exam 2 questions

Question 1

Mrs. Smith held a life estate in a single-family residence. The estate was based upon her own life. She leased the residence to Mr. Jones for a five-year period, but died a few weeks after the lease began. The lease was:

Answer 1

Valid only during the life of the lessor;

Question 2

not a characteristic of a fee simple title:

Answer 2

It is real encumbrances;

Question 3

rights of ownership in real property do individuals normally not have:

Answer 3

Eminent domain rights;

Question 4

As used in real property law, which of the following is most nearly correct as a meaning for the word “tenancy”:

Answer 4

The mode or method of holding title to real property by a lessee or owner;

Question 5

When a broker hires a salesperson under a valid independent contractor agreement, which of the following is correct:

Answer 5

Broker may be held liable for the salesperson’s conduct in a real estate transaction;

Question 6

What is the meaning of a quiet title action:

Answer 6

Court action to remove a cloud on the title.

Question 7

Which of the following is regarded as a personal property interest:

Answer 7

Leasehold estates in real property;

Question 8

When the state has given permission to a nonriparian owner of a farm to use a nearby lake, the owner has received this right by:

Answer 8

Appropriation.

Question 9

the inability of a corporation to qualify as a joint tenant in the ownership of property is due to the fact that:

Answer 9

It has perpetual existence;

Question 10

If a lien has been created by court action, and it covers all properties of the debtor in that county where it is recorded, it is known as a:

Answer 10

General lien;

Question 11

A husband, who owns separate property, dies without a will. Concerning that separate property, it would be distributed in which of the following ways:

Answer 11

One-third to wife and two-thirds to more than one child;

Question 12

Title to real property can be acquired by an individual by all of the following methods, except:

Answer 12

Escheat.

Question 13

When a governmental body takes private real property for necessary public use, certain legal processes must be followed. Such a taking is an exercise of the right of:

Answer 13

Eminent domain;

Question 14

Accretion would result in the acquisition of title to real land by which of the following:

Answer 14

An owner who acquired land by natural causes;

Question 15

An easement may be acquired by prescription in a manner similar to acquisition of land by:

Answer 15

Adverse possession;

Question 16

Governmental land use, planning, and zoning are important examples of:

Answer 16

Police power;

Question 17

Which of the following would cause a grant deed to be invalid at its inception

Answer 17

Legal incompetence of the grantor;

Question 18

Smith executes a deed to Brown and records it. Later, Smith seeks to set the conveyance aside, claiming that there had been no delivery to Brown. Why will he probably be unsuccessful in his effort:

Answer 18

Delivery is presumed with recording;

Question 19

Which of the following would be most advantageous to a seller who sells a parcel of real property by using a conditional sales contract instead of using a grant deed and carrying back a first trust deed:

Answer 19

The seller retains legal ownership of the property until the buyer makes the final payment;

Question 20

Which of the following would be least necessary for a valid deed:

Answer 20

Acknowledgment;

Question 21

Which of the following would be the best and most complete definition of the term “encumbrance”:

Answer 21

Anything which affects or limits the fee simple title to property.

Question 22

Which of the following statements, if any, is correct concerning the relationship between an effective interest rate and a nominal interest rate:

Answer 22

The effective interest rate is the rate actually paid by the borrower for the use of the money; the nominal interest rate is the rate specified in the note;

Question 23

A lien may be created by recording:

Answer 23

A mortgage;

Question 24

When a real estate licensee advertises properties on the Internet (world wide web), which of the following best describes the licensee’s responsibilities:

Answer 24

The licensee must exercise proper supervision over any non-licensee who responds to inquiries.

Question 25

The conscious charging by a private lender of more than the maximum amount of interest allowed by law is known as:

Answer 25

Usury;

Question 26

A straight note:

Answer 26

May be used in a real estate transaction; Is a note providing that the principal owing is to be paid at one time; May be secured by a mortgage;

Question 27

An acquired legal privilege for the right of use or enjoyment, short of an estate, which one may have in the land of another is known as:

Answer 27

An easement;

Question 28

When loaning money to two or more co-borrowers on a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the co-borrowers:

Answer 28

Jointly and severally.

Question 29

When acquiring an easement, which of the following methods would create an easement that could be most easily terminated for nonuse:

Answer 29

Prescription;

Question 30

Which of the following is true concerning promissory notes:

Answer 30

They are the evidence of the debt.

Question 31

Cassidy purchased one of 30 lots in a subdivision and signed a sales contract which stated, “No purchaser of a lot in this subdivision shall erect a ‘for sale’ sign on his lot until all of the lots owned by the subdivider are sold.” If Cassidy wants to sell his lot before the subdivider has sold all of his lots, he may:

Answer 31

Erect a ‘for sale’ sign of reasonable dimensions because the statement in the sales contract is declared by law to be void;

Question 32

After Mr. Gardner purchased his home, he discovered, by survey, that his neighbor’s garage was three feet over on his newly acquired property. This disturbed him greatly. For remedy, if a friendly settlement cannot be reached, he should bring civil suit against:

Answer 32

His neighbor;

Question 33

Which of the following is the purpose of the Federal Truth-in-Lending Act:

Answer 33

To provide consumers information concerning the cost of credit;

Question 34

A broker’s unlicensed assistant prepares a newspaper ad. According to the Business and Professions Code, which of the following is most correct:

Answer 34

The broker is required to read the entire advertisement prior to publication;

Question 35

The right to foreclose a trust deed, under a trustee’s power of sale, outlaws:

Answer 35

Never

Question 36

Unpaid real property taxes constitute a lien:

Answer 36

Prior to a mortgage lien;

Question 37

Most lenders, when they are deciding whether or not to make a proposed real estate loan, try to minimize the:

Answer 37

Chance of a substandard loan becoming a part of their portfolio;

Question 38

The gross rent multiplier is arrived at by dividing:

Answer 38

Sales price by gross monthly rental;

Question 39

Property is being sold whereby the purchaser is to continue the payments of an existing amortized loan secured by a first mortgage. In order for the buyer to assume the existing mortgage without penalty, the real estate agent should check to be sure the mortgage does not include:

Answer 39

An acceleration clause;

Question 40

When imposing restrictions on a new large subdivision, the procedure normally used is:

Answer 40

To record them with the county recorder, with adequate reference made thereto in the deed to each parcel.

Question 41

When comparing a straight note with an installment note, the straight note:

Answer 41

Will have no principal payments during the term of the loan except on the last payment;

Question 42

If the trust account contains trust funds belonging to more than one beneficiary, the broker may not disburse any funds without the prior written consent of every principal who has funds in the account:

Answer 42

If such disbursal will reduce the balance of the total funds in the account to an amount less than the various owners have on deposit;

Question 43

A title company could make a title search by searching the records of the:

Answer 43

County clerk’s office;
County recorder’s office;
Federal land office

Question 44

A standard policy of title insurance protects the insured against:

Answer 44

Lack of capacity of a party to any transaction involving title to the land;

Question 45

In making the decision of whether or not to issue a title policy, the title insurance company would be most concerned with those documents that appear within the:

Answer 45

Chain of title;

Question 46

Jesse, an unlicensed employee of a real estate broker, hands out door-hanger flyers and makes telephone solicitations, seeking buyers and sellers. Under the real estate law, his activities are:

Answer 46

Unlawful for both Jesse and the employing broker.

Question 47

Typically, when leasing real property, the commission of the leasing agent is based upon a percentage of:

Answer 47

Total rent collected over the term of the lease;

Question 48

Most buyers of real property receive which of the following types of policies of title insurance:

Answer 48

A standard policy;

Question 49

A real estate agent may legally represent all principals in the same transaction if:

Answer 49

He has informed all principals that he is the agent for each principal;
He has obtained consent of all to this agency relationship;
He is collecting commission from each principal with the knowledge of the others;

Question 50

it is proper business practice for real property managers to be compensated in all of the following ways,

Answer 50

Percentage of gross receipts;
Commission on new leases;
Commission on major repairs or alterations;

Question 51

When making a loan, amortization tables are used in order to determine the:

Answer 51

Monthly payment;

Question 52

Under the provisions of the Federal Fair Housing Law (Title VIII of the Civil Rights Act of 1968), persons complaining of discrimination in housing are permitted an election of which of the following ac

Answer 52

A civil action in federal courts;
A civil action in state or local courts;
A complaint with HUD;

Question 53

A broker presented an offer to a seller which met the terms of the listing from a financially-qualified black person. Later, his salesperson presented the seller an offer at a lower price from white prospects. The seller did not accept either offer, but instead, sold the property to a neighbor through the same salesperson. The neighbor wanted to buy the property so as to prevent a minority person moving into the neighborhood. Which of the following parties has not violated the Civil Rights Act of 1968?

Answer 53

White prospects;

Question 54

Discrimination in the sale or rental of residential housing accommodations based on sex, marital status, color, religion, race or national origin of the prospective tenant or buyer, is:

Answer 54

Unenforceable;
Illegal;
Contrary to public policy;

Question 55

When Williams subdivided a 40-acre parcel of land into 65 lots in 1955, he included the following in every deed: “The ownership, use, and/or occupancy of this property is limited to persons of the Caucasian race.” This deed restriction is:

Answer 55

Unenforceable because it violates the U.S. Constitution;

Question 56

The stated policy of the Real Estate Commissioner is to create a “color blind” industry which can help society obtain voluntary, peaceful, equal opportunities in fair housing. What does this mean:

Answer 56

Maintain an attitude that is absolutely free from bias and “color blind”;
That race, creed, or color is not a material fact in a real estate transaction;
Do unto others as you would have them do unto you;

Question 57

Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, sex, national origin, or ancestry:

Answer 57

Department of Fair Employment and Housing;

Question 58

If a broker presents an offer to purchase real property for the listed price from a ready, willing, and able black buyer, and the offer is refused by the seller because of the buyer’s race, the broker may:

Answer 58

Sue the seller for his commission;
Advise the black buyer of his right to complain to the United States Department of Housing and Urban Development;
Warn the seller that his refusal is a violation of the Fair Housing Act of 1968;

Question 59

A dress factory is being built in an area. It will employ mostly women. The owner of a real estate office told his employees to do the following: [1] direct their advertising to appeal to women who are married and have no children; [2] charge more rent to certain ethnic and religious groups than to others. Which of these instructions is in violation of the Fair Housing Laws:

Answer 59

C: Both [1] and [2];

Question 60

A licensed real estate broker may legally negotiate the sale of:

Answer 60

Any registered mobile home;

Question 61

Broker Knorr advertised in the newspaper that anyone who bought a property listed with the broker would receive a free microwave oven valued at $500. Such action is:

Answer 61

Legal, provided full disclosure is made to all interested parties;

Question 62

If a listing to sell a mobile home expires and is not extended or renewed, how long does the broker have to remove all yard signs and stop all advertising of the mobile home:

Answer 62

He has 48 hours from the termination;

Question 63

According to the Seller Transfer Disclosure Act, a broker can:

Answer 63

Visually inspect the property and reveal pertinent information;

Question 64

The Federal Truth-in-Lending Law (Regulation Z) gives the borrower a 3-day right of rescission when the loan is:

Answer 64

A loan secured by a second deed of trust on owner-occupied single-family residence when the money is borrowed subsequent to the purchase;

Question 65

When the real estate market changes from a buyer’s market to a seller’s market, which of the following results could naturally be expected:

Answer 65

Prices would rise because of the increased demand and lagging supply.

Question 66

A lender who refers to a loan as “seasoned” is referring to the:

Answer 66

Record of consistent payments on the loan.

Question 67

When a real estate licensee negotiates the sale of a mobile home in California, written notice of transfer must be provided to the Department of Housing and Community Development within:

Answer 67

10 calendar days.

Question 68

An acknowledgment may be taken by a notary public who is:

Answer 68

An employee of a corporation who has executed an instrument being acknowledged, if he is not personally interested;

Question 69

Life insurance companies, not willing to deal directly with mortgagors/ trustors, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through:

Answer 69

Mortgage companies;

Question 70

In computing the unspecified maturity date on a construction loan, the time for repayment of the loan starts running:

Answer 70

From the date of the note;

Question 71

If an owner wanted to sell his property, extending credit himself, and retain the legal title, the instrument used would be:

Answer 71

A real property installment/conditional sales contract;

Question 72

Smith sold a home to Jones on a land contract and recorded the contract. Jones made a $25 down payment and after the sale, made a few of the required monthly payments. One night Jones moved out and abandoned the house. Which of the following is true?

Answer 72

There is a cloud on the title;

Question 73

Under the Federal Truth-in-Lending Law, the cost of credit on certain loans is expressed as:

Answer 73

An annual percentage rate;

Question 74

A federal RESPA booklet and disclosures must be given a borrower by a real estate licensee when the federally-related loan is a first lien and the money is used to:

Answer 74

Purchase one-to-four residential units;

Question 75

When a real estate licensee fails to renew a license before it expires, the licensee:

Answer 75

Has two years from the expiration to renew by paying a late fee, but will not be required to take the state exam again.

Question 76

In order to secure an FHA loan, a new buyer would normally do all of the following, except:

Answer 76

Apply to the nearest office of the FHA for an appraisal;

Question 77

When property is being purchased under the California Veterans Farm and Home Purchase Plan, title is held by the:

Answer 77

Department of Veteran’s Affairs.

Question 78

When a real estate agent acts exclusively as a buyer’s agent, he can:

Answer 78

Present offers to the seller and seller’s agent;

Question 79

Which of the following closing costs would be classified as a recurring cost:

Answer 79

Impound account items.

Question 80

A contract between the seller of real property and a licensee, whereby the seller agrees to pay the licensee a commission if he produces a “ready, willing, and able” buyer and the licensee agrees to use due diligence in procuring the buyer, is called:

Answer 80

A bilateral executory contract;

Question 81

Hawkins wanted to purchase 200 acres of land for future subdivision, but did not have the necessary $65,000 cash. He persuaded his friend, Warner, to pay the $65,000 and purchase the land, and Warner then immediately signed a land contract for sale of the property to Hawkins for $88,000. This transaction would be:

Answer 81

A valid purchase and resale.

Question 82

If a broker is an agent of a seller, he owes to the buyer:

Answer 82

A duty of fair and honest dealing.

Question 83

If two parties want to create an enforceable broker-principal relationship concerning a right, title, or interest in real property, the most essential element to do so would be:

Answer 83

A written employment contract;

Question 84

Broker Jones had a listing to sell seller Smith’s house. Broker Jones received an offer on the house and presented it to seller Smith who hesitated in accepting the offer. The broker promised Smith verbally to find Smith another suitable residence before escrow closed. On the basis of that, the seller accepted the offer. If broker Jones failed to perform during the time period, which of the following is most nearly correct?

Answer 84

Seller Smith could initiate a civil suit and the broker would be responsible for damages;

Question 85

Escrow instructions can be executed by:

Answer 85

The buyers;
The sellers;
Third parties;

Question 86

A broker who solicits and accepts a deposit on the purchase price of a parcel of real property without express written authorization from the owner to sell the property, is:

Answer 86

Acting as agent for the buyer and not the seller.

Question 87

Broker Sullivan delivered an offer to purchase real property to Owner Mercer at 11 a.m. on Monday. Mercer asked for 24 hours to consider the offer. At 7 p.m. that same day, Broker Sullivan received two additional offers from different buyers through one of the broker’s salespersons. Sullivan firmly believes the owner will reject all three offers. In order to comply with the law, Sullivan must:

Answer 87

Simultaneously present the two additional offers to the owner as soon as the owner is available;

Question 88

Seller Smith employed Broker Jones under an open listing. While Broker Jones was discussing Smith’s property with Prospective Buyer Ford, the broker indicated that the roof was in good condition and did not leak. In fact, Seller Smith had instructed Broker Jones to explain to all prospective buyers that the roof was old and would have to be replaced. After purchasing the property, Buyer Thomas discovered a severe leak in the roof. The buyer, seeking relief, would most logically sue:

Answer 88

The seller and the broker, for damages and fraud.

Question 89

If a real estate licensee misrepresents a property to a buyer while he is acting as an agent, he may subject himself to:

Answer 89

Disciplinary action by the licensing authority;
Civil action;
Criminal action;

Question 90

Broker Hays took a 90-day exclusive agency listing to sell a property that was owned by Wilson. After 30 days, Hays had not sold the property, so Wilson sent him a certified mail letter canceling the listing. One week later Wilson listed the property with several brokers using open listings. Two weeks later, one of the brokers who had an open listing on the property completed a sale to new owners. In this situation Wilson most likely:

Answer 90

Is liable for payment of commission to Hays as well as to the selling broker.

Question 91

A real estate licensee submits a license renewal application, but his name is on a list of obligors who have not complied with a court-ordered payment of child support. Which of the following is most nearly correct:

Answer 91

A temporary renewal will be issued, but the licensee must pay the delinquent amount within 150 days;

Question 92

Broker Smith took a listing on commercial acreage and also received the right to purchase the property within 30 days. On the 28th day of the listing, the broker decided to buy the property. Before buying the property, he must:

Answer 92

Disclose any outstanding offers;
Give the owner any material information;
Obtain written consent from the owner which acknowledges any profit or anticipated profit;

Question 93

A man is buying a residence. After signing a valid agreement for sale, he asks the broker for permission to move into the property before the sale closes. The broker should:

Answer 93

Obtain written consent from the owner.

Question 94

A buyer made an offer on a property but refused to give a $500 deposit to the broker, as specified in the listing. He agreed to give the broker $500 as deposit as soon as the seller accepted the offer. Which of the following should be written in the form:

Answer 94

Buyer agrees to deposit $500 cash with the broker immediately upon seller’s acceptance;

Question 95

When depreciation is taken on real property:

Answer 95

The basis is reduced;

Question 96

The buyers made an offer on the exact terms of the listing contract on February 1, with the condition that the offer be accepted within 72 hours. The broker was unable to contact the sellers until February 6. When the sellers accepted the offer, the broker promptly notified the buyers. The buyers told the broker that they had changed their minds and did not want to purchase the property. The buyers demanded the return of their deposit:

Answer 96

The buyers have grounds to demand the return of their deposit;

Question 97

Under the present method of establishing federal income tax rates, the rate:

Answer 97

Increases as the amount to be taxed increases;

Question 98

In determining gain or loss on real property acquired by purchase, for federal income tax purposes, the term “unadjusted basis” most nearly means:

Answer 98

Original cost;

Question 99

The annual property taxes an owner of a home must pay are determined by:

Answer 99

Assessing the land and improvements separately, then multiplying the total by one tax rate;

Question 100

Under the Subdivision Map Act, subdivision reports must be filed with the:

Answer 100

City or county where the land is located;

Question 101

Mr. Jones, in order to comply with the regulations of the state Housing Law, should seek the issuance of a building permit from:

Answer 101

The local building department;

Question 102

In a city or county, compliance with the state Housing Act is usually enforced by:

Answer 102

Building inspector.

Question 103

Mr. James sold Blackacre to Mr. Woods. Before he sold it, Blackacre had an appurtenant easement across Whiteacre, which was owned by Mr. Sommers. When Mr. Woods tried to use the easement, Mr. Sommers protested. Which of the following is correct?

Answer 103

Mr. Sommers owns the servient tenement and must allow Mr. Woods to use the easement;

Question 104

Basic regulation of the housing and construction industries is accomplished by:

Answer 104

State Housing Act;
Local building codes;
The state Contractor’s License Law;

Question 105

Any advance fee contract used in connection with a real estate or business opportunity listing must include all of the following except:

Answer 105

A guarantee that the sale, lease or exchange will be completed;

Question 106

Which of the following, if present in the formation of a contract, would not make a contract voidable:

Answer 106

Illegal purpose;

Question 107

When a lender loans a borrower 100% of the purchase price of a house, and the loan is not government-related, the lender would be best protected by:

Answer 107

Appreciation;

Question 108

Which of the following would be an illustration of the government’s police power:

Answer 108

The enactment of zoning laws limiting the use which may be made of a parcel of real property.

Question 109

A voidable contract remains binding upon the parties until the contract is:

Answer 109

Rescinded;

Question 110

A developer, to avoid discrimination, instructed his sales staff to: (1) Give special preference to woman who want to purchase; and (2) Set aside the same number of homes for each ethnic group (Asian, Hispanic, African-Americans). Which answer best describes these policies:

Answer 110

Both policies are discriminatory, and therefore illegal.

Question 111

Under the Alquist-Priolo Special Studies Act a subdivider would be required to disclose to potential purchasers:

Answer 111

Earthquake fault lines;

Question 112

Which of the following is the legal method that a city uses to implement its general plan?

Answer 112

Zoning;

Question 113

One-half of a standard township would contain how many square miles:

Answer 113

18;

Question 114

As used in most deeds of trust, the term default refers to:

Answer 114

Use of the property for an illegal purpose or activity;
The refusal of the borrower to see that the property is adequately maintained;
Delinquent loan payments;

Question 115

When a borrower has defaulted on a loan, and the lender chooses judicial foreclosure, the mortgagor is given a specified period of time to redeem the property. During this redemption period, the right of possession of the property is held by the:

Answer 115

Mortgagor.

Question 116

Of the following, which would have priority (would be a superior lien):

Answer 116

A 1911 Street Improvement assessment lien (bond);

Question 117

When ordinary repairs are made to the broken equipment in a building, such repairs are appropriately classified as:

Answer 117

Corrective maintenance;

Question 118

The effectiveness of the market data approach of appraising would be limited most by which of the following?

Answer 118

Economic conditions that rapidly change;

Question 119

Ms. Rodriguez received a loan application from her lender that asked her to specify her marital status and ethnic background. Legally, she can:

Answer 119

Refuse to fill out that portion of the loan application;

Question 120

An owner of a 20-unit apartment house is considering installing a swimming pool and asks an appraiser for his opinion. The appraiser’s opinion would be based on the principle of:

Answer 120

Contribution;

Question 121

In deciding whether or not to make a specific home loan, a lender would consider which of the following factors most important:

Answer 121

The degree of risk;

Question 122

When an appraiser relies on the principle of substitution, he assumes that one property may be substituted for another in terms of:

Answer 122

Income;
Use;
Structural design;

Question 123

An appraiser who does not use generally accepted appraisal methods in order to influence an FSLIC or FDIC insured lender may be guilty of:

Answer 123

A felony.

Question 124

The quantity survey method, unit-in-place method, and the square foot/cubic foot methods in real estate appraisal most directly relate to:

Answer 124

The cost approach;

Question 125

According to a certain contract, the buyer will be taking the property subject to the existing loan. “Subject to” most nearly means

Answer 125

The buyer will not be personally liable for the loan.

Question 126

In income-producing property valued by the capitalization approach, if the property taxes increase and all else remains equal, the property value will:

Answer 126

Decrease more than the amount of the annual tax increase;

Question 127

In regard to the capitalization rate:

Answer 127

As it increases, value of property decreases;

Question 128

In appraising, which method places the greatest emphasis on the present worth of future benefits to be received by the owner:

Answer 128

Income.

Question 129

Insofar as real property is concerned, the major cause of loss of value is due to:

Answer 129

Obsolescence;

Question 130

Functional obsolescence might be attributed to each of the following except:

Answer 130

The proximity of obnoxious nuisances;

Question 131

If a roof slopes on all four sides, it is called a:

Answer 131

Hip roof;

Question 132

When an air conditioning unit has a higher energy efficiency ratio (EER), it means that:

Answer 132

The unit is more efficient;

Question 133

Which of the following is the name of sheet metal which is used to protect a building from water seepage?

Answer 133

Flashing;

Question 134

A “FICO” score is normally used for which of the following:

Answer 134

Reporting the credit history for a prospective borrower.

Question 135

The term “security interest” is best defined as:

Answer 135

The creditor’s interest in the debtor’s property;

Question 136

When obtaining a mortgage loan, the buyer often has to pay discount points. Those points are a percentage of:

Answer 136

The loan amount;

Question 137

A trust deed note taken by a state savings and loan association on a single-family owner-occupied residence could be prepaid without penalty:

Answer 137

If the loan is more than 7 years old;

Question 138

Which of the following would impair the security of a trust deed recorded on real property:

Answer 138

The trust deed is recorded after a work of improvement was commenced and a mechanic’s lien is recorded on the work;

Question 139

Which of the following would be true about a lis pendens:

Answer 139

It may affect title to real property based on the results of the lawsuit;

Question 140

In appraising real property by the market data approach, the appraiser often takes into account certain non-property characteristics of the two properties. All of the following would be considered a non-property characteristic, except:

Answer 140

The location and size of the parcel;