EXAM SAMPLE TEST - 2021 PSI GUIDE Flashcards
A farmer temporarily installs produce coolers in a leased farm stand in order to prevent spoilage. The coolers would be considered which of the following?
a. Trade fixtures that are real property.
b. Trade fixtures that are personal property.
c. Temporary real property.
d. Emblements.
b. Trade fixtures that are personal property.
Property can be converted from real to personal property and from personal property to real property by means of which processes, respectively?
a. Assemblage and plottage.
b. Application and dissolution.
c. Severance and affixing.
d. Planting and harvesting.
c. Severance and affixing.
The highest form of ownership interest one can acquire in real estate is the
a. legal life estate.
b. conventional life estate.
c. defeasible fee simple estate.
d. absolute fee simple estate.
d. absolute fee simple estate.
The distinguishing feature of a defeasible fee simple estate is that
a. it can be passed on to heirs.
b. it has no restrictions on use.
c. the estate may revert to a grantor or heirs if the prescribed use changes.
d. it is of unlimited duration.
c. the estate may revert to a grantor or heirs if the prescribed use changes.
Maria acquires a property from her uncle Alfonso. When Maria dies, the estate will pass to Alfonso’s other niece, Serena. The type of estate that Maria has in the property is a
a. conventional life estate.
b. legal life estate.
c. fee simple defeasible estate.
d. tenancy by the entireties.
a. conventional life estate.
One difference between a cooperative estate and a condominium estate is that
a. a condominium owner owns a unit of air space whereas the co-op owner owns a proprietary lease.
b. a condominium sale adversely affects other unit owners.
c. the coop owner owns stock and a freehold real estate interest whereas the condominium owner simply a proprietary lease.
d. the condominium owner owns the common elements and the airspace whereas the coop owner only owns the apartment.
a. a condominium owner owns a unit of air space whereas the co-op owner owns a proprietary lease.
Who are the essential parties involved in an estate in trust?
a. Owner, trustor and lawyer.
b. Owner, trustor and trustee.
c. Trustee, title company, and beneficiary.
d. Trustor, trustee and beneficiary.
d. Trustor, trustee and beneficiary.
A condominium owner enjoys a
a. share in an association that owns one’s apartment.
b. tenancy in common interest in airspace and common areas of the property.
c. fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.
d. fee simple ownership of a pro rata share of the entire property.
c. fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.
With various types of junior liens, the order of payment priority is generally established according to
a. the date of recordation.
b. what form of tax is in question.
c. the order of disbursement.
d. whether the lien was subordinated.
a. the date of recordation.
What is a lien-theory state in contrast to a title-theory state?
a. A state in which liens are given priority over other encumbrances.
b. A state in which a mortgagor retains title to the property when a mortgage lien is created.
c. A state in which the holder of a mortgage lien receives title to the mortgaged property until the debt is satisfied.
d. A state in which liens must be recorded to be enforceable.
b. A state in which a mortgagor retains title to the property when a mortgage lien is created.
A property owner has an easement appurtenant on her property. One day the property is sold to another party who is opposed to the easement. Following the closing, this particular form of easement
a. terminates.
b. transfers with the property.
c. transfers with the owner to a new property.
d. becomes a license on the property.
b. transfers with the property.
What fundamental legal purpose is fulfilled by title records?
a. Keeping the county apprised of tax payments.
b. Preventing identity theft.
c. Giving constructive notice of one’s rights and interests in the property.
d. Assembling all relevant documents in a single place.
c. Giving constructive notice of one’s rights and interests in the property.
What is “chain of title?”
a. The list of all parties who have ever owned real estate.
b. The bundle of rights linked to the recorded title to a parcel.
c. A chronology of successive owners of record of a parcel of real estate.
d. Involuntary conveyance of title by statutory rules of descent.
c. A chronology of successive owners of record of a parcel of real estate.
Which of the following provides the strongest evidence of marketable title?
a. A general warranty deed.
b. A title certificate.
c. Title insurance.
d. An attorney’s opinion.
c. Title insurance.
A store owner enters into a lease that charges rent per square foot, a common area fee, and a portion of the store owner’s gross income from the property. This kind of lease is a
a. triple charge, or triple net lease.
b. proprietors lease.
c. percentage lease.
d. retailer’s gross lease.
c. percentage lease.
An owner leases a property to a business in exchange for rent. The tenant is required to pay all operating expenses as well. This is an example of a
a. proprietary lease.
b. percentage lease.
c. gross lease.
d. net lease.
d. net lease.
A lease automatically terminates under which of the following circumstances?
a. The tenant fails to pay rent.
b. The leased property is foreclosed.
c. The tenant goes out of business.
d. The landlord cancels the lease.
b. The leased property is foreclosed.
A county or municipal authority usually grants a certificate of occupancy for new construction only after
a. all contractors’ work has been inspected.
b. all work has been completed for at least sixty days.
c. the construction conforms to building codes.
d. the tax assessor has valued the improvement.
c. the construction conforms to building codes.
A property owner is precluded by deed restriction from developing a thirty foot boat dock. The limitation prompts the owner to sell to another party. The new owner
a. is free to build the dock since the next door a. neighbor built a similar dock two weeks later.
b. takes title subject to the same restriction.
c. can build the dock with special permission from the zoning board.
d. may build, since the restriction is extinguished by the sale.
b. takes title subject to the same restriction.
Emily sells Rycole a property containing a deed condition. The condition stipulates that the forested portion of the property must never be razed for development. Three months later, Rycole proceeds to harvest the trees and turn the area into an executive golf course. What recourse, if any, does Emily have under the deed condition?
a. She has the right to re-possess the property because the grantee has violated the condition.
b. The condition has ceased to apply because she allowed the violation to continue for a certain
period of time.
c. She can claim the proceeds from the harvested trees.
d. She can force Rycole to sell the property to a new owner who agrees to comply with the
condition.
a. She has the right to re-possess the property because the grantee has violated the condition.
What is the essential purpose of legal descriptions of real property?
a. To create a consistent, unchanging standard for uniquely locating a property.
b. To enable courts and attorneys to calculate property size accurately.
c. To comply with common law for real property.
d. To eliminate cumbersome metes and bounds descriptions.
a. To create a consistent, unchanging standard for uniquely locating a property.
Which of the following characterizes metes and bounds descriptions?
a. They use meridians and base lines.
b. They identify an enclosed area, beginning and ending at the same point.
c. They use lot and block numbers.
d. They incorporate elevation into the descriptions
b. They identify an enclosed area, beginning and ending at the same point.
A buyer agrees to all terms of a seller’s offer except the length of time for a contingency to procure financing. The buyer extends the financing period in the offer by one week, signs the form, and mails it back to the seller. At this point, the seller’s offer
a. is void.
b. becomes an executory contract.
c. becomes a counteroffer.
d. has been accepted, since the modification was a contingency.
a. is void.
Real estate contracts that are not personal service contracts
a. may be assigned.
b. are not assignable.
c. must be in writing.
d. are exempt from the statute of frauds
a. may be assigned.
Which of the following contracts must be in writing to be enforceable?
a. A parol contract.
b. A six-month lease.
c. A two-year lease.
d. An executory contract
c. A two-year lease.
Agent Bob, who works for Broker Bill, obtains an owner listing to lease a building. Bill’s other agent, Sue, locates a tenant for Bob’s listing. Broker Bill in this instance is
a. an implied agent.
b. a dual agent.
c. a single agent.
d. a subagent.
b. a dual agent.
A transaction broker should disclose his or her agency relationship to prospective buyers and sellers
a. upon first substantive communication.
b. upon completion of the listing agreement.
c. immediately following completion of any offer.
d. immediately prior to closing
a. upon first substantive communication.
A transaction facilitator in a residential transaction represents
a. the seller.
b. the buyer.
c. both seller and buyer.
d. neither seller nor buyer
d. neither seller nor buyer
A principal instructs an agent to inform minority buyers that the property for lease was just leased an hour ago and is no longer available. The agent refuses to comply. In this case,
a. the agent should exercise caution until the listing expires, then decline to renew it.
b. the principal has proposed an illegal act, which should not be obeyed.
c. the agent is liable for breaching the listing terms.
d. the agent may sue the principal for discrimination and misrepresentation.
b. the principal has proposed an illegal act, which should not be obeyed.
The amount of a real estate broker’s commission is established by
a. agreement among competing brokers.
b. negotiation with clients.
c. the local Board of Realtors®.
d. state real estate license law
b. negotiation with clients.
A client revokes an exclusive right-to-sell listing two months prior to expiration. The reason stated: the client is too busy to meet with the agent. In this case,
a. the client is criminally liable for negligence.
b. the client may be liable for a commission and marketing expenses.
c. the agent can sue the client for specific performance, even if no customer had been located.
d. the agent must accept the revocation without the possibility of damage recovery.
b. the client may be liable for a commission and marketing expenses.
A protection period clause in an exclusive listing provides that
a. the owner is protected from all liabilities arising from the agent’s actions performed within the agent’s scope of duties.
b. the agent has a claim to a commission if the owner sells or leases to a party within a certain time following the listing’s expiration.
c. agents are entitled to extend a listing agreement’s term if a transaction is imminent.
d. an owner is not liable for a commission if a prospective customer delays in completing an acceptable offer.
b. the agent has a claim to a commission if the owner sells or leases to a party within a certain time following the listing’s expiration.
Real estate advertising must conform to regulatory standards and requirements. One requirement is
a. a broker may only place blind ads in social media outlets.
b. a broker must have all advertising approved by the local real estate board.
c. the advertising must not be deceptive.
d. sales agents may only advertise in their own name.
c. the advertising must not be deceptive.
The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor currently in practice. This is an example of
a. collusion.
b. price fixing.
c. allocation of markets.
d. steering
a. collusion.
Two leading agencies jointly agree to raise commissions charged to residential sellers to 7.5% of the sales price. Which of the following is true?
a. This is a perfectly legitimate business practice.
b. The brokers have illegally fixed prices.
c. The brokers have allocated markets.
d. The brokers have engaged in legal collusion
b. The brokers have illegally fixed prices.
A sale contract contains an open-ended financing contingency: if the buyer cannot obtain financing within a reasonable time, the deal is off. Six months later, the buyer still cannot secure financing. Which of the following is true?
a. The seller may cancel the contract, since it can be ruled invalid.
b. The buyer can continue indefinitely to seek financing, and the seller’s property must remain off the market, since “reasonable” is not defined.
c. The escrow agent is entitled to the buyer’s deposit.
d. The seller can force a lender to commit to a loan under fair financing laws
a. The seller may cancel the contract, since it can be ruled invalid.
In the event of a buyer’s default, a provision for liquidated damages in a sale contract enables a seller to
a. sue the buyer for specific performance.
b. force the buyer to quitclaim equitable title.
c. sue the buyer for the broker’s marketing expenses.
d. claim the deposit as compensated damages for the buyer’s failure to perform.
d. claim the deposit as compensated damages for the buyer’s failure to perform.
Which of the following is true of an option-to-buy agreement?
a. The potential buyer, the optionee, is obligated to buy the property once the option agreement is completed.
b. The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.
c. The contract can be executed at no cost to the optionee.
d. It is a bilateral agreement.
b. The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.
If a manufacturer that is the major employer in a small city moves its operations to another city, it is reasonable to expect
a. a fall in housing demand, but no other changes in the real estate market.
b. a decline in demand for all types of real estate in the real estate market.
c. an immediate fall in the demand for industrial real estate, but no other changes in the real estate market.
d. an immediate decline in the prices for industrial and office real estate, but no impact on the residential market.
b. a decline in demand for all types of real estate in the real estate market.
If a commercial real estate market is undersupplied, it is likely that
a. rental prices in that market will fall.
b. rental prices in that market will rise.
c. rental prices will remain stable until equilibrium is reached.
d. construction will increase to the point of equilibrium.
b. rental prices in that market will rise.
