the seeds. C) The neighborhood kids like to ride their bikes in Dora's driveway. D) The pink geraniums in the window boxes are fake.
A) Dora doesn't use the back door because the steps leading to the yard are rotted.
Which of the following situations is an example of a non-agency relationship? A) Dutton was previously a licensee. He's selling his home, and he wants Wanda, who's currently licensed, to assist him with the paperwork. B) Kendra represents Steven in the sale of his home by helping him complete the necessary paperwork to make his offer. C) Licensee Alexa works closely with her buyer clients' lender to be sure the lender has all information needed to approve the loan. D) Licensee Ingrid helps her neighbor Jeremy spruce up his house before Jeremy's agent holds an open house.
A) Dutton was previously a licensee. He's selling his home, and he wants Wanda, who's currently licensed, to assist him with the paperwork.
What must sellers provide prospective buyers of homes built prior to 1978, in addition to the federally required disclosure form? A) EPA lead safety pamphlet B) List of reputable home improvement contractors C) Verbal assurance that the home is lead-free before offering it for sale D) Written proof that the home is lead-free
A) EPA lead safety pamphlet
If downzoning occurs in one area, reducing property values in adjacent areas, what can the homeowners in those adjacent areas do? A) File a claim for inverse condemnation. B) Require a zoning change to their own property. C) Sell at a loss and file a claim. D) Sue their neighbors.
A) File a claim for inverse condemnation.
What does the income approach to value rely on when valuing properties that are five or more units? A) Gross income multiplier B) Gross rent multiplier C) Monthly gross rent D) Sales comparison
A) Gross income multiplier
Which of the following is the cost of replacing a building in the case of total loss? A) Insured value B) Investment value C) Mortgage value D) Value in use
A) Insured value
You've just signed a listing with a new seller client. What's true about electronic delivery of written notice or contract forms to your seller? A) It's allowed if the seller consented to it in the listing contract. B) It's allowed with special permission from the commission. C) It's illegal in Colorado. D) It's legal as long as it's subsequent to physical hard copy delivery.
A) It's allowed if the seller consented to it in the listing contract.
If a licensee has fiduciary duties to obey all lawful instructions from a client and also to exercise reasonable skill and care, which answer describes a situation in which there is a conflict between the two fiduciary duties? A) Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer. B) Ronna's buyer client asked her to keep his financial situation confidential. C) Ted, Ronna's broker, insisted that she teach a contracts class, even though she's a new agent. D) Though her customer was adamant, Ronna turned down a commercial listing because it was outside her area of expertise.
A) Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
Shannon is reading through paperwork related to her upcoming home purchase when she comes across the following: "Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West." What did Shannon just find? A) Legal description B) Mortgage clause C) Quitclaim deed D) Tax description
A) Legal description
What's the relationship between TILA, RESPA, and TRID? A) The Dodd-Frank Act requires that lenders use the TILA-RESPA Integrated Disclosures (TRID). B) TILA and RESPA require lenders to use TRID. C) TILA, RESPA, and TRID mandate the lender disclosures required for federally related transactions. D) TRID mandates the type of disclosures for TILA- and RESPA-related transactions.
A) The Dodd-Frank Act requires that lenders use the TILA-RESPA Integrated Disclosures (TRID).
Which amendment to CERCLA says that "innocent landowners" aren't responsible for the cleanup of hazardous contamination? A) Environmental Responsibility Amendment B) Hazardous Contamination Amendment C) Superfunds Amendments and Reauthorization Act D) The Fair Housing Act
C) Superfunds Amendments and Reauthorization Act
Which one of Gerry's statements to a client crosses the line into unauthorized practice of law? A) "I'd encourage you to have an expert look at the exceptions on your title insurance commitment." B) "Most couples take ownership of property as joint tenants, so that's what I'd advise." C) "The contingency clauses in your contract give you options to terminate the contract if, for example, your financing falls through." D) "We can add the brokerage firm's standard language into the 'additional provisions' section to cover what you're suggesting."
B) "Most couples take ownership of property as joint tenants, so that's what I'd advise."
Seller Jason is giving listing agent Rebecca a tour of his house and pointing out all the features, even the spot in the attic where a previous owner's ghost likes to come back and visit. Jason asks Rebecca if buyers should be told about this. Which response is best? A) "All states require sellers to disclose any undesirable feature of a house, which includes ghosts." B) "The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws." C) "We can tell prospective buyers that the property comes with a roommate." D) "You can't mention this, because it would be a fair housing violation."
B) "The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws."
A buyer is purchasing a home for $400,000 and is financing $300,000. What is the loan-to-value ratio? A) 72% B) 75% C) 82% D) 96%
B) 75%
Which of the following may be considered a stigmatized property? A) A home that has been on the market for more than one year B) A home where a homicide, suicide, or haunting occurred C) A home with a panic room D) A home with no basement
B) A home where a homicide, suicide, or haunting occurred
The property management ______ cements the relationship between the property manager and the owner. A) Addendum B) Agreement C) Lease D) Waiver
B) Agreement
Which of these items around the fireplace could be a clue that there is a problem? A) Ash and soot in the firebox B) Cracked or sloping firebox or hearth C) Hole in the soffit D) Missing mantle
B) Cracked or sloping firebox or hearth
What factors does the underwriter consider in reviewing a mortgage loan application? A) Capacity, collateral, and criminal record B) Credit, capacity, and collateral C) Credit, capacity, and collections D) Credit, credentials, and collateral
B) Credit, capacity, and collateral
Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title? A) As long as the chain of title is traceable for at least the past 30 years, Mario will have marketable title. B) Depending on his state's laws, Mario may have marketable title. C) Mario will have to perform his own research to find information necessary for repairing the broken link. D) Unless the chain of title can be tracked back to its beginning, Mario won't have marketable title.
B) Depending on his state's laws, Mario may have marketable title.
What's the best definition of personal property? A) Artificial attachments to land that include things such as fencing, buildings, and walkways B) Everything that's not real property C) Land D) Property that's fenced
B) Everything that's not real property
Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have? A) Graduated lease B) Gross lease C) Net lease D) Percentage lease
B) Gross lease
Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this? A) Area preference B) Improvements C) Permanence D) Scarcity
B) Improvements
Which of these statements about a deed's habendum clause is true? A) It describes any easements or liens against the property. B) It's a description of the act of conveyance. C) It's required in all deeds. D) It's the full legal property description.
B) It's a description of the act of conveyance.
Mardee represented condo owner Carol, and they signed an exclusive agency listing agreement. If Carol found her own buyer, would she owe Mardee a commission? A) No, because Carol is not a real estate licensee. B) No, because Carol procured the buyer. C) Yes, because they have an exclusive agency listing agreement. D) Yes, but she only owes the listing commission.
B) No, because Carol procured the buyer.
Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare? A) Allow a friend to use his week. B) Pass the timeshare on to an heir. C) Purchase an additional week if it becomes available. D) Try to exchange weeks with another timeshare holder.
B) Pass the timeshare on to an heir.
If a community isn't growing in an orderly fashion, which local land use group is likely at fault? A) Downtown business association B) Planning board C) PTA D) Zoning board of appeals
B) Planning board
Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean? A) The HOA can collect twice the amount of the money that she owes. B) The HOA lien takes priority over all other liens. C) The HOA must involve an administrative law judge in order to collect. D) The lien can be attached to both her real and personal property.
B) The HOA lien takes priority over all other liens.
Danette hasn't paid the first quarter water bill on her property. It was due on April 1. She's closing with the buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement? A) This is an accrued expense, and will appear as a buyer debit and a seller credit. B) This is an accrued expense, and will appear as a seller debit and a buyer credit. C) This is a prepaid expense, and will appear as a buyer debit and a seller credit. D) This is a prepaid expense, and will appear as a seller debit and a buyer credit.
B) This is an accrued expense, and will appear as a seller debit and a buyer credit.
Sheila owns a timeshare that gives her ownership of the property for a certain number of weeks per year in perpetuity. What type of timeshare is this? A) Eternal timeshare B) Timeshare estate C) Timeshare in perpetuity D) Timeshare use interest
B) Timeshare estate
A buyer with a $242,000 loan has a monthly principal and interest payment of $1,317.66. If $1,033.54 is interest, what's the new principal balance after the first payment is applied? A) $240,682.34 B) $241,672.12 C) $241,715.88 D) $241,976.21
C) $241,715.88
Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $200,500. Their tax rate is 1.5%. How much will their monthly taxes be? A) $111.04 B) $191.37 C) $250.62 D) $86.49
C) $250.62
A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan? A) $1,108,292.40 B) $500,000 C) $608,292.40 D) $750,000
C) $608,292.40 **First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.
Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement? A) Credit of $1,059.10 B) Credit of $1,350 and debit of $484.04 C) Credit of $721.50 D) Debit of $1,214.85
C) Credit of $721.50 **Since she already prepaid the property taxes, first determine the tax daily rate: $1,350 ÷ 365 = $3.70. Next, determine how many days from closing until the end of the year, which is 195 days. Next, multiply the daily rate you calculated in the first step, $3.70, by how many days from closing, 195: $3.70 X 195 = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside of closing, so this doesn't appear on the closing statements.
Shirley's lender discharged the mortgage lien on Shirley's property after processing her final payment. Which clause requires the lender to take this action? A) Acceleration B) Alienation C) Defeasance D) Due-on-sale
C) Defeasance
Leases can end in several key ways. Mutual agreement and eviction are two. What is another way that a lease can terminate? A) Conversion B) Criminal use C) Expiration D) Neglect
C) Expiration
In general, what is the term for a person who's been placed in a position of loyalty and trust? A) Attorney in fact B) Client C) Fiduciary D) Mortgage lender
C) Fiduciary
When is a cease and desist order effective? A) 30 days after issuance B) 90 days after issuance and for 120 days total C) Immediately upon issuance D) Retroactive from the first date of the prohibited activity
C) Immediately upon issuance
In the eyes of a lender, when financing a residence, what advantage does an investor have over owner-occupied borrowers? A) Investors always pay cash. B) Investors are less of a risk. C) Investors can use rental income to qualify. D) Investors maintain their property better.
C) Investors can use rental income to qualify.
Which of these is an example of puffery? A) Kari's ad boasts that the property is "just blocks from the proposed metro light rail station." B) Katherine's ad for her newly renovated home states, "New from the studs up." Her carpenter might tell you a different story. C) Kevin's MLS remarks note that the condo has the city's "most beautiful twilight view of downtown and the bay." D) Kim notes that the property "overlooks a serene, peaceful green space." It's next to a cemetery.
C) Kevin's MLS remarks note that the condo has the city's "most beautiful twilight view of downtown and the bay."
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted? A) Appraisal B) Cost C) Price D) Value
C) Price
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? A) Equity mortgage B) Purchase agreement C) Purchase money mortgage D) Seller-insured loan
C) Purchase money mortgage
Which of the following is a buyer's agent's task or duty? A) Advocating for the seller B) Negotiating for the seller C) Representing the buyer's interests D) Reviewing transactional documents with the seller
C) Representing the buyer's interests
Which statement about radon testing is true? A) It can only be performed by a licensed professional. B) It is not necessary. C) Test kits are available for purchase. D) Test kits are not available to the general public.
C) Test kits are available for purchase.
Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home? A) The area rug in the dining room B) The banker's lamps in the den C) The chandelier in the foyer D) The patio heater on the back patio
C) The chandelier in the foyer
A client terminates a listing agreement before its expiration date. What happens now? A) The agent must send the client a notice of release form. B) The agent must sue. C) The client may owe a commission anyway. D) The listing is cancelled.
C) The client may owe a commission anyway.
Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here? A) Agency after the fact, because Kennie Mae continued to perform tasks for Buzz through the closing date. B) Law of agency, because Kennie Mae defined her agency relationship with Buzz through the tasks she performed. C) The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz. D) The ratification doctrine states that Kennie Mae ratified her relationship with Buzz by signing the closing paperwork.
C) The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz.
Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud? A) Agency disclosures B) Buyer representation agreement C) The original sales agreement and any addenda D) The title
C) The original sales agreement and any addenda
Why are galvanized pipes a problem in older homes? A) They are not a problem. B) They are out of date and can lead to a variety of electrical problems. C) They can rust and cause leaks and low water pressure. D) They indicate the heating and cooling system(s) are outdated.
C) They can rust and cause leaks and low water pressure.
In marketing her new listing, Alice asks the photographer to "touch-up" the photos of the house so that the old roof and siding look as though they are new. Which statement about this is true? A) If Alice didn't have the actual color of either the roof or the siding changed, this does not rise to the level of false advertising. B) This is deceptive advertising for which Alice, but not her broker, can be disciplined C) This is deceptive advertising for which both Alice and her broker may be disciplined. D) This is not a deceptive practice since any serious buyer will see the actual property before making an offer.
C) This is deceptive advertising for which both Alice and her broker may be disciplined.
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. A) American Agricultural Lending Service B) Farm Credit System C) USDA Farm Service Agency D) USDA Rural Development Program
C) USDA Farm Service Agency
Your buyer client Gwen wants to learn as much as she can and asks a lot of questions. Which of the following of Gwen's questions could you answer while staying within your scope of expertise? A) Do the wood shavings outside the basement window mean there are termites in the home? B) Is the mold in the basement the dangerous kind? C) What are the property taxes for this property? D) Will an investment in this property lower my income taxes?
C) What are the property taxes for this property?
What is the most common way that asbestos enters the body? A) Asbestos coating in water pipes can contaminate drinking water, which is then ingested. B) Asbestos in paint can be released into the air as the paint peels, which is then inhaled or ingested. C) When asbestos fibers decay or are disturbed, the friable particles can be inhaled. D) When rocks and soil decay, asbestos gas is released, which is then inhaled.
C) When asbestos fibers decay or are disturbed, the friable particles can be inhaled.
Roberto, a licensee, filled in the blanks on a standard form used in his brokerage firm. Is this okay? A) No, because he's not an attorney, he shouldn't prepare contracts. B) No, he should have his client complete any forms. C) Yes, licensees can use standard forms provided by the brokerage or approved by an attorney. D) Yes, real estate licensees may draft contracts and fill in blanks on existing contracts.
C) Yes, licensees can use standard forms provided by the brokerage or approved by an attorney.
A buyer with a 30-year, $750,000 loan at a 5.75% interest rate has a monthly principal and interest payment totaling $4,376.80. If $3,593.75 is interest, how much is applied to principal? A) $251.66 B) $3,593.75 C) $4,376.80 D) $783.05
D) $783.05
A property is 330 feet long by 100 feet wide. How many square feet is the property? A) 10,300 B) 30,000 C) 3,300 D) 33,000
D) 33,000
Which of these areas would be included in the livable area calculation? A) A detached garage B) An attached garage C) An unfinished attic area with seven-foot ceilings D) A pool house connected to the house by a hallway
D) A pool house connected to the house by a hallway
Which of the following is an example of constructive eviction? A) A landlord locks a tenant out of her unit after she fails to pay her rent for three months. B) A tenant chooses not to renew a lease when the term expires and moves out. C) A tenant dies. D) A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.
D) A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.
To which of the following borrowers might a lender be most likely to recommend an FHA loan? A) An investor who intends to use equity in another investment property as his down payment B) A retired couple interested in downsizing from a large four-bedroom house they own free and clear to a condominium C) A single stockbroker with a $40,000 down payment and significant assets in a stock portfolio D) A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores
D) A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores
In a real estate transaction, which two parties are owed the same duties? A) Clients and cooperating agents B) Clients and customers C) Clients and other parties D) Customers and other parties
D) Customers and other parties
Physical characteristics of land include its immobility, indestructibility, and ______. A) Location B) Permanence of investment C) Scarcity D) Uniqueness
D) Uniqueness
Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be? A) Easement appurtenant B) Easement by necessity C) Easement by prescription D) Easement in gross
D) Easement in gross
A buyer, hoping to beat out all other offers, included a clause in the offer that reads, "Buyer to beat all competing offers by $1,000 up to a price of $700,000. Seller to provide copies of competing offer to buyer on acceptance." What type of offer is this? A) Bad B) Dynamic C) Elevator D) Escalator
D) Escalator
Hannah wasn't able to get the financing to open her boutique, so her mother became a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this? A) Arbitration B) Choice of law C) Damages block D) Indemnification
D) Indemnification
Broker Sam has extended an offer to licensee Jane, who has accepted the offer. Jane will work as an independent contractor for Sam. Based on this, which of the following statements is true? A) As an independent contractor, Jane will not have to fill out any tax-related or IRS-related paperwork. B) It is up to Jane whether or not she wants to have taxes withheld from her pay. If she does choose to have taxes withheld, she must complete a W-4. C) Jane will need to fill out a W-4 for tax withholding information. D) Jane will need to fill out a W-9 for IRS reporting purposes.
D) Jane will need to fill out a W-9 for IRS reporting purposes.
What attracts borrowers to adjustable rate mortgages? A) Balloon payment B) Convertible feature C) Initial cap D) Lower initial interest rate
D) Lower initial interest rate
Shari's clients want her to post that there are "no showings on weekends" on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______. A) Accounting B) Disclosure C) Loyalty D) Obedience
D) Obedience
How are fines assessed for violations of the CAN-SPAM Act? A) Daily B) Monthly C) Per complaint D) Per violation, which can be a single email
D) Per violation, which can be a single email **Solicitors may be charged more than $40,000 for every email they send that violates the CAN-SPAM Act.
An example of this type of leasehold estate is a month-to-month lease. A) Estate at sufferance B) Estate at will C) Estate for months D) Periodic estate
D) Periodic estate
Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property? A) Ensure that Cheng signs the deed. B) Ensure that he signs the deed. C) Purchase title insurance. D) Record the deed in his name.
D) Record the deed in his name.
Jim is meeting with a client at a listing. Outside the basement window, there are wood shavings. The client asks Jim if they mean there are termites in the home. What would be an appropriate response? A) Investigate further before offering an opinion. B) Offer his opinion that it usually doesn't mean there are termites present. C) Reassure the client that there is no termite infestation. D) Refer the client to a qualified pest professional.
D) Refer the client to a qualified pest professional.
Ron's company leased a building so that it could build an escape room experience. After operating for two years, attendance (and thus its profits) started to drop significantly, so it decided to close the location. When the workers started taking down the installation, they realized that some of the structures would damage the walls if they were to try to remove them. Which of these is true about these trade fixtures? A) If Ron leaves them in place and the lease expires, he has three months to remove them. B) Ron is required to leave the fixtures if they're attached. C) Ron is required to take the fixtures and return the premises to its original condition. D) Ron may take the fixtures as long as he repairs any damage caused by removal.
D) Ron may take the fixtures as long as he repairs any damage caused by removal.
Eleanor is moving from a starter home into something a little larger. Her agent has cautioned her against making the offer on the new place contingent on the sale of Eleanor's starter home. Why the caution? A) Eleanor might want to keep and rent out her smaller home as an income source. B) Eleanor should include a minimum of two contingencies to let the sellers know she is serious. C) Eleanor's lender might be wary of contingencies. D) Sellers would view an offer without that contingency as a stronger offer.
D) Sellers would view an offer without that contingency as a stronger offer.
The economic principle that tells us that when supply goes up, price goes down is also called ______. A) Conformity B) Price dropping C) Regression D) Supply and demand
D) Supply and demand
Ken, a licensee, has published an ad claiming that he can sell homes for 25% more than any of his competitors. The Federal Trade Commission determined this to be a deceptive ad. What might the FTC require Ken to do as a penalty for his deception? A) Discontinue publishing any ads for one full year. B) Live up to the claims in his ad within the next six months or go to prison. C) Pay each client 25% of the sale price for every house he sells. D) Take out new ads correcting the misinformation in his original ad.
D) Take out new ads correcting the misinformation in his original ad.
When a mortgage is used as a security instrument, who holds the mortgage and the promissory note? A) The borrower holds the mortgage, and the lender holds the note. B) The borrower holds the mortgage and the note. C) The lender holds the mortgage, and the borrower holds the note. D) The lender holds the mortgage and the note.
D) The lender holds the mortgage and the note.
Which of the following scenarios describes information that a licensee must disclose? A) The licensee heard a rumor that the city may buy houses on the street next year to build a freeway ramp. B) The licensee learned that the property had a tax reassessment last year. C) There are community-wide rumors that the property in question is haunted. D) The seller didn't disclose any leaks, but the licensee sees moisture on the basement floor.
D) The seller didn't disclose any leaks, but the licensee sees moisture on the basement floor.
Dave's company just did some renovation work on a free-standing hobby store in order to ensure that it's ADA compliant. As Dave is doing the final walk-through, he notes that the aisles are now wider, the restrooms each have an accessible stall, and the water fountain near the restrooms is lower and has more clearance. But he notices that one critical renovation hasn't been made. Which of these is key for ADA compliance? A) The cash register should be lower with no visual barrier. B) There should be a completely separate accessible restroom. C) There should be an accessible pay phone in the store. D) There should be a ramp in addition to steps for wheelchair accessibility.
D) There should be a ramp in addition to steps for wheelchair accessibility.
An attorney receives a request to have an appraisal performed on a property inheritance that she is transferring from her deceased client's estate to his heir. Which of these statements is true? A) A licensee or certified appraiser must always appraise estates that are inherited, but other types of estates are exempt. B) Appraisals performed for attorneys for any reason must be performed by a certified appraiser. C) Estate-related property transfers always require a certified appraisal. D) This isn't a federally related transaction and under federal law an appraisal isn't required.
D) This isn't a federally related transaction and under federal law an appraisal isn't required.
The benefits of a home warranty for buyers are clear. Why might sellers want to offer a home warranty to buyers? A) To allow the buyer the option to customize features of the home. B) To allow the buyer to customize certain items. C) To keep from having to buy new appliances before putting the home on the market. D) To protect themselves from any claims after closing.
D) To protect themselves from any claims after closing.
Sylvan, the seller, and Eric, the buyer, have signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until Eric exercises his option to buy, only Sylvan is bound by the option agreement; he may not sell the property to anyone else during the option period. What type of contract is this? A) Bilateral B) Executed C) Mutual D) Unilateral
D) Unilateral
It's January, and the pool at Roger's listing has been prepped for winter for several weeks. The homeowner assures Roger that it's in good working order. Roger has no reason to disbelieve the homeowner, so he tells prospective buyers that the pool is fine. The property sells, spring comes, and the new owners call to complain that the pump doesn't work, and the pool drain appears to be clogged. What did Roger commit? A) Fraud B) Negligent misrepresentation C) Puffery D) Unintentional misrepresentation
D) Unintentional misrepresentation