National Practice Exam #1

Which of the following items is not covered as a trigger term under Regulation Z? A. loan amount B. down payment amount C. frequency of payments D. number and amount of payments

frequency of payments

An agent is to receive 5% commission on a piece of property that was listed for $30,000. How much commission would he receive if the owner reduced the selling price by 15%? A. $1,275 B. $1,380 C. $1,500 D. $4,500

$1,275

Mr. Jones' property is valued at $17,700. It is assessed at $10,000 and taxed at a rate of $0.036 per dollar. If the tax is increased to $0.040 per dollar with the same assessment, how much more will Jones be required to pay? A. $36 B. $40 C. $360 D. $400

$40

Fabian owns a lot that measures 80 feet by 20 feet. What is the area of his lot? A. 1,200 square feet B. 1,400 square feet C. 1,500 square feet D. 1,600 square feet

1,600 square feet

A broker lists a property. A buyer submits a written offer and the seller accepts it. On the date scheduled for closing, the seller refuses to sign any of the papers. The broker is entitled to: A. A full commission because he fully performed B. One-half of the agreed upon commission C. Out of pocket expenses, but only if the client is in breach D. Nothing until the papers are ratified

A full commission because he fully performed

Zorba owns property and gladly allows his friend, Young, to use it. To best protect Zorba's interest, he should give Young: A. An easement in gross B. A right of way C. An appurtenant easement D. A license

A license

Truth-In-Lending (Regulation Z) applies to which of the following loans? A. A loan to purchase a single family home B. A purchase money mortgage C. A loan to purchase a 16-unit apartment building D. All of the above

A loan to purchase a single family home

RESPA does not apply to which of the following sales? A. A residential property with 100% seller assisted financing B. A residential condominium unit C. A townhouse in a new development with more than 25 units D. A single family dwelling

A residential property with 100% seller assisted financing

What is NOT a cloud on title? A. A valid first mortgage B. A recorded contract for deed under which the buyer's rights have been judicially terminated C. A recorded option contract whose option period has expired D. A recorded mortgage that has been paid in full, but a satisfaction has never been recorded

A valid first mortgage

What is a clause in a mortgage that prevents a buyer from assuming an existing loan? A. Condemnation B. Defeasance clause C. Alienation clause D. Acceleration clause Feedback

Alienation clause

When showing and selling property, a salesperson must: A. Inform buyers about hidden property defects B. Avoid statements which may deceive the buyer C. Present all offers, even after the seller has already accepted D. All of the above

All of the above

Which of the following contracts would be invalid if it did NOT contain a description of the property? A. A listing agreement B. A contract for the sale of real property C. A real estate option agreement D. All of the above

All of the above

In the process of taking a listing, a salesperson notices water stains on the ceiling of one of the rooms. What should the salesperson do? A. Nothing, because it is not a latent defect B. Nothing, because the stain is old C. Ask the owner if there is a leak D. Decline to list the property

Ask the owner if there is a leak

Broker Bill with XYZ Realty sells a property that was listed by Gene, an independent broker. In this transaction, what is the relationship between Bill and Gene? A. Bill is the agent; Gene is the principal B. Bill is the trustee; Gene is the trustor C. Bill is the sub-agent; Gene is the agent D. Either A or C could be correct

Bill is the agent; Gene is the principal

Employees generally: A. Work under direct supervision B. Hold regular office hours C. Choose how best to accomplish a task D. Both A and B

Both A and B

If a deed transferring legal title from one party to another is NOT recorded in the public record, which of the following statements is correct? A. The deed is valid B. The grantor gives up all rights to the property conveyed C. The transfer is not valid D. Both A and B

Both A and B

Consistent with Fair Housing Laws, an owner of an apartment building rents exclusively to the elderly. Currently, 70% of his units are occupied and 30% are vacant. To continue renting exclusively to the elderly (without violating Fair Housing Laws), the owner may rent the next unit to all of the following persons, EXCEPT: A. A couple who are expecting a baby B. A 65 year old handicapped person C. A retired 53 year old widow D. Both A and C

Both A and C

A property sold for $84,500 with a settlement date of August 1st. The property's tax assessment was $12,000 for the land and $59,500 for the improvements. Tax payments are due on January 1st and July 1st for the calendar year. Only the January 1st payment was made. If the tax rate is $2.69 per hundred, which of the following statements is true? A. Seller receives $189.42; Buyer owes $189.42 B. Buyer receives $189.42; Seller owes $189.42 C. Seller receives $160.28; Buyer owes $160.28 D. Buyer receives $160.28; Seller owes $160.28

Buyer receives $160.28; Seller owes $160.28

Cheryl and Chris enter into a buyer-broker agreement. They specify that the agreement will last for a two week period. At the end of two weeks, Chris informs Cheryl that the agreement is no longer binding. Chris is: A. Correct, so long as the agreement was written B. Incorrect, because the agreement is valid for a reasonable amount of time C. Correct, regardless of whether Chris informed Cheryl D. Incorrect, unless Cheryl agrees

Correct, regardless of whether Chris informed Cheryl

Title passes from the grantor to the grantee after a deed is: A. Signed B. Acknowledged C. Delivered D. Recorded

Delivered

If a person has been discriminated against in a real estate transaction, they could file a complaint with the: A. Local Association of REALTORS B. National Association of REALTORS C. Department of Housing and Urban Development D. Department of Health, Education and Welfare

Department of Housing and Urban Development

A property owner learns that a poisonous gas plant is going to be built next door. She appeals to a court to stop this construction. The basis for her appeal would be: A. Physical deterioration B. Functional obsolescence C. Economic obsolescence D. Environmental obsolescence

Economic obsolescence

One of the principal purposes of zoning is to: A. Restrict business activities B. Effectively plan C. Affect property values D. Generate revenue through taxes

Effectively plan

An owner entered into a valid listing agreement. During the agreement period, the seller sells the property himself. The seller is not legally required to pay a commission to any broker. What type of listing agreement did the seller have? A. An open listing B. An exclusive agency C. An exclusive right-to-sell listing D. Either A or B

Either A or B

When the seller and purchaser sign a sales contract, the purchaser receives: A. Equitable title B. Possession C. Fee simple estate D. Formidable Interest Feedback

Equitable title

The clause in a lease that allows rent to increase is a(n): A. Acceleration clause B. Percentage clause C. Escalator clause D. Contingency clause

Escalator clause

After failing to locate an owner or rightful heirs, the state may acquire ownership of abandoned property through: A. Eminent domain B. Adverse possession C. Escheat D. Estoppel

Escheat

Tom lists his home with Salesman Gary, with the provision that the house not be shown if he is not at home. Tom leaves town on Monday for a two week business trip. On Tuesday, Jose and Maria (a minority couple) contact Gary to see Tom's house. Gary refuses to show the house. In this situation, which of the following statements is true? A. The couple should file a discrimination suit against Tom, the owner of the property B. The couple should complain to Gary's broker and demand to be shown the property C. The couple should sue Tom, Gary, and the broker for refusing to deal with them in violation of Fair Housing Laws D. Gary's refusal to show the property satisfies his fiduciary duty to Tom

Gary's refusal to show the property satisfies his fiduciary duty to Tom

An agency relationship is created when a broker employs a property manager. This agency is considered to be: A. Specific B. General C. Managerial D. Universal

General

Property management agreements usually represent a: A. General agency B. Special agency C. Dual agency D. Universal agency

General agency

Jon purchased a 640 acre tract of land. Which method of legal property description would work best for Jon? A. Monument B. Metes and bounds C. Recorded plat D. Geodetic

Geodetic

Using a property in the most profitable manner is called the: A. Economic life B. Highest and best use C. Principle of conformity D. Reconciliation process

Highest and best use

A broker would be in violation of the Federal Fair Housing Act for all of the following actions, EXCEPT: A. Refusing to list a 4-unit apartment because it is owned and occupied by a minority couple B. Accepting a listing with the intention of changing the racial make-up of the neighborhood C. Hiring salespersons on the basis of sex, regardless of experience or qualifications D. Refusing to show a German couple property that is located in a mostly Italian neighborhood

Hiring salespersons on the basis of sex, regardless of experience or qualifications

When using the cost approach method, the appraiser subtracts the depreciation amount from the total value of a property. The appraiser would allow for depreciation of: A. Improvements only B. Land only C. Both land and improvements D. None of the above

Improvements only

Which method would an appraiser most likely use in estimating the value of an office building? A. Comparative market analysis B. Cost approach C. Income approach D. Market data approach

Income approach

The FDIC: Select one: A. Insures depositors up to $100,000 total B. Insures depositors up to $250,000 total C. Insures depositors up to $100,000 per individual account and institution D. Insures depositors up to $250,000 per individual account and institution

Insures depositors up to $250,000 per individual account and institution

Mary purchased the right to use an apartment for 2 weeks every year. This is an example of: A. Interval ownership B. Ownership as a joint tenant C. Cooperative ownership D. A limited partnership

Interval ownership

A person has the capacity to contract if he: A. Is mentally competent B. Has given consent C. Has agreed to the terms of the contract D. Is not subject to coercion

Is mentally competent

Barry makes a $150,000 offer on Pam's home, subject to financing at 4%. Pam accepts Barry's offer, but only agrees to 6% financing. Which of the following statements is INCORRECT concerning Pam's acceptance? A. It is a partial acceptance of the original offer B. Barry is now the offeree C. Pam rejected Barry's offer D. Pam may withdraw her offer at any time, prior to acceptance by Barry

It is a partial acceptance of the original offer

In order to be legally binding on all parties, a contract for sale of real estate MUST include: A. The signature of the spouse, if the seller is married B. An earnest money deposit C. A method to calculate the licensee's commission D. Legally competent parties

Legally competent parties

Discount points increase yields for: A. Brokers B. Lenders C. Sellers D. Buyers

Lenders

Which of the following acts does NOT constitute a violation of Federal Anti-Trust Laws? A. Real estate broker agreeing to charge the same commission rate B. Real estate brokers agreeing to not cooperate with a certain firm C. Lenders charging usurious interest rates D. Establishing territories in which brokers may operate

Lenders charging usurious interest rates

A title insurance policy reimburses the title holder for: A. Loss of property through foreclosure B. Loss as a result of a superior claim C. Damage caused by a fire D. Flood damage

Loss as a result of a superior claim

Gwen lists her home with Broker Steve under a valid exclusive right-to-sell listing. Steve works diligently to find a buyer for Gwen. After two weeks of focused searching, Steve finally finds a buyer to make an offer. However, when Steve presents the offer to Gwen, he discovers that Gwen also worked with Broker Gerry and sold her home without informing Steve. Steve is furious and demands his commission. Is Steve's listing still active? A. Yes, because Gwen and Steve had a valid exclusive right-to-sell listing B. No, unless the offer was at or above the list price C. No, because Gerry sold the house D. Yes, assuming that Gwen is in breach

No, because Gerry sold the house

Many Korean families have purchased homes in a specific neighborhood of your community. Now, local merchants are marketing to the Korean clientele. A Caucasian resident listed his house with your firm and you add the property to the MLS. You also place a bilingual ad in the newspaper and a bilingual "For Sale" sign on the property. Are your actions discriminatory? A. No, this is proper marketing practice B. No, because you are targeting the market most likely to purchase the property C. Yes, because national origin is protected by the 1968 Fair Housing Law D. Yes, because bilingual ads are a form of steering

No, this is proper marketing practice

A salesperson listed a property where a murder recently occurred. If the salesperson shows the property without advising potential buyers of the murders, the salesperson would be guilty of: A. Fraud B. Misrepresentation C. Puffery D. Nothing

Nothing

What is the difference between an easement and a deed restriction? A. One can "run with the land" and the other cannot B. One controls the use and the other controls the access C. One is created in a deed and the other is not D. Both must be in writing

One controls the use and the other controls the access

Jill agrees to sell a three-bedroom ranch to Jason. Per the sales agreement, Jill deposits the deed to the ranch in escrow. Subsequently, Jill dies. The ranch will most likely: A. Pass to Jill's heirs, provided she left a valid will B. Pass to the estate because the escrow terminates C. Pass to Jason, provided he satisfies the terms of the sales agreement D. Pass to Jason if he is an heir of Jill's

Pass to Jason, provided he satisfies the terms of the sales agreement

Which of the following covenants is most often included in a mortgage? A. Seisin B. Further assurances C. Quiet enjoyment D. Pay taxes

Pay taxes

A tenant just signed a five year lease in a shopping mall. Under this lease, the rent is $3,000 a month plus 3% of gross sales over $800,000. This agreement describes a: A. Gross lease B. Percentage lease C. Graduated lease D. Net lease

Percentage lease

Which of the following is NOT required for a valid real estate sales contract? A. Performance B. Offer and acceptance C. Consideration D. Must be in writing

Performance

Which method of legally property description relies on range lines? A. Vertical B. Lot, block, an subdivision C. Rectangular D. Monument Feedback

Rectangular

Nice and Easy Loan Company has a policy of either restricting the availability or requiring lower LTV ratios for loans made in "high risk" areas of the community. This practice is known as: A. Steering B. Blockbusting C. Redlining D. Good business

Redlining

Jean transfers a fee simple interest in property to her daughter, Lisa, but reserves a life estate for herself. During Jean's lifetime, Lisa holds a: A. Life interest, pur autre vie B. Remainder interest C. Reversionary interest D. Life estate

Remainder interest

A buffer zone would most likely separate: A. Office space from retail space B. Light industrial from heavy industrial C. Open space from residential D. Residential from commercial

Residential from commercial

A property owner obtains a permit to add a bedroom onto her house. Her neighbors notice that an addition would violate setback restrictions in the owner's deed. What is the best course of action for any affected neighbors? A. Sue for damages B. Nothing. The country sanctioned the addition by issuing a building permit C. Seek an injunction, forcing the owner to tear down the addition D. Ask the county to revoke her building permit

Seek an injunction, forcing the owner to tear down the addition

Federal Fair Housing Laws do NOT provide protection on the basis of: A. Gender B. Handicap C. Sexual preferance D. Single parenthood

Sexual preferance

A Hispanic family asks to see homes in the $125,000 to $140,000 price range. The broker only showed them property in integrated areas of the community, though there were appropriately priced homes in all-white areas of town. The broker is guilty of: A. Steering B. Blockbusting C. Gentrification D. Nothing, because the family did not specifically request to see the homes in all-white areas

Steering

Broker Johnson has listed Cheever's property and sells it to Brevard for $75,000. Before closing, Johnson discovers that the property has a serious structural defect. What should Johnson do? A. Tell Cheever only because he is Cheever's agent B. Tell Brevard only to satisfy his fiduciary duty C. Tell no one if the sales contracts already been executed D. Tell Cheever and Brevard to avoid liability

Tell Cheever and Brevard to avoid liability

Enforcement of the Fair Housing Law of 1968 is the primary responsibility of: A. The Federal Housing Administration B. The Federal Department of Housing and Urban Development C. The Federal National Mortgage Association D. The Government National Mortgage Association

The Federal Department of Housing and Urban Development

It would NOT be considered commingling of funds, if: A. The broker holds an earnest money deposit check, at the request of the offeror, until acceptance by the offeree B. The broker holds an earnest money deposit check, at the request of the offeror, after acceptance by the offeree C. The broker holds an earnest money deposit in his personal account until the offer is accepted or rejected D. The broker holds an earnest money deposit in his brokerage account because the deal is going to be all cash

The broker holds an earnest money deposit check, at the request of the offeror, until acceptance by the offeree

All of the following statements about the impossibility defense must be true, EXCEPT: A. At least one party is excused from performance B. At least one party cannot legally perform as agreed C. The contract could be rescinded, pursuant to a rescission agreement D. Neither party is liable for damages

The contract could be rescinded, pursuant to a rescission agreement

What is NOT true about metes and bounds? A. The metes and bounds survey ends at the point of beginning B. The distances shown in the deed will prevail over the actual distances measured C. The length of metes in the survey can be measured to one hundredth of a foot D. The monument at the point of beginning should be as permanent as possible

The distances shown in the deed will prevail over the actual distances measured

If a tenant and a landlord enter into a 3-month lease that expires at the end of the year, which of the following is correct? A. The lease may be oral B. The tenant must give 30 days notice before terminating the lease C. The landlord must give 30 days notice before terminating the lease D. The lease will extend for another term if the parties fail to provide proper notice

The lease may be oral

The vendee is: A. The one who buys or offers to buy B. The one who sells or offers to sell C. The one who lends or offers to lend money D. The one who borrows or offers to borrow money

The one who buys or offers to buy

Which of the following statements is true about options? A. The optionor can void the option if another offer is submitted B. The optionee can allow the option to expire C. The optionee can extend the option period automatically D. Options only involve raw land

The optionee can allow the option to expire

A property management contract is between the property manager and: A. His or her employees B. The owner of the property C. The tenants D. All of the above

The owner of the property

One house in a large neighborhood stands out because, compared to the others, it is not well maintained. Which concept best explains this single home's impact on the surrounding community? A. The poorly maintained home value may rise due to immobility B. The value of all other homes in the neighborhood will decrease due to immobility C. The poorly maintained home value would increase if it were assembled with another lot D. The values of other homes in the neighborhood will decrease due to situs

The poorly maintained home value may rise due to immobility

What would the appraisal of a single-family residence probably NOT take into consideration? A. The potential rental income B. The location of the property C. The floor plan of the house D. The sales price of the house across the street

The potential rental income

Real estate salespersons often prepare a CMA when making listing price recommendations. Which principle is a CMA primarily based upon? A. The principle of conformity B. The principle of contribution C. The principle of substitution D. The principle of highest and best use

The principle of substitution

Which of the following statements is true of mortgage brokers? A. They close, but do not service, mortgage loans in their own name B. They service, but do not close, mortgage loans in their own name C. They close, but do not service, loans in the name of the lender D. They service, but do not close, loans in the name of the lender

They close, but do not service, loans in the name of the lender

Which of the following policies provides compensation for defects? A. Homeowner's insurance B. Private mortgage insurance (PMI) C. Title insurance D. Both B and C

Title insurance

All of the following situations represent a transfer of real property upon the death of an owner, except: Select one: A. Escheat to the state B. Transfer by devisee C. Transfer by descent D. Transfer by eminent domain

Transfer by eminent domain

Which of the following actions would be a violation of anti-trust laws? A. Two brokers agree to only market their services in specific areas of the community B. Jim, a broker, advertises that his firm will only represent buyers C. An independent broker refuses to join the local Association of Realtors D. A firm has some salespersons working as independent contractors and others working as employees

Two brokers agree to only market their services in specific areas of the community

Two brokers agree to charge the same commission rate on all property listed by their offices. Such an action: A. Is common practice B. Violates Anti-Trust laws C. Violates both RESPA and Regulation Z D. Violates the Fair Housing Law

Violates Anti-Trust laws

Wilma lists her house with Broker Fred under an exclusive right-to-sell agreement. Fred later abandons the listing. Which of the following statements is true about this situation? A. Wilma must maintain the listing with Fred until the expiration date B. Wilma may terminate the listing C. Wilma must wait 90 days before she can list the property with another broker D. Wilma must file a notice of abandonment

Wilma may terminate the listing

Which of the following items is NOT a latent defect? A. Worn carpeting B. Seasonal flooding in the basement C. A foundation crack covered with paneling D. A faulty, but working, heating system

Worn carpeting

Broker A shows a house with a faulty roof. When he finds out about the roof, should he tell the buyer/customer? A. Yes, it is an agency responsibility B. Yes, it is a material fact C. Only if he is a dual agent D. Only if he has the seller's permission

Yes, it is a material fact

Jimmie the Gent is interested in property valued at $450,000. Jimmie will qualify for a $375,000 loan. However, Jimmie refuses to purchase if his LTV would fall under 80%. Is Jimmie likely to purchase the property? A. Yes, the LTV is within Jimmie's range B. No, unless Jimmie qualifies for another $2,000 C. Yes, so long as Jimmie qualities for another $10,000 D. No, unless Jimmie qualified for another $10,000 Feedback

Yes, the LTV is within Jimmie's range

A property is valued using the income approach to valuation. If the capitalization rate remains the same, but the NOI increases, will the property value be affected? A. Yes, the property value will decrease B. No, the property value will remain the same C. Yes, the property value will increase D. There is not enough information to choose an answer

Yes, the property value will increase