Real Estate Principles Main Chapter 1 (350 Questions)
No, the maximum security deposit allowed in California for an unfurnished property is two months' rent. The correct amount would be $4,800, including the first month's rent. Additionally, security deposits cannot be labeled as nonrefundable.
Shanta is renting beachfront property in Malibu. The unfurnished bungalow has two bedrooms, one bathroom, and is right on the beach. Shanta's monthly rent is $1,600. Her landlord, Harold, is requiring a $6,400 nonrefundable security deposit. This amount includes her first month's rent. Is this an acceptable amount for a security deposit?
No, when Shanta was deducting operating expenses, she included debt service and mortgage payments when they shouldn't have been included.
Shanta, a property manager of a retail center, is using the Income Capitalization Approach in trying to project future earnings for the partners who own the center. She first estimates the annual potential gross income, subtracts an appropriate allowance for vacancy and collection losses to arrive at a gross income, deducts operating expenses (including debt service and mortgage payments). This gives her the Net Operating Income. She then applies a capitalization rate to the net income to determine the value. Did she use the correct steps?
The Mello-Roos Community Facilities Act of 1982
Shivaram and Kiran are buying a home in a new subdivision. Due to all of the subdivisions in the area, a new elementary school is being built. Additionally, a new area park is planned. Shivaram and Kiran have been informed the taxes on their new home are substantially higher than their previous property. Why?
It seems the landlord did not like the idea of leasing his condo to a same sex couple. This is not permissible. A landlord must live by federal and state fair housing laws.
Thad and Pierre made an appointment to view a condo for lease advertised in the newspaper. Thad phoned the landlord and set up a viewing for two hours later in the day. The couple thought the condo was perfect and informed the landlord they wanted to start the application process to lease the condo. The landlord then explained the condo had just been leased. The next Sunday in the classifieds, the condo was again advertised for lease. A friend of the couple phoned the landlord, pretending to be interested in the property. When asked if it had been leased, the landlord replied "No". What is going on in this situation?
The California Conservation Act and The California Environmental Quality Act of 1970 (CEQA) The Clean Air Act The National Environmental Policy Act
A chain of restaurants would like to begin opening new sites along the Pacific Coastline. The owner wants all of the restaurants beachside with customer access to the beach and water from the restaurant. Which of the following ordinances or acts could govern the planning and opening of the beachfront restaurants?
Type of property and area zoning Value range and condition
Agent Peters has qualified buyers to purchase a new home. Now he needs to qualify the property they wish to buy. He understands the human qualification process. Can you help Agent Peters with steps to qualify the property?
Blockbusting
Agent Simpson tells residents of a neighborhood that minorities are moving into the neighborhood, and property values are sure to plummet. Simpson goes on to say, "resale values will suffer, the neighborhood will deteriorate, and if they don't sell their homes now, they will lose money." What form of illegal discrimination is Agent Simpson practicing?
PC 639-639a
Agent Sims needs one more new home sale this month to receive a bonus. She has one more that could possibly close and help her meet the goal. However, today she was informed the financing fell through for the buyer. Agent Sims has a lender friend that owes her a favor. She calls the lender, offers the friend one-quarter of her bonus if he will finance the buyers who were turned down. Which penal code section addresses this crime?
Steering
Agent Smith tells the Jacob family the Fernwood neighborhood is beautiful, attractive, and highly desirable. The next day, Agent Smith tells the Miller family that Fernwood is deteriorating, values are falling, and the school district is less than stellar. Name the form of illegal discrimination.
According to the Interstate Sales Full-Disclosure Act, Alex must obtain a public report from HUD and deliver a copy of this report to each prospective buyer.
Alex, a Nevada developer, has a very large development of attached retirement villas. He is interested in advertising this development in California. Alex has previously advertised and sold condos in his Arizona development to citizens of California. What must Alex do to promote and sell his Nevada development in California?
Origination, Operation, Completion or Liquidation
Alexandra and Marita are forming a real estate syndicate. They have their initial investments and are ready to proceed. What happens next?
A Combination Trust
Alexandra and Marita have formed a REIT. They have their investors and resources and are ready for business. The REIT will be investing in an assorted portfolio of real estate and mortgage investments. What type of REIT have Alexandra and Marita formed?
The company only pays federal taxes on the retained earnings, which are taxed at corporate rates.
Alexandra and Marita's company has qualified as a trust. It has distributed 96% of its income to its shareholders. Which earnings require the payment of federal taxes?
Allodial System
All property in the United States falls under which system of land ownership?
The owner owns the land to the center of the stream and the government owns the water. It is a Riparian Right.
Along a non-navigable stream, does an owner own the land, the water, both, neither? What is this right?
Tameka cannot apply for a 4-year salesperson because she has not completed three college-level real estate courses. Tameka is only sixteen and a licensee must be eighteen years old. Tameka cannot provide proof of legal presence in the United States.
Although 16-year-old Tameka's goal is to be a licensed real estate salesperson in the State of California, she is currently living in Canada. Her long-term goal is to be a successful salesperson, manager, and to own a brokerage. She has been studying the Real Estate Principles Course for next week's exam. However, if she passes, she cannot apply for her 4 year salesperson's license. Why?
Yes, according to the ADA, the first priority is the "get to the door standard" that includes installing ramps, widening entrances, and providing accessible parking spaces.
Amy suffered a spinal cord injury. She is partially paralyzed and confined to a wheel chair. She is self-sufficient in day-to-day living, has a career, and is looking for a new apartment. She decides to take a tour of Golden Gate Gables apartments. She was very happy with the two-bedroom unit and wants to put in an application for the unit. She has a special van—to accommodate her wheelchair--that requires an extra-wide disabled parking space. The Golden Gate Gables does not provide any special parking for the disabled. If Amy's application is approved for the apartment, does the apartment complex have to install a special parking spot for Amy?
The selection and preparation of a mortgage or deed by a broker, in which a fee was charged, constituted the unlawful practice of law.
The 1943 case People v. Sipper held what decision?
Contingency
The Ahmed family have signed a contract to buy the Miller family's home. However, the contract states the Ahmeds must first close on the sale of their current home within thirty days. If this closing does not occur, the contract is no longer binding for either party. Which contract term applies?
They live in Southern California. In Northern California the buyer usually pays the escrow service fees.
The Brights are buying a home from the Stones. They are splitting the escrow service fees 50-50. Do they live in Northern or Southern California? How does the other region usually handle the escrow service fees?
Yes, according to the regulations of the Real Estate Purchase Agreements in California, all offers received by the broker must be presented to the seller, no matter how out of line with expectations.
The Browns have a real estate agreement with Sell Fast Real Estate Company. A couple makes a ridiculously low offer on their home, which is five-bedrooms, five-baths in Malibu. The offer is $200,000 less than the Browns' asking price. Does the broker have to present the offer to the Browns, even if it is obviously going to be rejected and waste everyone's time?
In excess of $10,000
The Commissioner discovers in an audit commingling of trust accounts by a licensee. At what amount does the court issue a restraining order against the licensee?
There must be a binding contract between buyer (grantee) and the seller (grantor); and there must be a conditional delivery of transfer instruments and funds to a neutral third party.
The Escrow Act, found in the California Financial Code, establishes two essential mandates for escrow validity. What are these mandates?
The sale is considered valid between the two parties; it is void against creditors; they are legally permitted to attach inventory for any debt.
The Hannekes are selling their pharmacy to a small investor. They have decided not to follow the regulations set forth by the bulk sale law. Is the sale considered valid between the two parties?
Reverse Annuity
The Logans are in their seventies with a very nice home. They paid off their mortgage twenty-five years ago. Mrs. Logan has been having serious medical issues and Mr. Logan wants to hire home healthcare professionals to care for her. His retirement savings will not withstand these healthcare costs. He has turned to his home to supplement his monthly income in order to keep his wife at home. Which type of loan applies to the Logan's situation?
The fact that one party (the Marinos/sellers) or another party (the Snyders/buyers) pays a commission does not create an agency relationship.
The Marinos are selling their home to the Snyders. Tim is representing both the Marinos and the Snyders in the transaction. He had initially listed the Marinos' home and realized their home would be perfect for his buyer clients, the Snyders. After making all the necessary disclosures to both parties, he showed the Snyders the Marinos' home and they are buying it. The Marinos are paying commission on the transaction to Tim's broker, who in turn, will compensate Tim. Since the Marinos are paying Tim's commission, does this constitute an agency relationship, and, if so, what kind of an agency relationship?
Yes, Suzette deposited the earnest money in the broker's trust fund account as directed. She also deposited the check within three business days of receipt. Unless there were written instructions to hold the check until acceptance of the offer, the check may be cashed.
The McColls have made an offer on a new home. The home is new construction and scheduled to be completed by the end of the year. They provide a purchase deposit--a check in the amount of $40,000--to their agent, Suzette. Suzette, at the broker's direction, deposits the earnest money in the broker's trust fund account within two business days of receipt of the funds. Did Suzette follow the proper procedures?
The Building Codes Building Officials Conference of America
The McMillan Development Corporation is in the preliminary stages of building a commercial office development. They have received the building permit and all of the necessary approvals to break ground. Where do they go for guidance on the types of materials approved for construction, electrical wiring, etc.?
Fee Simple Absolute
The Moltasanto family has owned a vineyard in Sonoma for over one hundred years. They have owned all rights to the property since the first day of ownership. The property is always inherited by the oldest child after the death of the previous owner. Which type of estate is the Moltasanto family vineyard?
Severance
The Percy family have purchased a heavily wooded property in Northern California. They are planning to build a guest house off the main house for entertaining. In the process, many trees will need to be cleared. The family is planning to sell the wood to the neighbors as firewood. Which process applies?
Hold interest in a real estate company or brokerage firm.
The Real Estate Commissioner has the authority to perform all of the following actions except:
Functional Obsolescence
An appraiser is appraising a property that was built 65 years ago. The home has wonderful architectural charm, hardwood floors, and beautiful original molding, but it also has tiny bathrooms, and the closet space is nonexistent. Which type/types of depreciation applies/apply?
Three owners: One could own the subsurface rights, one the surface rights, and another the air rights.
An undeveloped acre of land sits in the middle of a secluded rural community. How many separate owners could this acre have?
Anthony is correct. Anyone who does the business of a contractor must be licensed. Unless, the property owner is planning to sell the finished real estate project, he does not need a license to work on his own property.
Anthony is adding a new deck to his home. He has obtained all the necessary building permits to construct his new deck. Anthony's neighbor, Steve, informed him he has to have a California State Contractor's License to even work on his own property. Anthony says that Steve is wrong. Who is right in this situation?
She must explain to the Richies that she cannot ethically remove a property from the market, after an offer has been made, to sidestep a purchase by a party. She must withdraw herself from the relationship with the Ritchies or from any situation where client discrimination occurs.
The Ritchie family has put their home on the market. The Sampsons make an offer on the Ritchies' home. Suddenly, the Ritchies decide not to sell their home. They explain to Sara, their agent, that the Sampsons "aren't quite right" for the neighborhood. What should Sara do?
In the state of California, transferring a principal residence of $1 million or less from a parent to a child is considered a transfer exclusion. The property will not be reappraised nor the taxes increased.
The Smiths have decided to move to Antigua. They are transferring the ownership of their $950,000 home in Oakland to their daughter, Renee. Renee has heard about Proposition 13 and is nervous about not being able to afford the increase in property taxes. Does she need to worry?
The Subdivision Map Act regulates the division of two or more lots; The Subdivided Lands Law defines a subdivision as a division of land into five or more lots; and a Land Project must have fifty or more vacant lots.
The Subdivision Map Act, the Subdivided Lands Law, and Land Projects all have a minimum number of lots required to meet requirements. Which of the following is correct?
Both parties close the transaction with ABC Escrow, the dual agency, in which both parties are represented. ABC Escrow then changes to separate agency and also handles each parties separate paperwork.
The Van Horns (buyers) and the Simpsons (sellers) have closed escrow on their real estate transaction. Who handles the completion of the transaction and both parties' separate paperwork?
The Van Horns are the grantees; and ABC Escrow the third party. This transaction constitutes escrow.
The Van Horns deposit funds with ABC Escrow as a requirement for the purchase of their new home. Who is the grantee and the third party, and what is the type of transaction?
Certified Residential Real Estate Appraiser, 200 hours
Appraiser Jones appraises one-to-four unit residential properties, and non-residential properties with a transaction value up to $250,000. What is this appraiser's level? How many hours of appraiser education were completed?
The CalBRE website
As an examinee, or a new licensee, where is the best, most accurate source for current California Bureau of Real Estate information?
an active "solar energy system" in a new subdivision.
Assembly Bill 1099 does not require a property tax reassessment for the construction or addition of
The process of dividing funds between parties is proration. It includes both expenses that are prepaid by the seller and paid after closing by the buyer.
At the close of escrow, ABC Escrow divides up funds proportionately between the Van Horns and Simpsons. What is the process and what expenses does it include?
Neither will be chosen for the loan because both are planning on buying homes outside the state.
At the present time, funds are limited for CalVet Program mortgage loans. A decision must be made to give one veteran a loan over another. Veteran A has been in the military service for 20 years and is a four-time decorated hero. He wants to buy an Oregon farm with the loan. Veteran B has been in the military four years. He lost his right leg in a battle in Afghanistan. He wants to buy a small home in Las Vegas for himself and his mother, who will live with him. Which veteran will they choose and why?
The Law of Supply and Demand
The Western Acres neighborhood is a highly desirable area in which homes very seldom go on the market. The Western Acres properties placed on the market sell very quickly and usually for or above asking price. Which principal of real estate applies to the homes in Western Acres?
45, four
The continuing education requirement in California is ____________hours every __________ years.
Total Land Valuation + Depreciated Value of Building = Value of Property Cost Approach
The cost approach to value may be derived by:
Automobiles and other personal property valued over $950. Money, labor, real and personal property that exceeds a value of $950.
The designation "grand theft" is used in relation to the theft of:
Obtaining maximum profit on the property. Evaluating the Rental Market Handling Tenant Complaints and Conflicts
The duties of a property manager to an owner include which of the following?
The instructions are considered unilateral and apply only to the Van Horns; therefore they may be known only to the Van Horns, their agent and ABC Escrow.
The escrow instructions in the Van Horn - Simpson transaction are deemed unavailable to the Simpsons. If instructions are confidential, and ABC Escrow is a dual agency representing both parties, why are the instructions only known to the Van Horns, their real estate agent, and ABC Escrow?
Tim forgot to obtain a building permit.
Tim owns a mobile home he wants to transform into real property. He attaches the mobile home to an approved foundation; records a document reflecting that the mobile home has been affixed to an approved foundation system; and obtains a certificate of occupancy. Which step, if any, did John leave out?
Universal Agent
Timothy has been hired by the estate of Tyler Wilbanks, who is recently deceased. Timothy has Power of Attorney and will be handling all the real estate affairs of the deceased estate. Which type of agent is Timothy?
It depends. If Tina and James have not received notification of the seller's accepting the offer, they may legally withdraw the offer and not be held liable on the contract. However, if the offer has been accepted, and communication of this offer has been received by the buyer, it is legally binding.
Tina and James have made an offer on a four-bedroom home that will be much more costly than their present mortgage. The day after making the offer, James learns his company is being sold and he will probably lose his job. Are Tina and James contractually obligated to the offer they have made on the new home?
No. Beverly's brush with delinquency is too fresh on her record for the bank to issue a mortgage. Although she has taken the steps to correct the issues, ninety days late on several debts is substantial. She more than likely did not meet the bank's financial requirements.
Beverly, an African-American woman, has applied for a mortgage on a new home. She has a reliable job as a court reporter and has been employed for ten years. Her income is substantial enough to pay a mortgage, in her budget, and still have seventy percent of her income remaining. She has, however, been at least ninety days late on several bills one year ago. Beverly has since caught up on her credit card bills, paid them on time, and reduced their balances by half. She has just been turned down for a mortgage by her bank. Has she been discriminated against?
The property owner must be paid compensation for the property. The property must be for public good or use. The owner must have due process in the court system.
To take private property through eminent domain, three steps must be taken by the state or local government. What are they?
Secret Profit
Bill the broker received a very high offer on a piece of property from a buyer. Bill makes a low offer through a "dummy" purchaser, or an accomplice who is not a buyer at all. Bill then sells the property to the buyer for the higher price, with the difference being profit. What's the violation?
If there had been no damage or cleaning required, which seemed highly likely in Bob's case, the landlord should have refunded his security deposit within 21 days of Bob's vacating the property.
Bob leased an apartment for three years from the Steiners. He was never late on his rent in those three years, kept the apartment immaculate, and never caused a moment of trouble. He has recently purchased his first home and moved out of the apartment. As expected, Bob gave the Steiners sixty days' notice he would be moving and left the apartment in perfect condition. It has been 45 days since he moved out and he's been watching for his security deposit refund to purchase a new sofa. When should he expect his security deposit refunded?
Cost of Sale; Special Assessment Taxes and General Taxes; the First Mortgage which is determined by the order of recording; and whatever is recoded next would be paid.
Brett lost his job last year. He has only been able to find temporary work and fell behind on his mortgage. His home is currently in foreclosure. He is confused as to what will happen and how the debts are paid. What is the order of payments in foreclosure?
Once the counteroffer is made by the seller, the buyer's original offer becomes invalid. If the buyers accepts the offer the seller has made, the same process takes place as with a regular offer.
Brian and Leslie have made an offer on Rudy and Judith's home. The first offer was rejected by the sellers. Brian and Leslie made another offer; Rudy and Judith rejected that offer. Never quitters, Brian and Leslie decided to try one last time and present their last and best offer. Rudy and Judith decide the prospective buyers are close, and make a counteroffer. What's the situation after a counteroffer is made by the sellers?
Ten percent of the principal of the loan.
Broker Burns is negotiating a first trust deed loan for buyers. The buyers have signed a contract for a fifteen-year loan. What is the maximum commission for Broker Burns?
A veteran's basic entitlement is $104,250. Lenders generally lend up to four times the available entitlement without a down payment. There is no maximum amount, but generally lenders limit VA loans to $417,000.
Bruce, a private in the US Army, has applied for his Certificate of Eligibility and been approved. He wants to purchase a condo for himself. What's the maximum amount lenders will loan Bruce, based on his veteran status?
Low Risk
Calvin is buying his first home. He has been saving and saving for years. The home he is buying has a price of $300,000 and Calvin has a down payment of $75,000. Calvin's loan is considered:
Practice of Real Estate and Mandated Disclosures
Carol is studying for the California real estate license examination. She knows she has to know all areas covered in the examination extremely well to pass. Which portion of the examination, approximately, makes up the largest portion of the test?
A fully amortized loan
Caroline has been paying her mortgage steadily for fifteen years. She has just received a notice from her lender that the loan due date is approaching and she will owe a lump sum of $11,257 to pay off her mortgage loan. Which type of promissory note has Caroline NOT been paying?
Supplemental Property Tax Notice
Certain disclosures must be made within the Subdivided Lands Public Report Notice of Intention. Recently, an amendment to these disclosures has added which of the following to the required disclosures under this notice?
Yes, it is not necessary for a deed to be recorded. However, recording is advisable to protect the ownership interests of the grantee, establish priority, provide a record, and convey the transfer of title.
Chandra and Fabian have heard that it is unnecessary to record a deed. Is this accurate?
Special Warranty
Chandra is selling her condo to Fabian. Chandra's deed explains the property has been clear since her ownership. However, she cannot guarantee that is the case prior to buying the condo. Which deed covers this situation?
No, they are not obligated to use any services recommended by the broker or agents licensed to the broker. Choosing a source of insurance is ONLY the client's choice.
Cheryl and Troy are closing on their home on Tuesday. Their brokerage represents the GoodHome Insurance Company. The couple have not yet decided what company will be handling their homeowner's insurance. Are they obligated to use GoodHome due to its affiliation with the brokerage?
Section 205
Chip is a veteran who fought in Desert Storm. He has just retired from the military. He has been told he qualifies for a property tax exemption based on his military service during wartime. Which exemption applies to Chip?
Martina should discuss with Christina what she knows in reference to California community property laws, but give no advice except to consult an attorney for advice.
Christina is planning on getting married in the next year. She is a very successful business owner and is planning on buying some vacation property on the coast. She asks her agent, Martina, for advice on how she should take title to this new property. Should she hold the title alone, or jointly with her fiance? How should Martina advise?
No, he came to the marriage with the vacation property, therefore it may remain a separate property. However, due to the commingling of the rental proceeds from the property in the joint account, she does have a right to half the proceeds.
Christine and Scott have been married for fifteen years. They have three children, a home, and a vacation home. The couple purchased their home together after their marriage, but Scott owned the vacation property prior to the union. Christine and Scott are now getting divorced. Christine wants half of their residence and half of the ownership of the vacation property. At times they have rented the vacation home and the proceeds have gone to their joint bank account. Does Christine have any legal right to the ownership of the vacation home?
60 days
Civil Code Section 1365.1 states that the homeowner association must distribute a written notice entitled, "NOTICE ASSESSMENTS AND FORECLOSURE" to EACH member of the common interest development association. How long immediately preceding the beginning of the association's fiscal year must this notice be distributed?
Mirror Image
Dan has recently been transferred to San Diego, and only has a month to find a home, sell his condo, pack, move, close, and get to work. His agent shows him the Walsh home and it's perfect. He offers the asking price, along with all the kitchen appliances and window treatments to remain with the property. The Walsh's accept his offer exactly as it is written. Which contract term applies to this situation?
If the Snyder family requests the information from Dan, and he has disclosed any interest he may have in the escrow company, then it is not prohibited. If Dan has made his suggested escrow company a condition of the transaction, it is a prohibited activity.
Dan, a real estate agent, suggests an escrow holder to the Snyder family for their real estate transaction. Is this a prohibited activity in California?
Acceleration Clause
David has been laid off from his job. Carey, his spouse, only works part time and has been trying to pick up extra shifts. They have missed their third home loan payment this month. Their lender has called the entire balance due and payable immediately. Which clause applies to their situation?
No, in the State of California, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $500.00.
Deanna is buying one of Kay's fur coats and several handbags. They are old friends and sometimes purchase each other's items instead of selling to a consignment shop. Deanna agrees to pay Kay $650.00 for the items, writes a check, and collects her purchased items. Is this transaction legitimate?
Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates.
Deanna is thinking of taking the step from renter to homeowner. She has a very stable position as a surgical nurse and excellent credit. She doesn't, however, have a large sum of cash handy for the down payment. One Sunday morning, she notices advertising for new condos where "no down payment is required." Should she look for any other information in the ad?
An Estate for Years
Derek's new office is undergoing a minor renovation and he cannot conduct business in the location for approximately six months. He decided to lease a temporary office in Samantha's building from June 1 to December 30. Which type of lease has Derek signed?
Implied Right of Habitability
Dr. Mullins owns a home he leases to college students. The tenants have been complaining to Dr. Mullins of bats in the attic. At times, the bats have flown downstairs into the living areas of the home. Recently in the area, a man was bitten by a rabid bat. The students are worried and are unsure of their rights. Which guarantee covers the tenants' right that the property meets the minimum health and housing codes?
No, the lessee is not required to sign, only the lessor. The lessee's occupation of the property is proof the lease agreement was accepted.
Drew is leasing his apartment from Reggie. The lease is for one year and they have agreed on all areas of the contract. The lease is in written form, and Reggie is the only party that has signed. Without Drew's signature, is the lease now invalid?
Necessity
Due to the subdividing of lots on the lake, Jim's property is surrounded on three sides by Louise's property. The only other boundary is the lake. Jim can only get to his home by driving up Andrea's driveway and behind her lake home to get to his own. How was the easement in this situation created?
A manufactured housing community.
Each of the following types of housing, with one exception, falls under the heading of Common Interest Development. Which is the exception to this?
Misdemeanor
Elliot has misrepresented himself by acting in the capacity of a real estate salesperson without being licensed by the State of California. Elliot had his license revoked three years ago for unethical actions. Elliot is guilty of what level of violation?
Truth in Lending
Ensuring consumers are fully informed of all finance changes and aware of the true annual interest rate are requirements of which regulation?
The National Environmental Policy Act The Clean Air Act
Ernesto is a developer who is building low-to-moderate-income, federally funded homes. He is building multi-family town homes that will help those graduating from welfare education programs get a new start off of public assistance and into the job market. Which of the following federal laws plays a major role in Ernesto's development?
January 1, 2013
Every California dwelling unit was required to have a Carbon Monoxide Detector by:
Marital status and sexual orientation.
Formerly, the Unruh Civil Rights Act protected people from being discriminated against because of their sex, race, color, religion, ancestry, national origin, disability, or medical condition. However, recent changes have added two new bases for discrimination that are illegal in California. These are:
The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
Under Article 7, what is the maximum amount that may be charged to the borrower for loan costs and expenses? Also, under Article 7, if the home is not occupied by the owner, under what circumstance is the loan exempt from a balloon payment?
Consumer loan
Under California Finance Code, what is defined as a consumer credit transaction that is secured by real property located in California, which is used, or intended to be used or occupied, as the principal dwelling of the consumer?
67%
Under the amended Davis-Stirling Common Interest Development Act, in order to grant the exclusive use of a common area to one or more owner, there must be a passing affirmative vote of what percentage of the owners of that common interest development?
A condominium buyer receives a fee interest, or deed, to her unit. A stock cooperative is a corporation formed to own the land. Veronica would not receive a grant deed, but does share in the corporation and the right to occupy a specific unit.
Veronica has recently completed her surgical residency and is tired of paying rent. She needs a residence that is very low maintenance due to her grueling surgical schedule. Condos and Stock Cooperatives (co-ops) have both been high on her list. Help Veronica differentiate between these two residential options.
Unenforceable
Victoria decides not to lease the condo from Sanchez. (They have an oral agreement.) She tells him she has changed her mind the day before she had agreed to move in. He has spent time and money getting the property ready for Victoria and is thinking of suing. Which type of contract applies to the situation?
Offer
Victoria, the lessee is negotiating to lease a condo from Sanchez, the lessor. They have agreed on the monthly lease payment, term of lease, security deposit, and so forth. Victoria plans to start moving in on the first day of next month. Which of the following applies to this situation?
Yes, under the listing's "safety clause," there is a period of time set forth after the expiration of the listing contract, during which the broker is entitled to compensation if the owner sells to anyone who was shown the property or who made an offer on the property during the agreement--as long as the broker notified the owner in writing of the names of the prospective buyers with whom they negotiated during the listing term.
Gary and Paul have signed the Exclusive Authorization and Right to Sell listing contract with Meyer's Real Estate. The term of the agreement was sixty days. After the expiration of the agreement, Gary and Paul sold their home to a couple who were shown the home by a salesperson licensed to Meyer's Real Estate. Does the real estate company have any claim to compensation from the sale?
Method of Attachment Adaptability Intent
Gary and Paul have wooden shutters installed throughout their home. A few years later, Paul is promoted by his employer and transferred to another city. Gary wants to take the wooden shutters to their new home. Paul insists they must remain with the home. Which of the five tests for real and personal property applies?
Georgina failed the exam. The exam is qualifying by nature and if you pass, you pass; your score is irrelevant and is not revealed.
Georgina sat for the examination about two weeks ago. She believes she passed with flying colors and checks her mail immediately upon arrival home for her results. Today, they arrived and, as she opened the envelope, she saw her test score. Did Georgina pass or fail?
Gerald must first apply for a Certificate of Eligibility to obtain a VA loan. The home must qualify with an appraisal and be issued a Certificate of Reasonable Value.
Gerald, a sergeant in the Marine Corps, is getting married and wants to purchase a home. How does he begin the process of getting a VA loan? What follows?
It is not permissible for Gerard to solicit California residents. He must hold a California real estate license in addition to his Nevada license.
Gerard, a Nevada real estate licensee, has been advertising his services online to California citizens. He sells resort property outside Las Vegas and believes the California market could be very lucrative. Is it permissible for Gerard to advertise in this manner? Why or why not?
The handwritten clause generally supersedes the preprinted clause.
Ginny, a licensee, uses a preprinted contract in Tim's purchase of a new loft apartment. There is a discrepancy in the contract between a preprinted clause and a handwritten addition. Which clause supersedes?
Commercial
Gordon makes a trip to his financial institution one morning. He has conducted all of his banking transactions at the institution for more than twenty years. Today he walks out with a loan on his new home and one for a new boat. What method of financing has Gordon secured?
PC 470, 473
Greg, a licensee, fails to have his client sign off on the purchaser's counteroffer. Greg's client verbally approves the new terms, but Greg failed to obtain his signature. The deadline for signing the counteroffer is in one hour. Greg decides to sign his client's name. Which Penal Code Section addresses this crime, if it is a crime?
Covenant
HEH, Inc. owns a large parcel of land which will be used for commercial development. Upon the sale of the property to HEH, Inc., the grantor in a written agreement established the lake may never be touched and the property may only be used for commercial purposes. Which type of private deed restriction is in place for HEH, Inc.'s property?
Hannah would need the appointment of the Governor of California. Her primary duty as Commissioner would be to enforce the laws in a manner in which maximum protection for real estate consumers is achieved.
Hannah is a newly licensed California real estate salesperson. She has aspirations of one day being the California Real Estate Commissioner. How does she get there and what does she do once she's there?
Rural Economic and Community Development (RECD)
Wallace and Melissa live in a small rural community of just over 15,000. They want to purchase a home and start a small home-based business. At the current time, they have a very limited income and need their own home. Where is the best place for Wallace and Melissa to turn for a home loan?
The number of parties involved and the method of foreclosure on default.
What are the major differences between a mortgage and a deed of trust?
he could speak with the broker and possibly come to a mutual agreement that it is in both parties' best interest to cancel the listing.
Hassan is not happy with the listing agreement on his home through REE Realty Company. He has not been pleased with the showings without notice, the agents showing his home have been rude, and he doesn't feel the property has received the advertising or exposure promised when he signed the listing contract. What is his best option for terminating the listing with REE Realty Company?
A Pledge and Collateral. A Pledge is a promise to pay; and Collateral allows a lender the right to foreclose if the borrower does not pay.
What are the parts of a mortgage loan? What purpose does each part serve?
Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 6.
What are the steps set forth for a real property securities dealer? Which Article do the regulations fall under?
jose is the agent; Howard is the principal; they have an agency relationship; Jose is a special agent. Jose is the agent; Howard is the principal; they have a fiduciary relationship; Jose is a special agent.
Howard wants to purchase a vacation property. He decides to use the expertise of a real estate professional. One of his business associates recommends Jose. Howard explains to Jose that he wants Jose to only represent his purchasing interest, and a contract is signed. Who is the agent? Who is the principal? What is their relationship? What is Jose's role?
Obtain a building permit; place the mobile home on a permanent foundation and obtain a Certificate of Occupancy. Also, a document stating the mobile home has been attached to a permanent foundation must be recorded.
What are the steps to convert a mobile home into real property, if it is possible?
Dower, a wife's interest in the husband's property; Curtesy, a husband's interest in a wife's property; and Homestead, protection against unsecured debts for the party who did not sign for the loan.
What are the types of legal life estates?
Small investors.
What category of borrowers sees Syndicate Equity Financing as a good opportunity?
Howard does not need a specialized license to work with Mineral, Oil, and Gas transactions.
Howard, a licensee, has heard about a specialized area of real estate brokerage--the mineral, oil, and gas brokerage. Howard is trying to find his niche in the industry and believes this is the direction in which he needs to head. What specialized license does Howard need to work with mineral, oil, and gas transactions?
Eight Points
If a conventional loan is at 16% and the VA loan is at 15%, the lender will want to charge how many points to increase the yield on investment?
Record a Restrictive Covenant Modification document.
If a person believes that her property has been placed under an unlawful restriction, covenant, or other provision, based on an arbitrary reason as defined in the Government Code, she may:
A Covenant of Further Assurance
In a general warranty deed, the implied promise: "If there is a defect, I promise to take care of any problems" is referred to as:
The transfer of land from father to son, upon the father's death.
In early common law, transfers of land were only made when:
Division of markets is a violation of the Sherman Antitrust Act.
In order to equalize business in their area, ABC Realty and RMH Realty have an unwritten agreement. They have agreed to split up their area with ABC taking everything north of the highway and RMH everything south. Under this agreement, the real estate agents licensed to each respective brokerage will not be competing and all will profit. Is this a violation? If it is a violation, what is it called and what is it violating?
Real Estate Fraud Prosecution Trust Fund.
In some counties, certain funds are collected and then distributed to be used only for the exclusive purpose of deterring, investigating, and prosecuting real estate fraud crimes. This fund is the:
The constitutional right of the government to regulate private activity to promote the general safety, health, and welfare of society. Police power controls and directs land use regarding subdivisions.
In studying for her real estate license, Elise is reading about police power. She is confused and doesn't understand why law enforcement would have any role in real estate sales, transactions, and regulations. What does the term "police power" refer to in real estate?
No, it is not permissible for a broker to accept those funds. The requirement is outlined in Article 5.
Is a broker allowed (permitted) to accept lender funds unless that broker owns the loan? Which requirement under the California Business and Professions Code addresses the question?
Yes, as long as the products or services do not include any actions for which a California real estate license is required.
Is it permissible to advertise real estate associated services or products in California without a California real estate license
California's Statute of Frauds requires a lease to be in writing if it has a term of more than one year, or has a term of less than one year, which expires more than one year after the agreement is reached.
What circumstances require a lease to be in writing?
Yes, a trade of properties (Exchange) is possible if the trade involves no financing and the properties are not mortgaged.
Jack owns a small home near a school. He doesn't have any children, and doesn't plan on having any in the future. Jack is a writer and works out of his home. All of the noise from the playground during the day interrupts Jack while he is trying to work. Tina, a friend of Jack's, also owns a small home. Her home is in a quiet, little secluded neighborhood. She has a child that will be entering first grade in the fall and wishes she lived closer to a school. One day, Jack asked Tina if she would want to exchange homes. Is this a possibility?
Yes, Jackson's initial deposit to open the account should have only totaled about $200.00. The $15,000 he deposited of his own money to open the account is considered excessive.
Jackson, a broker, is accused of commingling his money with trust account funds. His broker's trust account is a non-interest-bearing account. The current balance of the trust account is $430,000. The earnest deposit funds portion of the account totals $415,000; the broker's initial deposit totals $15,000. Is Jackson guilty of commingling?
Advance Fees for a Loan secured by Lien on Real Property
Jamison, a broker, has been fined $10,000 and is being sentenced to four months' prison time for violations he has committed through his brokerage. Which type of violation did he possibly commit?
Submit a proper application within 2 years of her license expiration. Providing evidence of the completion of current required continuing education. Pay the appropriate late renewal fee.
Jan failed to renew her license prior to its expiration. In order to renew her license now Jan must:
Jan qualifies for an FHA loan, if her income is adequate. There is usually a small down payment required. Jan qualifies for a VA loan due to her status as a veteran's unmarried widow. The VA loan does not require a down payment.
Jan is moving into a new home. Her husband recently died during military service in the Middle East. She cannot afford a very large down payment at this time, but wants to get her children into their first home to provide some stability after the loss of their father. What are Jan's options?
The Office of Fair Housing and Equal Opportunity (OFHEO)
Jane feels she has been discriminated against in her search for a new home. She's a single mother of two who works full time. Where does she go with a complaint?
She may file suit within two years of the violation. She may seek a restraining order, actual damages, and punitive damages of up to $1,000.
Jane has filed her complaint of discrimination. She also wants to seek some sort of punitive damages. What are her options, if any?
The number of times the inventory is sold per year.
What does the term "turnover" reference in a business opportunity?
The total finance charge to the total amount to be financed.
What is included in the APR?
A right thumbprint of the person signing the deed, quitclaim deed, or deed of trust affecting real property.
What is required by a notary of the person signing the notarized document?
90 days after filing the lien; Three years
What is the California Statute of Limitations on bringing a court foreclosure to enforce a mechanic's lien? To bring action for removal of encroachments?
The Department of Corporations, The California Bureau of Real Estate, The Department of Corporations
What is the correct order of regulatory agency jurisdiction changes to non-corporate California real estate syndicates since The Real Estate Syndicate Act's inception in 1970?
In Southern California, the bilateral escrow instructions are signed by the buyer and seller shortly after they've signed their purchase agreement, just after the start of escrow, which is approximately 30 to 60 days prior to the close of escrow. In Northern California, the instructions are usually not signed until one or two days before the close of escrow. In Southern California, escrow services are usually performed by independent escrow companies or financial institutions. In Northern California, the escrow services are usually performed by title insurance companies.
What is the difference between Southern California and Northern California in reference to escrow accounts?
Commingling is the practice of mixing a client's money with the agent's personal funds. Conversion is the unlawful misappropriation and use of a client's funds by a licensee. Conversion is the more serious violation.
What is the difference between commingling and conversion? Which, if either, is considered a more serious violation?
Multiple-Choice Tests
What is the form of California State Real Estate licensing examinations?
FHA insures repayment of the loan; VA guarantees repayment of the loan.
What is the major difference between a VA Loan and a FHA Loan?
The major difference is: in an Estate from Period to Period, the tenant must give notice to vacate whereas in an Estate for Years, there is no need to give any notice.
What is the major difference between an Estate for Years and an Estate from Period to Period?
The general real estate business consists of production, marketing, and financing of real property; a brokerage is directed primarily toward the sale, exchange, lease, rental, and financing for compensation.
What is the major difference between the real estate business in general and a real estate brokerage?
17
What is the mill rate of .017?
The annual and quarterly process is Threshold Reporting. Additionally, if a broker negotiates more than $1,000,000.00 in loans annually, he must take part in Threshold Reporting.
Janet is a broker who negotiates a number of loans to specific subdivisions. Last year, she took part in 27 loans to homeowners in one subdivision. Due to this large number of loans to a subdivision, Janet has to report loan activities to the California BRE. What is the name of this reporting process, how often must the reports be made, and what is an additional requirement for making these reports?
No, the broker must inform the seller in writing the buyer's check is being held until acceptance of the offer. No, the broker must inform the seller of the buyer's check being held at the exact time the actual offer is presented.
Janice has given her broker an earnest money deposit check with written instructions to hold the check until the seller has accepted her offer. Her broker follows instructions and informs the seller, through a telephone conversation with the seller's agent after the initial offer was presented, the buyer's check is being held awaiting offer acceptance. Did Janice's broker handle this situation correctly?
Disclosure
What is the true purpose of Truth in Lending Law?
A Fiduciary Relationship with the broker having a fiduciary responsibility to the funds' owners.
When a buyer hands over earnest deposit money to a salesperson licensed to a broker, or to the broker themselves, what type of relationship does this create?
Market Value
When an appraiser assumes that no one is being forced to sell at a reduced price because of an impending divorce or similar situation; and that both buyer and seller are well-informed customers, he is more than likely hired to determine:
The property is transferred to the state. Property cannot be without an owner.
When an owner dies without a will or heirs, what happens to the property and why?
If the Commissioner believes that a person has or is about to commit a violation of law, order, license, permit, etc., the Commissioner has the authority to bring action against the person. The Commissioner can command in the name of the people of the State of California in the Superior court of the State of California, that the individual not continue with the violation or not move to commit the violation.
When can a violation that hasn't happened yet be a violation?
If the licensee routinely assists sellers in determining whether a proposed buyer in a land contract or purchase-money mortgage is creditworthy.
When is a real estate licensee considered a creditor?
It is only permitted if the FDIC insures the account, and the account is used only for specific first loans.
When is it permissible for a broker to possess an out-of-state trust account?
Civil Rights Act of 1866
Which act is known as the original fair housing statute?
Legally Competent Parties; Offer and Acceptance; Consideration; and Legality of Object
Which are the four elements required for a valid contract?
A percentage of income.
Which form of payment is most common for a property manager?
An Equity Trust
Which is not a form of syndication?
Although all levels of government have laws, regulations, and ordinances that must be recognized and followed, the state housing law is a uniform law that must be adopted by ALL cities and counties in California.
Which level of government is in charge of all planning controls?
Real Estate Commissions General Operating Funds Rents and Deposits from Broker-Owned Real Estate
Which of following are not considered trust funds?
Buying/Selling of Securities and Discount Rates
Which of the following are functions of the Federal Reserve?
The homeowner is required to have a tag guaranteeing the mobile home's proper construction.
Which of the following conditions does not apply in converting a mobile home into real property?
Trust Deed
Which of the following deeds are not really deeds at all?
California Statute of Frauds
Which of the following does not belong in listing agreement provisions?
Accession
Which of the following elements is not necessary for a valid contract?
Net Operating Income divided by Capitalization Rate = Value
Which of the following equations is the correct application of the capitalization rate?
Solicit borrowers or lenders for or negotiate loans on mineral, oil, or gas property Lease or offer to lease or negotiate the sale, purchase, or exchange of leases on mineral, oil, or gas property Assist another in filing an application for the purchase or lease of, or to locate or enter upon mineral, oil, or gas property owned by the state or federal government.
Which of the following is an action taken by a Mineral, Oil, and Gas specialist on behalf of others?
A geological hazard.
Which of the following is exempt from the Natural Hazards Disclosure?
Mortgages are used instead of Deeds of Trust, which allows borrowers greater flexibility and protection.
Which of the following is not a characteristic of the California mortgage market?
Vesting
Which of the following is not a fourfold unity?
To determine the marketability of a property.
Which of the following is not a goal of a real estate appraiser?
Certified Specialized Real Estate Appraiser
Which of the following is not a level of licensing for real estate appraisers?
Tacking On
Which of the following is not a method of involuntary alienation?
PC 518, 519
Jason has approached Sam about purchasing an acre of property that adjoins Jason's backyard. Sam has explained to Jason on numerous occasions that he is not interested in selling. Jason has resorted to telling Sam if he doesn't sell the land, he'll contact the authorities and accuse him of dealing drugs out of his home. Which Penal Code Section addresses this crime?
Jason, conversion is considered a much more serious violation than commingling and has heavy criminal penalties.
Jason, a broker, has been accused of conversion. His partner, Justin, has been accused of commingling. Which has been accused of a more serious offense?
Americans with Disabilities Act (ADA)
Which of the following is not a part of a property management agreement?
They may not permit, under any condition, any person to make any addition, deletion, or alteration of an escrow instruction.
Which of the following is not a prohibited escrow-related activity?
Sheriff's deed
Which of the following is not a real estate deed used in an open-market conveyance transaction?
The owner's motivation to sell
Which of the following is not a required disclosure?
Prepayment penalties are optional.
Which of the following is not a requirement for an FHA loan?
Written in testator's handwriting
Which of the following is not a requirement of a will?
Tenancy in Common
Which of the following is not a type of leasehold estates?
Impounds
Jeanne and Mark are buying a home. They've been told their mortgage payment will be $1,072 per month. There's also an additional amount of $335.62 being added to the monthly payment, bringing their total to $1,407.62. It was explained the additional $335.62 is to cover insurance and property taxes. Which loan definition applies?
Yes, Yolanda is correct. It is illegal for Mike to take such actions. The landlords may serve the tenants with a three-day notice of eviction.
Jeff and Ryan rent a house from Mike and Yolanda Reynolds. They are three months behind in their rent and neighbors have been complaining about the noise coming from the home. Mike and Yolanda have tried to work with Jeff and Ryan to help them get back on track with the tardy rent, but the guys are not cooperating. Mike and Yolanda have decided they have no choice but to start the eviction process. Mike wants to just go in and remove the possessions, shut off all the utilities, and change the locks. Yolanda believes Mike's idea may be illegal and thinks there are other options. Is she correct and, if so, what are the options?
Covenant of Exceptions and Reservations
Jeffrey is selling his loft to Caroline. He is using a General Warranty Deed in the transfer of property. Which of the following covenants is not a requirement?
No, he does not have a case. Since the microwave was not reclaimed during the period allowed by law.
Jeremy opened a coffeehouse in a space leased from Maria and Renaldo. A week before his lease expired, Jeremy moved to a new location without his commercial microwave which was attached to the counter. Eighteen days following notice of Jeremy's right to reclaim the microwave, Maria and Renaldo sold the microwave at auction. Jeremy is furious and threatening legal action. Does he have a suit?
he is obligated to speak to the authorities and report what he has witnessed. If he is unsure a crime has been committed, he should obtain legal advice.
Jeremy, a licensee, witnesses Patti, another licensee, involved in behavior that is questionable. Jeremy learns Patti's client is also willfully involved in the indiscretions. What action, if any, should Jeremy take?
$5,000 - The points are shown as a debit to the buyer.
Jerilyn has been approved for a home loan in the amount of $250,000 with two points. If one point equals one percent (1%) of the loan balance, what will the points cost Jerilyn? How are the points shown at closing?
Jerry may change his mind on the lot he has reserved. He is not committed simply because of the reservation. He may legally back out and receive a full refund, up until the time the final report is issued.
Jerry is interested in purchasing a lot for new construction in a new subdivision. The Commissioner has issued a preliminary public report in this case, allowing the subdivider to take reservations for lot purchases. Does Jerry have any recourse to change his mind?
No, the Mortgage Disclosure Statement should have been presented to them within three days of the broker's receipt of their written loan application, or before the Scotts were obligated to take the loan.
Jim and Kim Scott have been working very hard to rebuild their credit. They are now in good financial shape to buy their first home. The couple has been working with a mortgage broker, Ted, to assist them in finding the best loan. They complete the application, are approved for a loan, complete other paperwork, and are now obligated to complete the loan. A week before they are due to close, they receive the Mortgage Disclosure Statement, outlining all of the costs and terms associated with the loan. The costs and terms are not what they had previously understood. Are they stuck with this loan?
Alluvial Right
Which of the following is not a water right?
In a retirement community if 70% of the dwellings have one person who is 55 years of age or older, provided there are amenities for elderly residents.
Which of the following is not an exemption to the federal fair housing laws concerning age and family status?
None of the Above
Which of the following is not considered a type of common interest ownership?
Each parcel of land has its own nonhomogeneous characteristics. No two properties are the same.
Which of the following is not considered one of the five economic characteristics of land?
Voluntary Tenancy
Which of the following is not considered one of the six distinct forms of ownership in California?
0.0865
Which of the following is the dollar value of the mill rate 86.5?
Income Tax Lien; Mortgage Lien
Which of the following liens is both general, involuntary, and statutory? Which lien is specific, voluntary, and equitable?
Net Listing
Which of the following listing agreements is illegal in most states?
Off-Site Property Managers
Which of the following parties are not exempt from the licensing requirements in California?
A trust account may be an interest-bearing account.
Which of the following statements concerning California Trust Account Requirements is false?
The Humboldt Base Line and Meridian in the northwestern part of the State; The Mt. Diablo Base Line and Meridian in the central part of the State; and The San Bernardino Base Line and Meridian in the southern part of the State.
Which of the following statements concerning California's three sets of base lines and meridians is true?
A trade fixture is personal property and can be removed by the tenant any time before the end of the lease term. Annexation changes personal property to real property; severance changes real property to personal property.
Which of the following statements concerning real and personal property is true?
Matt must treat the sale of the business and the sale of the real property as two separate and concurrent transactions with two concurrent and contingent escrows.
Johanna is selling her restaurant, J's Café. She has decided restaurant hours are too long for her and is changing careers. Matt, a licensee, is assisting Johanna in the sale of the café. She wants to sell both the real property, the restaurant itself, and all of the personal property inside to one buyer. A buyer is interested in the physical restaurant, the business itself, and all of the personal property inside the restaurant. How will Matt handle the sale of both the real property and the business itself?
A deed must be recorded in order to be valid.
Which of the following statements in reference to a deed is untrue?
ABC Escrow is the neutral party; the Van Horns are the buyers; the Simpsons are the sellers.
John and Jane Van Horn are buying their first home from the Simpson family. ABC Escrow will be the closing agent for both the Van Horns and Simpsons. Which of the three is considered the neutral party in this real estate transaction?
No, the termination of an escrow does not terminate the associated contract.
John and Thom are purchasing their dream home. Due to the expiration of escrow instructions, the escrow has been terminated. Have they lost the contract on the house of their dreams?
The balance sheet shows the business's profits as of a particular date.
Which of the following statements is false in reference to a balance sheet?
The seller and agent must provide the Homeowner's Guide to Earthquake Safety booklet and also disclose that a property is in an earthquake zone.
Which of the following statements is true concerning Earthquake Hazards Disclosure?
Proposition 13
John and Thom purchased a home that only had one previous owner. It is a simple three-bedroom, two-bath ranch. The previous owner built the home in 1964 and recently passed away. John and Thom had looked at the previous owner's property taxes and found them to be quite manageable. When they received their first assessment, they were shocked. Which proposition is attributed to this dramatic increase in property taxes?
General taxes are Ad Valorem taxes. General taxes are used for the general operation of the governmental agency authorized to impose the taxes. Real property tax (general taxes) are based on the assessed valuation of the property.
Which of the following statements referring to general taxes is true?
He does not have any options. Once a completed Salesperson Examination Application is submitted to the CalBRE, no changes of any kind may be made to the application.
John completes the Salesperson Examination Application and submits it to the California Bureau of Real Estate. Driving home from work, he realizes he used his old address and not his new one on the application. What should he do?
Article 16 - Ethics and Agency Relationships
John is still studying for his California real estate license. Once again, he is having a difficult time keeping areas straight. Help John with the largest area of the NAR Code of Ethics Standards and Practices.
The Better Business Bureau®
John is studying for his California real estate license. He is studying federal law, state law, and local law. Now, he is trying to get a handle on something called "Professional Code." What source has no input on the topic John is currently studying?
Anti-discrimination laws and fair trade practices
John is trying to keep things straight while he studies. He's having a rough time distinguishing federal and state legislation. Help John with the primary focus of federal legislation.
Cooperative
John lives in an apartment and each month pays his rental payments. He is also considered a stockholder in his building and owns property. In what type of apartment does John live?
None of the Above
Which of the major warehousing agencies in the Secondary Market are not regulated by a government agency?
Part 2, Sections 11000 to 11200 of the Business and Professions Code
Which portion of the California Business and Professions Code consists of the Subdivided Lands Law?
Commission's Regulation 2770
Which regulation or section(s) apply to the use of the Internet for advertising in California?
All discrimination in selling or renting residential property based on race is prohibited under the provisions of the Civil Rights Act of 1866, Jones v. Mayer.
While waiting in the lobby of the Fair Real Estate Company's office, Samir and Rhadika overhear an agent tell clients, "You wouldn't be happy in THAT neighborhood. It's very "colorful," if you know what I mean." Which ruling by the Supreme Court dealt with this issue?
The tenant - 100% of rent is deductible as an expense. The tenant - The total debt load of the tenant remains the same.
Who benefits from a long-term lease?
Local Building Inspectors.
Who enforces the codes of the California State Housing Law?
Mortgage Guarantee Insurance Corporation
Who is the largest private mortgage insurer?
he has a couple of options available to resolve this issue. He may spend up to one month's rent in repairs or abandon the premises. If he abandons the premises, Jonathan is relieved from paying additional rent and other conditions of the lease.
Jonathan rents a two bedroom house from Samantha and Gerald. The plumbing keeps backing up into the basement, leaving water and sewage on the basement floor. Jonathan has repeatedly reported this issue to Samantha and Gerald. He has made telephone calls and spoken to each landlord; he has also sent a written request with proof of delivery. It has been two months and not only has nothing been done, they have not even responded to his calls or requests. What are Jonathan's options, if any?
It is very difficult for the seller to remove a buyer that is in default. The buyer is at risk because he holds no immediate title to the property. Court battles involving both the seller and buyer could be lengthy and costly.
Why are sales contracts no longer a popular financing instrument in California?
Buyers who can only make a small down payment with monthly installments. Usually they must meet certain conditions, and the Contract for Deed does not require conveyance (transfer) within the same year.
Why would a Contract for Deed (Installment Sale Contract) be attractive to certain buyers?
It is actually considered a mortgage financing alternative.
XYZ Corporation is interested in a piece of land for development. They are selling off a bit of company stock to buy the property without any debt. Is XYZ's sale of stock considered a form of financing?
Escalator Clause
XYZ Development, Inc. leases commercial space to businesses. Most of the leases are long-term, from five to fifteen years in length and have fixed rents. XYZ's contracts contain a clause in which both parties agree to annual adjustments of rent based on tax increases and other operating costs. If the previous year did not see more than a five percent increase in these costs, there is no change in the rent. What is the clause?
they could not prove it was financially solvent and was unable to furnish a surety bond of at least $25,000, or more, based upon the yearly average trust obligations.
XYZ Escrow has been turned down in its application for an escrow license. What could be the reasoning behind the denial of the license to XYZ?
Anticipation
Jose has heard rumors that a zoning change will be taking place involving a piece of undeveloped sale property. Jose buys the property in hope the zoning change will take place, making the property much more valuable on the market. Which principle of value applies?
XYZ Escrow did not maintain the records and files of its clients. Due to poor record keeping, several escrow accounts at XYZ were overdrawn.
XYZ Escrow has gone out of business. They committed one of THE violations of all violations of escrow holder regulations. What is the violation?
The power be exercised in a reasonable manner. The provisions be clear and specific. Freedom from discrimination.
Zoning ordinances have changed in the area adjacent to a residential neighborhood. The residents are incensed a retail shopping area is being developed one block from their subdivision. They are concerned about the traffic, noise, and what this will do to their property values. The new zoning ordinances must ensure:
Juanita may simply proceed with the contract, despite Amir's unwillingness to correct the problems. Juanita may cancel the contract altogether.
Juanita is in the process of buying Amir's home. She made an offer that was accepted by Amir and both are happy with the financial terms. After paying for several inspections, Juanita has found serious structural and electrical issues with Amir's home. In the contract, she has requested these items be rectified at Amir's expense within thirty days. At the end of thirty days, Amir is unwilling to spend the money to correct the items. What are Juanita's options?
Contribution
Judy and Xavier are planning a very large addition to their home. The kitchen will be doubled in size with a new hearth room, and a large new master suite will complete the renovation. They live in a neighborhood of houses in the $500,000 range. This addition will change the appraisal value of their home substantially. Which principle of value applies?
Easton v. Strassburger
Judy is the listing agent for the Brandts' home. In the inspection of their home, she discovers a few issues of concern. The basement is very damp and smells of mildew. Judy noticed what appeared to be mold on the interior walls of the lower level. She also saw what she believed to be their main line overflowing in the utility area of the basement. State the case that is responsible for broker's conducting a diligent inspection of properties they are listing or selling.
A Bridge Loan
Karen and Jay need a larger home. They have two large dogs and a baby on the way. One day in the real estate section, they see their dream home. The couple view the home that very day, make an offer and it's accepted. There's only one problem: They haven't even put their home on the market. Which type of loan gives Karen and Jay their best option of paying two mortgages until their current home sells?
Ostensible Agency
Katie and Rich own a rental home they have put up FSBO. They've noticed the same woman has accompanied several potential buyers viewing the home. Katie and Rich discover she is a broker that has been "showing" the home on the sly without their permission. Instead of fighting this aggressive salesperson, the couple just go along. In which manner was agency created?
Sections 10176 and 10177 of the Business and Professions Code.
Katrina had her license suspended for making false promises to clients. She had a habit of telling clients what they wanted to hear and never being able to state the facts. Of course, she could never follow through with her statements and several complaints were filed. Which guidelines constitute most suspensions?
After the "intent to sell" notice, a five-year period of redemption begins. Ken can redeem his property from delinquency by paying all back taxes, interest, penalties, and any other applicable fees.
Ken has fallen behind on his property taxes. He has received the "intent to sell" notice and is terrified of losing his home. Ken lost his job and cannot immediately repay the back taxes. How can Ken keep from losing his residence?
Ken may be issued a 150-day temporary license while he is on the list of child support obligors. Only one 150-day temporary license may be issued. His full-term license may be issued if a release is obtained from the district attorney's office during the 150-day temporary period.
Ken has just passed his licensing examination. However, he has been notified the CalBRE will not issue a full-term license. Ken is behind on child support payments and therefore has not complied with a court order to provide these payments. Will Ken ever be able to obtain his license?
Joint Tenancy
Kim, Chris, and Beth are all partners in a cosmetics firm. Kim is leaving the partnership and wants to sell her shares of the business, including the property owned by the partnership, to Chris and Beth. The three partners own the property with the right of survivorship should one or more of them die. The remaining partners are not interested in buying Kim's interests. Kim has been unable to find a buyer for her share of the partnership. She has now resorted to asking the court to either sell her shares or sell the entire property. What form of concurrent ownership applies?
Yes, the seller of any residential structure built before 1978 is obligated to provide a lead-based paint disclosure.
Larry and Carlos are purchasing a 1930s bungalow in the Hollywood Hills. It is their dream home and once belonged to a silent film star. Is a lead-based paint disclosure necessary on this lovely, historic bungalow?
Lillian is the grantee and Julia is the grantor. Julia is the grantee and Anne Marie is the grantor.
Lillian is buying Julia's home in Malibu. Julia, after selling her home to Lillian, is buying Anne Marie's condo in San Francisco. In these transactions, who is the grantor and who is the grantee?
RESPA
Lily, a licensee, has been referring her first-time home buyers to Safe Insurance Company for all of their insurance needs. The insurance company has been providing Lily with "motivation" in the form of cash to keep the referrals coming. Which law or act prohibits this type of violation?
Submitted a check to the State of California for mobile home fees and the check was not honored. Knowingly participated in the sale of a stolen mobile home.
Lisa has had her California real estate license suspended for violations involving mobile homes under the California Business and Professions Code. What could she have possibly done?
Earthquake Information Lead-Based Paint Electromagnetic Fields
Lizette is buying her first home today. She is overwhelmed with all of the information that is being disclosed. Sex offender disclosures, smoke detector compliance, title insurance--the list goes on and on. Which of the following are environmental hazards the seller and agent are obligated to disclose?
A Bill of Sale Financial Statements
Lois is selling her needlework shop to Simon. Simon is also purchasing the name of the business from Lois, all of the fixtures, and the inventory. Lois is essentially handing over the entire business, from top to bottom, to Simon, who is planning continuing what she had started. What are the essential elements of this business opportunity sale?
Lot and Block System
Lot 19, Block 8, Western Acres Subdivision, City of Sacramento, County of Sacramento, State of California. Which method of legal description applies?
Proposition 60 allows homeowners 55 years and older to transfer their base-year property tax value to another home of equal or lesser value.
Louise recently turned 65, retired, and is downsizing to a smaller home. She was concerned about moving from the home she owned for 40 years with its low assessment to a smaller home, but with a much larger assessment. Which proposition eases her worries?
She may re-take the examination as many times as it takes to earn a passing score, but her application will expire in January and she must reapply first.
Lydia applied for the salesperson examination in January 2014. She sat for the exam three times in 2014 and four times in 2015. Each time, Lydia did not receive a passing score. How many times may Lydia sit through the examination in 2016?
She did NOT receive an actual score this time in the mail. This means she finally passed the licensing exam, and her license application is included in the envelope.
Lydia feared she did not pass the California State Licensing Exam AGAIN. As she nervously opened the envelope that held the results, what was the first clue to the outcome of her reexamination?
File the Salesperson Examination Application (RE400A)along with the appropriate fee.
Lydia has decided to actually spend a considerable amount of time STUDYING for the exam this time, in hope of earning a passing score. Her application has expired in the two years of fruitless reexaminations. What does she need to do to reapply?
Conditional Approval
MTH Bank has given the McKelvey's a written pledge to lend $250,000 on a new construction home, for 30 years, at 6.53%. The McKelvey's will now present this pledge to the subdivision's sales agent to continue with their new home's construction. Which loan definition applies?
Attestation
Marcus wants to have the deed to his new home recorded to protect his ownership rights. In order to record the deed, it must be notarized. Marcus must go before a notary public and verify the signing of the deed. The notary then signs the deed. The verification of Marcus' signature in the signing of the deed is known as:
The buyers must give the public notice. They must give a public notice 12 business days before the transfer occurs. It gives the seller's creditors an opportunity to file a claim if trade credit is still owed on the inventory.
Maria and Carlos are selling their grocery store to a large corporation. There will be a bulk transfer of the store's inventory in the sale to the corporation. Public notice must be given of this transfer. Who must give the public notice? How many days public notice must they give and why?
Incurable
Maria, a single mother of three, has been saving to buy the family's first home. Her budget is limited, but there is a home she can easily afford on the market. Unfortunately, there have been zoning changes in the area, and a twenty-four hour convenience store is located across the street. Is this deterioration curable or incurable?
Alexandra is only liable if she is named as a general partner in the certificate or if she participates in control of the business.
Marita and Alexandra set up a Limited Partnership. Marita is named General Partner and Alexandra is named Limited Partner. Marita embezzles funds from the investors. Is Alexandra liable for Marita's indiscretion?
Alexandra is correct. Section 25206 was added to the Corporations Code making obtaining a broker-dealer license optional.
Marita tells Alexandra they must obtain their broker-dealer license from the Department of Corporations to engage in the sale of real estate syndicate security interests. Alexandra disagrees with Marita, explaining they both have their broker licenses and that is sufficient. Who is correct and why?
They were guilty of subversion by using improperly obtained test questions to prepare for the examination. This is considered a dishonest practice. they had an unfair advantage over the other applicants taking the examination. It was basically old fashioned cheating, and was not tolerated.
Marta and Sean acquire notes from a previous California State Licensing Exam through a friend. This friend had previously taken the exam and managed to record the questions on his scratch piece of paper. Marta and Sean score passing grades on their exams, but are denied licenses. Why would they be denied a license?
They have been denied the full protection of the Equal Credit Opportunity Act (ECOA). The ECOA is a part of the Fair Financing Laws.
Martha and Liz have applied for a mortgage. They both have excellent credit and very successful careers and they are perfect on paper. Martha and Liz are partners and are expecting the birth of their first child together. They are denied a loan. What's the violation here?
A bill of sale; a balance sheet; the profit and loss statement; and a bulk transfer of any inventory.
Martin is purchasing a personnel agency from Warren and his partner. The agency has been very successful over its twenty years in business, and Warren is ready to retire. What elements should Martin expect from Warren as part of the business sale?
No, California law has held that post-dated checks are the equivalent of a promissory note and are non-negotiable. The broker must not accept a post-dated check from a buyer without adequate disclosure to the seller.
Matilda is buying a condo from Tom and Alex Ries. She has given her agent, Manuel, earnest deposit funds in the amount of $10,000. Matilda has post-dated the check to coincide with the expiration date of offer acceptance on the contract. Do the basic trust fund regulations apply to Matilda's earnest deposit?
Yes, the missing minimum requirement is the absence of a sufficient description of the property, such as an address and/or a legal description.
Max owns a townhouse in Sacramento. He is in the process of leasing it to Hannah. The contractual lease states Hannah Scott will be leasing Max Thomas' townhouse for two years beginning July 1. She will be paying $1,000 per month due by the first of each month. The lease clearly states Max will be the landlord of the townhouse and Hannah the tenant. Is there a minimum requirement for a California lease missing?
he could go to prison and/or be fined $10,000 for each illegal transaction.
Max, a licensee, accepts a bribe from ABC Title Company for referring clients. What is Max's possible punishment?
Trustee's Deed
Maya, who lives in California, just purchased her first home at a foreclosure sale. She was given a deed at the sale. What type of deed was she given?
Melinda is the Grantor. Trevion is the Grantee.
Melinda is selling her home to Trevion. The deed, conveying the property, will be a general warranty deed. Who is the Grantor? Who is the Grantee in the transaction?
Deficiency Judgment
Sumatra has had a terrible year. He lost his business and now he has lost his home in foreclosure. The proceeds from the foreclosure sale were not sufficient to cover his debt, and NOW the lender has taken him to court to obtain more money. Which of the following applies to Sumatra's situation?
Susan may sell her property herself without obtaining a real estate license. Although she will be compensated for the sale of her home, she is not representing another person.
Susan is thinking of putting her home up for sale but doesn't want to use a real estate agent. What are her options?
The Garcias own the condo in freehold but rent it to Suzette in leasehold.
Suzette is leasing a condo from the Garcias. She has been renting the condo for over three years. She renews the lease each year and, because of her loyalty and exemplarily rental history, the Garcia's allow her to make any décor changes she wishes. Which of the following statements is true about the relationship between the Garcias and Suzette?
Tax laws often distinguish between real and personal property. An agreement for a sale of real property must be in writing and signed by the party to be charged. If the amount or value is $500 or more, an agreement for the sale of personal property must be in writing.
Melinda's mother recently passed away. She is thinking of selling her belongings in an estate sale. During her research, she came across real and personal property regulations and laws. Please help Melinda understand the legal difference(s) between real and personal property.
While the federal government sometimes taxes the estates of deceased persons, California has eliminated inheritance taxes altogether.
Sydney has inherited her grandmother's estate worth approximately $4.5 million. She is worried about paying taxes on the estate and the inheritance. How will these taxes affect her new estate and inheritance?
Metes and Bounds System
Merle has a rural piece of land in the northern part of the state. He is in the process of selling it to a developer. The property has a pair of one-hundred-year-old trees that mark the entrance to the property. A stream and a bluff mark the end of Merle's property. What method of real estate description would best suit Merle's land?
It is certainly not acceptable. Miranda is accepting compensation for representing another person in a real estate transaction and she does not hold a California real estate license.
Miranda helps her friend Lupe purchase a home. She researches the neighborhood, assists her with a mortgage -- she essentially acts as Lupe's real estate agent. There is only one issue, Miranda does not have a California license and Lupe has paid Miranda for her help. Is this acceptable?
Miriam must hand over the check to only her own broker. At that point, the broker might direct her to put the funds into the hands of the broker's principal; place the funds into a neutral escrow depository; or deposit the funds into the broker's trust fund bank account.
Miriam is a real estate salesperson. She has just been handed a $100,000 earnest money deposit certified check from buyers who are interested in a new home. What does she do with the money?
No, not only should the broker have deposited the earnest money within three business days of receipt of the funds, the money was to have been deposited into the broker's trust fund not the broker's account.
TBH Realty Company is handling the sale of the Lopez (seller) home to the Bright (buyer) family. The buyers give an earnest money deposit to the brokerage in the amount of $5,000. The money is then deposited into the broker's account at the bank on the seventh business day after receiving the funds. Has TBH Realty Company followed all trust account regulations with the earnest money?
Fee Simple Defeasible
Mr. Manning has owned a restaurant for forty years. He is in the process of selling his business to a group of investors who plan on revamping the restaurant and turning it into a destination. In the negotiation of the sale, Mr. Manning has stipulated he is willing to accept their offer on two conditions: There may never be any alcohol served on the property and there can never be dancing of any kind. Mr. Manning is insistent on these conditions due to his religious beliefs. If either of these activities ever takes place, Mr. Manning would have the right to take back the property. Which type of estate applies?
Economic, Environmental, or External Obsolescence
Mrs. Jenkins has lived in her little 1940s cottage for forty years. Her home is immaculately maintained; it has a beautiful, well-manicured garden, and is just as lovely inside as outside. Unfortunately, the same cannot be said for the rest of her neighborhood. Other neighbors have let their properties go downhill. There is absolutely no curb appeal to any of the other homes in her neighborhood. Mrs. Jenkins' neighborhood is definitely in decline. Which type/types of depreciation applies/apply?
$124,440
Naomi has a home loan amount of $120,000. Her monthly principal and interest payment is $679.00 for thirty years. How much interest will Naomi pay over the term of her loan?
Conventional Loan
Patrice and Jacque have secured a mortgage loan. They must provide at least a 20% down payment, but are not required to have a government guarantee or private mortgage insurance. What type of mortgage loan have they obtained?
they have an involuntary lien placed on their home for delinquent property taxes. The couple needs to pay the taxes, any interest and/or late fees, and have the lien removed.
Patrice and Michael are in the process of refinancing their townhouse. The mortgage company calls and gives the couple the news they have a lien on their home for non-payment of the previous year's property taxes. What type of lien is on their property? What do they need to do to remedy their situation?
Aesthetic Zoning
Patrice has purchased a century-old townhouse in San Francisco. She wants to make some changes and updates to both the exterior and interior. She isn't happy with the historic pediments outside the townhouse. Patrice's vision is of a minimalist, clean, modern home that reflects her personal style. Which type of zoning regulation, if any, may affect Patrice's vision of a minimalist town home?
Yes, in California any apartment complex that has sixteen or more rental units must have a manager that lives on-site. In addition, Kimberly, as an off-site manager, must hold a real estate broker license. If she decides to hire a residential manager, who lives on the property, they do not need a broker's license.
Pelican Bay Apartments is a complex consisting of 80 units. The units are available in studio and one-, two-, and three-bedroom apartments. Kimberly Bracco is the property manager of Pelican Bay. She has decided to stay in her condo and not reside at Pelican Bay. She is also pursuing her California real estate license as she manages the property. Is anything wrong with this scenario?
Fee Simple Defeasible
Penelope is interested in buying a 150-year-old historical home in San Francisco. If Penelope decides to purchase the home, it must be on the condition the original architectural features are never removed from the home. Additionally, if Penelope buys the home and then sells it at some point, the same condition must be in the sales contract, and so on. What type of freehold estate is this historic home?
Yes, it is a violation. Leases do not terminate because a property is sold.
Penny and Joe rent an apartment in the Trade Winds apartment complex. They moved in one month earlier and signed a one year lease. Today the couple received a notice stating the complex has been sold and their lease will terminate at the end of thirty days. Is this a violation?
Penny failed to indicate in the advertisement her license status.
Penny, a California licensee, has been advertising on the Internet. She specializes in the sale of upscale homes in the Hollywood Hills area. Penny has been violating the Business and Professions Code, Sections 10235.5 and 10140.6. What has she done?
Net Listing
Perry is listing his home with Extra Real Estate Company, a brokerage. He wants the listing as follows: He must receive $250,000 from the sale of the home, anything above that price is the broker's commission. Which type of listing agreement is Perry demanding?
Yes, Peter should be giving this position a second thought based on the clause. This type of clause is an Allowable Vacancy Rate.
Peter has been offered the position of property manager for a large apartment complex. These apartments are upscale with impeccable maintenance programs and beautiful amenities for its residents. His contract has a clause that states, "If at any time during our agreement the property has a vacancy rate of more than 12%, our agreement is cancelled." Should this clause give Peter pause in accepting the position? Does this type of clause have a name?
Antitrust violations; fines of up to $10 million for corporations and up to $1 million for individuals and/or prison time
Price fixing, group boycotts, bid rigging, market allocation and division of markets by location or price are all examples of ________________ and are punishable by ___________________.
The public notice is known as Notice of Intent to Sell Bulk and must be published in a general circulation newspaper.
Public notice must be given of a bulk transfer of inventory in a business sale. What is this notice known as and where must the notice be published?
Equitable Right of Redemption, Foreclosure, and Statutory Redemption
Put the following foreclosure actions in order:
Helpful Real Estate Company becomes the agent of RSS Real Estate Brokerage due to the appointment without the consent of the principal.
RSS Real Estate Brokerage is the listing broker for the Pratte property. RSS delegates some of the responsibility of the listing to Helpful Real Estate Company. The two brokers cooperate on listings frequently and have a good working relationship. Unfortunately, RSS failed to get the principal's (Pratte's) agreement to the delegation. What is the relationship between RSS Real Estate Brokerage and Helpful Real Estate Company?
Fiduciary Responsibility to the Owner Achieving the Highest Rate of Return for the Owner
Rafe is an assistant property manager of a large residential community. He wants someday to be promoted to property manager. Rafe needs to consistently learn his duties and responsibilities to the owner and demonstrate them accordingly. What duties/responsibilities should he focus on?
Practice of Real Estate and Mandated Disclosures
Raj is stressed. He is getting ready to take the salesperson examination and doesn't know where to begin studying. Help Raj by telling him the examination topic(s) with the largest concentration of questions.
Ramon may take the examination as many times as he needs. He need only reapply to re-take the examination. Ramon must pay the examination fee if he is to re-take the examination.
Ramon did not pass his licensing examination. He didn't think it was a possibility to fail and doesn't know what to do to re-take the test. Ramon is not even sure he is allowed to take the examination a second time. What are Ramon's options?
California Business and Professions Code Section 10145 Commissioner's Regulation 2832
Ramon, a salesperson licensed to Richard, a broker, has been given specific written authorization to make a withdrawal from the broker's trust account. Ramon is uncertain this is permissible under California Law. Which California Law, if any, references Ramon's concern?
$149,950.50, $149,900.70
Renata has a home loan for $150,000 at 7.5% interest for 30 years and her payment is $987.00 per month (including principal and interest). What is the principal balance after Renata has made one payment on her loan? After two payments?
Escalator Clause Lease
Renee is leasing her condo in San Francisco from Brad. For the first six months of the lease, her rent will be $1,200 per month. Every six months her rent will increase $100 per month based on the increases to Brad in taxes, insurance, and other operating costs. What type of lease has Renee signed?
Nonconforming Use (Legal)
Ricardo's Restaurant is currently located between two subdivisions. The restaurant has been in business for over forty years. Currently, the area no longer allows any commercial activity. The zoning board ruled Ricardo's may continue to operate unless it is sold, destroyed, or used for any other commercial purpose. Which zoning exception applies to Ricardo's?
State the problem. Gather, record and verify the necessary data. Analyze and interpret. Neighborhood analysis. Neighborhood cycle. Site analysis.
Ross, a newly licensed residential real estate appraiser, is on his way to appraise his very first piece of property. He is nervous on the way to the property and is going through the appraisal process in his head. Please help Ross put the appraisal steps in order.
Roy is considered a Subdivider. His first step should be a development plan; however, this plan must include all state and local government regulations, the Subdivided Lands Law, the Subdivision Map Act, the California Environmental Quality Act, zoning, and local general and specific plans.
Roy Malone owns a large piece of land in the Sonoma Valley. He is planning to subdivide the land into five lots for the construction of luxury homes. If Roy carries through with this project, what are his roles and his next steps?
The Owner's Objectives The Fair Housing Laws
Sam is the owner of a ten-unit apartment complex. He has just hired a new property manager to run the property. Serena, the new property manager, has been drawing up a new set of management plans for the property. What should be the deciding factor in the adoption of the new plans?
must immediately stop his licensed activity. His salespersons are all placed immediately in non-working status, and his branch office licenses are cancelled. He must then take all necessary steps to re-activate his license, his salespersons' licenses and the branch office licenses.
Sam, a broker, thought the postage meter stamp was sufficient evidence of a U.S. Postal Service postmark. He was wrong and his broker's license expired. What happened next?
Severalty
TBH, Inc. owns land for development adjacent to their corporate headquarters. TBH, Inc. is the sole owner of the property. The land will be developed as a shopping and restaurant area. Which form of ownership does this property fall under?
The tennis court and swimming pool are owned in common by all the property owners. It is a Planned Unit Development.
Tamara and her children live in a subdivision with a tennis court and swimming pool. Her children are thrilled to be able to use these wonderful amenities. Who actually owns the tennis court and swimming pool? Tamara and her children reside in which type of common interest development?
Marketable Title
Ted and Jack are selling their home to Duncan and Gary. Upon the title search, the title company discovers Ted and Jack's home is free of any liens or problems and can be easily sold. Ted and Jack's property holds which type of title?
Ted and Lisa are clients, and Steven is a customer. The listing agent must disclose to Steven that he/she represents Ted and Lisa and explain customer relationships.
Ted and Lisa are selling their home and have signed a listing agreement. Client or customer? Steven visits Ted and Lisa's open house, and he is interested in purchasing their home. What happens next? Is Steven a client or customer?
The park had become overcrowded.
Samantha and Todd live in a mobile home park. They have lived in the park for five years and have never been late on their rent, utilities, or any other bills. Today the mobile home park landlord has terminated their tenancy. Which of the following is not a justifiable legal reason why this couple might have been evicted?
No, although it is an acceptable reason for the landlord to enter the units, they must give the tenant at least a 24-hour notice and enter between normal business hours.
Samir Shah is a landlord leasing apartments for residential use. He will be updating the lighting fixtures in his units during the month of January. He has been having his maintenance crew enter the units at will to make the changes. Several of the tenants have been surprised, frightened, and inconvenienced. Is it acceptable for Samir's employees to enter unannounced?
Tom is in luck. Since he has already taken the appropriate actions and obtained a judgment to obtain possession of the property before Jack filed his bankruptcy petition, the previously filed eviction remains in effect.
San Diego tenant Jack Stone is a full-time slacker. The guy has not paid rent in months and refuses to give up possession of the property. After many attempts to solve the problem outside of a courtroom, landlord Tom Crick gives up, files an eviction notice, and obtains a judgment to obtain possession of the property. Three weeks later, however, Jack tells Tom that just that morning he's filed for bankruptcy--so the eviction is off. Which of the following statements is true of this situation?
By Accession and through Avulsion (It must be reclaimed within one year of the occurrence.)
Sania and her mother own property on a river. The water has carried part of their bank downstream to another property. They want their bank back and are prepared to have it returned. Which method of property transfer applies?
Sara's lifetime wasn't too long. The results are normally mailed out in five days. She could have also received her results online through the eLicensing system and through the Interactive Voice Response system.
Sara waited and waited and waited for what she thought was a lifetime. Finally, Thursday morning the results of her California real estate examination arrived. What was the maximum length of "the lifetime" Sara waited and could she have gotten her results by another method?
Ratification
Scott is trying to sell his home FSBO. The Bartells believe Scott's home could be their dream home, but they have been working with Melinda, a licensee, to find a new home. Melinda shows the Bartells the home, failing to disclose her status as an agent. They love Scott's home and want to buy it. Scott is not interested in any way, shape, or form in working with an agent. However, the Bartells have made an offer above his asking price and he can't refuse it over the Melinda issue. Which of the following describes the creation of this agency relationship?
A description starting at a designated place on a parcel using the Metes and Bounds System.
A Point of Beginning refers to:
A check made payable to the broker or to an escrow or title company is an option. A personal note made payable to the seller or a pink slip on an automobile given as a deposit is acceptable.
Serena and Lucy want to make an offer on their dream home. The seller is requesting a very large earnest money deposit with serious offers on the home. Serena and Lucy have some cash set aside for this purpose, but are short of the amount the sellers are requesting. Do they have any other options?
Base lines are horizontal and run east/ west; meridians are vertical and run north/south; township lines are horizontal running east/west from a principal base line; and ranges are vertical running north/south on either side of a principal meridian.
Serena is studying for her California real estate license. She is very confused about base lines, meridians, townships, and ranges. Keeping these sets of intersecting lines straight has Serena stumped. Can you help?
In Contract
Shakeel and Shaheen have sold their home, made an offer on Derek and Kamisha's home, and the offer was accepted. All the details of the sale have been worked out, agreed upon and signatures obtained. Now, Shakeel and Shaheen must obtain a loan for the property. What is the best term to describe their position in the transaction's timeline?
The transfer of a rock, some dirt, or a branch of a tree (feoffment). Livery of Seisin, the actual delivery of possession of the property. A statement made in front of witnesses in sight of the land, and the new owner's entry onto that land.
Shamus McManus purchased property from Sir Ian Wainwright under early English common law. Which of the following were acceptable methods of property transfer?
taxation, to determine the owner's tax bill.
A mill rate is used in real estate
The company must distribute at least 85% or more of its income to its shareholders.
A small group of investors are in the initial stages of putting together a real estate investment trust (REIT). Which of the following is not a qualification?
Statute of Limitations
A subdivision has a homeowner association rule that states there can be no above ground pools in the subdivision. The Curtis family has an above ground pool in their backyard. Four years later, the new association president threatens to take the family to court for violating the subdivision regulations. Why doesn't the new president have a case?
$3,675.00
A taxing jurisdiction has a mill rate of 14.7. What is an owner's tax bill if his taxable value is $250,000?
Concentrate on the pertinent facts of the case. Think about who stands to gain and lose by his decision. Explore different solutions to the problem.
Agent Green is faced with an ethical dilemma. He was present when two brokers were having an unethical discussion that could be considered collusion. He doesn't know if he should act as if it never happened, or report the incident to his broker. What steps should he employ when making this decision?
Maria must change the listing price on a price change or extension form.
Adeeb has listed his condo with Maria's broker and she is his listing agent. The listing agreement is signed and the day to begin showing his property is nearing. Adeeb decides the day before the open house to raise his asking price by $20,000. Maria disagrees with the decision but goes along with Adeeb's wishes. How must Maria take care of this contractual change in price?
A fine up to a maximum of $50,000.
A corporation is found guilty of charging purchasers advanced fees for securing mortgage loans on homes they have listed. What is the punishment for the violation?
Directive Zoning
A developer wants to build a sprawling two-story office complex. The developer's and architect's vision is something low, modern, and new. They are planning the complex in an urban area of town, replacing ten blocks of old high-rise buildings. Unfortunately, the zoning commission's vision does not coincide with either the developer's or the architect's. Which type of zoning regulation applies?
The lender is concerned with the loan applicant's need of financial assistance.
A first-time buyer has applied for a large mortgage loan at ABC Bank. The first-timer has good credit, good debt-to-income ratio, a stable position and adequate income. The lender still has concerns. Which of the following is not one of the lender's concerns?
Square Foot Cost; Unit in Place; and Quantity Survey Method
A local school has been destroyed by fire. Nothing has been salvaged and the school will have to completely rebuilt. What are the three methods of determining the cost of rebuilding?
Avulsion
A violent storm comes in from the ocean, hitting the beachfront properties with destructive force. When the Meyers return to their home, they find the beach has disappeared from their property. Which term describes the damage?
PC 639-639a
ABC Mortgage Company accepts a bribe from a licensee in exchange for approving mortgages for all of his clients. Which Penal Code Section addresses this crime?
They may rescind the transaction based on the misrepresentation of the broker.
Ben and Amanda are interested in a vacant, undeveloped lot. They are going to continue to live in their current home, pay off the lot's loan, and then build a new home on the lot. Before closing on the purchase of the lot, they discover the zoning regulations permit nightclubs to be built in the immediate area. They specifically asked the broker about this issue and were told there was no reason to worry. What are Ben and Amanda's options, if any?
The city council or board of supervisors
Beth and Brian have been informed a convenience store is going to be built on the corner across from their residence. They are furious and want some answers as to how this could be happening in their neighborhood. Who should they go to for answers and the final word on the decision?
No, she has not served the 181 days of active service required.
Conchita is applying for a VA loan. She has served in the military, on active service, for ninety days. She is trying to buy a town home near her base for easier commuting. The town home has qualified with an appraisal and has been issued a Certificate of Reasonable Value. Will Conchita be considered for a VA loan?
Not very good at all. According to the Alcoholic Beverage Control Act, the person must be of good moral character. All of Damon's convictions probably won't bode well with his receiving a license.
Damon has a string of misdemeanor convictions. He was just cleared of felony fraud. Damon is now opening a restaurant and wants to serve alcohol. What are Damon's chances of being issued a liquor license?
The goodwill of a business has monetary value, which is protected by law.
How is goodwill protected in business opportunity transactions?
There are three primary steps that must be taken to achieve the general plan. Under California Code, every city and county is required to develop a general plan. The steps are as follows: A Resource Analysis, Formulation of Community Goals, and The Plan Implementation.
How many primary steps must be taken to develop a general plan? Who is required to develop a general plan? What are the primary steps, in order, to achieve the desired general plan?
Two - One is for security deposits and one for current rents and management.
How many, if any, escrow or trust accounts must a property manager maintain?
Yes, if a collector makes more than ten annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker.
Jacinda makes collections on real estate loans. Last year, she made approximately 20 collections and collected $38,000. Must Jacinda be licensed?
Counteroffer
Jack is buying the Padillas' home. He makes his offer and in his terms states he wants all the window treatments, refrigerator, and microwave to be part of the sale. The Padillas accept his offer on the condition that the refrigerator is the only item that stays in the home. Which contract term applies?
Jack has the possessory right and Justin the reversionary right.
Jack is leasing a home from Justin for a year. He has decided to lease until he gets a good feel for the area and knows where he wants to buy. In this relationship, who has the reversionary right and who has the possessory right ?
Prepayment Penalty Clause
Jonathan is in the process of refinancing his home loan. Due to the lowering of interest rates and Jonathan's credit score improvement, he has been able to secure a conventional loan with an excellent annual percentage rate. Unfortunately, his current loan contract contains a stipulation that if he repays the loan before three years, he will owe the lender a fee of two percent of the loan balance. Which clause applies to Jonathan's situation?
Johnel should not be negotiating the fee due ABC Escrow as part of escrow procedures. The buyer and seller negotiate between themselves who is responsible for paying the escrow holder's fee.
Johnel, of ABC Escrow, is beginning to work on the escrow procedures of the Van Horn - Simpson file. She prepares the instructions; orders the title search and report; requests new loan instructions and documents; negotiates the fee due ABC Escrow from the parties involved; and accepts the pest control report and other reports. Which of these procedures is prohibited?
Livery of Seisin
Jonathan decides to sell his home and transfer all of his property ownership rights to the new buyer. This bundling and selling of rights is known as:
Maurice IS required to pay into this fund due to the Inclusionary Zoning Ordinance. He must either set aside a designated number of units for low-to-moderate-income housing; or, in certain cases, like Maurice's, he may pay into the fund. If he refuses his building permit will be denied.
Maurice is a builder of new residential housing in the San Fernando Valley. He builds high-end homes in various subdivisions in the area. Maurice has been paying into a fund that is used by the government for low-to-moderate-income housing. Is Maurice required to pay into this fund and, if so, why? Does he have any other options?
Michelle must give Luis a sixty-day written notice of the lease termination because he has lived in the property for more than one year.
Michelle owns a rental property in San Diego that she has rented to Luis for four years. The street on which the house is located is going through a major widening and most of the homes are going to be leveled for the project. Through eminent domain, Michelle must sell her home to the city for the construction. What is the required length of notice Luis must receive from Michelle in terminating the lease?
The Civil Rights Act of 1968 Title VIII
Miguel and Maria have found a wonderful condo to lease. They call the owner and express their interest. The owner tells the couple it is no longer available for lease. Two weeks later, Maria sees the "FOR LEASE" sign outside the condo. Which act or law has been violated by the owner?
The programmable calculator
Miguel sits down, ready and prepared to take the examination. He neatly places his slide rule, programmable calculator, single piece of scratch paper, answer sheet, pencil and pocket-size electronic calculator on the desk and he is ready to begin. Although extremely prepared, which item of Miguel's is NOT permitted in the testing site?
California Business and Professions Code Section 10153
Mikela wants to research and study the requirements for the California Real Estate Examination Test. Where can she find the exam's purpose and requirements?
No, not at this point in her career. In order to be appointed to the post by the governor, she must have a minimum of five years' experience as a real estate broker.
Missy, a licensee, desperately wants to be appointed the next California Real Estate Commissioner. For the three years she has held her California real estate license, she has been ranked in the top five in new home sales in her office. Missy has never had her license suspended or revoked, and prides herself on being ethical in every transaction and interaction. Does Missy have a chance?
After June 15, 1976; HUD
Mobile homes manufactured ___________ are required to have tags guaranteeing proper construction. Who issues this tag?
No, two years after the license expires, all license rights lapse. Molly must re-qualify through the examination process before being licensed in real estate once again.
Molly, a successful real estate salesperson, took some time off to stay at home with her first child. Days turned into weeks, weeks into months, months into years, until Molly's child was starting school. She decided she needed to head back to her profession and pick up where she left off. During her at-home time, Molly hadn't kept up with any CE requirements, nor had she renewed her license after its expiration almost three years earlier. Can Molly simply pick up where she left off?
Handwritten portions of real estate contracts always supersede preprinted forms.
Patrice and Cornell are completing a sales contract with Mary, their agent. The sales contract used at Mary's brokerage is preprinted. Mary, as a senior agent, has the authority to waive one of the brokerage's fees. The fee is explained and preprinted on the contract. Mary simply crosses it out, writes "waived," and both parties initial. Which overrules the other? The preprinted or handwritten portions of the contract?
A lender must lend funds 25 times a year and/or must lend the funds for at least five housing loans annually.
Sam is selling one of his rental homes. His advertisement reads: "For Sale By Owner - Owner Will Finance - No Down Payment!" What are the criteria for being considered a creditor under Truth in Lending?
The property will be transferred according to the Statute of Descent and Distribution.
Olive Maccones dies without a will. She has three sons and seven grandchildren. She owned a substantial amount of property. What happens to the property?
To become real property, their mobile home must have a permanent foundation.
Saffron and Serge have a mobile home in which they travel from city to city, town to town, selling pottery and playing music. One week they may be in Berkeley, the next Sacramento. The couple travel wherever their mobile home will take them. Which of the following is true?
Sally may not sell new mobile homes, but she may sell used mobile homes, if they have been registered with the State of California and are on a lot. She would have to become licensed by the California Department of Housing and Community Development to sell new mobile homes.
Sally, a licensee, has been asked to be the sales agent for a company selling new mobile homes. Can she sell these new mobile homes? If not, what sort of mobile homes can she sell?
The Four-Year Salesperson License
Sam has successfully completed the Real Estate Principles course, the Real Estate Practices course, an additional college level course, and passed the salesperson licensing examination. Which license is available to Sam?
4 pCi/L Radon and above
The Juarez family are moving into a new home and are having the home tested for Radon. They have young children and are worried about the possible effects the gas could have on their health and development. What is the interior reading that should concern the family?
Yes, this is legal as long as hr does not violate the Federal Fair Housing Laws. These statements are considered "Puffing" in the real estate world. "Puffing" can be unethical if the statements are not true, but it is not illegal.
The Lemps have been looking at new homes for weeks and have not found anything worthy of an offer. Mikel, their agent, has invested a large amount of time in showing homes with no luck. Today, he calls Mr. Lemp and says, "I have found you the perfect home! The home is amazing! The yard is perfect and lush. The school district is the best in the state. This home and area are the most prestigious in the city!" Are these types of statements legal?
Dismiss the findings if the charges are not sustained at the hearing. Reduce the proposed penalty and make an official decision.
The law judge has just issued a decision based upon the findings in a formal hearing of a real estate salesperson for various ethical violations. What is the role of the California Real Estate Commissioner at this point in the proceeding?
To protect the public.
The main purpose of the California Bureau of Real Estate (CalBRE):
Special Assessment Tax
The sewers in Mary's neighborhood need replacing. In fact, the entire sewage system for her city needs replacing. The city has imposed a tax that will pay for all of the sewer updates in the area. What type of real estate tax applies?
Attestation
The signature of a notary public is known as:
The Corporate Form
This form of syndication allows limited liability for the investors but has negative tax features. Which form fits the description?
The General Partnership The Joint Venture
This form of syndication avoids double taxation but has a lack of centralized management. Which form fits the description?
The Limited Partnership
This is the most frequently used organizational form for real estate syndicates. Which form fits the description?
Formulation of Community Goals
This step of the general plan, sometimes known as the master plan, should encompass all aspects of the projected growth, including the social, economic, and physical features. Due to this step, while considered long-range, the plan must allow for short-range flexibility. Which step is described?
Yes, private mortgage insurance is required for all loans with less than 20% down payment.
Tracy and Darnell are buying a home. They have a 15% down payment and have qualified for a thirty year fixed conventional rate mortgage. Will Tracy and Darnell have to pay PMI?
IRS State Board of Equalization
Tucker, a licensee, has been instrumental in the sale of a nightclub to a group of investors. He has guided the buyers every step of the way in obtaining this new business opportunity. What government agencies are also in need of notification by the investors concerning their new business?
Sale-Leaseback
Tyoka has a small retail store in San Diego. He sells imported items such as clothing, arts, and crafts. He has recently sold the store to a group of investors. In the arrangement with the investors, Tyoka now leases his former store from the new investors. What type of financing applies to Tyoka's new arrangement?
