Real Estate Flashcards use it
The newest employee at Edwards Escrow Co., Adam Riley, is handling the escrow paperwork for the sellers and the buyers on an Anaheim property sale. When Adam goes to figure out the prorations for the month of February, for which some of the expenses have already been paid by the sellers, Adam cannot remember what number to use to figure out the proration. Which of the following should he use? 28 days (or 29, if it's a leap year), since that is the actual number of days in February, the month for which the prorations are being calculated. 30 days, which escrow companies use as their base month in figuring out prorations. 31 days, which escrow companies use as their base month in figuring out prorations. 52, because there are 52 weeks in every year, and all escrow companies in California are required to use this base figure in proration calculations
28/29 days. I thought it was 30 days.
Escrow cannot be terminated in which of the following ways? By the completion of escrow. Because of the death of one of the principals. By mutual agreement. By a court or interpleader action.
Because of Death of one of the principals
Each of the following actions, except for one, is considered subversion. Which of these answers is not a form of subversion? Reproducing exam material without authorization. Bringing a calculator into the examination room. Using paid examinees for the purpose of reconstructing an examination. Buying exam material.
Bringing a calculator into the examination room.
Which type of leasehold estate has a definite beginning and ending date? An estate for years. An estate from period to period. An estate at sufferance. An estate at will.
An estate for years.
Modesto broker Killian Johnson has just received a money deposit and the related instructions from the buyer, Luis Alverez. Which of the following does NOT describe how Killian should handle this deposit? Give the money to the principal to the transaction. Deposit into Killian's account, then figure out his commission, deduct that number to arrive at the final amount (due to the principal) and then write a check to the principal for the monies due to him, within 3 business days. Put it into a neutral escrow depository. Put it into the broker's trust fund account at a bank or other financial institution.
B
Which of the following statements is NOT accurate about the California Disclosure Regarding Real Estate Agency Relationship Form? It must be signed before the seller signs any listing agreement with the agent, or, in the case of the buyer, before that buyer signs the purchase contract. This form is required for leases of residential property for more than one year and for the sale of a mobile home, IF the mobile home is offered for sale or sold through a real estate agent. California law does NOT require that all real estate agents provide a written disclosure to the buyer OR the seller, depending on which party the agent represents. California law requires that all real estate agents provide a written disclosure to the buyer AND the seller, regardless of which party to the transaction the agent represents.
B
What percentage of the California Real Estate General Fund is set aside to go into the Real Estate Education and Research Fund? 5% 8% 10% 12%
8
If a mobile home is real property, then the California Business and Professions Code Section 10131 (a) is a real estate broker's authorization to negotiate a sale of the real property/mobile home, transferring the mobile home by use of: A quitclaim deed. A grant deed. Laches. Any deed, other than a trust deed or deed of trust.
A grant deed.
When Chloe Armstrong pays off the 30-year conventional loan on her Oceanside home in less than 20 years, she is thrilled. However, she is not nearly as happy when she reads the fine print on the contract, which permits her lender to charge her EXTRA interest just for paying off the loan early. This is known as: Subrogation. A prepayment penalty. A subordination clause. An acceleration clause.
A prepayment penalty.
The type of company that sells securities specializing in real estate ventures, and requires a minimum of 100 investors, is known as: A real estate syndicate. A real estate investment syndicate. A real estate investment trust. An equity trust.
A real estate investment trust.
California property taxes are now levied using: A pure ad valorem system. A system that is based on the date of acquisition. A special assessment system. None of the above.
A system that is based on the date of acquisition.
If ABC Title Insurance Company wants to get in the business of handling escrows what licenses would it have to obtain? A title company does not need to obtain a special license to handle escrows. A title company is not permitted to handle escrows in any capacity. If the title company has been in business for a minimum of 5 years, it may handle escrows without a special license. If the title company has been in business for a minimum of 10 years, with annual audits for review by the State of California, it does not need to be specially licensed to handle escrows in California.
A title company
A full summary of all consecutive grants, conveyances, wills, records, and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status, but NOT including encroachments and forgeries, is known as a(n): Chain of title. Disintermediation. Abstract and opinion. Quitclaim deed.
Abstract and opinion.
Kathy Bates has just moved into a condominium complex of 60 units. The complex has a swimming pool, and a management company takes care of the upkeep of the outside of the property. The monthly cost for pool maintenance, grass cutting, tree trimming, private street maintenance, and the newly-updated clubhouse is currently $400.00 a month. Each year, the cost of such services increases, as do the costs for necessary repairs as the buildings get older. This year, new roofs are in order for all of the buildings. The condominium association, which is made up of the owners of the property, decides that, in order to cover the increase in costs, and to replace the roofs on the property, they must pass a(n):
Ad valorem tax. Special assessment. General real estate tax. None of the above. B. special assessment
The legal phrase that describes the right to recover money or other personal property through a judicial proceeding, including the right to recover something under a contract, such as money owed on a note, as well as the right to recover damages for a tort or private wrong, is known as: Choses in action Chattels Chattels real Judicial action.
Choses in Action
The main purpose of this law is to provide procedures and information to ensure that governmental agencies will consider and respond to the environmental effects of their proposed decisions. This is known as the: California Environmental Quality Act of 1970. California Conservation Act. National Environmental Policy Act. Clean Air Act.
California Environmental Quality Act of 1970
Which level of government is currently "in charge" of planning controls for California property?
Federal
La Mesa real estate broker Michael Hagans plans to begin listing or selling mobile homes. He must comply with all but one of the following statements. Which of these is NOT a requirement for Michael to list or sell mobile homes? He must only sell new mobile homes. He must only sell used mobile homes if they've been licensed by the California Department of Housing and Community Development. The mobile home must be capable of being transported over a road, with a hitch attached to the unit (or stored underneath it) and the axles attached to the frame. It is Michael's responsibility to ensure the proper completion and delivery of the title to the buyer of the mobile home.
He must only sell new mobile homes
A land project is a speculative subdivision development of 50 or more vacant lots that are located: In a rural area that has fewer than 1,000 registered voters within 2 miles. In a rural area that has fewer than 1,500 registered voters within 2 miles. In a rural area that has fewer than 2,000 registered voters within 2 miles. In a rural area that has fewer than 2,000 registered voters within 3 miles.
In a rural area that has fewer than 1,500 registered voters within 2 miles.
San Bernardino seller Craig Watkins has just signed a contract to sell his home of 13 years to buyer Ivedale Bosch, who has recently moved to California from Montana. The contract has met all the necessary requirements, and all inspections and other mandates have gone along as expected and as agreed to until one week before closing, when Craig decides to back out. However, he understands that he could face legal action by Ivy; so he offers to sell her another house he owns and has rented out for the past few years, in lieu of the San Bernardino one promised. The second home is worth $15,000 more than the originally contracted one, and has an extra bedroom. However, Ivy isn't interested, because she wants to be close to her elderly mother, who lives in a San Bernardino retirement complex. Craig refuses to complete the sale on the original home. Which of the following statements is true of this situation? Ivy may sue Craig for specific performance, because no two properties are exactly the same and he hasn't fulfilled his end of the contractual agreement. Craig has the right to refuse to sell to Ivy within up to 3 business days prior to the closing date for the sale. No penalties are to be paid from either party to the other. Craig has the right to refuse to sell to Ivy within up to 3 business days prior to the closing date for the sale. Any charges incurred by Ivy in the contractual process must be refunded to her by Craig within 24 hours after the original time set for closing. Craig cannot force Ivy to accept his offer of the other property. However, under California Civil Code, if the seller in this type of situation (Craig) offers the prospective buyer a home of equal or greater value, with an equal or greater number of bedrooms and square footage, the buyer may not bring legal action against that seller.
Ivy may sue Craig for specific performance, because no two properties are exactly the same and he hasn't fulfilled his end of the contractual agreement.
When grantor, Emilie Richards, delivers the deed to the Cloverdale property to the grantee, Jane Curless, she drives it over to Curless's current residence, where they read through the grant together. There is a condition included in the grant, but it is straightforward and agreeable to both. This type of delivery is known as: Manual delivery. Conditional delivery. Delivery through recording. Delivery through mutual acceptance.
Manual Delivery
Napa resident Maria Gonzales, a newly-licensed real estate broker, has just negotiated her first trust deed loan for her client, Isaac Mahrsan. The loan's term is 5 years, and it is Isaac's first loan. Under Article 7 of the Mortgage Broker Law in California, Maria knows that certain regulations have been set forth regarding her commission in such a transaction. What is the maximum commission for loans subject to Article 7, for first loans? Maria's maximum commission on this loan is 5 percent of the principal, which applies to loans of 5 years or less. Maria's maximum commission on this loan is 5 percent of the principal, which applies to loans of 10 years or less. Maria's maximum commission on this loan is 5 percent of the principal of a loan, which applies to loans of 3 years or more. Maria's maximum commission on this loan is 10 percent of the principal of a loan, which applies to loans of 3 years or more.
Maria's maximum commission on this loan is 10 percent of the principal of a loan, which applies to loans of 3 years or more.
Appraiser Louis finds a property located in the same neighborhood as the appraised property, and wants to use it as a comparable sale. The comparable has more bedrooms than the subject, one less bath, and one less garage. The appraiser will have to subtract the extra bedrooms from the comparable, add a bathroom to the comparable, and add a garage to make the properties equal. What type of approach to value has Louis utilized? Market data approach. Cost approach. Summation approach. Reproduction cost.
Market data approach.
Which of the following is not a way of creating agency in California? By agreement. By ratification. By mutual action. By estoppel.
Mutual Action or Mutual Agreement?
There are four principal prerequisites for transforming a mobile home into real property: (1) Obtaining a building permit; (2) Attaching the mobile home to an approved foundation; (3) Recording a document reflecting that the mobile home has been affixed to an approved foundation system; and: (4) Obtaining a certificate of occupancy. (4) Canceling the registration. (4) Notification by the mobile home owner of both the HCD AND the local assessor about the mobile home's transformation into real property. (4) Obtaining the written approval of the California Bureau of Real Estate Commissioner.
Obtaining a Certificate of Occupancy
When Christopher cuts down a tree in his backyard and sells it as firewood, the firewood then becomes personal property. This process is known as: Annexation. Severance. Choses in action. Emblementation.
Severance
Which of the following is NOT one of California's sets of base lines and meridians? The Humboldt Base Line and Meridian. The Mt. Diablo Base Line and Meridian. The San Bernardino Base Line and Meridian. The Los Angeles Base Line and Meridian.
The Los Angeles Base Line and Meridian.
A law used to finance public services, such as waste treatment plants, parks, and schools, in newly developed areas, can result in extra-high taxes, in addition to the normal property taxes, and MUST be made known to any buyer before a purchase takes place. This law is: The Street Improvement Act of 1911. The Mello-Roos Community Facilities Act of 1982. Proposition 60. Proposition 90.
The Mello-Roos Community Facilities Act of 1982
Co-authors and sisters, Mary and Perry Corrigan, have just written their fourth bestseller, even though Mary lives on the East Coast, while Perry resides in Calistoga. When the home next door to Perry is sold, Perry buys it and then gift deeds it to her sister so that they can live side-by-side for the several months of the year they spend writing together. In this situation, what consideration is necessary for this deed to be considered valid and legal? Love and affection is the only consideration necessary. Love and affection is necessary, but the consideration must also include something (another real property, an automobile, or monetary payment) that is worth at least 10% of the value of the property. An agreement that Perry actually "owns" the property, and as such, may take it back without giving notice or a reason. Both A and C.
b
When potential customers, Grace and Leo Adams sit down with real estate broker, Sam Slama, they tell him they've just begun interviewing brokers before they sign with one to help them buy their first home. He assures them he understands, and that he will answer their questions to the best of his abilities. When they ask what his commission rate is, he responds, "It's seven percent, just like all the other guys in town, as you'll find. We all charge the same; so it makes for a fair deal for our wonderful customers." Leo thinks the guy sounds great, but Grace is a bit suspicious of his uber-charm. Which of the following is true of this situation? Grace is right: Sam is too good to be true. Commissions are negotiable, not set by law. Grace has a good head on her shoulders. Sam is more than overly slick; he's a law-breaker. It is a violation of the Sherman Anti-trust Law to price-fix in this way. While he may sound too good to be true, Slick Sam hasn't broken any laws, or lied. He's just trying to gain their trust in the hopes of earning their business, and there's no crime in that. Both A and B.
both A and B
When Jim, Jill, and Jeri take ownership to a Bakersfield home, they hold their ownership concurrently. Jim has the greatest proportion, with 45%, while Jill holds 30% and Jeri the last 25%. They each have the right to individually possess, will, or sell their interest. This is known as: Community property with the right of survivorship. Tenancy in Severalty. Tenancy in Common. Joint Tenancy.
c
One appraisal principle of value is based on the concept that the more a property or its components are in harmony with the surrounding properties or components, the greater the contributory value. In other words, the more the properties are alike, the more they retain value. This is known as: Substitution. Regression and progression. Conformity. Competition.
conformity
A contract in which the vendor (seller) agrees to convey the title to the real property after the vendee (buyer) has met certain named conditions, and which does not require conveyance within one year, is ordinarily used in the case of a buyer who can only make a small down payment and monthly installments. This type of contract, because it holds disadvantages for both the seller and the buyer, is no longer a popular financing instrument in California. This is known as a(n): Mortgage. Installment land contract, also known as an installment sales contract. Open-end mortgage. Secondary mortgage market loan, such as Fannie Mae, Ginnie Mae, or Freddie Mac.
open
Real estate syndication is accomplished through three phases. Which of the following answers correctly names these steps in their proper chronological order? (1) Origination; (2) Operation; (3) Liquidation. (1) Outlay; (2) Operation; (3) Completion. (1) Outline; (2) Origination; (3) Completion. (1) Origination; (2) Investment; (3) Liquidation.
(1) Origination; (2) Operation; (3) Liquidation.
Which of the following is NOT a type of water rights? Riparian rights, which relate to rivers. Littoral rights, which relate to seashores and beaches. Alluvial plain, which relate to delta areas along rivers. Doctrine of Prior Appropriation, which relate to irrigation and "first in time equals first in rights" theory.
Alluvial plain, which relate to delta areas along rivers.
By California statute, a joint tenancy may be created in which of the following ways? By transfer from a sole owner to himself or herself and others as joint tenants. By transfer from tenants in common to themselves or to themselves, or any of them, and others as joint tenants. By transfer from joint tenants to themselves, or any of them, and others as joint tenants. Any of the above.
Any of the above.
Credit union president Bill Bradley has just refused a loan for 25-year-old LaDawna Kingston, an African-American woman and, in his opinion, the very definition of a "religious zealot." Bill refused the loan based on her credit rating and lack of job stability. When LaDawna learns of his refusal, she tells him she's calling an attorney, because she's been discriminated against. Which of the following statements is true in this situation? Bill could be in big trouble, since it is illegal for a real estate licensee to discriminate against a person seeking a loan based on racial, religious, or economic reasons. Bill could be in big trouble, since it is illegal for a real estate licensee to discriminate against a person who is of any "protected class," even if that person does not meet the financial loan qualifications that every applicant must face. Bill could face serious penalties if LaDawna files suit against him. It is illegal for a real estate licensee to decline financing to a person of another race, even though that person does not meet the financial loan qualifications set forth for every applicant. As long as Bill refused the financing based solely on economic reasons (lack of job stability, poor credit rating, income, or net worth), he has acted lawfully and will not face any disciplinary action.
As long as Bill refused the financing based solely on economic reasons (lack of job stability, poor credit rating, income, or net worth), he has acted lawfully and will not face any disciplinary action.
Under Article 7 on "hard money loans" (cash) of $30,000.00 and over for first trust deed loans, and $20,000.00 and over for junior deeds of trust, except where the new usury laws apply, the loan broker's commission maximum is: 10%. 12% 20% As much commission as her borrower will agree to pay her.
As much commission as her borrower will agree to pay her.
In which of the following capacities does the Commissioner serve in California? As the chairperson of State Department of Justice As the chief executive of the Bureau of Real Estate. The Commissioner serves as both the chairperson of the State Department of Justice, and the chief executive of the Bureau of Real Estate. The Commissioner serves in neither of these capacities. Instead, the Commissioner strictly serves in an advisory position over the real estate industry.
As the chief executive of the Bureau of Real Estate.
In 1980, an important piece of environmental legislation was passed. This legislation established a fund called the Superfund, to clean up uncontrolled hazardous waste sites and to respond to spills, and it also created a process for identifying potential responsible parties (PRPs) and ordering them to take responsibility for the cleanup action. What was the name of this law? Environmental Responsibility Act, or ERA. Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA. California Environmental Protection Agency Act, or CEPAA. The Uniform Commercial Code Act, or UCCA.
CERCLA or Comprehensive Environmental Response, Compensation, and Liability Act
In California, which of the following is considered the same as cash when provided in business transactions? A check. A promissory note. A post-dated check. All of the above
D
California real estate lenders are divided into 3 major categories. Which of the following is NOT one of these categories? Institutional lenders. Non-institutional lenders. Depository institutions. Government-backed programs.
Depository Institutions
When new college graduate Sami Hensen goes to visit her Great-Aunt Gertrude, she is surprised when the older relative tells her she is soon leaving on a cruise with friends. Sami cannot imagine how her great-aunt can afford such luxury, while living in a nice house in a peaceful neighborhood, and wonders if her aunt's mental capacities are failing her. At her gentle inquiry about the costs, her Great-Aunt Gertrude laughs away her concern, telling her that she has been receiving monthly checks out of the equity she has in the home. Now Sami really thinks her old aunt is off her rocker! If Great-Aunt Gertrude is correct, which of the following statements is true of this situation? Gertrude has a Package Mortgage, which is commonly used in situations of people who are "house rich, cash poor." This type of loan is common for senior citizens. Gertrude has a Wraparound Mortgage, which provides for extra cash-in-hand. Gertrude has a fully-amortized loan, so she receives a monthly dividend. Gertrude has a Reverse Annuity Mortgage, which is a loan that must be repaid upon the owner's death, if she moves elsewhere, or upon the sale of the property.
Gertrude has a Reverse Annuity Mortgage, which is a loan that must be repaid upon the owner's death, if she moves elsewhere, or upon the sale of the property.
Barney Dinesh has served two years of active duty for the United States Army in the Middle East. He is still on active duty, though he is now stationed stateside in California. He and his new wife, Alma, have found a home they both love, and their agent tells them about the Cal-Vet loan, saying that he believes Barney would qualify for this. What are the main requirements for such a loan, and does Barney (from the information given here) seem to qualify for the Cal-Vet program? The Cal-Vet loan requires that the veteran have served a minimum of 120 days' active duty; provide an affidavit if on active duty (or an honorable discharge if not active); and a $500.00 deposit. Provided Barney can procure this affidavit, and the deposit money, it appears that he would qualify. The Cal-Vet loan program requires that the veteran have served a minimum of 120 days' active duty; provide Statement of Service if on active duty (or an honorable discharge if he is no longer active); and be willing to buy a California home or farm. Based on the information provided herein, Barney should qualify for the program. The Cal-Vet loan program requires that the veteran have served a minimum of 90 days' active duty; provide Statement of Service if on active duty (or an honorable discharge if he is no longer active); and be willing to buy a California home or farm. Barney would appear to qualify, based on the given information. The Cal-Vet loan requires four essentials: (1) The veteran must have served a minimum of 90 days' active duty; (2) The veteran must provide a Statement of Service if on active duty (or an honorable discharge if he is no longer active); (3) The veteran must be willing to buy a California home or farm; and (4) Most importantly, the veteran must meet the requirements for a Veterans Administration (VA) loan before he can be approved for a Cal-Vet loan (This doesn't mean he is going to take out a VA loan, but merely that he meets the federal VA standards). There is not enough information given in the question to determine whether or not he'd meet the federal VA qualifications; so the second part of this question cannot be answered.
The Cal-Vet loan requires four essentials: (1) The veteran must have served a minimum of 90 days' active duty; (2) The veteran must provide a Statement of Service if on active duty (or an honorable discharge if he is no longer active); (3) The veteran must be willing to buy a California home or farm; and (4) Most importantly, the veteran must meet the requirements for a Veterans Administration (VA) loan before he can be approved for a Cal-Vet loan (This doesn't mean he is going to take out a VA loan, but merely that he meets the federal VA standards). There is not enough information given in the question to determine whether or not he'd meet the federal VA qualifications; so the second part of this question cannot be answered.
The law used by cities and counties for street improvements, in which a typical example would be that the local government hires a contractor to improve streets, and then each owner along that street is liable for paying a pro rata share of that cost, is known as: The Street Improvement Act of 1911. The Mello-Roos Community Facilities Act of 1982. Documentary Transfer Tax. Proposition 60.
The Street Improvement Act of 1911.
Under which of the following is a subdivision defined as "a division of land into 5 or more lots for the purpose of selling, leasing, or financing, whether now or in the future"? The Subdivision Map Act. The Subdivided Lands Act. The Interstate Land Sales Disclosure Act. All of the above.
The Subdivided Lands Act.
Which of the following statements about the county fiscal year in California is factual? The county fiscal year begins on January 1 and ends on December 31. The county fiscal year begins on June 1, and ends on May 31. The county fiscal year begins on July 1, and ends on June 30. The country fiscal year begins on October 1 and ends on September 30.
The county fiscal year begins on July 1, and ends on June 30.
In California, there is a requirement to report annual and quarterly loan activities to the California BRE, IF, within the past 12 months, a broker has negotiated any combination of 10 or more loans to a subdivision OR a total of more than $1,000,000.00 in loans. This mandate is known as: Threshold Reporting. "Big Lending" Reporting. The Mortgage Loan Broker Law. Regulation Z.
Threshold Reporting
California residents Kate and Jennifer decide to make a "deal": Kate will sell Jennifer her new Dell laptop for $600, a steal since she paid over $1,000 for it. They both feel they've gotten a great deal. Does this agreement need to be in writing, under California law? Yes, because under California law, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $200.00. Yes, because under California law, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $500.00. No, because this is personal property, and written agreements are not required for personal property sales. No, because the value of this computer was under $2,000.00. California law ONLY requires that an agreement for the sale of personal property with a price or value of more than $2,000.00 be in writing.
Yes, because under California law, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $500.00.
Pauline Chasse has just signed a lease agreement with landlord, Wayne Godbrey to rent a house he owns in Delano. The lease states definite beginning (January 1, 2016) and ending (October 30, 2016) dates, and sets forth the rent amount and due dates and all additional property and personal information required in such a lease. Wayne hands a copy to Pauline, but she notices that he has not signed it. When she comments about this to him, he tells her that signatures are not necessary since the lease is for less than a year. Which of the following is true of this situation? Wayne is correct. Under the Statute of Frauds in California, leases of less than one year are not even required to be in writing, and therefore, signatures are not required. Leases of less than one year are not required to be in writing. However, if a lease IS in writing, then it must be signed by the lessor (in this case, Wayne). Leases of less than one year are not required to be in writing; but if there is a written lease, then it must be signed by both the lessee and lessor. Because the property being leased is located in Northern California, a lease agreement is required to be both written and signed by the lessor if the lease period is for 6 months or more. Therefore, Wayne was incorrect and he must sign the lease. If he does NOT sign the lease, then it will remain valid, but will not be court-enforced, should Pauline default on any of the related provisions.
b
Stockton broker Dustin Giles has been asked by super-cautious sellers Frank and Carole Bellacera to find out the comparable sales for a seller's property, since that seller isn't sure at which price to list his property. When he gives the information to them, they insist this is NOT what they want. Their lender needs the actual value upon which that lender will determine the loan amount. Someone is confused here, but which someone? The Bellaceras are confused, since what they originally described was an appraisal, which Dustin provided. What their LENDER actually needed to establish the loan amount was a competitive market analysis, or CMA. The Bellaceras mislead Dustin because what they originally described was a CMA, or Competitive Market Analysis, which real estate licensees perform often in order to help sellers arrive at a listing price for their home. However, what the lender needs is an appraisal, which would establish the market value. An appraisal must only be performed by an independent licensed fee appraiser. Dustin should have known from the start to perform an appraisal, which is used to estimate value — both for the listing price AND for the loan value, since these two amounts are going to be very close, dollar-wise. The Bellaceras didn't really know what they were talking about, but Dustin SHOULD HAVE recognized it, and didn't. What they requested originally was a CMA, or competitive market analysis, which Dustin is NOT legally authorized to perform unless he is licensed, under the California Business and Professions Code as a Competitive Market Analyst.
b or d
