Practice Exam #1
Someone who has power of attorney may do all of the following except: a) Sign the name of his principal b) Deed the property to another person c) Charge commission for himself d) Deed the property to himself
d) Deed the property to himself
Interest rate on trust deed loans are primarily determined by which of the following: a) International market b) Federal reserves c) Demand for federal government loans d) Demand for supply of money
d) Demand for supply of money
Which of the following phrases will best describe the nature of a payment, to keep the principal informed: a) Fiduciary obligation b) Ethical conduct c) Good business practice d) Responsibility
c) Good business practice
Which of the following is not a lien: a) An encroachment b) A mortgage c) A trust deed d) Property taxes
a) An encroachment
A roof with four slopes is known as: a) Hip roof b) Gable roof c) Grabble roof d) Solar roof
a) Hip roof
When a lender in a trust takes a deed in lieu of foreclosure who is liable for the second financing: a) Trustor b) Beneficiary c) Trustee d) Mortgagor
b) Beneficiary
The provisions of the Subdivision Map Act are enforced by the: a) Real Estate Commissioner b) Subdivision Land Act c) Planning commission d) Contractor License Board
c) Planning commission
If no notice of non completion is recorded on an improvement project anyone can record a mechanics lien within: a) 10 days b) 30 days c) 60 days d) 90 days
d) 90 days
A title company could make a title search by searching the records of the: a) County clerk's office b) County recorder's office c) Federal land office d) All of the above
d) All of the above
An easement could be created for what length of time: a) Perpetual b) For years c) Lifetime d) Any of the above
d) Any of the above
An appraiser's narrative appraisal report of a single-family residence probably would contain no reference to: a) Appraiser's qualifications b) Neighborhood data c) Market analysis d) Type of financing available
d) Type of financing available
A salesperson was to receive a 45% share of a 6% gross commission. He received $8,100. The property sold for: a) $300,000 b) $200,000 c) $280,000 d) $400,000
a) $300,000 $8,100 / 45% = $18,000 $18,000 / 6 % = $300,000
Mr. Smith bought a property for $72,000 with $20,000 cash down payment and a $52,000 loan. The loan did not require interest and did not require any payments for one year. One year later, he sold the property for double its purchase price. Each dollar of his original cash investment is now equal to: a) $4.60 b) $7.30 c) $2.30 d) $6.90
a) $4.60 $72,000 X 2 = $144,000 $144,000 - $52,000 = $92,000 $92,000 / $20,000 = $4.60
If a broker is an agent of a seller, he owes the buyer: a) A duty of fair and honest dealing b) Same fiduciary obligation to the buyer as the seller c) Questions from the buyer as related to the sales price d) Answers to questions about the monthly payment
a) A duty of fair and honest dealing
A broker was able to make a sale to an interested buyer based on false information that the seller had provided to the broker. The broker had acted in good faith and in a reasonable manner in relying on the false information. Thereafter, the buyer rescinded the contract because of the fraud. Given these circumstances, the broker is entitled to: a) A full commission and indemnity for any loss caused by any related legal action by the defrauded buyer against the broker b) Only expenses related to property advertising c) Half commission d) No commission
a) A full commission and indemnity for any loss caused by any related legal action by the defrauded buyer against the broker
Which of the following best describes the actions of an agent under single agency: a) A single-agency broker is client-oriented b) A single agency represents the buyer and seller c) In one transaction no escrow instructions are needed d) Buyer and seller represent themselves
a) A single-agency broker is client-oriented
Walker hired a construction company to install a swimming pool on their residential premises. In the event the construction company was unpaid and it was necessary for them to file a lien for payment of the contract, the encumbrance created would be: a) A specific lien b) A general lien c) Attachment lien d) Contractors lien
a) A specific lien
A trust deed can have a provision that allows future loans on the property to have priority: This would be called: a) A subordination clause b) An acceleration clause c) Or more clause d) A prepayment penalty clause
a) A subordination clause
Listing a home at an inflated price requiring minority prospects to pay that price, but accepting a lower price from other prospects: a) Could cause the listing salesperson and broker to be liable for money damages in a Fair Housing suit. b) Violation of the Fair Housing Laws c) Is illegal under FHA and VA financing loans only d) Is not illegal if the buyer agrees to the price
a) Could cause the listing salesperson and broker to be liable for money damages in a Fair Housing suit.
Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, sex, national origin, or ancestry: a) Department of Fair Employment and Housing Act b) Discrimination Act c) Department of Real Estate d) Labor and construction department
a) Department of Fair Employment and Housing Act
A deed: a) Does not have to be recorded to transfer title b) It has to be recorded to be valid c) It has to be acknowledged d) Can only be recorded by the lender
a) Does not have to be recorded to transfer title
Three of the following real estate terms are closely associated, which term doesn't go with the group: a) Easement b) Lien c) Judgment d) Attachment
a) Easement
A contractor was building a new home. Before completion, he received several offers to rent the property. Just before completion, he received several offers to rent the property. Just before completion, the city announced that it was taking 10 feet off the front of the property to widen the street to facilitate traffic,. Thereafter, offers to rent were for approximately, 10% less. This would be an example of which of the following types of depreciation: a) Economic obsolescence b) Functional obsolescence c) Functional and economic obsolescence d) Depreciation
a) Economic obsolescence
When a governmental body takes private real property for necessary public use, certain legal processes must be followed. Such a taking is an exercise of the right of: a) Eminent domain b) Police power c) Escheat d) Zoning laws
a) Eminent domain
The basis of the market data approach to appraising is found in: a) The principle of substitution b) The principle of progression c) The principle of stability d) The principle of conformity
a) The principle of substitution
When an air conditioning unit has a higher energy efficiency ratio (EER), it means that: a) The unit is more efficient b) The unit is less efficient c) The unit needs more electricity to operate d) The unit needs less electricity to operate
a) The unit is more efficient
A real estate licensee refers transactions to a specific escrow company, because the escrow company pays him a referral fee for each such referral. Regarding this arrangement, which of the following is correct: a) This arrangement is prohibited under real estate law b) If the amount does not exceed $50 it is permissible c) If all parties are informed it is permissible d) If the fee doesn't increase the amount charged in the good faith estimate
a) This arrangement is prohibited under real estate law
Which of the following loans on a home would probably be made without requiring a down payment from the borrower: a) VA loan b) CAL-Vet c) FHA d) Conventional
a) VA loan
If a 32-unit apartment building shows an annual net income of $117,800, and the appropriate capitalization rate is 8%, what is the approximate value of the property: a) $9,424,000 b) $1,472,500 c) $1,178,000 d) $1,170,790
b) $1,472,500
Two brokers agreed to split a 4 1/2% commission on a 50-50 basis on the sale of a property for $162,500. The listing salesperson agreed to a 50-50 split with his employing broker. What is his commission: a) $3,656.20 b) $1,828.13 c) $5,400.00 d) $4,860.00
b) $1,828.13 $162,500 X 45% = $7,312.50 $7,312.50 X 50% = $3,656.250 $3,656.25 X 50% = $1,828.13
Morrison receives a net income of $675 per month at an annual return rate of 7 %. Morrison's investment amounted to: a) $8,100 b) $108,000 c) $10,000 d) $110,000
b) $108,000 $675 X 12 = $8,100 $8,100 / 7 % = $108,000
A property sold for $150,000 in a county which had established a documentary transfer tax rate of $ .55 for each $500. Of the purchase price only $125,000 was subject to the tax. Which of thee following is nearest to the tax that would have to be paid: a) $165 b) $138 c) $27 d) $139
b) $138
The Lee's made an offer to purchase the Wilson's property. As part of the offer, the Lee's agreed to take title "subject to" an existing VA loan which the Wilson's obtained when they purchased the property in the approximate amount of $39,000. If the Wilson's sell to the Lee's under these conditions, which of the following is true concerning liability for a loss suffered by the government after a foreclosure on the VA loan: a) The Lee's will be primarily liable b) Wilson's will be primary liable c) Both Lee's and Wilson's are liable d) Neither is liable
b) Wilson's will be primary liable
Which of the following is the legal method that a city can use to implement its general plan: a) Building codes b) Zoning c) Variance d) Safety zones
b) Zoning
Leland uses an 8% capitalization rate for a 40-unit apartment building that generates $174,000 net income. Which of the following is the most appropriate value of this property: a) $1,400,000 b) $1,566,000 c) $2,175,000 d) $2,170,000
c) $2,175,000 $174,000 / .08 = $2,175,000
A broker obtained a 6% listing on a selling price of $108,000. The seller incurred additional closing costs of $1,450. Based on the preceding information, the seller's total cost of sale would amount to: a) $10,780 b) $7,500 c) $7,930 d) $6,500
c) $7,930 $108,000 X 6% = $6,480 + $1,450 = $7,930
A real estate broker who owned a large real estate firm operating under ABC Realty Co, listed a property for a total of $40,000. The broker and many of his salespersons were all principals in an investment company. The investment company decided to purchase the property so the broker presented an all cash offer. But did not disclose the buyers relationship under this circumstances: a) The broker's offer would be valid if he discloses the buyers relationship to the escrow company b) The broker's offer is a legal contract even though it was all cash c) The broker's action was improper because he did not reveal the true identity of the purchaser d) The broker's action was proper since he was able to sell the property
c) The broker's action was improper because he did not reveal the true identity of the purchaser
When comparing condominiums and rented apartments, which of the following is true: a) Each will receive a separate tax bill. b) The occupier has a fee estate c) The person who occupies each unit would have an estate in real property d) None of the above
c) The person who occupies each unit would have an estate in real property
During the winter time, an appraiser finds that the inside of an exterior wall of a building is about the same temperature as the other interior walls. The appraiser would come to the conclusion that: a) The heating system is faulty b) The furnace has a good EER rating c) The wall insulation is adequate d) The heating pipes are leaking
c) The wall insulation is adequate
Which of the following statements is most nearly true concerning the activities of mortgage companies: a) They prefer not to negotiate commercial loans b) They are not regulated by the state c) They prefer negotiating loans which are salable in the secondary market d) They do not insure government loans
c) They prefer negotiating loans which are salable in the secondary market
A trustor defaults on his loan and refuses to reinstate the deed of trust. The most expedient thing for the beneficiary to do is to institute a: a) Judicial foreclosure b) Lien sale c) Trustee sale d) HUD sale
c) Trustee sale
Jose is an unlicensed employee of a licensed real estate broker. The broker pays him to distribute door hanger fliers to homes in the immediate neighborhood and to make telephone solicitations for potential buyers and sellers. This activity by Jose is: a) Unlawful for the broker but not Jose b) Unethical for Jose and the broker c) Unlawful for both the broker and Jose d) An acceptable business practice
c) Unlawful for both the broker and Jose
George Carson is selling time-shares in his Wildacre subdivision. He mailed advertisements to 10,000 people, offering them the chance to win a prize, but did not reveal that in order to be eligible, the person must visit Wildacre and listen to a sales presentation. All of the prize winners had become owners in Wildacre. Is there anything wrong with this situation: a) No prizes may be offered at any presentation related to real estate b) Yes; property owners are excluded c) Yes; anyone offering prizes or gifts must reveal any required attendance at a sales presentation when offering the prize or gift. d) No; if winners become property owers at Wildacre
c) Yes; anyone offering prizes or gifts must reveal any required attendance at a sales presentation when offering the prize or gift.
A broker is negotiating a 25 year commercial lease at a straight annual rental of $30,000. The broker is to receive compensation for negotiating this lease as follows: 7% of the annual rent for the first year, 5% of the annual rental for the next four years, 3% of the annual rental for each of the next fifteen years; and 1% of the annual rental for every year thereafter during the term of the lease. By the end of the 19thyear, the broker will have received a total commission of the most nearly: a) $25,000 b) $20,800 c) $20,500 d) $20,700
d) $20,700 $30,000 X 7% = $2,100 X 1 = $2,100 $30,000 X 5% = $1,500 X 4 = $6,000 $30,000 X 3% = $900 X 14 = $12,600 TOTAL: $20,700
When a deed shows the racial identity of the clients, it can be re-written only by authorization from: a) The laws created in 1978 b) Title companies c) Offensive and discrimination department d) A court order
d) A court order
When a lender makes a loan regulated by the Real Estate Settlement Procedures Act, the loan applicant must be provided with which of the following: a) A bill of sale b) A purchase agreement c) An Interest rate disclosure form d) A good faith estimate
d) A good faith estimate
Local government laws for the regulation and control of land use includes which of the following: a) Building codes b) Zoning ordinances c) Subdivision ordinances d) All of the above
d) All of the above
Which of the following can be appurtenant to land: a) Stock in a mutual water company b) Attachments c) Easement d) All of the above
d) All of the above
Which of the following is considered real property: a) Land and buildings b) Artificial items which are immovable by law c) Easements that convey rights of way over adjoining land d) All of the above
d) All of the above
In which of the following contracts does one of the parties agrees not to revoke an offer for a certain period of time: a) Exclusive right to sell listing b) Exclusive agency listing c) Net listing d) An option
d) An option
To an appraiser, a definition of value is: a) A relationship between desirous persons and things desired b) The ability of one commodity to command other commodities in exchange c) The present worth of future benefits arising out of ownership of a property d) Any of the above
d) Any of the above
Which is the best way to create an agency relationship: a) By actions b) By options c) By experience d) By written agreement
d) By written agreement
Under the Subdivision Map Act, subdivision reports must be filed with the: a) County assessors office b) Real estate commissioner c) Department of construction subdivisions d) City or county where the land is located
d) City or county where the land is located
Who is more likely to earn a sales commission, the broker who: a) Attempted to bind the principal to the contract. b) Secured an offer with a deposit. c) Secured acceptance to an offer d) Communicated acceptance of the offer from the buyer to the seller.
d) Communicated acceptance of the offer from the buyer to the seller.
A buyer relied upon the fraudulent statement of the seller's agent and was damaged. The seller was unaware of the agent's false statement, and he tried to enforce the agreement. The buyer: a) May sue the seller for fraud b) May sue the seller's agent for fraud c) Has sufficient grounds for rescission d) Could do any of the above
d) Could do any of the above
Harrison and David, both single people, owned a parcel of real property as joint tenants. Harrison encumbered his interest for $10,000, borrowing the amount to pay medical bills without the knowledge or consent of David. Shortly thereafter, Harrison died, with the debt still unpaid. Which of the following would be true: a) David becomes the owner but subject to pay the $10,000 b) Beneficiary and David become joint tenants each paying $5,000 c) Beneficiary and David as tenants in common each paying $5,000 d) David would own all of the property free and clear of the encumbrance
d) David would own all of the property free and clear of the encumbrance
Broker Walter entered into an oral listing agreement with the seller of real property, without a subsequent written verification. The payment of a commission to Broker Walter under these circumstances would be: a) Illegal under Real Estate Law b) No commission to be paid c) Through court action d) Permissible if the seller agrees to it
d) Permissible if the seller agrees to it
The mortgage insurance on a FHA loan: a) Protects the lender in the event of the trustors death b) Protects the borrower from a fire loss c) Is paid by the lender d) Protects the lender in the event of default
d) Protects the lender in the event of default
Of the following types of deeds, which one would contain no warranties, expressed or implied: a) A will deed b) Grant deed c) Warranty deed d) Quitclaim deed
d) Quitclaim deed
A high priced, high quality home surrounded by lower priced, lower quality properties will suffer loss in value due to: a) Stability b) Conformity c) Progression d) Regression
d) Regression
When gross income is changed into value in one operation, which of the following describes this occurrence: a) Comparison cost b) Cost c) Value d) Rent multiplier
d) Rent multiplier
When a residential neighborhood is composed mostly of owner occupied residential properties it tends to: a) Lower property values b) Elevate property values c) Conformity of values d) Stabilize value
d) Stabilize value
A broker's ad in a local newspaper says that if a buyer or seller brings this ad to his office and either list or buy a property through him, that he will give that person $50. Which of the following is true: a) The broker is not allowed to give referrals b) Illegal under real estate law c) Commissions are paid only to licensed individuals d) The broker can give $50 to the buyer or seller
d) The broker can give $50 to the buyer or seller
Of the following, which is the best definition of a balloon payment: a) Late interest payments of a 30 year loan due at the end of the loan b) Additional payments to avoid prepayments penalties c) Principal payments d) The required payment of the entire balance due
d) The required payment of the entire balance due
The decline of mortgage interest rates would occur: a) When the Fed increases the reserve requirements b) When the Fed decreases the reserve requirements c) When the inflation increases d) When the mortgage money supply increase
d) When the mortgage money supply increase
Which contract would be most difficult for a buyer to obtain financing on: a) Land Contract b) FHA c) VA d) Conventional
a) Land Contract
When title is transferred, the grantee in the deed may have the title insured by: a) A title insurance policy b) Hazard insurance c) Homeowners insurance d) Chain of title
a) A title insurance policy
A sublease is considered to be: a) A transfer of less than the entire leasehold b) A transfer of the entire leasehold c) An assignment d) An estate for years
a) A transfer of less than the entire leasehold
Mr. Brown hired an agent to purchase a home. The offer has a contingency. The offer was contingent upon the sale of Brown's home. The owner made a counter offer accepting the Brown's offer with the right to continue marketing the home for better offers and granting to Brown a right of first refusal to remove his contingency if a better offer came in. The Brown's accepted the offer and immediately listed their home for sale. Shortly thereafter the seller notified Brown that a better offer has been presented without any contingencies. What should the agent advise Brown to do: a) Advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home b) The agent may offer his advice, the decision is up to the buyer c) Advise the buyer to remove the contingency immediately d) Advise the buyers to rent the property first so they can purchase the home without selling their existing home first.
a) Advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home
The right granted by an owner of real property to a telephone company for the purpose of erecting poles to support telephone wires over the property creates: a) An encumbrance b) A restriction c) A specific lien d) A general lien
a) An encumbrance
A broker receives rental income from several apartment units which he owns. He plans soon to accept an offer, accompanied by a deposit, to sell one of the units. Under these circumstances, he should: a) As owner, place neither the rental income nor the sale deposit in a trust account b) Deposit the rent in the brokers trust account c) Deposit the rent in the brokers trust account if doesn't exceed $200 d) Deposit both the rent and deposit in the trust account
a) As owner, place neither the rental income nor the sale deposit in a trust account
A listing (authorization to sell) generally: a) Authorizes the broker to find a buyer for the property b) Is a bilateral executed contract c) Allows the broker to collect a commission during the term of the listing d) Becomes a legal contract when the buyer signs it
a) Authorizes the broker to find a buyer for the property
Which of the following is least correct about in-house sales: a) Brokers cannot sell their own in-house listings b) The broker always works for the seller c) May sell it only to a buyer d) May be sold only from broker to broker
a) Brokers cannot sell their own in-house listings
A lessee rents a building from May 1st to July 1st. His tenancy is: a) Estate for years b) Month to month c) Periodic tenancy d) Monthly lease
a) Estate for years
Under which of the following listings must an owner pay a commission, even though it was sold entirely through the owner's own efforts a) Exclusive right to sell listing b) Exclusive agency listing c) Open listing d) Net listing
a) Exclusive right to sell listing
A real estate broker sent all of his title business to a Title Co. In appreciation of the business, the title company paid the broker $10 for each transaction. According to Real Estate Settlement Procedures Act, "RESPA," this practice is: a) Forbidden b) Permissible c) Acceptable if buyer and seller are told about it d) Permissible if seller pays for the title services
a) Forbidden
Brokers Andrews and Benson both have an open listing on a property. Broker Andrews showed the property to a prospective buyer and carried on negotiations, but the buyer decided not to buy. Two weeks later, Broker Benson contacted the same buyer and arranged a sale of the property. The seller would be obligated to pay a commission as follows: a) Full amount to Benson only b) Full amount to Andrews only c) Half to Benson and half to Andrews d) Full amount to both Brokers
a) Full amount to Benson only
Each owner in a tenancy in common: a) Has the right to possession of all of the property b) Cannot divide the property c) Has the right to possession only half of the property d) Only one may have possession of the entire property
a) Has the right to possession of all of the property
Purchasing a home with a lower down payment and longer repayment terms will generally: a) Increase the total financing cost b) Decrease the financing cost c) No affect on financing cost d) Affects the amortization process
a) Increase the total financing cost
A broker used the following clause in his exclusive listing contract, " In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser." This clause: a) Is important for the creation of a bilateral contract b) Is necessary for the creation of an unilateral contract c) Is superfluous to the contract d) Requires the broker to advertise the property with multiple listing service
a) Is important for the creation of a bilateral contract
When a legal description begins with the phrase, " Beginning at a point on the northerly edge of "O" Street 100 feet east of the NE corner of the intersection of "O" and Seventh Street, "Which of the following methods of land description is being used: a) Metes and Bounds b) A township c) A track and map system d) A U.S. Government survey
a) Metes and Bounds
When making a loan, amortization tables are used in order to determine the: a) Monthly payment b) Annual percentage rate c) Interest rate d) Beneficiary's right
a) Monthly payment
The item that would appear on the debit side of a buyer's closing statement would be: a) Purchase price b) Prepaid rents c) Mortgage interest d) Down payment
a) Purchase price
The words "time is of the essence" can be found in which of the following contracts: a) Real estate purchase contract and receipt for deposit b) Real estate listing agreement c) Grant deed d) Escrow instructions
a) Real estate purchase contract and receipt for deposit
A voidable contract remains binding upon the parties until the contract is: a) Rescinded b) Cancelled c) Voided d) Disqualified
a) Rescinded
Broker Gutierrez had a listing to sell seller Smith's house. Broker Gutierrez received an offer on the house and presented it to seller Smith who hesitated in accepting the offer. The broker promised Smith to find Smith another suitable residence before escrow closed. On the basis of that, the seller accepted the offer. If broker Gutierrez failed to perform during the time period, which of the following is most nearly correct: a) Seller Smith could initiate a civil suit and the broker could be responsible for damages b) Cancel the acceptance c) Smith has no recourse against the salesperson since it was a verbal agreement. d) Salesperson is liable and may be sued for criminal actions
a) Seller Smith could initiate a civil suit and the broker could be responsible for damages
Broker Hudson has had a house listed for sale for nine months without selling it.He knows that the building needs major structural repairs, and he has listed it at 10% above its fair market value. He runs an advertisement in a newspaper that says, "Three bedroom, Victorian. You won't believe the price! Move right in. Hudson - 222-2222." This advertisement is bad because: a) Since Hudson knows that the property needs major repairs, it is deceptive and misleading b) It is illegal to advertise a property that is over priced c) An over priced property is a misleading price d) The advertising is misleading and the broker will be liable
a) Since Hudson knows that the property needs major repairs, it is deceptive and misleading
If the owner of a property thinks that his property has been over-assessed by the county assessor, he would contact: a) The Assessment Appeals Board b) The controller c) The tax collector d) The department of appraisals
a) The Assessment Appeals Board
Which of the following is the reason that a real estate agent must keep his principal informed of material facts concerning a pending real estate transaction: a) The agent is a fiduciary b) Because it is printed on the purchase agreement c) The agent must be concerned with the commission the seller is paying d) The broker works only for the seller
a) The agent is a fiduciary
When an appraiser is appraising a property he usually considers all of the following except: a) The assessed value b) The property description c) The final value d) Neighborhood data
a) The assessed value
When depreciation is taken on real property: a) The basis is reduced b) Value increase c) Value is stable d) Has no value
a) The basis is reduced
A broker receives an offer from a buyer for a specific property. The deposit was in the form of a personal promissory note for $2,000 payable to the seller in 60 days plus 10% interest. Which of the following is true: a) The broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before the seller accepts the offer. b) All deposits to purchase real estate must be in the form of personal check c) A personal promissory note is acceptable if it is $1,000 or less d) Personal promissory notes are too risky and the broker may return the offer
a) The broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before the seller accepts the offer.
Which of the following is the most difficult for the mortgage lender to evaluate: a) The degree of risk b) Credit of borrower c) Interest return d) Cost of financing
a) The degree of risk
A Chicano prospect asks to be shown homes but does not specify that he wants to see homes located in a neighborhood where there are no Chicanos. How should a licensee decide which properties to show him: a) The licensee may select homes for showing as he would for any other prospect b) The licensee could assume that the prospective buyer is not interested in that neighborhood. c) The licensee may decided not to provide service to the buyer d) The licensee should show him homes only in Chicano neighborhood
a) The licensee may select homes for showing as he would for any other prospect
The appraisal of an income-producing property is made as of a "given date" to indicate: a) The market conditions influencing the value of the property at that point in time. b) The effective age of the property c) The date of inspection d) The assessed value
a) The market conditions influencing the value of the property at that point in time.
In which of the following programs will the borrower pay no down payment: a) VA loans b) Fannie Mae c) FHA or PMI d) Freddie Mac
a) VA loans
A real estate broker presented an offer to a seller which met the terms of the listing. The offer was from a financially-qualified black person. Later, his salesperson presented the seller an offer at a lower price form white prospects. The seller did not accept either offer, but instead, sold the property to neighbor through the same salesperson. The neighbor wanted to buy the property so as to prevent a minority person from moving into the neighborhood. Which of the following parties has not violated the Civil Rights Act of 1968: a) White prospects or non-minority b) Seller c) Salesperson d) Both salesperson and seller
a) White prospects or non-minority
A joint tenant can dispose of an interest held in real property in all of the following ways, except: a) Will it b) Sell it c) Lease it d) Transfer it
a) Will it
Two buildings are leased on a long term basis, one for a post office and the other for a hardware store. Using the capitalization approach to appraise the properties, the post office would demand: a) A higher capitalization rate b) A lower capitalization rate c) The same capitalization rate d) None of the above
b) A lower capitalization rate
An appraiser using the replacement cost method may use the initial cost per square foot or cost per cubic foot in the computations. On a unit cost comparison basis: a) A small house would cost less per unit than a large house b) A small house would cost more per unit than a large house c) The small house and large house would cost the same d) A large house would cost more per unit than a small house
b) A small house would cost more per unit than a large house
A real estate broker was charging 1/8 percentage interest rate higher to borrowers that English wasn't their first language. This action by the broker is: a) Legal because the broker had to work harder explaining the concept in a different language b) A violation of the Housing Finance Discrimination Act of 1977 c) A violation of the Department of Real Estate d) a violation if mortgage guidelines
b) A violation of the Housing Finance Discrimination Act of 1977
The hardest and yet the most important part of the market data method of appraising is: a) Establishing the value multiplier b) Adjusting for the differences between the comparable properties and the subject property. c) Collecting neighborhood data d) Finding the unit of comparison
b) Adjusting for the differences between the comparable properties and the subject property.
The Alquist-Priolo Earthquake Special Studies Act is applicable to: a) All cities in California b) All counties in California c) Only on designated earthquake fault lines d) All regions in northern California
b) All counties in California
The purpose of the Truth-in-Lending Act is to: a) To regulate charges for credit b) Assure a meaningful disclosure of credit terms c) Establish the maximum monthly payments on a trust deed d) Establish the maximum annual percentage rate
b) Assure a meaningful disclosure of credit terms
A mortgage loan may be insured by: a) The Beneficiary b) The California Finance Act c) FHA or private mortgage insurer d) The borrower
c) FHA or private mortgage insurer
n Order to operate a competitive, yet profitable business, a real estate broker needs to be concerned with "desk cost". Which of the following most nearly represents the correct way to calculate desk cost: a) Divide the total operating expenses of the firm, plus commissions b) Divide the total operating expenses of the firm, including salaries, rent, insurance, etc., by the number of salespersons. c) Calculate the total monthly gross income and divide by the number of salespersons. d) Calculate the total monthly gross income and subtract any losses
b) Divide the total operating expenses of the firm, including salaries, rent, insurance, etc., by the number of salespersons.
When an agent is accused of "puffing," the agent might have been guilty of which of the following: a) Advising the real estate agent to elevate the price on the property to help the buyer with financing costs. b) Exaggerating the features of the property and/or neighborhood when showing the property to prospective buyers c) Charging the seller higher cost in different neighborhoods d) Convincing the buyer to make a lower offer
b) Exaggerating the features of the property and/or neighborhood when showing the property to prospective buyers
An offer to purchase real estate could be terminated in all of the following ways, except: a) Acceptance with a counter offer to the offeror b) Failure to communicate notice of revocation before the other party has communicated his acceptance c) Death of offeree or offeror d) Expiration of time to accept an offer
b) Failure to communicate notice of revocation before the other party has communicated his acceptance
Concerning the second installment of real property taxes in California, the due date and delinquent date are respectively: a) November 1st and December 10 b) February 1st and April 10th c) November 1st April 10th d) December 10th April 10th
b) February 1st and April 10th
Mr. Gonzalez took out a loan for improvements to his real property that was fully amortized. If the loan provides that there are equal monthly payments, the amount credited to the principal will: a) Decrease while the interest payment decreases b) Increase while the interest payment decreases c) Principal and interest will remain the same d) Increase at a constant rate for the life of the loan
b) Increase while the interest payment decreases
When financing a home with a long-term loan, if equal payments are made, the amount of the principal will: a) Decrease while the interest payment decreases b) Increase while the interest payment decreases c) Principal and interest will remain the same d) Increase at a constant rate for the life of the loan
b) Increase while the interest payment decreases
Broker Hayes took a 90-day exclusive agency listing to sell a property that was owned by Wilson. After 30 days, Hays had not sold the property, so Wilson sent him a letter through certified mail canceling the listing. One week later Wilson listed the property with several brokers using an open listing. Two weeks later, one of the brokers who had an open listing on the property, completed a sale to new owners. In this situation Wilson most likely: a) The seller may not cancel the listing and he owes a commission to Hays b) Is liable for payment of commission to Hays as well as to the selling broker c) Is liable to Broker Hays d) Has the right to the list his property with another company
b) Is liable for payment of commission to Hays as well as to the selling broker
If a real estate licensee was trying to persuade people to list or to sell their property by telling them that members of another ethnic group were moving into their neighborhood, and it would be to their advantage to sell, it would be an example of all of the following, except: a) Blockbusting b) Legitimate conduct c) Panic selling d) Illegal conduct
b) Legitimate conduct
A tenant enters into a 2 year lease. If the lease contains no clause of assignment of subleasing. The tenant: a) May assign a sublease to another tenant b) May sublease to another tenant c) Cannot sublease d) May assign the lease only but not sublease
b) May sublease to another tenant
When a broker runs an ad the broker must disclose: a) Last name of the broker b) Name of the broker c) Name of broker and salesperson d) Name of the salesperson
b) Name of the broker
An owner of an apartment house deducted $6,000 from the gross income for depreciation on his federal income tax return. The basis of the property is therefore: a) Increased by $6,000 b) Reduced by $6,000 c) Remains the same d) Adjusted only when the property is sold
b) Reduced by $6,000
When dealing with the public, a broker may not: a) Disclose any of his duties to other agents b) Remain silent concerning material facts about a property known only to himself c) Reject a listing if it is discriminatory or overpriced for minorities d) All of the above
b) Remain silent concerning material facts about a property known only to himself
An agency relationship may be terminated by: a) Termination by lis pendis b) Termination by completion c) Termination by estoppel d) Termination by tour de force
b) Termination by completion
Under the Business and Professions Code the broker is required to keep a copy of a deposit receipt for a minimum of three years from: a) Acceptance of the offer b) The date of closing of the transaction c) The date of recording of the deed d) The date the deed was notarized
b) The date of closing of the transaction
All of the following regarding in house sales are true except: a) The listing agent can act as a dual agent b) The listing broker can act as buyer's agent only c) The broker may purchase the property himself d) The seller may represent the seller only
b) The listing broker can act as buyer's agent only
A tenant of an apartment complex was working on heating ducts. The tenant sees that the ducts contain asbestos insulation. Does the tenant have a legal obligation to warn anyone he should: a) Let owner know by certified mail b) The tenant has no legal obligation to warn people c) Let the repairman know d) report it to the Department of Real Estate
b) The tenant has no legal obligation to warn people
Which of the following rights of ownership in real property do individuals normally not have: a) Rights to severance damages b) Riparian rights c) Eminent domain rights d) Financing rights
c) Eminent domain rights
Land that is subject to an easement is said to be: a) Prescriptive easement b) Appurtenant to the land c) Encumbered d) An encroachment
c) Encumbered
A Cal-Vet who wishes to purchase a home using the Cal-Vet program would send his application to: a) Department of Real Estate b) Real Estate Commissioner c) Department of Veterans Affairs d) Veterans Administration
c) Department of Veterans Affairs
Buyer Barker paid $4.40 per square foot to purchase a 20,000 square foot lot. If the parcel is rectangular in shape and 200 feet deep, the approximate cost per front foot would be: a) $200 b) $440 c) $880 d) $960
c) $880 20,000 / 200 = 100 front ft. 20,000 X $4.40 = $88,000 purchase price $88,000 / 100 = $880
Half a mile by half a mile represents how many acres: a) 80 acres b) 120 acres c) 140 acres d) 160 acres
c) 140 acres
All of the following statements about covenants and conditions are false, except: a) The violation of the covenant results in the loss of title b) Covenants and conditions must be for the benefit of the general public c) A violation of a condition can result in the loss of title d) All covenants and conditions are for benefit of the public in general
c) A violation of a condition can result in the loss of title
For Federal income tax purposes, capital expenditures for improvements are: a) Only a percentage of the improvements may be depreciated b) Subtracted from the cost basis of the property c) Added to the cost basis of the property, and depreciated d) It cannot be depreciated
c) Added to the cost basis of the property, and depreciated
When an owner refuses to pay the broker an earned commission, the broker may properly seek relief by: a) Filing a complaint with the Department of Real Estate b) Filing a vendor's lien c) Court action d) All of the above
c) Court action
Which of the following is an acceptable response to sellers who have indicated that their home is not to be shown to prospects who are members of the ethnic minority group. The appropriate response would be: a) I can show it to anyone I want b) With these conditions the seller will get a better price c) I cannot accept the listing on your property because it is prohibited from discrimination. d) With unacceptable terms they wont be interested
c) I cannot accept the listing on your property because it is prohibited from discrimination.
The Federal Housing Administration (FHA) was created primarily to provide: a) Insurance for home loans in the secondary market b) To insure the borrower c) Insurance for home loans made by approved lenders d) To improve the economy for mortgage bankers
c) Insurance for home loans made by approved lenders
Broker Knot advertised in the newspaper that anyone who bought a property listed with the broker would receive a free microwave oven valued at $500. Such action is: a) Illegal b) Unethical c) Legal, if full disclosure is made to all interested parties d) No prizes are allowed in real estate transactions
c) Legal, if full disclosure is made to all interested parties
Which of the following does not directly affect the mortgage interest rates: a) Demand for funds b) Inflation c) Rate of unemployment d) Supply of money
c) Rate of unemployment
A real estate salesman went into a neighborhood to obtain listings of residential property. He made representations that because of the entry into the neighborhood of minority groups, property values would be reduced and a there would be a decline in the quality of schools and an increase on the crime rate: a) Permissible as long values do not decrease b) Not illegal as long as the statement is true c) Sufficient grounds for disciplinary action against the licensee d) Unlawful only when the Real Estate commissioner finds out about the representation.
c) Sufficient grounds for disciplinary action against the licensee
The term estoppel best describes: a) Zoning changes b) Construction codes c) Tenants rights and landlord responsibilities d) Eviction notices
c) Tenants rights and landlord responsibilities
Of the following, which best characterizes the term "single agency": a) The agent represents both the buyer and the seller b) The broker can only keep his principal informed about any information about the property c) The agent represents one client in dealing with a third person d) The agent has the right to represent many principals in a single agency
c) The agent represents one client in dealing with a third person
A lender under a trust deed is know as: a) The trustor b) The trustee c) The beneficiary d) The mortgagor
c) The beneficiary
When a salesperson takes a listing, the listing is the property of: a) The multiple listing service b) The sales person only c) The broker who employs the salesperson d) Both broker and salesperson
c) The broker who employs the salesperson
A new real estate salesperson, made strong efforts to obtain listings in a non- integrated community. He found success by insinuating to property owners that should minorities move into the area, the value of their homes would decrease. Which of the following terms best describes the activities of the salesperson: a) Steering b) Panic peddling c) Blockbusting d) Both "B" and "C"
d) Both "B" and "C"
Recorded title to a parcel of real property was vested in Johan Wilson, a single woman. After her marriage to William Roberts, she executed a deed to the property only in the name of Johan Roberts, a married woman. The discrepancy in the grantor's name is: a) Valid if John Roberts agrees to it b) A defect on title that may cause title to be vested as tenants in common c) Immaterial if the property is properly described d) A defect which may cause a cloud on the title
d) A defect which may cause a cloud on the title
A loan secured by real property usually consists of: a) A mortgage loan statement b) FHA or VA insurance c) Hazard insurance d) A promissory note and a trust deed
d) A promissory note and a trust deed
If two parties want to create an enforceable broker-principal relationship concerning a right, title, or interest in real property, the most essential element would be: a) A purchase agreement b) Commission agreement c) A contract to accept a deposit d) A written employment contract
d) A written employment contract
Which of the following notices could be important to the filing of a mechanic's lien: a) Notice of non-responsibility b) Notice of cessation c) Notice of completion d) All of the Above
d) All of the Above
Broker Smith took a listing on commercial acreage and also received the right to purchase the property within 30 days. On the 28th day of the listing, the broker decided to buy the property. Before buying the property, he must: a) Disclose any outstanding offers b) Give the owner any material information c) Obtain written consent from the owner which acknowledges any profit or anticipated profit d) All of the above
d) All of the above
If a real estate licensee misrepresents a property to a buyer while he is a acting as an agent, he may subject himself to: a) Disciplinary action by the licensing authority b) Civil action c) Criminal action d) All of the above
d) All of the above
The maximum commission a broker may charge for the sale of residential property is: a) Set by Real Estate Code of Ethics b) Six percent of the sales price c) Determined by the number of monthly sales d) Determined by the broker's contract with his principal
d) Determined by the broker's contract with his principal
Lenders know that the lower the loan-to-value ratio, higher is the: a) Interest rate b) Risk c) Loan to value ratio d) Equity
d) Equity
Carter bought 10 acres of vacant land for $20,000 per acre, making a cash down payment of $20,000, and executing a straight note and a blanket deed of trust for the balance. As a part of the note, the lender agreed that when Carter made an additional payment of $20,000 on the principal, the trustee would issue a partial reconveyance for one acre. Carter has paid a total of $40,000 on the note and now owns two acres free and clear. The percentage of his equity in the encumbered property: a) Variable b) Has decreased c) Remains the same d) Has increased
d) Has increased
Which of the following is true regarding the depreciation of land under federal income tax law: a) Land is depreciated every year b) The owner may deduct depreciation of land over time c) Land is depreciated by comparables d) Land cannot be depreciated
d) Land cannot be depreciated
When the Environmental Review Board or the Department of Real Estate issues a "negative declaration," it means that the subdivision: a) Has not been approved by the department of Environment Protection Plan b) Has been approved by the Environment Protection Agencies but subject to inspections. c) The public report has warnings about possible environment safety d) Will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental report.
d) Will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental report.
