RET #1
When a broker receives trust funds and places them in a trust account, which of the following statements is most nearly correct about interest earned on those funds:
he broker may not receive directly or indirectly any interest on trust funds.The broker is prohibited from receiving any benefit, directly or indirectly from interest earned on trust funds.
The term used by lenders, "mortgage yield" best describes:
he effective interest return obtained from a first trust deed by an investor;The mortgage yield is the profit, or effective return that the lender receives from a loan.
Which of the following defines a "mortgage loan"?
loan collateralized with real estate.A mortgage loan is a loan that is obtained by a borrower using real estate as the collateral or the security.
A developer can use the Street Improvement Act of 1911 as amended to raise funds for all of the following purposes, except:
o purchase land for subdivision;Funds obtained through the Street Improvement Act of 1911 must be used to improve the property, including off-site improvements such as streets, sewers, etc., but not to purchase land.
Four months ago, a seller accepted a proper offer to purchase his real property. The contract was in writing. Later, the seller refused to complete the transaction, since he felt the value of the property would increase in the near future. Under these circumstances, the Statute of Limitations could affect the rights of the buyer to prevail in a civil action, due to a breach of a written contract, within:
4 years.A right rising out of a written contract must be pursued in court within four years of the default (i.e., breach), according to the Statute of Limitations.
A real estate broker who specializes in selling residential property in a given area may refuse to accept a listing on a property in that area for which of the following reasons:
: Because the owner's required price is substantially above the market price in the area of the residences;A broker should refuse to take a listing if the owner's price is substantially above the market value of the property. If he refused because of the minority status of anyone, then he would be discriminating on the basis of race.
Ms. Swan listed a vacant lot with Broker Benton for $11,400. Prospective buyer Gardner submitted an offer at a purchase price of $11,000 with the offer to expire in thirty days. The next day, Ms. Swan made a counteroffer with the sales price to be $11,200, which Gardner would not accept. Three days later, Swan delivered to Benton a signed acceptance of Gardner's $11,000 offer. When Benton told Gardner of Ms. Swan's acceptance, Gardner decided not to buy the property. Based on these actions, there is:
: No contract.Any counteroffer terminates the original offer, so there is no contract.
Private restrictions on real property can be written either as a condition or as a covenant. Which of the following is most correct concerning such restrictions
: Violation of a condition can result in penalties which are more severe, and can result in loss of title;Violation of a condition can result in loss of title, which is more severe than damages or an injunction, which result from violations of a covenant.
Which of the following would be considered real property?
A bearing wall in a single-family house
Most likely, the United States Attorney General would act to enforce the Federal Open Housing Law whenever:
A conspiracy exists to practice resistance to the Federal Open Housing law;The United States Attorney General has authority to enforce the Federal Open Housing Law, especially in an area where there is evidence that a conspiracy exists to resist the Fair Housing Law.
When examining a properly-prepared closing statement, the broker would discover that a mortgage assumed by the buyer would appear as:
A debit to the sellerA mortgage assumed by the buyer would be charged against the seller's proceeds, since the seller had the obligation to pay off that mortgage. Such an entry would be recorded as a credit to the buyer against the purchase price; and a debit to the seller.
Compliance with the agency relationship law enacted as a part of the civil code would be required in which of the following transactions
A lease for a period of longer than one yearThis is the only choice in which an agent is involved. The civil code requires that the agency relationship be disclosed to all principals.
When lenders use the term "debt-income ratio," they are referring to:
A loan qualifying tool;he debt-income ratio is a qualifying tool that lenders use to measure the amount of debt that borrowers have in relation to their income.
All of the following are essentials of each and every contract, except:
A proper writing.Some contracts (e.g., a lease for a year or less) do not have to be in writing to be enforceable, according to the Statute of Frauds.
Of the following types of deeds, which one would contain no warranties, expressed or implied
A quitclaim deed
The real estate financing instrument which transfers equitable title to real property, but retains legal title in the seller, is called:
A real property conditional installment sales contract A real property conditional installment sales contract (land contract) is a financing device by which the seller (vendor) retains legal title, but transfers equitable title to the buyer (vendee).
Mr. and Mrs. Winters hired the Superb Construction Company to install a swimming pool on their residential premises. In the event the construction company was unpaid and it was necessary for them to file a lien for payment of the contract, the encumbrance created would be:
A specific lien
An instrument which usually transfers possession of real property, but does not transfer ownership is:
A sublease;
Once a judgment has been obtained against real property, a plaintiff would obtain which of the following in order to cause the property to be sold:
A writ of execution
A change in a zoning ordinance could be initiated by:
A: A subdivider/developer;B: A local government agency;C: The owner of a property;D: All of the above. D
Personal property can never:
A: Become real property;B: Be hypothecated;C: Be alienated;D: None of the above.
The requisites of a grant deed when compared to a land contract of sale may differ with respect to:
A: Interest conveyed;B: Signatures of the principal parties;C: Designation of purchase price;D: All of the above. D
An easement could be created for what length of time
A: Perpetuity;B: The lifetime of a person;C: A term of years;D: Any of the above.
Tyson owns a store building which he leased to Crown for seven years. Crown's estate in the store building is:
A: Personal property;B: Estate for years;C: A chattel real;D: All of the above.
The law permits a real estate licensee to act as an agent in the sale of some mobile homes. All of the following acts are grounds for discipline by the Real Estate Commissioner against a real estate salesperson's license, except:
A: Selling, as agent, a mobile home which is greater than 8 feet in width and 40 feet in length;
Mike Coogan, a new real estate salesperson, made strong efforts to obtain listings in a non-integrated community. He found success by insinuating to property owners that should minorities move into the area, the value of their homes would decrease. Which of the following terms best describes the activities of Salesperson Coogan:
A: Steering;B: Panic peddling;C: Blockbusting;D: Both "B" and "C".Correct Answer is : DSuch activity is described as both panic peddling and blockbusting.
When comparing condominiums and rented apartments, which of the following would be true
A: The person who occupies each unit would have an estate in real property;
When a blanket mortgage is placed upon a property and a "release schedule" is put into the mortgage showing the amount of the loan that must be paid off for each of the lots, those individual amounts would likely be proportionately larger for the first lots that are sold. The reason for this practice is:
A: To increase the security value of the remaining lots;B: To compensate for the loss of security as the lots under the blanket encumbrance are removed;C: To compensate for the loss of security due to the best lots being sold first;D: All of the above. D
: A prospective buyer would be entitled to damages from a real estate broker in the event the broker:
Acts in excess of the authority given the broker by the seller;A real estate licensee would be liable for damages to the buyer in the event the licensee acts in excess of the authority given him by the employing client.
Which of the following is not essential to the creation of an agency relationship:
Agreement to pay a consideration;An agent could represent either seller or buyer, and compensation is not a requirement. For example, a broker could be asked by a buyer to help arrange a loan. If the broker did, he might not receive any compensation, but he would still be the agent of the buyer for that one act.
Installment notes often include an "or more" clause. Such a clause would:
Allow an accelerated payoff;
A formal declaration, not an oath, that a statement is true or that the declarer will tell the truth is:
An Affirmation
Involve more interest than an installment note;
An easement in gross is a right in another's land created for the benefit of adjacent land;
A family rents a vacation home from September 1, 2002 to January 1, 2003. Their tenancy would properly be classified as:
An estate for years Since the rental period is a specific period, it is an estate for years.
The purpose of the Truth-in-Lending Act is to:
Assure a meaningful disclosure of credit terms;Regulation Z of the Truth-in-Lending Law requires lenders to disclose the annual percentage rate (APR) of interest, and all directly or indirectly associated costs to be paid by potential borrowers thereby allowing them to shop for their loans.
David gave a grant deed to John transferring title to a house. The title is subject to a condition stating that title will be forfeited if alcoholic beverages are ever sold on the property. John would have which of the following types of estates:
B: A fee simple defeasible;Title which is conditioned on doing something or not doing something in the future is known as a fee simple defeasible title.
A real estate salesman went into a neighborhood to obtain listings of residential property. He made representations that because of the entry into the neighborhood of minority groups, property values would be reduced by a decline in the quality of schools and an increase in the crime rate. These practices by the salesman are:
B: Grounds for disciplinary action;Such activities would be defined as promoting panic selling which is against the fair housing laws. Therefore, the salesman could have his license suspended or revoked by the Real Estate Commissioner.
To qualify a real property sales contract for recordation, it must:
Be signed by both buyer and seller and be acknowledged.In order for a land contract to be accepted by the county recorder's office for recordation, it must be signed by the buyer and seller and acknowledged by both of them.
An "open-end" provision in a mortgage would benefit the borrower the most if he:
Borrowed additional money.
Upon discovering that a salesperson in his office was receiving a referral fee from a local lender for every real estate loan the salesperson referred to the lender, the broker of record in that office took only two actions: He discharged the salesperson, and he warned all other salespersons in the office never to accept such fees. Based only on the foregoing, which of the following is most nearly correct:
Both broker and salesperson may be subject to disciplinary action by the Commissioner.
An easement in gross:
Burdens servient land;
Where a buyer withdraws his offer to purchase real property prior to acceptance by the seller, the:
Buyer is entitled to the refund of the earnest money depositA "meeting of the minds" is a three step process: (1) The offeror makes an offer; (2) the offer is received by the offeree and accepted; (3) the offeree's acceptance must be communicated back to the offeror. Until this takes place, there is no contract and the offeror may withdraw or cancel the offer without a reason
When the term "beneficiary statement" is used by those in real estate finance, it identifies a statement made:
By the lender, as to the current balance due to pay off a real estate loan;
If there has not been an agreement to the contrary, all of the following would qualify as a negotiable instrument, except:
C: A mortgage securing a promissory note;
When the Federal Reserve Board increases the reserve requirements, it will:
C: Decrease loan activityIf the Federal Reserve Board increases the reserve requirements, that means that the banks will have to hold on to more cash, making less of it available for loan activity
An acceleration clause is inserted in a note that is otherwise negotiable. The addition of this clause:
C: Does not reduce the negotiability of the note;
Another name for an estate of inheritance is:
C: Estate in fee;
A person sold his home and took back a note secured by a purchase money deed of trust. He selected a real estate broker from the telephone book and asked him to service this loan. If the broker takes on this duty, state law requires him to:
C: Have a written authorization from the holder of the note;This is required by state law. A real property securities dealer is a broker who sells an existing trust deed and guarantees a return on it. A loan broker's statement is used in negotiating brand new loans under Article 7. A mortgage loan correspondent creates or negotiates a loan, sells it to someone else, and then services that loan.
: A fee simple absolute estate would best be defined as:
C: The highest interest a person can have in real property;
To alienate title to property, one:
Conveys title.
Question: Jones conveyed his ranch to Brown using a land contract. The ranch was serviced by a mutual water company, and Jones was a stockholder in the company. The stock which Jones owned was appurtenant to the land. Does Brown have to enter into a separate contract for the stock of the mutual water company:
D: No, because the stock was appurtenant to the land and therefore part of the real property and part of the land contract.
When a pest control company discovers no evidence of infestation of termites, but discovers conditions which may lead to such infestation, the cost of correcting such conditions is paid by:
D: The buyer only if he chooses to have the condition corrected.
Agent John has given seller Henry an offer that includes the phrase "All kitchen appliances are to be left with the house and become the personal property of the buyer." Henry accepts all of the other terms of the offer, but objects to leaving the appliances. John crosses out that item and initials it on the contract on behalf of the buyers. He does this despite the fact that the buyers are on vacation and cannot be consulted about this. Such action would most accurately be classified as:
D: Unlawful conduct.
A "GPAM" mortgage loan provides for:
Deferment of certain payments on the principal during the early period of the loan;The loan known as graduated payment adjustable mortgage (GPAM) has partially deferred payments of principal at the start of the term, increasing as the loan matures.
When a valid grant deed is prepared, title passes when it is
Delivered
In order to operate a competitive, yet profitable business, a real estate broker needs to be concerned with "desk cost." Which of the following most nearly represents the correct way to calculate desk cost:
Divide the total operating expenses of the firm, including salaries, rent, insurance, etc., by the number of salespersons.
A deed:
Does not have to be recorded to transfer title.
The land that is benefitted by an easement is called the:
Dominant Tenement
Following proper action by the local authorities, the zoning on a vacant lot was changed from "commercial" to "residential." Such an action is called:
Down Zoning
Which of the following is always required in joint tenancy ownership of real property:
Equal shares of interest in the property by each of the joint tenants;
The basic protection of a lender on a purchase-money second trust deed would be:
Equity of the borrower;The ultimate security of any loan is the property itself. Therefore, the borrower's equity would be most important.
The main purpose of a deed is to:
Evidence the change in title or transfer of an interest in real property;
Which of the following does not buy loans in the secondary mortgage market?
Federal Housing Administration.The Federal Housing Administration (FHA) insures loans; it does not buy loans
For more than one hundred years, the Garza family has owned and operated a gold mine on federal land. The only access to their mining claim is across an adjoining parcel. That parcel is sold to a new owner, who fences off the parcel and padlocks the gate across the access road. The Garzas would be best advised to:
File a quiet title suit against the new owner to protect their rights;The Garzas should file a quiet title suit, to get the court to order that access be allowed across the adjoining parcel.
When a title company issues a California standard policy of title insurance, the policyholder is insured against loss which occurs because of:
Forgery in the chain of recorded title;
Broker Farr is showing property that he has listed to Olson. Broker Farr knows that there are massive plumbing repairs to be made. Broker Farr:
Has to tell the buyer, because he must disclose all material facts;A licensee must reveal all material facts. A material fact is one which is likely to influence the principal's decision, such as massive plumbing repairs, or any defect of which the agent has knowledge or which is not apparent to a reasonable, prudent person
Richards agreed to list his property for sale with Broker Jackson. In using a standard listing form, Richards completed Paragraph 10 with the following words: "Delete provisions in Paragraph 3c above which says, Agency is hereby authorized to accept on my behalf a deposit toward the purchase price in any amount." If Broker Jackson produced a buyer:
If he accepts a deposit, he holds it as agent of the buyer until the offer is accepted by the seller;If a broker is not authorized to accept a deposit and he does so, he becomes the agent of the buyer for that one act.
A straight note, same term and interest rate, would:
Involve more interest than an installment note;
Which of the following would not be legally proper for a licensee to do?
Keep the client's secret that the roof leaks.A licensee must reveal all material facts to a prospective buyer. Certainly the fact that the roof leaks would be a material fact which might influence the buyer's decision.
In financing for new construction, the lender will usually release the final payment to the builder when the:
Lien period has expired;In loans for new construction, the lender usually holds the final payment until the lien period has expired to be sure that there will be no mechanic's liens filed against the property. These mechanic's liens might take precedence over the construction loans, depending upon the date when the work or improvement was first begun.
A builder needs a long-term loan of $3,000,000 to develop a new shopping center. Which of the following would usually be the best source of such funds:
Life insurance companies;Life insurance companies make the largest loans on real estate because they prefer better type properties and large, long-term loans.
A tenant in good standing under a valid five-year lease which makes no mention of assignment or sub-leasing, may legally do which of the following:
May sublease or assign the leasehold to anyone, since the lease made no mention of any restrictions on such action.
: Among the choices available to an investor, stocks and bonds, when compared with real property, are usually thought to be:
More liquid in the marketplace.Stocks and bonds are relatively easy to sell, and hence are regarded as a more liquid investment.
Who pays the points on a Cal-Vet loan:
No one. There are no points on a Cal-Vet loan because the property is purchased outright by the Department of Veterans Affairs and then resold to the qualifying veteran with a land contract.
When an existing contract is replaced by an entirely new contract, it is an act of:
Novation comes from the Latin word "nova," indicating something new.
The mortgage insurance on an FHA loan:
Protects the lender in the event of default;he mortgage insurance on an FHA loan protects the lender in the event of a default on the loan. It is paid for by the borrower.
Easements are terminated by all of the following, except:
Revocation by the owner of the servient tenement;
Legally and technically, property is defined as:
Rights or interests which a person has in the thing owned;
Salesperson Kingston presented to Broker Wright Buyer Kingsford's offer to purchase Seller Brightwood's real estate, accompanied by an earnest money deposit in the form of a personal note in the amount of $1,000. Broker Wright should inform Salesperson Kingston that:
Seller Brightwood should be informed prior to acceptance that the deposit is a promissory note.A promissory note is legal consideration as an earnest money deposit, but the principal should be informed of this information.
Broker Davis has had a house listed for sale for nine months without selling it. He knows that the building needs major structural repairs, and he has listed it at 10% above its fair market value. He runs an advertisement in a newspaper that says, "Three bedroom, Victorian. You won't believe the price! Move right in. Davis - 234-5678." This advertisement is bad because:
Since Davis knows that the property needs major repairs, it is deceptive and misleading; when a building needs major structural repairs, it is misleading to advertise it as being in "move-in" condition.
By means of the Federal Fair Housing Law, Congress established a national policy of fair housing throughout the United States. This policy applies to which of the following
The Civil Rights Act of 1968 applies to all of the foregoing circumstances.A: Single-family residences that are individually owned and that are offered for sale through a real estate broker;B: Single-family residences owned by private individuals who own more than three such residences;C: All type family dwellings of six units where the owner occupies one of the units;D: All of the above.Correct Answer is : D
A broker who is hired by an owner to sell his property must reveal all significant and material information to the principal. Which of the following would be considered material information and must be revealed:
The agent's knowledge that a better offer to purchase is imminent;The existence of a better offer that is imminent could very well be a material fact to the seller. It would probably influence his decision on a present offer.
On March 5, a prospective buyer gave a broker his personal check for $1,000 payable to the seller along with an offer to buy the property. He told the broker that the check should not be cashed until March 30. Which of the following is correct?
The broker may hold the check, but must tell the seller that it is being held uncashed before the seller accepts the offer.If a buyer asks a broker to hold a check uncashed for a period of time, the broker may do so, but the agent must tell the seller the circumstances before the seller accepts the offer.
When real property is sold, a copy of the structural pest control report must be given, if requested, to:
The buyer
Which of the following persons would usually be in the weakest position against loss of property due to a claim of title by an outside person:
The holder of an unrecorded quitclaim deed who does not occupy the property.
Of the following, which best defines a fee simple estate:
The most interest that one can hold in land.
: The two requirements which governmental units must observe in the exercise of the power of eminent domain are:
The proposed use must be public, and just compensation must be paid to the owner.
Of the following, which is considered a violation of fair housing laws in regards to periodic tenancy:
The requirement of a landlord of a co-signer exclusively for tenants who are single;Answer "C" specifies that the landlord has singled out tenants who are single; therefore, this landlord is discriminating. All the other answers indicate that the landlord is placing requirements that pertain to all tenants, which is not discriminatory.
When the general level of prices decreases
The value of money increases;When prices decrease, money becomes more valuable since it can buy more goods.
Which of the following statements is most nearly true concerning the activities of mortgage companies:
They prefer negotiating loans which are salable in the secondary market;Mortgage companies often do service the loans they originate, are active in FHA and VA loans, and are usually organized under state laws. They often negotiate loans which are sold on the secondary market.
If a licensee placed the following ad in a newspaper, which of the following would describe the ad? "Three bedroom, two-bath, pool and spa, large lot -- $167,000. 555-1234."
This is blind advertising.Since this ad has no wording in it which indicates that it was placed by an agent rather than an owner, it would be considered blind advertising.
The right or power to sell a property in the event of a default under the terms of the trust deed is given by:
Trustor to the trustee
Authorization to sell a parcel of real property in the event of a default is given by:
Trustor to trustee;
The listing agent for a residential property can legally complete the entire Real Property Transfer Disclosure Statement:
Under no circumstances;
An estate is granted to "A" for the life of "X." "A" dies while "X" is still living. The estate:
Vests in the heirs or devisees of "A."
Which of the following statements is true concerning escrow procedures:
When the escrow requirements have been met, the escrow agency changes from a dual agency to a separate agency;The escrow holder in a sale of property through an escrow is, at first, the "agent of both parties" (dual agency in which neither buyer nor seller is to be favored). When the conditions are performed, the escrow holder usually becomes the "agent of each of the parties."
When is a broker relieved of the obligation to present an offer to purchase real property to the principal:
When the offer is patently frivolous or the broker is acting on written instructions of the principal;If an offer is obviously frivolous or if the principal tells him in writing not to present certain types of offers, the broker is relieved of his duty to present the offer.
When renting residential property, the amount of a security deposit which a lessor may legally charge from a lessee is determined in part by which of the following:
Whether the unit is furnished or not;If the unit is furnished, the lessor can charge a higher deposit than if it is not.
The exercise of police power whereby land is divided into districts according to the use to which the land may be put is known as:
Zoning Zoning is the exercise of police power whereby land is divided into districts according to the type of use to which the land may be put.
Land that is subject to an easement is said to be:
encumbered
