Broker Study Questions

Question 1

An exception in a deed is the

Answer 1

withholding of rights in the property from the grantee. An exception, such as retaining mineral rights, would transfer ownership of the property to the grantee, but retain the mineral rights for the grantor. The granting clause demonstrates the intent to transfer the property.

Question 2

A standard policy of title insurance insure against:

Answer 2

Forgery ; A standard policy covers Recorded matters, Forgery and Capacity, but never any unrecorded matters.

Question 3

An interest in real property may be acquired by either prescription or by adverse possession. The interest resulting from prescription is:

Answer 3

the right to use another’s land. Prescription (easement by prescription) only conveys the right to use another’s land.

Question 4

Appraisers speak of “the highest and best use.”

Answer 4

A starting point for an appraisal and Greatest net return are related to this expression. The principle of highest and best use is based on the reasonable use of real property at the time of the appraisal, which is most likely to produce the greatest net return to the land and/or the building over a given period of time.

Question 5

Unlike a joint tenancy, the tenancy in common requires only one unity, which is the unity of

Answer 5

possession

Question 6

A wife recorded a declaration of homestead on the community property without the husband’s signature. Which of the following exemptions would the community receive?

Answer 6

$100,000 The law permits the wife to declare a homestead exemption on 1) her separate property 2) the husband’s separate property and 3) the community property - all without the signature or consent of her husband. The “head of the household” exemption is $100,000; for disabled or persons 65 or over, the exemption is $175,000; and for all others $75,000. [Code of Civil Procedure 704]

Question 7

When title to real property, which is encumbered by a deed of trust, is transferred as the result of a sale, it is always necessary to:

Answer 7

have the grantor deliver a deed.

Question 8

The difference between the way an appraiser looks at depreciation and the way an accountant looks at depreciation is

Answer 8

an accountant is interested in book depreciation and an appraiser is interested in actual depreciation.

Question 9

A receipt for a Final Public Report must be kept by the subdivider for

Answer 9

3 years.

Question 10

Which of the following would affect the owner’s ordinary income tax liability of an owner-occupied residence?

Answer 10

Uninsured loss resulting from collapse of a fence caused by high winds.This is not income-producing property; therefore, depreciation (a) and expenses (b) & (d) cannot be deducted on a tax return. Deductions for a principal residence include property taxes, mortgage interest, premiums for PMI, and points paid on the purchase of the home. Choice (c) is correct because the tax code does allow a person to claim tax deductions for household damage caused by thefts, vandalism, fires, floods, hurricanes and others kinds of casualties. There are some restrictions. Relief is available only for uninsured home losses. They must be reduced by any settlements received from the home owner’s or renter’s insurance. Nor is there any write-off for the first $100 of each theft or casualty loss. The major limitation is that total home losses generally are allowable only to the extent they exceed 10% of adjusted gross income.

Question 11

Interim loan =

Answer 11

Construction Loan

Question 12

A Real Estate Syndicate usuallly takes the form of

Answer 12

a limited partnership.

Question 13

Privity would most likely exist in:

Answer 13

Contractional relationships

Question 14

The written instrument used to create land restrictions for the benefit of lot owners in a new subdivision is:

Answer 14

declaration of restrictions.

Question 15

As relating to real estate, a patent is:

Answer 15

a sovereign grant.

Question 16

The Federal National Mortgage Association was created under Title III of the National Housing Act for the purpose of:

Answer 16

buying Title II loans to keep the market sound.

Question 17

Edna is a farmer and needs to raise additional working capital and wishes to encumber her growing crops. If the lending institution is agreeable to this, Edna would be asked to sign a:

Answer 17

financing statement.

Question 18

Another name for a chattel real is

Answer 18

lease.

Question 19

A father needed money to send his son to college. He borrowed enough money from the bank to pay off his existing loan and have enough for his son’s college. Later, he sold his home subject to the first trust deed and took a second trust deed as part of the purchase price. In the event of default on both trust deeds, which of the following is true?

Answer 19

The bank could obtain a deficiency judgment against the father.

Question 20

Recording a deed gives:

Answer 20

public notice.

Question 21

In order to meet the SAFE Act license requirements in California through the Department of Real Estate (DRE), individuals must first:

Answer 21

be issued a California real estate license.

Question 22

The dictate that a sign should not be placed on a property without the owners consent is found in

Answer 22

NAR Professional Code of Ethics.

Question 23

How is a private restriction enforced?

Answer 23

Injunction

Question 24

Speculative value would be approximately the same as:

Answer 24

market value.

Question 25

The seller under a land contract, not recorded, may

Answer 25

not encumber the property in excess of the amount due on the contract.

Question 26

How is title perfected when property is acquired by adverse possession?

Answer 26

By quiet title action

Question 27

For violations of the real estate law, procedure for disciplinary action is set in the

Answer 27

California Code of Regulations

Question 28

The income remaining after cost of labor and management have been paid is called

Answer 28

theory of surplus productivity

Question 29

Bulk transfer is found in the

Answer 29

Uniform Commercial Code

Question 30

Provisions are made in the Real Estate Law whereby a real estate broker may seek reimbursement directly from his principal for expenses incurred by the broker in conjunction with his employment under

Answer 30

Negotiating a loan in which a Broker’s Loan Statement is required

Question 31

In real estate financing, reference is sometimes made to take out loans. This refers to

Answer 31

long term loan taken out after construction

Question 32

Economic obsolescence is said to be extraneous, caused by environmental or economic changes. Of the following, which is a correct statement concerning economic obsolescence?

Answer 32

Value loss due to proximity to a major highway causing noise and traffic hazards will create economic obsolescence

Question 33

All fees charged and collected from the licensing of persons or from the regulation of transactions are placed in the

Answer 33

Real Estate Fund

Question 34

Any real estate licensee is subject to discipline by the Commissioner. Which of the following would be grounds for discipline

Answer 34

Providing for the termination date of an exclusive listing to be 5 days after the close of escrow

Question 35

Deciduous

Answer 35

is not a type of soil or a soil condition.

Question 36

Assume you are a buyer and want to be protected against unrecorded encumbrances in the purchase of real property. You would

Answer 36

obtain a extended coverage policy

Question 37

An appurtenance is

Answer 37

stock in a mutual water company.

Question 38

A buyer must bring a lawsuit for breach of written contract against a seller within:

Answer 38

4 years.

Question 39

Which of the following are synonymous?

Answer 39

Construction loan and interim loan

Question 40

When the state has given permission to a non-riparian rights owner of a farm to use a nearby lake, the owner has received this right by

Answer 40

appropriation. When the State of California gives permission to use nearby water supplies, they appropriate the right to the property owners that have requested the right to use the water.

Question 41

An agreement to sell community property, signed by the husband alone, is

Answer 41

voidable

Question 42

A hostess at an open house who never tells the clients the prices, because all the information is contained in the data sheet she hands each client.

Answer 42

Must have a Real Estate License

Question 43

Tenants, Bob and Lisa Jones, allowed the children from the neighboring back lot to enter a gate in their backyard and travel through to the front yard in order to catch their school bus every weekday. By doing this, what have they created?

Answer 43

An easement. An easement is a right-of-way and can be granted by a tenant as long as it does not conflict the terms of the lease.

Question 44

If an income property is valued at $250,000 using a 6% capitalization rate, how much would an investor pay for the property if he demanded a 10% capitalization rate?

Answer 44

$150,000, $250,000 x 6% = $15,000 annual net income. $15,000 divided by 10% = $150,000. Remember, as capitalization rate goes up, the value goes down.

Question 45

“Depth tables” are used by

Answer 45

appraisers

Question 46

Equivalent to a board foot?

Answer 46

6” x 12” x 2” Any combination of 144 cubic inches = a board foot.

Question 47

Leasehold estates are “chattels real.” They are also a less-than-freehold estate.

Answer 47

Statement of Fact

Question 48

Division 6 of the Uniform Commercial Code pertaining to bulk transfers of goods is for the protection of

Answer 48

creditors.

Question 49

When a tenant voluntarily gives up a lease before the expiration of its term, it is know as surrender. A lease is a combination of both a conveyance and a contract.

Answer 49

Statement of fact

Question 50

A borrower on a new loan is required to advance $412.00 for an impound account. He would do so for the benefit of

Answer 50

the trustor and the beneficiary

Question 51

The maximum length of time for which a valid lease may be written is

Answer 51

99 years on urban property.

Question 52

The type of wood-destroying insect that causes the greatest amount of damage to real property is the:

Answer 52

Subterranean termite.

Question 53

A due-on-sale clause in a promissory note would most likely not be enforced bya lender under:

Answer 53

a deflationary trend which creates more homes for sale than buyers.

Question 54

A lender receiving a mortgage or deed of trust as security for a promissory note would be given the best protection by the

Answer 54

value of the property.

Question 55

An individual has been appointed by a life insurance company to solicity loans on real property which will be secured by first trust deeds on the properties. He will receive a commission for each such loan consummated. Under these circumstances, it will be required that he:

Answer 55

Possess both an active real estate broker’s license and secure a mortgage loan originator endorsement.

Question 56

A lender’s fee required of a buyer to obtain an FHA loan is called an

Answer 56

Application Fee

Question 57

The economic life of an income property is

Answer 57

shorter than its physical life

Question 58

An appraiser, in determining the value of real property, would give consideration to:

Answer 58

(1) The desire of a person for the desired thing, (2) The relationship of the value of the property in exchange for other property, and (3) Effective demand, as evidenced by purchasing power, and relative scarcity

Question 59

An attorney-in-fact under a general power of attorney cannot

Answer 59

deal with his principals property for his own benefit.

Question 60

When using a purchase money deed of trust, the trustor:

Answer 60

signs the promissory note and deed of trust and gives it to the beneficiary.

Question 61

The penalty for a broker who arranges a real estate loan and fails to submit a Mortgage Loan Activity Notification to the DRE in a timely manner must pay:

Answer 61

$50 a day for the first 30 days the report is not filed and $100 per day thereafter

Question 62

Whether an item is a fixture is important when land is bought or sold or when a lease expires. It is a fact that:

Answer 62

an item is permanently attached to real property does not in all cases indicate that the item is a fixture.

Question 63

All of the following would affect a contractor or a sub-contractor in filing a mechanic’s lien:

Answer 63

Notice of Completion, Notice of non-responsibility, and Notice of cessation.

Question 64

A Commercial acre is:

Answer 64

an acre of ground less dedicated streets, alleys, etc.

Question 65

One of the main reasons that condominium projects are to grow in demand in the future is:

Answer 65

land value

Question 66

When tenants in common do not agree on matters pertaining to the property, the remedy would be

Answer 66

a partition action.

Question 67

The California State Housing Act, which contains minimum code requirements, is found in the

Answer 67

Health and Safety Code

Question 68

The Real Estate Commissioner’s Subdivision Final Public Report expires

Answer 68

five years from the date of the issuance of the report.

Question 69

A husband and wife have been searching for a new home. One day when the husband was at work, his wife learns that a new listing has appeared on the MLS. Her agent calls her and urges her to come see it ASAP. She goes to view the property, without her husband, loves the house but cannot reach her husband at work to sign an offer on the home. If the seller accepts the offer, the contract is

Answer 69

Valid.

Question 70

In absence of a will, the separate property of the decedent is divided:

Answer 70

1/3 to surviving spouse and 2/3 to the children

Question 71

The term “functional utility” most nearly means the :

Answer 71

desirability and usefulness of the property are such that it would be easily marketable at the asked price.

Question 72

In respect to deeds, a recorded deed is:

Answer 72

presumed delivered and accepted.

Question 73

The Real Estate Commissioner approves this form used by the Real Estate broker:

Answer 73

Mortgage Loan Disclosure Statement

Question 74

The National organization of African-American Real estate brokers is know as

Answer 74

The National Association of Real Estate Brokers.

Question 75

Economic Obsolescence is

Answer 75

the type of depreciation that is the most difficult to calculate.

Question 76

Recording a deed presumes Delivery

Answer 76

Statement of Fact

Question 77

When the escrow requirements have been met, the escrow agency changes from a dual agency to a separate agency.

Answer 77

Statement of fact.

Question 78

Broker Jones appraised two similar commercial properties. Both were leased on a long term basis. One was a hardware store and the other was a post office. Compared to the hardware store, the cap rate on the post office was lower or higher?

Answer 78

Lower

Question 79

For violations of the real estae law, procedure for disciplinary action is set in the

Answer 79

California Code of Regulations

Question 80

A borrower on a new loan is required to advance $412 for an escrow acct. He would do this for the benefit of

Answer 80

the mortgagee only

Question 81

According to the Department of Real Estate, An Employee best describes the relationship of a salesperson to the broker.

Answer 81

Statement of Fact

Question 82

Slanted boards that support the roof boards and shingles are called

Answer 82

Rafters

Question 83

Economic Obsolescence is the type of depreciation that is most difficult to cure.

Answer 83

Statement of Fact

Question 84

Value per front foot would increase due to a commercial property whose depth is extended beyond that of neighboring lots.

Answer 84

Statement of Fact

Question 85

A licensee listed a property, promising the owner she would advertise the home. The owner relied on the promise of the real estate agent and listed the home because of it. If the agent failed to advertise the property. The agent has committed:

Answer 85

Actual Fraud

Question 86

A telephone company places poles and strings wire across privately owned land. This would be an example of an

Answer 86

encumbrance

Question 87

A solemn declaration by a person whose religious beliefs forbid the taking of an oath is an affirmation.

Answer 87

Statement of Fact

Question 88

TILA as modified by the Mortgage Disclosure Improvement Act, requires waiting period prior to consummation of a transaction. The waiting period is

Answer 88

7 business days from the mailing or delivery of the TIL Statement to the consumer.

Question 89

Mr. Furney is delinquent on his 2006-07 real property taxes. The “sale to the state” took place on his property at the time prescribed by the law. Mr. Furney took steps in 2008 to pay his delinquent taxes. The proper procedure for Fr. Furney to redeem his property is to

Answer 89

Make the payment, then receive and record a comptroller’s receipt because the redemption period still applies.

Question 90

“CRV” is a common phrase used in the financing of real estate. The CRV is issued by the

Answer 90

Veterans Administration

Question 91

Wills play a very important part in the transfer of title to real property. These are all parties to a will:

Answer 91

Testator, Executor, and Devisee

Question 92

Title is perfected when property is acquired by adverse possession

Answer 92

Quiet title action

Question 93

Financing statements are to be filed with the

Answer 93

Secretary of State