Real Estate License Wizard Exam
A mortgage loan that requires monthly payments of $400.00 for 15 years and a final payment of $20,000. Typically a loan structured like is called a A) a balloon loan. B) a payday loan. C) a standard loan. D) a home equity loan.
A A balloon loan is a mortgage which does not fully amortize over the term. Amortization is when payments divide into equal amounts for the duration of the loan. A balloon loan is different as not all payments are equally divided and the most substantial payments are called Balloon payments. A common example of a balloon loan is the seven-year Fannie Mae Balloon, which features monthly payments based on a 30-year mortgage. Making the rate of payments much lower. At the end of seven years, the rest of the loan is due. This last payment is called a balloon payment because of its large size. At that point, the borrower may sell the home to cover the balloon payment or take out a new loan to cover the payment, effectively refinancing the mortgage.
An interest in real property which is held for the duration of the life of a designated person is called a A) Life Estate B) Fee Simple Absolute C) Fee Simple Defeasible D) Estate at Will
A A life estate is an interest in real property which is held for the duration of the life of a designated person. It may be limited by the life of the person holding it or by the life of another person. This designated person is called a life tenant. fee simple absolute estate - estate of inheritance. Greatest estate possible in real property, containing greatest amount of rights, contains all the bundle of rights estate at will - created at end of lease where landlord lets tenant remain in possession for an indefinite period w/o renewing the original agreement
What best describes an agent hired to perform a specific duty? A) a special agency B) a general agency C) a universal agency D) an exclusive agency
A A special agent is an agent hired to perform a specific duty. The real estate agent's power and authority is limited to that specific task. Example: If you list a house on behalf of a seller, you are hired for one specific job - listing the house. Once that job is complete, then the agency relationship is over.
After smoking, this is the second leading cause of lung cancer in the United States. A naturally occurring gas that forms in rocks, soil, and water. A) Radon B) Chlorine C) Lead Paint D) Carbon Monoxide
A After smoking, this is the second leading cause of lung cancer in the United States. Radon is a naturally occurring gas that forms in rocks, soil, and water.
Amendments and addendum are essentially the same thing, correct? Choose the best answer. A) Incorrect. An amendment typically changes terms of a contract. An addendum "adds" terms to a contract. B) Incorrect. An addendum typically changes terms of a contract. An amendment "adds" terms to a contract. C) Correct. They are the same thing. Amendments are just used in government laws whereas addendums are used for civil documents. D) Correct. They are the same thing and can be used interchangeably.
A An amendment typically changes terms of a contract. An addendum "adds" terms to a contract. For example, let's say a buyer and seller have agreed to an April 10th closing date but later both agreed to change the closing date to April 25th. They would use an amendment. Addendums are used to add or delete terms or conditions NOT previously agreed to. That's the difference.
Commingling is the opposite of what? A) Separation B) Contribution C) Combination D) Transformation
A Commingling refers to mixing brokers funds with clients funds. The opposite of commingling is separation, which is just separating the funds.
Which of the following would NOT apply to the income approach in the valuation process? A) Depreciation B) Capitalization C) Gross Income Multiplier (GIM) D) Gross Rent Multiplier (GRM)
A Depreciation. Only the Cost Approach valuation process uses depreciation.
Who dictates trust accounts and when to deposit earnest money or other trust funds? A) State Specific License Law B) The Brokerage Firms C) Federal Law D) County Law
A Each state determines the rules for brokerage firm trust accounts and how earnest money must be deposited.
The period over which a property may be profitably utilized is called its: A) Economic life B) Amortized life C) Income life D) Net life
A Economic life is the expected period of time during which an asset remains useful to the average owner. When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life.
According to the Do Not Call list and Established Business Relationship (EBR) Rules, how many months does a real estate professional have to call an expired listing client to solicit new business (referral)? A) 18 months B) 6 months C) 3 months D) Indefinitely
A In this example the answer is 18 months. Established business relationship means a relationship between a seller and a consumer based on..... " the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months." Per 16 CFR 310.2
Whose obligation is it to disclose potential lead-based paint to buyers of homes built before 1978? A) The seller B) The buyer's agent C) The listing agent D) Either the listing or buyer's agent
A It's the seller that must make the disclosure. It's real estate professionals' job to make sure all parties are in compliance with the law, but ultimately it's the sellers obligation.
Which of the following is an economic characteristic of real estate? A) Scarcity B) Immobility C) Uniqueness D) Indestructibility
A Real estate has three physical characteristics that differentiate it from other assets in the economy: 1. Indestructibility meaning land cannot be destroyed or worn out. Its appearance may be altered but it always continues to exist. 2. Immobility meaning geographical location of the property remains the same & can never be changed, it is fixed. 3. Uniqueness or non-homogeneity meaning no parcels of real estate are exactly alike. An economic characteristic of real estate is scarcity meaning the total supply is fixed.
Which of the following laws prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. A) The Fair Housing Act B) The Equal Credit Opportunity Act (ECOA) C) The Civil Rights Acts of 1866 & 1964 D) The Smart Opportunity and Housing Act
A The Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more.
Who appoints or selects the California State Real Estate Commissioner? A) The Governor B) The Districts Representative C) The National Real Estate Commission D) The Citizens of California; its voted on every term.
A The Real Estate Commissioner is appointed by the Governor, and serves as the chief executive of the Department of Real Estate.
Under the terms in a mortgage, the lender must be paid in full if the property is sold to another person. This is known as the A) alienation clause. B) dominant clause. C) habendum clause. D) acceleration clause.
A The alienation clause is a contract provision that comes into effect when ownership of a specified asset is transferred or sold. It ensures that if a transfer of property happens the lender is paid in full from the original borrower. It's a legal clause lenders add for protection. acceleration clause - in the event a borrower defaults on a note, this clause allows lender to require the entire principal balance be immediately due and payable
What is the proper procedure for changing a contract that already has become binding? A) Sign a separate amendment B) Replace the old contract with a new one C) Write the changes in the original contract D) Write the changes in the original contract, date, and initial the changes
A The proper procedure for changing a contract that has already become binding is to sign a separate amendment. Remember, separate amendments are used to modify or change executory contracts.
If a buyer refuses to go ahead with a purchase of property which he has signed a contract, what usually happens to the earnest money? A) It is kept by the seller B) It is kept by the buyer C) It is kept by the escrow company D) It is split between the escrow company and the seller
A The seller is usually entitled to keep the earnest money, because this is considered forfeiture of the contract. The only way the buyer can back out and get their earnest money back is if something happens with the inspection, appraisal, or they have a contract clause offering that protection.
Which of the following are the main participants in real estate markets? A) Users, owners, renters, developers, renovators, and facilitators B) Players, buyers, sellers, renovators, and facilitators C) Buyers, sellers, investors, and facilitators D) Buyers, sellers, and investors
A Users, owners, renters, developers, renovators, and facilitators are the main participants in real estate markets.
Which of the following statements about water rights is true? Choose the best answer. A) Water rights are appurtenant. B) Water rights are transferred exclusively in quitclaim deeds. C) Water rights are double taxed similarly to how corporations are taxed. D) The two basic forms of water rights are ocean rights and lake rights.
A Water rights are appurtenant, meaning they run with the land and not with the original owner. In other words, if an oceanfront property is sold, the new owner gains the littoral rights and the seller relinquishes his or her rights
Appraiser Larry has a set of special-purpose and public service buildings like schools, churches, and post offices, which he needs to appraise. Which approach to value would Larry, the appraiser choose to complete the task? A) Cost Approach B) Estate Approach C) Income Approach or Summation D) Market Data Approach or Sales Comparison Approach
A For special-purpose and public service buildings like schools, churches, and post offices the cost approach is the best choice. The reasoning is because these types of buildings usually do not have income so Income Approach is out, and there's not enough comparables to do the sales comparison approach. Cost approach is the best answer.
An example of functional obsolescence in real estate is A) outdated plumbing. B) a house not having a pool. C) a house in a lower class area. D) an agent not being able to sell a property.
A Functional obsolescence refers to the loss of property value due to an obsolete design feature. Outdated plumbing would be considered functionally obsolete because it is outdated. Who determines what is obsolete or not? Usually the buyer or homeowners. If a neighborhood is filled houses with new bathrooms and/or new plumbing, and your's isn't, It would be considered functionally obsolete.
When an asset is pledged as collateral to secure a loan what is it called? A) hypothecation B) encumbrance C) investment D) insurance
A Hypothecation occurs when an asset is pledged as collateral to secure a loan. A rental property, for example, may undergo hypothecation as collateral against a mortgage issued by a bank. encumbrance - a claim against an asset by an entity that is not the owner. Common encumbrances are liens, easements, leases, mortgages, restrictive covenants lien - legal claim against property that can be used as collateral to repay a debt
The deed that offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land. A) general warranty deed B) special warranty deed C) quitclaim deed D) trustee deed
A The general warranty deed offers the grantee the most protection. General warranty deeds protect homeowners from stakes and claims from previous people, from the beginning of time to right now. It also protects homeowners from any potential encumbrances. A general warranty deed grants an undeniable fact that this property is coming with no liens and no heirs they could potentially lay claim to the piece of property. Rarely used in California because title insurance removes reliance on this deed grant deed - most common deed used in Cali. two warranties 1) grantor has not transferred title to anyone else 2) grantor warrants they have not encumbered the title general warranty deed - five required covenants 1) covenant of seizin 2) covenant against 3) encumbrances covenant of quiet enjoyment 4) covenant of further assurance 5) covenant of warranty forever special warranty deed - similar to warranty deed except it does not warrant title is entirely free of encumbrances. Two warranties 1) warranty that grantor received title 2) warranty that property was unencumbered by grantor only bargain and sale deed - no express warranties 1) implication only that grantor holds title and possession. Used by sheriff's sale or land sale quitclaim deed - no express or implied warranties - used primarily to convey less than fee simple or cure a title defect
Unlike apartments, which are leased by their tenants, condominium units are owned outright. A condominium is often shortened to A) CCR's B) co-ops C) corps D) condos
A condominium is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. A condominium is often shortened to condo. What is the difference between a condo and a co-op? Well, a condo is a private residence in a multiunit structure that includes ownership of commonly used property. A co-op is also a multiunit building, but that's where the similarities end. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit. Have to go through a board and be interviewed to buy a co-op.
Which of the following best describes a blind offer? A) A purchase contract that was made by an unlicensed individual or without the authorization of a real estate professional. B) A purchase contract written by a buyer without seeing the property. C) An offer that includes restrictive covenants. D) An offer without earnest money.
B A blind offer in real estate is a purchase contract written by a buyer without seeing the property. This is common in commercial properties such as apartment complexes, and it's not uncommon in multi-family homes such as duplexes and fourplexes. It's not typical in single-family homes or apartments.
Which of the following is a lien? A) A novation B) A mortgage C) An easement D) An investment
B A lien is a legal claim on an asset. Mortgages are a type of lien as it provides the lender a claim over the borrower's assets and allows the lender the right to detain the assets, property or goods to secure payment. novation - original contract is canceled and a new one replaces it
Which of the following would not be considered appurtenant? A) An inground pool B) A trade fixture C) A set of trees D) An easement
B Appurtenant is an adjective meaning it is attached to something. If something is appurtenant, it belongs to something else, either attached to or by law. An appurtenant easement is a type of easement that "runs with the land." These all would be considered appurtenant, other than a trade fixture. Remember, trade fixtures are pieces of equipment used in a business and can usually be easily removed.
Who funds the California Consumer Recovery Account? A) California Taxpayers B) California Real Estate Agents C) The Active California Governor D) The Active California Legislature
B California's Bureau of Real Estate and the Consumer Recovery Fund do not receive funding from the general state budget. Instead, the Consumer Recovery Account is funded from a portion of the fees paid by real estate licensees.
During your time as agent you will run into many different types of people from areas across the world. Closing is called many names depending on which region of the U.S you are from. Which of the following is NOT a legal name for closing? A) settlement and transfer B) exchange and transfer C) passing papers D) closing
B Closing is known by many names. Some areas of the country may call it settlement and transfer some may call it passing papers. The textbook name is for closing is closing.
Fees that the buyer pays to close the deal are called: A) seller costs B) closing costs C) broker fees D) earnest deposits
B Closing is the final step in executing a real estate transaction. It is when official ownership and payment is transferred to the rightful parties. The fees that the buyer pays to close the deal are called closing costs.
A real estate commission is usually based on the: A) Listing price B) Selling price C) Earnest deposit D) Amortization percentage
B Commissions paid to real estate agents are negotiable, while many people believe that commission is always 6% it varies. That percentage is a percentage of the sale price of the home, also known as the selling price.
What is the procedure used by a public or private entity with the powers granted to take privately owned real estate? A) Escheat B) Condemnation C) Eminent Domain D) Inverse Condemnation
B Condemnation is the procedure used by a public or private entity with the powers granted from eminent domain to take privately owned real estate. eminent domain is the right which grants the government to take privately owned land from someone while condemnation is the action of taking that land.
Mr. Jay lives on a property right next to a bridge. The state wants to widen the bridge due to the higher amounts of traffic reported. The state needs the space on either side of the bridge to widen the road. The government seizes Mr. Johnson's property and gives him $150,000 for it. This government's right to take over privately-owned real for public use is an example of: A) Escheat B) Eminent Domain C) Adverse Possession D) Inverse Condemnation
B Eminent domain is the government's constitutional right to take over privately-owned real for public use (usually despite the owners' wishes). Eminent domain for the federal government is protected under the Fifth Amendment of the Constitution, while for state governments, it is protected under the Fourteenth Amendment. Mr Jay's example is an example of eminent domain escheat - when a person dies intestate and no heirs are found, or when a property has legally been abandoned. attorney general of Cali must file claim on behalf of state, if no legal claimant comes forward within 5 years, title to property vest in the state condemnation - government's power of eminent domain and property ownership because of condemnation extinguishes all other interest in the property, including leasehold interests
What is Ginnie Mae's primary responsibility? A) To create FHA and VA loans. B) To guarantee the security of loans. C) To maintain an active secondary market for mortgages. D) To manage and liquidate previously acquired mortgages.
B Ginnie Mae exists to solely guarantee the security of the loan. Ginnie Mae is a government agency that guarantees securities backed by loans issued under other government agency programs, such as the VA and FHA. Fannie Mae, is a private corporation that buys loans from private lenders, assembles them into mortgage-backed securities to maintain an active secondary market. Today Fannie Mae buys FHA, federal VA, and conventional loans; they don't lend money only buys existing loans Freddie Mac - buys federal VA, FHA, and Conventional loans from a variety of primary lenders, however most loans purchased originate out of savings and loan institutions
Holding earnest money without depositing it, is what? A) Always illegal B) Legal with written authority C) Legal with verbal authority D) Legal if held by a broker
B Holding earnest money is only legal with written authorization, and even then it's best to deposit it as soon as possible. Having verbal authority is not good enough, and in many states is considered illegal.
A bilateral contract is one in which A) a restriction is placed in the contract by two parties to limit the performance of the other party. B) the promise of one party is given in exchange for the promise of the other party. C) only one of the parties is obligated to act. D) something is done by only one party.
B In plain terms, a bilateral contract is an agreement between two or more parties. Most business and personal contracts fall into this category.
A property owner acquired the ownership of land that was deposited by a river running through his property by what? A) Succession B) Accretion C) Reliction D) Avulsion
B In real estate, the increase of the actual land via a stream, lake or sea by the action of water which deposits soil upon the shoreline is accretion. reliction - gradual increase in riparian or littoral land by recession of water. Usually occurs when river or lake recedes avulsion - geological process where soil is torn away suddenly and violently from the land by flowing water or waves and deposited elsewhere
A seller made a counteroffer and gave three days for acceptance. The very next day, the seller receives a better offer, which they want to accept. What is the first step the seller should make? A) Nothing, since the seller already made a counter offer. B) Withdraw the counteroffer C) Withdraw the offer D) Sign the new offer
B In this situation, the new offer cannot be accepted unless the seller's counteroffer is withdrawn or hypothetically rejected. Remember, if a new offer is accepted two valid contracts could exist, so the first step must be to withdraw the counteroffer.
The EPA requires real estate professionals to give purchasers and tenants of residential dwelling a pamphlet about Lead-Based paint if the dwelling was built before when? A) 1968 B) 1978 C) 1983 D) 1992
B Lead-Based Paint Disclosure Rule (Section 1018 of Title X) requires that potential buyers and renters of housing built prior to 1978 receive certain information about lead and lead hazards in the residence prior to becoming obligated to buy or rent, and provides the opportunity for an independent lead inspection for buyers. Sellers, landlords, and agents are responsible for compliance.
Liquidated damage is most likely to be found in which of the following documents? A) Listing contracts B) Purchase contracts C) Self employment contracts D) Salary employment contracts
B Liquidated damages are most likely to be found in purchase contracts. Remember, liquidated damages are the amount agreed to in advance that will compensate a party for any loss they suffer on a purchase contract. Often set forth within a contract, and specify in advance the damages for a breach of contract terms (buyer will lose earnest money)
Philip has a contract with his neighbor Jessica for lawn service. Philip can no longer mow the lawn due to an ankle injury. Paul, Jessica's other neighbor, agrees to carry out the terms of Philips contract. In order to do this, Jessica must substitute Philip's name with Pauls on the contract. What is this an example of? A) An option B) A novation C) An addendum D) An amendment
B Novation is the procedure in which an original contract is terminated and replaced with a new one. The legal process of novation makes it possible to transfer all contract benefits and liabilities from previous parties to a set of new ones. In plain terms, it's a simple way to replace an old contract with a new one while maintaining most or all of its original properties. When you see any name transfers just think novation.
Which of the following statements is NOT true about radon? A) It is created during the natural decay of radioactive uranium. B) It is a liquid released in soil. C) It is colorless. D) It is odorless.
B Radon is a GAS not a liquid.
Real property can be converted to personal property by A) inference B) severance C) accession D) changement
B Severance is the opposite of attachment. Severance is taking an item that is attached to the land and removing it as personal property. accession - accession is acquiring of title to something added to property either man-made or through natural geological processes
Who is most likely to win a suit for specific performance? A) The seller B) The buyer C) The real estate professional D) All parties have the same odds of winning a suit for specific performance
B Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. Both the buyer and seller can sue for specific performance, but it's more common for a buyer to sue and win a suit on specific performance. The buyer is more likely to force since the seller was the one who put the property on the market.
Which of the following best describes the acceleration clause? A) A provision in a mortgage or deed of trust signed with the lender that states that the borrower must pay the mortgage in full before the borrower can transfer the property. B) A contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract. C) The statement that a lender can penalize a borrower if the borrower pays off the mortgage much sooner than usual. D) A contract provision in real estate that establishes the order of priorities of financial claims.
B The acceleration clause is a contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract.
The amount borrowed is called the: A) Interest amount B) Principal amount C) Escrow amount D) Origin amount
B The amount owed is called the principal and the price of borrowing the money is called the interest.
Generally speaking, what happens when the supply of available houses in an area decreases significantly? A) The average cost of housing goes down B) The average cost of housing goes up C) Commission rates are raised D) Commission rates are lowered
B Think of supply and demand like a scale usually if one side raises, the other will lower or vice versa. Generally, low supply and high demand increase price. In contrast, the greater the supply and the lower the demand, the price tends to fall. So in real estate terms, when the supply of available houses in an area decreases significantly the average cost of housing goes up.
What is the illegal action or practice of lending money at unreasonably high rates of interest? A) Forgery B) Usury C) Altercation D) Puffing
B Usury is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Currently, most states have usury laws in place and set a cap on the maximum amount of interest a lender can charge. These rates can vary significantly by state and may differ depending on the type of financial product you're using. Usury is a form of predatory lending.
Economic life is the length of time during which a piece of property may be put to profitable use. Economic life is usually: A) neither shorter or longer than physical life. B) shorter than physical life. C) the same as physical life. D) longer than physical life.
B When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life. Economic life usually is shorter than physical life, as a structure generally will still physically exist but not be viable in the marketplace.
Andrew created a life estate on his property for his sister Gabby. Under the terms of the deed, ownership of the property will last until A) his death. B) her death. C) his moving date. D) his last day of the fiscal year.
B When you hear life estate think of life and death. A life estate is an interest in real property which is held for the duration of the life of a designated person. It may be limited by the life of the person holding it or by the life of another person. This designated person is called a life tenant. This is kind of a trick question, in this case since Andrew created the life estate FOR his sister she is the life tenant, meaning it will last until her death.
Upon passing the California State License Examination the applicant has how long to apply for their real estate license? A) Two years B) One year C) Six months D) 3 months
B After you pass the examination, and if you have not filed a License Combo Application: You will be sent a Salesperson License Application (RE 202) or Broker License Application (RE 200). This form must be completed and returned along with the appropriate fee within one year after passing the examination.
A parcel of real property that has an easement over another piece of property is best described as: A) a servient estate B) a dominant estate C) an estate of sufferance D) an estate in tenement
B By definition, a dominant estate is a parcel of real property that has an easement over another piece of property. estate at sufferance - when lease is terminated but tenant does not vacate, AKA holdover tenancy tenement - same as estate
Using a trust typically has advantages and disadvantages. One of the main advantages of Land Trusts are: A) renters are taxed less. B) the land remains in the government's hands. C) that the actual property owner can remain anonymous. D) the land is granted park level and can be tax deductible on a 1099.
C A land trust is a legal agreement in which a property owner transfers the title to a property to a trustee. The property owner is typically the beneficiary and directs the trustee in all matters relating to the management of the property, as outlined in the trust agreement or deed. The property owner also retains all property rights including the freedom to develop, rent and sell the property. One of the main advantages of this trust is that the actual property owner remains anonymous. Land trusts can not only bring some legal protection, but it can also help the property owner negotiate prices if he or she is particularly wealthy and wants to remain anonymous.
A lease agreement where the tenant has the right to buy the property within a specified period of time is called what? A) Purchase Option B) Option Contract C) Lease Option D) Option Lease
C A lease option is when a lease is combined with an option contract. option contracts - a unilateral contract by which a buyer is given the right to purchase a specified property at a specified price and for a fixed period. Rarely used in residential real estate but prevalent in commercial or raw land transactions
Which of the following contracts would best be described as a contract in which only one party makes a promise to perform an action? A) implied contract B) bilateral contract C) unilateral contract D) implied-in-fact contract
C A unilateral contract is a contract in which only one party makes a promise to perform an action. An insurance contract or a reward contract are both examples of unilateral contracts. Unilateral contracts appear more often than you may think; one of the most common instances is a reward contract. Imagine you've lost your cat, Coco. You place an advertisement online offering a $250 reward to the person who returns Coco. By providing a reward, you're offering a unilateral contract.
Typically a warranty deed contains how many covenants? A) two to three B) three to four C) five to six D) eight to nine
C A warranty deed can include six forms of covenants for title. A warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). The general warranty deed offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land. Typically a warranty deed has five to six covenants.
Acceleration is a term associated with which type of document? A) Leases B) Deeds C) Mortgages D) Rental agreements
C Acceleration is a term associated with mortgages. The acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if payments are not being made or there is a breach of contract. Usually, if a borrower isn't making any payments on the property the acceleration clause will come into effect. Which demands immediate payment for the said property. It's more of a legal clause that they add for protection to make sure borrowers aren't taking advantage of them.
The best way to determine fair value. A) Divisional Contractors B) 28/36 Rule C) Appraisal D) Gross Rent Multiplier
C Appraisals are the best way to determine fair value. The overall appraisal process is based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets.
A claim that has the appearance of having valid title, but in reality, the person either does not hold actual title, or there is a significant defect in the written documents supporting title, that makes it invalid. This an example of which legal concept: A) Falsifiable Action B) Intangible Title C) Color of Title D) Clerical Title
C Color of title refers to a claim to title that appears to be legally valid but may be defective. This legal concept is often discussed in adverse possession claims. If adverse possession is claimed under color of title, usually the claims are met sooner or in an easier fashion
If a leased premises becomes uninhabitable deliberately in an attempt to remove the tenant. What is this action called? A) Condemnation B) Actual eviction C) Constructive eviction D) Abandoning lease property
C Constructive eviction is a term used in the law of real property to describe when a landlord sidesteps the formal, legal eviction process, and instead attempts to force the eviction of the tenant by rendering the property uninhabitable. A tenant who is constructively evicted may terminate the lease and seek damages.
Which of the following is an example of Economic Obsolescence? A) broken shingles. B) old shaggy carpet. C) flight patterns above your house. D) a large shed in the backyard that is rotted.
C Economic Obsolescence -refers to the loss of property value due to external factors, meaning things off the property affecting the properties value. Examples of causes of economic obsolescence can include: flight patterns, a busy highway, and rise in local crime. Physical Obsolescence - 1. normal wear and tear, can be curable or incurable 2. can be curable (new roof) or incurable (structure compromised) functional obsolescence - 1. factors inherent within the structure that makes the structure outmoded by today's standards 2. can be curable (lack of weatherization or outdated electrical system) or incurable (outdated floor plan that cannot be altered)
Fee packing, equity stripping, and balloon payment abuses are all examples of what? A) Fixing B) False Disclosure C) Civil rights laws violations D) Predatory lending practices
C Fee packing, equity stripping, and balloon payment abuses are all examples of predatory lending practices. Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. While these practices are wrong, unfortunately sometimes they are perfectly legal.
An agent took a listing and later discovered that her client had previously been declared incompetent by the court. The listing is now A) unaffected because the agent was acting as good faith as the owner's agent. B) unaffected because her client took the listing making it a verbal contract. C) of no value to the agent because the contract is void. D) renegotiable by both parties.
C In order for a contract to be valid a few things must occur: -The party must be at least 18 years old and of sound mind. -A contract must be legal. For example, there cannot be a contract to kill, steal or anything illegal. -The contract must hold a clear and definite consideration. -There must be mutual consent of the contract. Since the client has been declared incompetent by the court. The listing is now void.
iAppraiser Leo was hired to prepare a feasibility study for a 12-unit apartment complex in which the owner is considering putting in a swimming pool. Which basic principle of appraising should Leo use? A) Condemnation B) Reconciliation C) Contribution D) Closing
C Leo should use Contribution. Contribution is most commonly applied to determine how renovation and property changes may affect the property's overall cost. In this case, since the owner wants a feasibility study, contribution would need to be used. Swimming pools are a common contribution example. It's worth noting the cost doesn't always equal the value to the home. For example, a pool could add $5000 to the value of a home but cost $10,000 to build. condemnation - when gov exercise its right of eminent domain to use property for the benefit of the public, like a private road, this is called easement by condemnation reconciliation - used for balancing check books on trust accounts
Traditionally real estate agents are paid through a fee paid for performing a transaction, called a A) Wage B) Salary C) Commission D) Earnest Deposit
C Most real estate agents make money through commission. A commission is a fee paid to an agent for performing a transaction. A commission is usually a percentage of the property's selling price, although sometimes it can be a flat fee.
What type of court handles the analysis and transfer of real estate or general estate assets of a deceased person (without a will)? A) Injunction B) Escheat C) Probate D) Estate
C Probate is the analysis and transfer administration of estate assets previously owned by a deceased person. When a property owner dies, his or her assets are commonly reviewed in a probate court if they do not have a will.
A non licensed buyer negotiated the purchase of a house. During a conversation with the seller, the seller agreed to include both the washer and the dryer, in the sale, and this was included in the sales contract. In this situation, if the seller takes the appliances, what recourse (if any) does the buyer have? A) The buyer can declare the principle of performance, and trade any assets he has for the assets he wants. B) The buyer has no recourse because he negotiated the sale himself. C) The buyer may sue the seller for specific performance. D) The buyer may sue the seller for partial performance.
C Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. In our instance since the washer and dryer were included in the contract, the buyer may sue the seller for specific performance.
Steve (a real estate agent of five years) was at his local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. What should Steve do? A) Excuse himself from the discussion, as this could constitute a violation of The Equal Credit Opportunity Act. B) Excuse himself from the discussion, as this could constitute a violation of the Fair Housing Act. C) Advise the other agents this could constitute a violation of the Sherman Antitrust Act. D) Listen carefully so he can be more competitive in the market.
C Steve should advise the other agents this could constitute a violation of Sherman Antitrust Act. The Sherman Antitrust Act prohibits price-fixing. Real estate agents and brokers should understand that any discussion about commission could constitute a violation of the laws even if only implied.
Which of the following might suggest that rent is too low in an apartment unit? A) The building is poorly maintained. B) There are many for lease signs in the area. C) There is a high occupancy rate. D) There is a high vacancy level.
C Technically speaking, if there is a high occupancy rate (higher than usual), rent may be too low. The theory of supply and demand supports this. Property managers need to be aware of this as one of their responsibilities is to make sure the rental property is at max profitability.
The purpose of the California Consumer Recovery Account is to enable A) sellers to recover lost money on sales agreements. B) widows to gain money if their spouses passed away. C) people to get recourse of uncollected judgement against licensees. D) sellers to recover escrow money that banks have handled improperly.
C The Consumer Recovery Account is funded from a portion of the fees paid by licensees. It enables a person who has been defrauded or had trust funds converted by a real estate licensee in a transaction requiring that license, and who satisfies specified requirements (California Business and Professions Code Section 10471 et seq.) to recover at least some of his or her actual loss when the licensee has insufficient personal assets to pay for that loss.
A contract that legally binds two or more parties together, to specific obligations, that create a legally binding contract between the buyer and the seller. A) Equity Agreement B) Escrow Agreement C) Purchase Agreement D) Settlement and Transfer Agreement
C The Purchase Agreement is a contract that legally binds two or more parties together, to specific obligations, that create a legally binding contract between the buyer and the seller. So in plain terms, a Purchase Agreement is the document buyers and sellers sign with all the terms and conditions of their transaction on it.
Which of these meets the Department of Housing and Urban Development's (HUD) definition of family as a protected class? A) Two twin brothers in their 30's B) A 62-year-old man with his 50-year-old wife C) A single parent with a foster child age 11 and a son age 18 D) A married couple with an elderly parent over the age of 50
C The answer is a single parent with a foster child aged 11and a son aged 19. Familial status is defined as one or more individuals younger than 18 living with a parent or guardian. It also includes pregnant women and anyone who is in the process of assuming custody of a child younger than 18. HUD fair housing laws protect against 7 classes Families (familial status) Crave (color) Resorts (race) Not (national origin) Small (sex) Hotel (handicap) Rooms (religion)
To whom does an agent always owe their fiduciary responsibility? A) The buyer B) The seller C) The principal D) The broker
C The principal is always the one whom you have an agency relationship with and therefore is the person whom you owe fiduciary responsibility.
A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of A) Highest and Best Use. B) Contribution C) Anticipation. D) Balance.
C The principle of anticipation in appraisal is the principle that the value of property today is the present value of the sum of anticipated future benefits. It's also worth noting that the principle of anticipation doesn't always refer to monetary gain. It could also be emotional or mental gain.
If a contract has prepayment penalties, they can be found in which real estate contract clause? A) In the Habendum Clause B) In the Defeasance Clause C) In the Prepayment Penalty Clause D) In the Penalty and Insurance Clause
C prepayment penalty clause - states that a lender can penalize a borrower if the borrower pays off the mortgage much sooner than usual. Lenders are required to disclose prepayment penalties at closing in the form of a prepayment penalty clause. habendum clause - aka "to have and to hold" clause. is a clause in a deed or lease that defines the type of interest and rights to be enjoyed by grantee or lessee. Default is fee simple absolute (greatest estate possible in real estate). defeasance clause - in loan documents stipulates the borrower will be able to regain clear title after the debt is paid 1) in case of mortgage, lender executes a satisfaction of mortgage 2) in case of trust deed, a reconveyance deed is executed 3) in case of land sale, borrower will receive title to the property by a grant deed
Mrs. Jane lives in a small residential neighborhood. 100-year-old trees surround her home, and her neighbor Mr. Joe claims the trees are on his property and is planning on cutting them down. Mrs. Jane tries to reason with Mr. Joe, but he refuses to listen. Mrs. Jane files a lawsuit that includes a court order for Mr. Joe to stop his actions until they can work something out. What type of court order is this? A) a temporary protective order B) an authorized dispute order C) an injunction D) an easement
C If a dispute is pending, the court will likely issue an injunction preventing Mr. Joe from cutting down the trees until they are entirely resolved. Injunctions can be used to protect interests in real property. A court ordered injunction can be used to prevent a harmful action, stop ongoing or repeated conduct, or force a defendant to take action to prevent harm. injunction - opposite of specific performance and breaching party refrains from doing a specific act
An individual owned three acres of land. When she sold one acre to her friend, she reserved for herself and family an appurtenant easement over the friend's land for ingress and egress. The friend's land is what? A) subject to a tenement lawsuit B) the dominant tenement C) the servient tenement D) is involuntarily committing tax fraud
C Remember. A Dominant Estate is a parcel of real property that has an easement over another piece of property. A Servient Estate is a parcel of land that is subject to an easement. appurtenant easement - An easement that benefits adjoining property, such as a driveway, is termed an "appurtenant easement." An easement that does not benefit a particular tract of land, such as a gas transmission pipeline, is termed an "easement in gross."
What is the biggest difference between private and public land use controls? A) private land use controls are written in the constitution while public are up to the local governments. B) public land use controls are written in the constitution while private are up to the local governments. C) the government does not write or enforce private land use controls but it does impose and enforce zoning. D) the government writes or enforces private land use controls but it does not impose and enforce zoning.
C The primary public land-use control is zoning and issued by the government. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. The biggest difference is that the government does not write or enforce private controls but it does impose and enforce public controls like zoning.
What is the best definition listed for the term: "conventional loan?" A) A type of loan insured or guaranteed by the government. B) The most basic form of a U.S loan, typically the most popular too. C) A type of loan that follows all the rules of an adjustable-rate mortgage or balloon loan. D) A type of loan that is not insured or guaranteed by the government, but backed by private lenders.
D A conventional loan is a type of loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower. Yes, typically they are the most popular but the best definition by far is the following: A type of loan that is not insured or guaranteed by the government, but backed by private lenders.
In real estate, a deed is best defined as: A) a written will signed by a lawyer. B) a written promise to one person from another. C) a declaration or assurance that one will do a particular thing or that a particular thing will happen. D) a written legal document by which ownership of real estate is conveyed from one party to another.
D A deed is a written legal document by which ownership of real estate is conveyed from one party to another. For a deed to be legal it must include the identification of the grantor and grantee, and the adequate description of the property.
Your client signs a contract to buy a house and the seller refuses to sell the house at the very last minute. Your client still wants the house. What should your client do? A) sue for diligence B) sue for rescission C) sue for monetary damage D) sue for specific performance
D A lawsuit for specific performance would grant your client the house. Specific Performance asks the court to force the opposing party into a contract that binds them to actually perform the contract at issue, rather than award damages for breach of contract. For voidable contracts (one clouded by a defect) ratification - make a voidable contract fully enforceable rescission - make a voidable contract unenforceable restitution - place the parties in the same position they were in before they entered into the contract
Josh agrees to represent Susan in the sale of her home. The listing contract states that Josh will receive a fee of $15,000 from Susan at closing, regardless of the sales price. Is this a legal and a valid form of compensation? A) No. Flat fees are illegal. B) No. The fee has to be given before closing otherwise its voided. C) Yes. Since the fee is lower than the united states regulated minimum it is legal. D) Yes. Compensation can be determined in different ways, as long as the seller and broker agree.
D Compensation is negotiated between the broker and the seller and may be transferred and distributed in many ways. As long as the seller and broker agree compensation no matter how much, when, or in any avenue is legal.
Any loss in the value of a property over time from any cause. A) Deliverance B) Decreasement C) Depression D) Depreciation
D Depreciation is any loss in the value of a property over time from any cause. There are three main forms of depreciation: Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.
Which action is legal as a real estate agent? (Antitrust Laws) A) Price Fixing B) Dividing Territories C) Conspiracy to Boycott D) Selling property you listed to someone who resides in more then one state over.
D Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws. Dividing Territories is when competing brokers agree to split territories, and divide interests accordingly. This is a clear antitrust violation. Conspiracy to Boycott occurs when two or more persons or entities conspire to restrict the ability of someone from competing. Another clear antitrust violation. Selling property you listed to someone who resides in more than one state over is not a violation and is legal.
An example of an antitrust violation is A) selling more than one hundred houses in a taxable year B) buying a house in another state C) an equity loan D) price fixing
D Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Typically agencies set their commission rates depending on the price of the property. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws.
Which of the following would not be considered real property? A) A fixture B) An easement C) Mineral rights D) A mortgage
D Fixtures, easements, and mineral rights are all examples of real property - a mortgage is not. Real Property is all things attached to the land and all the legal rights to it. Real property is usually things that are immovable such as the home itself or the buildings within the property line. There are some exceptions of items that can be moved but are still real property, like for businesses. Business-related items like mineral rights, or if you own a farming business it would include crops, barns, and stables. Those are all considered real property because it is part of the business.
A senior housing development may refuse to rent to families if what? A) If 60% of the residents are 55 or older. B) If 55% of the residents are 55 or older. C) If all units are occupied by people over the age of 55. D) If all units are occupied by people over the age of 62.
D In order to qualify for the Fair Housing Act's "Housing for Older Persons" Exemption, at least 80 percent of the units must have at least one occupant who is 55 years of age or older OR all units are occupied by residents over the age of 62.
CRV stands for Certificate of Reasonable Value and is issued by who? A) Fannie Mae B) Federal Mortgage Association C) Federal Housing Administration D) The Department of Veterans Affairs
D Once the appraisal has been performed on a property being bought with a VA loan, the Department of Veterans Affairs (VA) issues a Certificate of Reasonable Value. A Certificate of Real Estate Value documents the price at which a property was sold as well as any unique terms that were added to the transaction prior to its completion.
Antitrust laws prohibit competing brokers from all of the following except: A) Boycotting other brokers in the marketplace. B) Dividing the market to restrict competition. C) Agreeing to set sales commissions and management rates. D) Receiving compensation from both the buyer and the seller.
D Receiving compensation from both the buyer and the seller is not an antitrust violation. Dual agency is when one real estate agent represents both the buyer and seller in a transaction. While it may seem ideal from an agent's perspective, it can lead to some significant risks, which is why it is illegal in eight states. In most states, though, dual agency is legal, but state laws have measures in place to protect parties that use it. Still even in states where it is illegal it is not classified as an antitrust violation, while all the other examples are.
Tony and Taylor are two unmarried individuals who own property with equal interests and a right to survivorship. Which of the following forms of ownership would Tony and Taylor most likely have? A) Tenants by the entirety B) Tenancy in common C) Community property D) Joint tenancy
D Remember, community property and tenants by the entirety is through marriage. You can't have that form of ownership with two unmarried individuals. Joint tenancy would be the best answer. Tenancy in common significantly differs from a joint tenancy, particularly in terms of survivorship rights and the degree of ownership each tenant has. Unlike with a joint tenancy, tenants in common have no rights of survivorship. So knowing that Tony and Taylor have a right to survivorship and are unmarried, we can assume they have a joint tenancy. The amount of interest really doesn't matter in this case.
In the case of a standard tax lien who gets paid first? A) the homeowner. B) the buyer/seller. C) the commission. D) the government.
D Tax liens are imposed by the federal, state, or local government based upon back property taxes that are due. Not only can these seriously impact your credit report, but until they're paid off, they can prevent you from selling the property. Tax liens are involuntary and usually specific. The important thing to remember is the government always gets paid first in terms of money distribution.
Buyer Dan is considering buying a lot to build a single family residence. Dan hires an appraiser to appraise the lot. Which approach to value would the appraiser choose to complete the task? A) Cost Approach B) Estate Approach C) Income Approach or Summation D) Market Data Approach or Sales Comparison Approach
D The Market Data Approach is also commonly called the sales comparison approach. The Cost Approach is also referred to as summation. And lastly, the Income Approach, is also known as capitalization. Each method has its own set of benefits. The answer is the Market Data Approach or Sales Comparison Approach because it's a single family residence.
In real estate, alienation is best described as: A) denying use of an easement B) changing a property from one zoning district to another. C) the act of transferring bonds, cash, money or any form of currency in escrow. D) the act of transferring title, ownership, an estate, or an interest in real estate from one party to another.
D The actual transfer of title in a real estate transaction is handled by lawyers or title agencies, not the agent. However as with other legal aspects in the transactions a real estate agent needs to understand them. Alienation is the act of transferring title, ownership, an estate, or an interest in real estate from one party to another.
There are three main forms of depreciation, what are they? A) Major Obsolescence, Minor Obsolescence, and Physical Deterioration. B) Seasonal Obsolescence, Quarterly Obsolescence, and Yearly Obsolescence. C) Seasonal Obsolescence, Economic Obsolescence, and Physical Deterioration. D) Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.
D The three main forms of depreciation are : Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.
If a minor signs a contract to buy real estate, the resulting contract is legally what? A) Valid B) Invalid C) Void D) Voidable
D There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. If a minor signs the contract it is considered voidable. void contract - void contracts are legally unenforceable at the time of their formation or a nullity voidable contract - one clouded by a defect
Under these rights, all landowners whose properties adjoin a river or stream, have the right to make reasonable use of it as it flows through or over their properties. A) river rights B) ad valorem rights C) littoral rights D) riparian rights
D Under riparian rights, all landowners whose properties adjoin a river or stream, have the right to make reasonable use of it as it flows through or over their properties. The only limitation owners have is they cannot stop or prevent the flow of water. Riparian rights vary from state to state but most grant unrestricted use. Unrestricted use means owners have the right to access it for swimming, boating, and fishing, build docs, etc
Government power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare. Escheat is A) when a property owner sells their property and the government gets a portion of the sale. B) when a property owner sells their property and the local government gets a portion of the sale. C) when a property owner dies and leaves no proper documented inheritance plan, the property ownership reverts to his/her heirs. D) when a property owner dies and leaves no proper documented inheritance plan, the property ownership reverts to the government.
D When a property owner dies and leaves no proper documented inheritance plan, the property ownership reverts to the government. Escheat ensures that property always has ownership. Escheat is part of the reason it's critical to have a will or when you are purchasing property you establish a clear right to survivorship.
As a listing agent, what obligations do you owe to an unrepresented buyer? A) none B) loyalty C) confidentiality D) honesty and fairness
D Agents or brokers function under certain legally mandated duties called fiduciary duties. Fiduciary duties include: Loyalty, confidentiality, disclosure, obedience, reasonable care and diligence, accounting and more. Honesty and fairness must be given to an unrepresented buyer.