Real Estate Principles Chapters 1-15 Exam Prep

The Real Estate Advisory Commission consists of 6 members. 10 members. 11 members. 7 members.

10 members. There are 10 members of the Real Estate Advisory Commission. They are appointed by the Real Estate Commissioner, who presides over their meetings.

When a residential tenant vacates, the landlord must mail the tenant either the entire security deposit or an itemized list of deductions, plus a check for any remaining balance within 14 days. 21 days. 7 days. 30 days.

21 days. Within 21 days after the tenant has vacated the premises, the landlord must mail the tenant the amount of the security deposit or a written itemized statement of the basis for the disposition of the security deposit and any remaining amount.

How many sections are in a township? 6 18 36 24

36 In the rectangular survey system, land is measured, divided, and numbered in each direction from the point of intersection of the baseline and the meridian in townships, each of which is an area of six miles square (36 square miles) made up of 36 townships of one square mile each.

The federal Fair Housing Act provides for age-restricted housing when all residents of an adult community are at LEAST age 55. 50. 62. 65.

62 The act exempts adult communities in which all residents are at least age 62.

What does the escrow officer file when the buyer and seller are unable to resolve a dispute which prevents the closing of escrow? An interpleader action A quiet title action A writ of possession An estoppel agreement

An interpleader action If the parties cannot agree on terms, the escrow holder can bring a legal action known as interpleader to have a court determine the rights of the parties.

The second property tax installment is delinquent after December 10. April 10. May 16. February 1

April 10. The property tax year runs from July 1 through the following June 30. Property tax is payable in two installments due November 1 and February 1. The February payment is delinquent after 5:00 pm on April 10.

Unless an extension is given, a federal income tax return must be filed for the preceding tax year by August 15. May 15. October 15. April 15.

April 15 A federal income tax return must be filed by April 15 for the preceding calendar year if adjusted gross income is high enough or federal income tax has been withheld and a refund is due. Both individuals and corporations are taxed.

California's Real Estate Law is found in the Business and Professions Code. Government Code. Civil Code. Financial Code.

Business and Professions Code California legislation has been compiled into a series of books called codes. The Real Estate Law is Division 4 of the Business and Professions Code. Part 1 covers licensing and Part 2 covers transactions.

The Subdivided Lands Law can be found in the Business and Professions Code. Penal Code. Civil Code. Health and Safety Code.

Business and Professions Code. The Subdivided Lands Law (found in the Business and Professions Code) describes the forms of ownership allowed in a subdivision of five or more parcels on up to 160 acres of land.

An architectural style that features a distinctive gambrel roof and dormers, and has 1½ or 2½ stories is Spanish. Dutch Colonial. Victorian. French Colonial.

Dutch Colonial. The Dutch Colonial architectural style has 1½ or 2½ stories, distinctive gambrel roof, and dormers.

An agent owes which of the following to a third party? Fiduciary duties Duty of representation Duty of disclosure Duty of trust

Duty of disclosure A real estate agent owes to a third person a duty of full disclosure of material facts that the agent knows regarding the property, unless prohibited by law from doing so. The agent bears this responsibility independent of any instruction received from the property owner. If the property owner tells the agent not to reveal certain defects, the agent must inform the principal that the agent cannot hide such information. To do otherwise would make the agent liable for money damages, and place the agent's license in jeopardy.

When you divide the capacity of an air conditioner in BTUs by the number of watts of electricity required to run it, you get its conservation ratio. EER. heat ratio. 120 v. 220 watt ratio.

EER. The energy-efficiency ratio (EER) is found by dividing an air conditioning unit's capacity measured in British Thermal Units (BTUs) by the number of watts of electricity needed to run it.

Which of the following could NOT be an escrow holder? Listing broker Escrow partnership Selling broker Escrow corporation

Escrow partnership In California, an escrow company must be a corporation licensed to perform escrow services. An escrow company cannot be a partnership.

The federal agency that insures savings accounts is the FNMA. FHA. FDIC. FHLMC.

FDIC The Federal Deposit Insurance Corporation (FDIC) was created by Congress in 1933 to insure individual accounts in participating banks and (as of 1989) savings and loan associations, up to $250,000 per depositor, per insured bank, for each ownership category.

The federal Fair Housing Act is enforced by state agencies. HUD's Office of Equal Opportunity. the Justice Department, through the Attorney General. FHA.

HUD's Office of Equal Opportunity. An individual has one year in which to file a complaint alleging discrimination with HUD's Office of Equal Opportunity (OEO) or two years in which to file a lawsuit in federal or state court.

Which of the following could NOT file a mechanic's lien? Contractor Equipment lessor Architect Home improvement lender

Home improvement lender A mechanic is anyone who performs work on real property or an improvement to real property or furnishes the material used in the work. Persons entitled to a mechanic's lien include all those who work or supply materials at the request of the property owner, or any contractor, subcontractor, architect, builder, or other person placed in charge of all or part of a project.

Which of the following is NOT considered a tenant? Lessee Lodger Hotel guest Boarder

Hotel guest The California Civil Code, beginning at Section 1940, governs situations in which a person hires real property. Tenants, lessees, boarders, lodgers, and others (but not guests at hotels) are included in those provisions.

Performance of a contract may be excused if a party can prove which of the following? Lack of negotiating skill Impracticability of performance A better deal elsewhere Novation

Impracticability of performance Performance may be excused in the event of impracticability of performance (commercial frustration). If changed circumstances make a purchase uneconomic, there may be an excuse for nonperformance (e.g., a buyer's financial downturn such as an extreme drop in market value of the buyer's company's stock), so that the purchase, although not impossible, would impose extreme financial hardship.

When an agent represents both the buyer and seller in the same transaction, this action is an example of subagency. prohibited by the MLS. known as dual agency. against the law.

In a dual agency, the same agent represents two principals in the same transaction. A dual agency places the agent in the precarious position of carrying out agency responsibilities to two principals whose interests are in opposition. Any agent who acts on behalf of both parties to a transaction is required by law to inform both parties and obtain their written consent to the dual representation.

Real property taxes become a lien on November 1. January 1. February 1. July 1.

January 1. On January 1, when the assessment roll takes effect for the next tax year, a lien is placed on all assessed real property in the amount of the tax due.

Which of the following documents is used with a CalVet loan? Sheriff's deed Land contract Grant deed Trust deed

Land contract CalVet loans are administered by the California Department of Veterans Affairs (CDVA), which authorizes, processes, funds, and services the loans. No outside lenders are involved, because the program is totally self-supporting. CDVA buys the selected property from the seller and resells the property to the veteran on a land contract. CDVA holds title until the veteran has repaid the amount owed, although the veteran has the right to possession of the property as her personal residence.

The first property tax installment of the tax year is due on February 1. April 1 November 1. July 1.

November 1. The property tax year runs from July 1 through the following June 30. Property tax is payable in two installments due November 1 and February 1.

RESPA regulates loans for which of the following? One- to four-unit family dwellings Commercial property Land subdivisions Multiple family dwellings

One- to four-unit family dwellings The Real Estate Settlement Procedures Act (RESPA) requires certain disclosures by lenders in federally related mortgage loans involving the sale or transfer of residences of one to four dwelling units.

Which of the following is NOT considered concurrent ownership? Community property Tenancy in common Joint tenancy Ownership in severalty

Ownership in severalty Concurrent ownership is ownership by more than one person at the same time. Ownership in severalty is ownership by only one person.

By which principle will the value of a nonconforming building be enhanced if surrounding buildings are of a higher value? Regression Progression Contribution Competition

Progression The value of a building is enhanced if buildings around it have a higher value, typically because they are better maintained, better quality construction, larger, or a combination of such factors.

Every real estate broker must be licensed by the Bureau of State. Housing. Corporations. Real Estate.

Real Estate The Bureau of Real Estate licenses real estate brokers in California.

Which type of deed would be used when the purchaser pays off a loan secured by the real estate? Grant deed Reconveyance deed Quitclaim deed Trust deed

Reconveyance deed A reconveyance deed executed by the trustee is the means by which the trustee returns title to the trustor when the debt secured by the deed of trust is paid off. The beneficiary notifies the trustee that the debt has been cleared by sending the trustee a document called a request for reconveyance.

Which of the following does NOT require a real estate license? Presenting an offer Selling your own property Taking a listing Negotiating a lease

Selling your own property It is not necessary to have a real estate license to sell your own property.

The procedure for filing a subdivision plan when property is divided into two or more parcels is found in the zoning regulations. Subdivided Lands Law. Subdivision Map Act. building codes.

Subdivision Map Act. The Subdivision Map Act (found in the Government Code) establishes a statewide procedure for filing a subdivision plan when property is divided into two or more parcels.

A holder of which of the following ownership interests can devise her share of the property to someone else? Community property with right of survivorship Tenancy in common Tenancy in partnership Joint tenancy

Tenancy in common A tenant in common can give away, sell, or devise (will) her share of the property to someone else. The recipient receives the share of the tenant in common and full right of possession.

Which of the following is NOT considered a valid reason for the landlord to enter the tenant's unit? The landlord needs to make agreed-on repairs. The landlord wants to leave a gift for the tenant. A person needs help. There is a gas or water leak.

The landlord wants to leave a gift for the tenant. The California Civil Code permits the landlord a right of entry in an emergency; when the tenant has abandoned the premises; pursuant to a court order; so that the landlord can make necessary or agreed-on repairs or perform other required services; and so that the landlord can show the property to prospective tenants, mortgagees, purchasers, workers, or contractors.

The applicant for a real estate salesperson's license must complete how many college-level courses before taking the licensing examination? Seven Three One Five

Three An applicant for a real estate salesperson's license must complete three college-level courses before taking the licensing examination.

Which of the following provides the BEST protection? Certificate of title Title insurance policy Abstract of title Guarantee of title

Title insurance policy Title insurance can be for the benefit of either property owner or lender and takes effect as of the day of closing.

Which of the following deeds is a security instrument? Quitclaim deed Grant deed Trust deed Sheriff's deed

Trust deed The trust deed, also called a deed of trust, can be used when property serves as security for a debt, typically the loan used to purchase the property, but it can be any loan using the property as collateral to guarantee payment of the amount borrowed.

What is the maximum amount of security deposit a landlord can collect in advance for an unfurnished residential unit? Two months' rent Three months' rent One month's rent Any amount the owner justifies

Two months' rent The maximum amount of a security deposit is two months' rent for an unfurnished residential property or three months' rent for a furnished residential property.

A principal residence must be occupied for how long to take advantage of the maximum exclusion of profit from taxable income? Two years One year Five years 18 months

Two years As of August 5, 1997, homeowners are allowed an exclusion from federal income taxation of up to $250,000 (for single taxpayers) or $500,000 (for a couple married at the time of sale) of the profit on the sale of the principal residence. The exemption is allowed if the home was owned and occupied for two of the last five years prior to the sale.

The rectangular survey system is also known as the Torrens system. lot, block, and tract system. U.S. government survey system. metes and bounds system.

U.S. government survey system The rectangular survey system is also called the section and township system, or the U.S. government survey system, and is used by the United States Surveyor General to survey public lands.

Which of the following generally does NOT require a down payment? FHA-insured loan VA-guaranteed loan CalVet loan Loan from a conventional lender

VA-guaranteed loan As long as the estimate of reasonable value does not exceed the amount of the VA loan guarantee, the VA does not require a down payment, although the lender may. The VA loan guarantee can never be more than the estimate of reasonable value, but a higher purchase price may be negotiated if the veteran pays the difference between the reasonable value and the purchase price in cash at the closing.

Which of the following is NOT a way to terminate a contract? Novation Verification Release Rescission

Verification Rescission, release, and novation are all methods to terminate a contract. Verification is a method of confirming the accuracy of a description of a property or contract elements.

Escrow officers usually base their prorations on a full calendar year. a 30-day month a monthly basis. business days

a 30-day month In most prorations as part of the closing of a transaction, a 30-day month is used.

Most California houses are built without a garage. an attic. a rear yard. a basement.

a basement. Most California single-family dwellings do not have basements (rooms that are partly or entirely below ground level).

The typical real estate purchase agreement is an implied contract. a unilateral contract. a voidable contract. a bilateral contract.

a bilateral contract The typical real estate purchase contract is bilateral. One party promises to transfer the right of ownership or use of real estate, and the other party promises to pay some form of compensation for that right.

A provision that gives the lender the right to demand full payment of a mortgage upon a sale of the property is a notice-of-sale an escalator clause. a partition clause. a due-on-sale clause.

a due-on-sale clause. A due-on-sale clause is an acceleration clause in a real estate financing instrument granting the lender the right to demand full payment of the remaining indebtedness upon a sale of the property.

The highest form of modern land ownership is known as a real estate trust. an estate for years. a fee simple absolute. a life estate.

a fee simple absolute The highest (most complete) form of ownership is a fee simple absolute, in which right of possession is not restricted

To transfer use of an entire property, but not ownership, the property owner would use a lease. an easement. a quitclaim deed. a trust deed.

a lease. A lease is a contract that conveys an interest in real property from one person to another. Most frequently, a lease transfers the use of property without transferring outright ownership.

A notice of nonresponsibility would protect an owner from a mechanic's lien. a foreclosure. an eviction. trespassers.

a mechanic's lien The owner of real estate has protection if unauthorized work is begun on the property by posting a notice of nonresponsibility in a conspicuous place on the land and recording a copy of the notice with the county recorder within ten days of learning of the construction, repair, or other work. The notice must include a property description; the name, address, and property interest of the owner or other person giving notice; and a brief statement that the person giving notice is not responsible for any claims arising from the work.

An instrument by which property is hypothecated to secure the payment of a debt or obligation is known as a reconveyance deed. a sheriff's deed. an encroachment. a mortgage.

a mortgage The security instrument by which real estate serves as assurance that a debt will be repaid usually is referred to as a mortgage, even when it is a deed of trust.

With title insurance, the buyer ALWAYS receives an extended coverage policy. an abstract of title. a regular coverage policy. a preliminary report.

a preliminary report. After the title insurance policy is ordered and before the sale closes, the title insurer submits a preliminary report of the condition of the property title to the purchaser through the escrow holder.

A prohibition in a deed against a property use is known as an encroachment. an easement. a restriction. a condition.

a restriction Any form of restriction is a limitation on the use of land. The most common private restrictions are the covenants, conditions, and restrictions found in a deed. Subdivision developers frequently make use of deed restrictions to ensure that the uniform appearance of the homes in a subdivision is maintained.

In California, the inheritance and gift taxes have been combined. reduced. increased. abolished.

abolished Proposition 6 repealed the California inheritance and gift taxes.

Taxes charged in direct relation to property value are illegal. paid upon a sale only. ad valorem taxes. paid annually.

ad valorem taxes. Property taxes usually are ad valorem taxes, which means they are charged in relation to the value of the property taxed.

Private land can be conveyed for public use or ownership by all of these methods EXCEPT deed. adverse possession. statutory dedication. common law dedication.

adverse possession Private land can be transferred for public use or ownership by common law dedication, in which a landowner devotes land to a public use (such as a roadway); by statutory dedication, in which certain areas (such as an easement) are set aside for intended public use; or by transfer of fee simple ownership by deed (the preferred method of public acquisition as it preserves the public character of the land). Land cannot be acquired for public use by adverse possession.

Real property includes land. fixtures. appurtenances to land. all of these.

all of these The California Civil Code definition of real property includes land, fixtures, anything incidental or appurtenant to land, and anything immovable by law.

Community property is the only form of ownership during marriage. all property acquired by the husband during marriage. all property acquired during marriage. all property acquired during marriage that is not separate.

all property acquired during marriage that is not separate. Community property is real or personal property acquired by either spouse during marriage or by registered domestic partners during that relationship. Community property cannot be sold, mortgaged, or leased for one year or longer without agreement of both spouses or registered domestic partners.

Accretion is the process of accumulating new soil along a flowing body of water. adjacent to an ocean. close to a baseline. next to a lake.

along a flowing body of water Land area can be increased by forces of nature; accretion is the process by which land adjacent to a flowing body of water accumulates new soil.

The repayment of a loan in equal installments that include both interest and principal reduction is referred to as a mortgage loan. an amortized loan. a straight loan. a hard money loan.

an amortized loan In an amortized loan, payment is by installments that include both interest and principal.

Something that is used with the land for its benefit, such as a roadway or a waterway, is known as an encumbrance. a fixture. an appurtenance. personal property.

an appurtenance An appurtenance to land is anything used with the land for the benefit of its owners, such as a roadway, an easement, right of way, or condominium parking space.

The right of an owner of a parcel of land to travel over an adjoining parcel of land is known as an easement. a restriction. an encroachment. a covenant.

an easement The right of use for a particular purpose or to travel over someone else's land is called an easement. An easement usually is the right of the owner of a parcel of land to travel over an adjoining parcel.

The Real Estate Law treats a salesperson as a general agent. an independent contractor. a dual agent. an employee of the broker.

an employee of the broker. A real estate salesperson can conduct business only as the agent of a broker and must have a written employment agreement with the broker. The Real Estate License Law always considers a salesperson to be an employee acting under the direct supervision and control of the broker. This is true even when the salesperson is treated by the broker as an independent contractor for compensation, work assignment, and tax purposes.

An estate which has a definite termination date is known as an estate at will. a periodic estate. a freehold estate. an estate for years.

an estate for years. An estate for years is a leasehold created by landlord and tenant for a particular period of time.

The escrow officer acts for both the buyer and seller as a single agent. an impartial third party. a general agent. a special agent.

an impartial third party. The escrow officer is responsible only for the duties related to the escrow process. The escrow officer will make the required distributions once all the preconditions have been met. This will protect both the buyer and the seller.

For tax purposes, a salesperson can work for the broker as an independent contractor. a subagent. a partner. a dual agent.

an independent contractor An independent contractor usually has great flexibility in accomplishing the task undertaken and will receive a commission based on completed transactions, instead of a salary, with no payroll deductions.

A nonexclusive listing agreement is also known as an option listing. an open listing. an agency listing. a net listing.

an open listing An open listing is nonexclusive and a commission is earned only if the listing broker is the procuring cause of sale. To be the procuring cause of a sale, the agent must be the one who initiates a continuing series of events that result in a completed transaction.

The legal proceeding to evict a tenant is a notice to vacate. a quiet title action. an unlawful detainer. a 30-day notice.

an unlawful detainer. If the tenant fails to comply after notice to pay or quit has been given, the landlord can request an order of eviction from the court by a legal proceeding called unlawful detainer.

For earthquake safety, California building codes require that the foundation be connected to the sill using anchor bolts. posts and beams. joists. girders.

anchor bolts. Since 1931 California building codes have required the use of anchor bolts through the sill and into the foundation wall as an earthquake safety measure (the sill is the wood member that is placed directly on the foundation wall).

Land is torn away by the action of water in the process called avulsion. accretion. evolution. reliction.

avulsion The natural force of a moving body of water acting gradually or suddenly may tear away land in the process called avulsion; it is distinct from erosion, in which rainfall wears away the surface of the soil.

To be enforceable, real estate sales agreements must be in writing. contain a granting clause. be acknowledged. be recorded.

be in writing A valid contract for the sale of real estate must be written. An oral contract to purchase real estate is unenforceable, no matter what its terms, because it is oral and not written.

A contract that is a promise for a promise is known as a voidable contract. void contract. bilateral contract. unilateral contract.

bilateral contract In a bilateral contract, both parties make a promise to do something or to refrain from doing something and both are obligated to perform.

Personal property is usually transferred by a bill of sale. purchase contract. deed. will.

bill of sale Ownership of real property is usually transferred by an instrument called a deed. Personal property is usually transferred by a bill of sale.

Failure to perform a contract obligation is known as a novation. breach. rescission. release.

breach A contract may be discharged by a breach of contract. A breach occurs when one of the parties fails to perform all or part of the obligations required by the contract. The nonbreaching party who is injured by the breach is entitled to legal relief.

The Real Estate Law allows a business opportunity to be sold by a real estate licensee. by a PRLS licensee. with a special endorsement. by a financial planner.

by a real estate licensee A real estate licensee may represent others in the purchase or sale of a business. Business brokerage is a growing area of real estate practice.

A personal residence and business equipment are considered capital assets. real property. intangible property. personal property.

capital assets. A capital asset is all property except business inventory or other property held for sale in the ordinary course of one's business.

RESPA requirements do NOT apply to conventional loans. commercial loans. FHA-insured loans. VA-guaranteed loans.

commercial loans Settlement statements detailing transaction costs to buyers and sellers of dwellings of one to four units are required by the Real Estate Settlement Procedures Act (RESPA). Commercial (non-residential) loans are not subject to RESPA.

If an owner devotes land to a public use, such as a roadway, a transfer occurs by condemnation. escheat. common law dedication. partition.

common law dedication A common law dedication occurs when a landowner devotes land to a public use, as when a roadway is opened to public use or described as such in the deeds to adjoining parcels.

The person responsible for determining assessed values is the county assessor. county supervisor. county tax collector. sheriff.

county assessor. The county assessor is the elected official responsible for determining assessed values and preparing the tax roll.

A promise by a property owner NOT to do something is called a prescription. restriction. restraint on alienation. covenant.

covenant. A covenant is a promise to do something or to refrain from doing something. Covenants are often used in leases (e.g., a tenant might promise to use the property only for a specified purpose). The remedy available when a covenant must be enforced will be an injunction or money damages.

The security instrument of choice in California is the deed of trust. grant deed. quitclaim deed. mortgage.

deed of trust The deed of trust is the preferred security instrument in California.

A loss in value from any cause is known as inherent loss. equity loss. capitalization. depreciation.

depreciation. Depreciation is a loss in value from any cause.

When a landowner has the right to travel over the property of an adjoining landowner, the property that benefits from the easement right is called the tenant at will. servient tenement. dominant tenemnet. life tenant.

dominant tenemnet The land benefited by the easement is the dominant tenement. The land over which the easement runs is called the servient tenement.

Interior walls can be finished with plasterboard, also called drywall. building paper. filler. wallpaper.

drywall Interior walls can be finished with plasterboard, also referred to as drywall or wallboard.

Federal fair housing protections do NOT include the category of sex. handicap. economic status. familial status.

economic status. The federal Fair Housing Act (Title VIII of the Civil Rights Act of 1968), as amended, prohibits discrimination based on race, color, religion, sex, national origin, ancestry, handicap, or familial status.

The right of a government agency to take private property for a public use is called escheat. a partition action. a quiet title action. eminent domain.

eminent domain Governmental entities have the right to acquire title to property by eminent domain.

Under the Real Estate Law, a real estate salesperson works for a broker as an Incorrect associate broker. independent contractor. employee. agent.

employee For purposes of the Real Estate Law, a salesperson is always considered the employee of the broker.

An improvement that extends onto an adjacent property without permission is an avulsion. encumbrance. encroachment. easement.

encroachment An encroachment occurs when part of an improvement extends over the boundary line between properties without permission. Fences and buildings are typical forms of encroachment. Even the roof eave of a building can be an encroachment if it extends into the airspace of a neighboring lot.

Liens are classified as easements. encroachments. encumbrances. writs of attachment.

encumbrances An encumbrance is anything that has an effect on the fee simple title to real estate or the use of the property. A lien is an encumbrance that makes property security for the payment of a debt or discharge of an obligation.

The purpose of the property tax assessed value is to insure all counties are equal. equalize property taxes. establish the base value. create the transfer tax rate.

establish the base value. The base value of a property is its full cash value (market value) as of February 28, 1975, or the date of a subsequent reassessment event. Assessed value, for property tax purposes, is the property value to which the tax rate is applied.

The MOST commonly used form of listing agreement is the exclusive agency. open agreement. net agreement. exclusive right to sell.

exclusive right to sell The most commonly used form of agreement is the exclusive authorization and right-to-sell listing, by which the broker is entitled to a commission no matter who sells the property, even if the owner finds a buyer without the broker's assistance.

A contract that has yet to be performed is known as an implied contract. express contract. executed contract. executory contract.

executory contract. A contract is said to be executory when some future contract obligation is yet to be performed. A listing agreement is executory, because the real estate broker must find a buyer for the listed property in order to earn the compensation promised by the seller. Until the sale is closed, a real estate purchase contract also is executory.

The right of possession is restricted under a freehold estate. fee simple subject to a power of termination. fee simple qualified. life estate with a right of reversion.

fee simple subject to a power of termination Fee simple subject to a power of termination is ownership in which the right of possession is restricted in some way by some limitation or condition.

Real estate licenses are renewable for a period of four years. two years. three years. one year.

four years The full term on renewal of a broker's or salesperson's license is four years.

In medieval England, the highest form of ownership was the freehold estate. estate for years. life estate. leasehold estate.

freehold estate In medieval England, the freehold estate was the highest form of land ownership and the owner could use the property in any way without being subject to the demands of an overlord.

Someone who receives real property is known as the devisor. grantee. mortgagee. grantor

grantee A conveyance of real estate is called a grant; the person conveying the property is the grantor, and the person receiving the property is the grantee.

The MOST profitable, physically possible, and legally permissible use of real property is referred to by appraisers as its subjective value. inherent value. highest and best use. capitalization.

highest and best use. The highest and best use of real estate is its most profitable, physically possible, and legally permissible use. A highest and best use study can be made of a vacant site or a site to be redeveloped.

An important step at the beginning of the appraisal process is to determine highest and best use. gather the data. estimate land value identify the scope of work.

identify the scope of work The appraisal process begins by identifying the scope of work necessary to perform the appraisal.

For a valid escrow, there must be a binding agreement and conditional delivery of the title insurance. instruments of transfer. home warranty. property insurance.

instruments of transfer. To create a valid escrow, there must be a binding contract and conditional delivery of instruments of transfer to the escrow holder.

The cost of using money BEST describes an open market. interest. credit. a free market.

interest A purchaser of real estate who defers part or all of the purchase price uses some form of credit. When the purchaser receives credit from the seller, the cost of that credit is usually the rate of interest charged to the purchaser.

If a person dies without leaving a will, that person dies statutorily. intestate. administratively. testate.

intestate A person who dies without having made a will is said to have died intestate. All states make provision by law for distribution of the property of intestate persons.

A real estate broker can handle an escrow when the broker is the agent or a party to the transaction. is acting for another broker. is not a party to the sale. charges a fee.

is the agent or a party to the transaction. A real estate broker can act as an escrow only in transactions in which the broker acts as an agent or party and is subject to special rules.

The MOST luxurious floor plan gives each bedroom direct access to the kitchen. its own adjoining bathroom. an outside door. ceramic tile flooring.

its own adjoining bathroom. The most luxurious plan gives each bedroom its own adjoining (en suite) bathroom.

Parallel wooden members that support floors and ceilings are studs. joists. baseboards. ridge boards.

joists Joists, along with girders, are parallel wood beams that are part of the foundation and support the floor and ceiling of a wood-frame house.

Under Spanish rule, land was owned primarily by the missions. conquistadors. king. peasants.

king In 1513, Balboa claimed all lands "washed by the Pacific Ocean" for the King of Spain.

An installment sales contract is also called a voidable contract. terminable contract. temporary contract. land contract.

land contract. The land contract (also referred to as a contract for deed or installment sales contract) is a form of seller financing in which the buyer takes possession of property and makes payments on its purchase but does not receive legal title to the property for at least one year from the date of possession.

On default of a VA-guaranteed loan, the VA will pay the property's market value. down payment. lender's loss on the amount guaranteed. remaining mortgage balance.

lender's loss on the amount guaranteed. The Department of Veterans Affairs (VA) guarantees payment of remaining mortgage indebtedness, up to a maximum amount. If the borrower defaults, the VA will pay the lender's net loss up to the amount of the guarantee, which is decreased proportionately as the loan amount is repaid.

The Federal Housing Administration insures payment of loan points for the lender. a broker's commission. loan principal. a discount.

loan principal The Federal Housing Administration (FHA), a division of the Department of Housing and Urban Development (HUD), does not make loans, but it insures loans made by approved lending institutions.

One of the MOST important duties of agent to principal is the duty of hard work. beneficial conduct. loyalty. salesmanship.

loyalty One of the most important duties the agent owes the principal is the duty of loyalty. The agent's role in the transaction is to consider the interests of the principal first and foremost.

A property's most probable price on the open market under normal circumstances in an arm's-length sale is known as its actual price. book value. selling price. market value.

market value. The market value of real estate is the most probable price it would bring in an arm's-length transaction under normal conditions on the open market.

The interest rate on CalVet loans depends on the CPI. may change annually. never changes. changes monthly.

may change annually The interest rate on all loans may change annually, depending on the cost of bonds to fund the program. Monthly loan installments will increase to cover additional interest charges.

Which of the following is NOT an institutional lender? savings and loan. thrift. insurance company. mortgage company.

mortgage company. In California, a mortgage company is a mortgage banker licensed by the California Department of Business Oversight and subject to the California Residential Mortgage Lending Act.

A payment to FHA at closing is the escrow fee. recording fee. loan interest rate. mortgage insurance premium.

mortgage insurance premium. The FHA up-front mortgage insurance premium is paid to FHA at closing. It is not considered an acquisition cost in computing down payment. The premium may be paid by the borrower or someone else, or it may be included in the loan amount.

If a landlord's interest in leased property is transferred, the security deposit paid by the present tenant is returned to the tenant along with a notice of eviction. is returned to the tenant immediately. may be kept by the landlord. must be transferred to the new owner.

must be transferred to the new owner. The security deposit paid by a tenant is transferred to a new owner of the leased property.

Real estate commission rates are negotiable. subject to cancellation. always 4 percent. fixed by law.

negotiable In California, real estate commissions are negotiable. There is no predetermined commission rate, and the seller and broker are free to set whatever rate they agree on.

There are three principal baselines and meridians in California. The intersection of the Humboldt Baseline and Meridian is in a state other than California. southern California. central California. northern California.

northern California. The Humboldt Baseline and Meridian were established on Mt. Pierre in Humboldt County in 1853. The other two baseline and meridians were established a few years earlier.

When both parties to a contract agree to substitute a new agreement for the present one, this is known as a release. rescission. breach. novation.

novation By a novation, the parties substitute a new agreement for the original one, discharging the original agreement. If the new agreement falls within the statute of frauds, it must be written.

The placement of a house on a site is called its footing. foundation. orientation. design.

orientation The placement of a house on a site is called its orientation. Depending on geographic location, orientation is generally best when the greatest window expanse faces south.

The test for a fixture does NOT include origin of manufacture. relationship of the parties. method of attachment. intent of the parties.

origin of manufacture The tests for a fixture (MARIA) include the method by which the thing is affixed; adaptability of the thing for another use; relationship of the parties, intent in using the thing, and agreement of the parties.

Historically, a leasehold was considered a life estate. fee simple interest. real property interest. personal property interest.

personal property interest. Historically, a leasehold estate was considered personal property. Today, for certain purposes a leasehold estate is considered real estate.

Land use controls that benefit the public health, safety, and general welfare are possible because of the government's health and safety laws. police power. regulations. restrictions.

police power. Land-use controls are possible because of the government's police power, which enables governing bodies to regulate private activity by enacting laws that benefit the public health, safety, and general welfare.

An agent is authorized to act in place of the principal by a purchase contract. listing agreement. power of attorney. multiple listing clause.

power of attorney An attorney-in-fact is an agent who has been granted a power of attorney by a principal. A power of attorney authorizes an agent to act in the capacity of the principal.

mechanic's lien requires a promissory note. a servient tenement. a deed. preliminary notice.

preliminary notice If a mechanic's lien will be filed, preliminary notice of intent to file the lien must be hand-delivered or sent by first-class registered or certified mail to the property owner, general contractor (if any), and construction lender (if any).

A real estate broker works for the principal. Bureau of Real Estate. real estate board. third party.

principal An agency agreement is a form of employment contract and can be structured in several ways. The principal is the employer, but the agent may act as either an employee or an independent contractor. The main difference is in the type of control the principal exercises over the agent.

Today, more than 50 percent of California land is owned by the state government. federal government. private sector. municipalities.

private sector Of the more than 100 million acres of California's total area, government entities own about 49%, leaving the majority of ownership in the private sector.

The credit extended by seller to buyer is a conventional loan. mechanic's lien. secondary market loan. purchase money mortgage.

purchase money mortgage. The purchase money trust deed or purchase money mortgage is given by buyer to seller at the time of purchase to secure all or part of the purchase price. The purchase money may come from a third party (such as an institutional lender) or take the form of credit from the seller.

The term real estate means the same thing as ownership. personal property. real property. intangible personal property.

real property In California, the term real property is synonymous with the term real estate.

In order to be valid, a grant deed does NOT require a proper writing. recording. a granting clause. the signature of the grantor.

recording There is no legal requirement that a deed be witnessed, that the grantor's signature be verified, or that the deed be recorded in the county recorder's office; nevertheless, such steps are practical necessities to prevent problems.

Rejecting real estate loans because of location is called distortion. steering. redlining. blockbusting.

redlining Redlining is the illegal practice of rejecting real estate loan applications because of the location of the property involved.

The right of the future holder of what is currently a life estate is a fee simple subject to a power of termination. fee simple defensible. fee simple conditional. remainder.

remainder The owner of a life estate has the right to possession and use of property but only as long as the life of an identified person(s). If the right of possession and use goes to a third person when the life estate ends, rather than returning to the grantor of the life estate, that person has a remainder interest while the life estate is in existence and a fee simple estate on termination of the life estate.

An exact replica of a structure being appraised determines replacement cost. objective review. reproduction cost. subjective review.

reproduction cost. Reproduction cost is the cost of a new building of exactly the same design and materials as the subject property.

Both parties agree to cancel a contract in the process of rescission. reformation. novation. release.

rescission If both parties agree, they may take back (rescind) the contract in the process called rescission.

A condition that would prohibit a property owner from transferring title to the property is known as a restriction. writ of attachment. judgment. restraint on alienation.

restraint on alienation. A restraint on alienation is any condition that prohibits a property owner from transferring title to the property and is not legally recognized. An example would be a condition that the grantor's consent be obtained before the grantee could sell the property. Such a restraint is void—totally ineffective—and the grantee holds the property free of the restraint.

The highest point of construction of a wood frame building is the ceiling joist. bridging. ridge board. frieze board.

ridge board. The rafters of a roof meet at the ridge board, the highest point of construction of a frame building.

The BEST method for valuing residential property is usually the capitalization approach. income approach. sales comparison approach. cost approach.

sales comparison approach. The method that usually is the most significant in appraising residential property is the sales comparison approach.

The transfer of existing mortgages between investors is the Correct growing equity program. extended credit program. primary mortgage market. secondary mortgage market.

secondary mortgage market The sale and purchase of mortgages secured by real estate take place on the secondary mortgage market.

Real estate loans generally include a promissory note and a grant deed. security instrument. purchase contract.

security instrument Real estate loans in California generally are made using two instruments. The promissory note is the borrower's promise to pay the amount borrowed and is evidence of the debt. The security instrument, typically a deed of trust, transfers title to the real estate to a third party until the loan is repaid.

Ownership in severalty is separate ownership. community property. concurrent ownership. a joint tenancy.

separate ownership Ownership in severalty, also called separate ownership or sole ownership, is ownership by one person. The property owner is the only person to receive the benefits (and responsibilities) of ownership.

The four unities of joint tenancy do NOT include interest. possession. time. severance.

severance he four unities of joint tenancy (TTIP) are: unity of time, title, interest, and possession.

One of the main responsibilities of the seller is to order fire insurance. review the title report sign escrow instructions. obtain a new loan.

sign escrow instructions. One of the main responsibilities of the seller is to sign the escrow instructions.

The basis of MOST residential real estate appraisals is the principle of conformity. contribution. substitution. change.

substitution. The principle of substitution states that value tends to be determined by the cost of acquiring an equally desirable property.

The government's police power can be used for all of the following purposes EXCEPT general welfare. safety. taxation. public health.

taxation Taxation is not a police power. Police power enables government bodies to regulate private activity by enacting laws that benefit the public health, safety, and general welfare.

A real estate appraiser's opinion of property value is usually valid only for six months. the date given. the tax assessor. a lender.

the date given. Most often, the value conclusion is the appraiser's opinion of the property's market value as of the date of the property inspection. An appraisal can provide an opinion of value as of some other date, however, such as the date property was taken in a condemnation proceeding.

A real estate salesperson is supervised by the buyer or seller. the seller. any licensed broker. the employing broker only

the employing broker only The employing broker is held accountable for the salesperson's conduct in performing business activities.

A long-range plan for local development is commonly known as the design plan. CC&Rs the general plan. zoning.

the general plan. Community development goals are set out in the general plan, which is required by state law for every city and county within California.

The effectiveness of various kinds of insulation is measured by the thickness of the drywall. their R-value. heat control. environmental controls.

their R-value. The effectiveness of various kinds of insulation is expressed by their R-value.

In northern California, escrows are typically held by escrow companies. banks. real estate brokers. title insurance companies.

title insurance companies. In Northern California, escrow typically is handled by a title insurance company. In Southern California, separately licensed escrow companies often are used, and financial institutions also perform many escrows.

The unit-in-place method is used as an appraisal method. to find highest and best use. to calculate reproduction cost. by lenders only.

to calculate reproduction cost. The unit-in-place method makes use of the construction cost per unit of measure of each of the component parts of the subject property, such as walls, plumbing units, and heating units.

When a real estate license expires, licensed activity must cease but the license may be renewed up to two years later. four years later. one year later. three years later

two years later A license that is not renewed before it expires may be renewed at any time up to two years from the expiration date. All licensed activity must cease before the license is renewed and a late renewal fee will be required.

A rent control ordinance that allows market rent to be charged a new tenant has base rent stabilization. vacancy control. vacancy decontrol voluntary rent control.

vacancy decontrol If an ordinance contains a vacancy decontrol provision, when a unit becomes vacant, there is no restriction on the rent set for a new tenant.

Money is a medium of exchange as well as a measure of value. intrinsic worth. investment potential. credit.

value Money is a medium of exchange as well as a measure of value. In exchange for our work efforts, we earn income in the form of money.

A contract that has no legal effect from its inception is a quasi contract. valid contract. void contract. voidable contract.

void contract

A holographic will does NOT have to be witnessed. entirely handwritten. signed. dated.

witnessed A holographic will is one written by hand, dated, and signed by the testator. It does not need to be witnessed, but it must be entirely handwritten; there can be no printed or typewritten parts of the will.

Minimum parcel size, building height limitations, and required setbacks are covered in a master plan. general plan. specific plan. zoning ordinance.

zoning ordinance. A zoning ordinance typically covers permitted land uses, minimum parcel size, building height and lot coverage limitations, required setbacks, and maximum density.