Final Exam Flashcards
Evelyn and her boyfriend, Noah, are getting married, and are looking to purchase a new home. They have asked you as their real estate licensee for advice on how to take title. What advice can you give them regarding on how they should take title?
A. As tenants in common, so that each would have a one-half interest
B. Suggest they speak to your supervising broker
C. Suggest they speak to an attorney
D. As joint tenants, so if one of them dies the other will get the property
C. Real estate licensees cannot give legal advice such as how to take title.
An appraisal would most likely be used in all of the following transactions or situations EXCEPT:
A. subletting an apartment unit
B. selling or refinancing a property
C. establishing property taxes or when applying for property insurance
D. originating a mortgage or home equity loan
A. Value does not need to be established in order to sublet an apartment unit.
A listing agent has an accepted offer to purchase on a listing. Another offer is being written and the buyer wants information about the existing offer. What information can the listing agent share with the second buyer?
A. The seller is looking for secondary offers because the primary buyer’s offer contains a well and septic inspection contingency that seller is supposed to pay for and the seller does not want to pay for the inspection
B. The existing offer does not look very strong because the buyer is trying to obtain a loan for 100% of the purchase price
C. The existing offer has a continued marketing (bump) clause
D. The existing offer meets the seller’s closing date requirement of July 15
C. Wis. Admin. Code § REEB 24.12 A licensee cannot share the terms of one buyer’s offer to purchase with any other buyer. A licensee can say another offer exists, that it has contingencies, or a continued marketing clause but nothing more specific than that.
Which of the following would be a fair housing violation in Wisconsin?
A. A property owner charging more money to a tenant with children than to a tenant without children
B. A firm refusing to list a property because the sellers insist on listing the property for $25,000 more than the firm’s estimated of selling price
C. A lender charging different terms based only on the criteria of age in the granting of credit
D. A builder building homes designed specifically for the elderly
A. Wis. Stat. § 106.50(1): It is the declared policy of this state that all persons shall have an equal opportunity for housing regardless of sex, race, color, sexual orientation, disability, religion, national origin, marital status, family status, lawful source of income, age or ancestry. Wis. Stat. § 106.50(2)(5m): Nothing in this section prohibits discrimination based on age or family status with respect to housing for older persons. Wis. Stat. § 106.50(2)(5m)(b): Nothing in this section shall prohibit a person from exacting different or more stringent terms or condition for financing housing based on the age of the individual applicant for financing if the terms or conditions are reasonably related to the individual applicant.
If a buyer wanted their second counter-offer to include the first three items discussed in their first counter-offer to seller, the buyer:
A. would reissue the first counter-offer along with a multiple counter-offer to incorporate any additional changes
B. must write a new offer
C. cannot resubmit these provisions because seller has previously rejected them
D. can state any other terms in the second counter-offer and incorporate the first three items of the buyer’s first counter-offer by reference
D. The entire agreement between the parties is found in the offer to purchase and the most recent counter-offer. Therefore, any provisions that are acceptable must be incorporated either word for word or by reference from one counter-offer to the next.
From the grantee’s point of view, the best deed to receive is a:
A. quitclaim deed
B. deed in lieu of foreclosure
C. warranty deed
D. personal representative’s deed
C. The general warranty deed offers the most comprehensive guarantee of title. The grantor makes five promises to the grantee. They are the covenants of seisin, against encumbrances, further assurance, quiet enjoyment, and warranty forever.
Deadlines expressed as a number of days from an event, such as acceptance, are calculated by excluding the day the event occurred and by counting subsequent calendar days. When does acceptance occur?
A. All parties have signed a copy of the offer to purchase
B. One party tells another party that they have accepted the offer
C. An offer to purchase that has been signed by all parties is delivered binding the parties
D. A licensee indicates an offer as being accepted in the MLS
A. The WB-11 Residential Offer to Purchase lines 43-44 states: “Acceptance occurs when all Buyers and Sellers have signed one copy of the offer, or separate but identical copies of the Offer.”
A seller accepts an offer for $175,000. Two weeks before closing a tornado causes $5,000 in damage to the property. What must the seller do?
A. Amend the real estate condition report and deliver a copy to the buyer
B. Notify the buyer in writing and repair the damage
C. Extend closing by three weeks
D. Allow the buyer to rescind the offer
B. If a property is damaged after an offer is accepted, the language in the offer specifies what will occur. The Property Damage Damage Between Acceptance and Closing section of the offer says, “If, prior to closing, the Property is damaged in an amount not more than five percent of the purchase price, other than normal wear and tear, Seller shall promptly notify Buyer in writing, and will be obligated to restore the Property to materially the same condition it was in at the date on line 1 of this Offer.”
When acting as a buyer’s agent, a licensee must disclose buyer agency to all parties or risk a claim of:
A. misrepresentation
B. HUD violations
C. Fair Housing violations
D. RESPA violations
A. Failing to disclose an agency relationship with a buyer could lead to a claim of misrepresentation against a license if the seller or listing firm thought the licensee was acting as a selling firm.
Which of the following activities requires a real estate license?
A. A personal representative selling the real property of an estate
B. Receiving compensation to procure a buyer for another person’s business
C. A property manager showing a rental unit
D. An adult child helping an elderly parent with the sale of their home
B. Wis. Stat. § 452.01(d) A broker means any person who for another and for a commission, money or other thing of value, negotiates or offers or attempts to negotiate a sale, exchange, purchase or rental of any business, its goodwill, inventory, fixtures or an interest therein.
A buyer’s licensee is representing two separate buyers. Each buyer is interested in the same property. How should the buyer’s licensee proceed?
A. The licensee should disclose the terms each offer to the other buyer because it is material information.
B. One of the buyers should be referred to another licensee within the buyer’s firm.
C. One of the buyers must be turned into a customer.
D. The licensee should draft competing offers on behalf of each buyer.
D. The WB-36 Buyer Agency Agreement at lines 165-168 provides, “Buyer acknowledges and agrees that the Firm and its agents may act for other buyers in connection with the location of properties and may negotiate on behalf of such buyers with the owner or owner’s agent. In the event that the Firm or its agents undertake to represent and act for other buyers, the Firm and its agents shall not disclose to Buyer, or any other buyer, any confidential information of any buyer, unless required by law.”
Which of the following is NOT true of both condominium and cooperative ownership?
A. The owner will typically pay a regular maintenance fee
B. The owner has a real property interest
C. The owner owns the property interest in severalty
D. The owner has the ability to vote on decisions that affect the developments financial status
B. Ownership in a cooperative is a personal property interest whereas ownership in a condominium is a real property interest.
Licensees are required to disclose to all parties:
A. known material facts
B. known sex offenders
C. possible material facts
D. possible material adverse facts
D. Licensees are required to disclose to all parties known material adverse facts and possible material adverse facts in writing and in a timely fashion. A licensee only needs to disclose material facts to a client.
A tree growing near the corner of a lot is ordinarily considered:
A. personal property
B. real property
C. an encroachment
D. a security interest
B. A tree is permanently affixed to the property. That makes it real property.
When a depository institution remits the interest earned on a firm’s interest-bearing trust account to the Department of Administration they must inform the firm of all the following EXCEPT the:
A. Interest earned on the account
B. Rate of interest applied to the account
C. Service charges on the account
D. Account balance
A. Wis. Stat. § 452.13(2)(e)(1) When a depository institution remits interest to the Department of Administration they must furnish to the firm maintaining the interest-bearing trust account the rate of interest applied, the amount of service charges or fees deducted, if any, and the account balance for the period that the statement covers. The firm does not receive information on the interest that was actually paid.
A licensee offers payment for a buyer’s home inspection. What is this offer from the licensee to the buyer called?
A. A referral
B. Commission
C. Fee-splitting
D. An incentive
D. Wisconsin allows incentives to be offered to buyers and sellers directly provided they are documented properly prior to closing. Such incentives may be offered in any amount in order to induce the buyers and sellers to purchase or sell.
A seller is selling a condominium. What must accompany the seller’s real estate condition report?
A. A copy of meeting minutes from the last three association meetings
B. A condominium addendum to the real estate condition report
C. Floor plans of neighboring condominium units
D. The names and phone numbers of units on either side of the seller’s unit
B. A seller of a condominium must provide a real estate condition report accompanied by an addendum to the condition report and an executive summary.
A city zoning board changes the zoning for a single parcel of property to meet a public need. This would be called:
A. downzoning
B. spot zoning
C. nonconforming use
D. a variance
B. Spot zoning occurs when a single parcel of land rezoned. A variance allows a parcel to violate permanently a zoning law. Downzoning changes the use of all the properties within a zoning district.
The market data approach when used by a licensee:
A. replaces the need for an appraisal
B. gives an opinion of the price a property will most likely sell for on the open market
C. is an appraisal
D. is an opinion of a property’s value
B. The market data approach is used to establish the most likely price existing residential real estate will sell for on the open market.
What does Regulation Z require a lender to disclose to a consumer?
A. The cost of the credit report
B. The estimated closing costs
C. The amount of interest paid over the life of the loan
D. The cost of the appraisal
C. The purpose of Regulation Z, which is a part of the Truth in Lending Act, is to require lenders to disclose to borrowers the financing charges they will have to pay to obtain credit. Finance charges are the total of all costs the customer must pay directly or indirectly, for obtaining credit, and include such costs as interest, loan origination fees, discount points, and service fees.
Which of the following creates an express agency?
A. Offer to purchase
B. Disclosure to customers form
C. Property management agreement
D. Counter-offer
C. A property management agreement is a written agency agreement between a licensee and property owner. It gives the property manager the right to represent the property owner in leasing situations.
Which of the following creates a multiple representation relationship?
A. A buyer’s licensee presents an offer to a seller
B. A listing licensee presents a counter-offer to a buyer
C. A listing licensee writes an offer for a buyer on one of the listing licensee’s listings
D. A buyer’s licensee writes an offer for a buyer on a property listed by the buyer’s licensee’s firm
D. Multiple representation occurs when a firm has an agency contract with both the buyer and the seller in the real estate transaction. The phrase “a buyer’s licensee” tells us that the buyer has an agency agreement with the firm. “A property listed with the buyer’s licensee’s firm” tells us that the seller also has a listing contract with that firm. The buyer’s licensee’s firm has an agreement with both the buyer and the seller.
The financing commitment contingency would be satisfied if which of the following were to occur?
A. The seller receives a loan commitment subject to conditions
B. The buyer’s agent receives a loan commitment from the buyer’s lender
C. The seller receives a loan commitment from buyer along with a notice of unacceptability
D. The buyer receives a loan commitment from lender
A. Lines 270-280 of the WB-11 Residential Offer to Purchase If Buyer qualifies for the loan described in this Offer or another loan acceptable to Buyer, Buyer agrees to deliver to Seller a copy of a written loan commitment. This contingency shall be satisfied if, after Buyer’s review, Buyer delivers to Seller a copy of a written loan commitment (even if subject to conditions) that is: (1) signed by Buyer; or (2) accompanied by Buyer’s written direction for delivery. Delivery of a loan commitment by Buyer’s lender or delivery accompanied by a notice of unacceptability shall not satisfy this contingency. CAUTION: The delivered loan commitment may contain conditions Buyer must yet satisfy to obligate the lender to provide the loan. Buyer understands delivery of a loan commitment removes the Financing Commitment Contingency from the Offer and shifts the risk to Buyer if the loan is not funded.
Calculate the monthly payment for a mortgage of $120,000 at 9 percent for 20 years. The factor is 9.
A. $960
B. $1,200
C. $1,060
D. $1,080
D. $120,000 x 9 = $1,080,000. $1,080,000/$1000 = $1080. To find the mortgage payment, multiply the loan amount by the factor and then divide by 1000.
Changing the zoning from residential to scenic reserve would be an example of:
A. downzoning
B. bulk zoning
C. spot zoning
D. buffer zoning
A. Changing zoning from residential to scenic reserve is a change in zoning from a more active to a less active classification.
The property being transferred has a purchase price of $475,450. What is the transfer fee the seller will pay at closing?
A. $1,426.50
B. $1,440.00
C. $14,263.50
D. $1,426.35
A. The transfer fee is $475,500 x .003 = $1,426.50
A licensee presents an offer to one spouse because the others spouse is not currently available. After the licensee leaves, the couple decides to accept the offer for their homestead property. Only the spouse to whom the licensee presented the offer signs it. It is delivered back to the buyer. What is the status of the offer?
A. Valid
B. Voidable
C. Void
D. Unenforceable
C. The offer is void. There was never a contract because the essential elements of the contract were never met. Both spouses need to sign to accept the offer. If the missing spouse had authorized the other spouse to sign on their behalf, the spouse to whom the offer was presented could have signed that person’s name and then signed on behalf of the missing spouse as a power of attorney. Wis. Stat. § 706.02 states that a contract to convey must be signed by or on behalf of all parties and 706.03(1m) states that a conveyance signed by one purporting to act as agent for another shall be ineffective as against the purported principal unless such agent was expressly authorized, and unless the authorizing principal is identified as such in the conveyance or in the form of signature.
A buyer receives an inspection report that discloses defects as defined by the inspection contingency. Under what circumstances will buyer NOT be able to give a Notice of Defects?
A. The seller was not aware of the defects.
B. The defects existed when seller bought the house.
C. The defects can be readily cured by seller.
D. The buyer had knowledge of the defects at the time of the offer.
D. WB-11 Residential Offer to Purchase lines 210-211.
The Bump Clause time frame does not begin to run until the:
A. notice has been sent by mail to buyer
B. notice has been delivered by fax to buyer
C. notice has been dropped into the buyer’s agent’s overnight box
D. buyer’s actual receipt of the notice
D. Please refer to lines 336 - 337 of the WB-11 Residential Offer to Purchase.
A firm is allowed to act in a multiple representation relationship when:
A. the offer to purchase is drafted by the Agent of Buyer and Seller
B. the seller agrees to multiple representation in the listing contract
C. both clients in the transaction consent in writing to the multiple representation
D. the buyer consents to multiple representation in the buyer agency agreement
C. Wis. Stat. § 452.135(1) No firm may provide brokerage services to more than one client in a transaction without an agency agreement with each client and a written consent to multiple representation.
At what point in the real estate transaction does a buyer receive equitable title?
A. At closing
B. When all contingencies have been removed
C. When the offer is accepted
D. When binding acceptance occurs
B. Equitable title is the right to obtain absolute ownership to property when legal title is held in another’s name. A buyer obtains equitable title after all contingencies have been removed and they are ready to consummate the transaction.
According to the WB-36 Buyer Agency Agreement, a commission is earned by the buyer’s firm only if the:
A. buyer purchases the property defined in the buyer agency agreement
B. listing firm agrees to compensate the buyer’s firm
C. buyer acquires an interest in property or enters into an enforceable contract that is acceptable to buyer
D. buyer’s firm is directly involved in the locating and negotiating of the property the buyer purchases
C. See lines 37-40 of the WB-36 Buyer Agency Agreement. The Firm has earned the Firm’s commission if during the term of this Agreement (or any extension of it), Buyer or any Person Acting on Behalf of Buyer acquires an Interest in Property or enters into an enforceable written contract to acquire an Interest in Property, at any terms and price acceptable to owner and Buyer, regardless of the purchase price range.
In the WB-1 Exclusive Right to Sell Listing Contract, the firm earns a commission when the:
A. transaction closes
B. seller accepts an enforceable contract for the sale of all of the property
C. listing licensee presents an offer to purchase
D. damages have been liquidated
B. The firm earns a commission if the seller accepts an enforceable contract for the sale of all or any part of the property.
A licensee is required to do all of the following EXCEPT:
A. have the technical knowledge, skills, or training possessed by competent third-party inspectors and investigators of real estate and related areas
B. be knowledgeable regarding laws, public policies, and current market conditions on real estate matters
C. protect the public against fraud, misrepresentation, and unethical practices
D. assist, guide, and advise the buying or selling public
A. Licensees are not required to have the technical knowledge, skills, or training possessed by competent third-party inspectors and investigators of real estate and related areas.
A right or privilege to use a property that belongs to or passes with property would best be described as a/an:
A. mortgage
B. encroachment
C. easement
D. right-of-way
C. An easement is the right to use the property of another. An encroachment is an encumbrance on property but is not an easement. A mortgage is a lien on another’s title.
Who signs a deed?
A. The seller and buyer
B. The seller and seller’s attorney
C. The seller
D. The buyer
C. Wis. Stat. § 706.02 says that a valid conveyance must identify the parties, identify the land, identify the interest conveyed, is signed by or on behalf of each of the grantors, is signed by each spouse is a homestead property, and is delivered
In the event a seller unilaterally cancels the listing contract before its expiration date, what can a listing firm do?
A. Inform the seller that they must go forward until the listing expires
B. Report the seller to the DSPS
C. Sue the seller for specific performance
D. Demand compensation for the damages sustained as a result
D. In the event that seller cancels the listing contract unilaterally before its expiration date, the firm may demand compensation for the damages sustained as a result. The firm cannot sue the seller for specific performance and cannot compel the seller to remain in the relationship as a party to the listing contract.
Compare the WB-13 Vacant Land Offer to Purchase to the WB-11 Residential Offer to Purchase. Which of the following statements is most correct?
A. The WB-13 financing contingency requires a well water and septic test whereas the WB-11 financing contingency does not.
B. The WB-13 includes a provision requiring the seller to provide the buyer with a survey of the property and the WB-11 does not have any survey language.
C. The WB-13 must have a legal description and the WB-11 does not.
D. The WB-13 includes a map contingency.
D. The WB-13 includes a map contingency where the WB-11 does not. A buyer of residential property using a WB-11 could include a map contingency but would have to add it in additional provisions or as an addendum to the offer.
Susan decides to make an offer to purchase Brian’s home. Susan has a buyer agency agreement with Nick. Nick writes the offer to purchase and takes it over to Brian’s home personally. Nick learns that Brian is at Mike’s house so Nick goes to Mike’s house to deliver the offer to Brian. Brian is not at Mike’s. Nick hands the Offer to Purchase to Mike and asks him to give the Offer to Brian. For the delivery to Mike to be considered effective delivery under the terms of the offer, on what line of the WB-11 Residential Offer to Purchase would Mike’s name need to be stated?
A. Line 588
B. Line 589
C. Line 577
D. Line 576
D. Line 576 of the WB-11 Residential Offer to Purchase reads, “Name of Seller’s recipient for delivery, if any___________________.”
Which of the following is NOT typically considered client funds?
A. Earnest money deposits
B. Advance fees
C. Security deposits collected by a property owner
D. Finder’s fees
C. Wis. Stat. § 452.13(1)(a): “client funds” means all down payments, earnest money deposits or other money related to a conveyance of real estate that is received by a licensee on behalf of a firm or any other person. “Client funds” does not include promissory notes. Security deposits collected by a property owner are just security deposits. If the property owner also happens to be a real estate licensee, then those security deposits will be real estate trust funds but they are considered “non-client funds” because they are not related to a conveyance of real estate.
The Statute of Frauds applies to all the following real estate transactions EXCEPT:
A. a lease for less than one year
B. a listing contract
C. an offer to purchase
D. an option to purchase
A. A lease for less than one year can be an oral contract. A court would consider it enforceable against both parties.
If a buyer wishes to give a Notice of Defects, the buyer MUST provide:
A. a copy of the home inspector’s report with the Notice of Defects
B. a copy of the home inspector’s report with an Amendment
C. verbal notice only
D. a Notice of Defects only
A. When a buyer provides a Notice of Defects a copy of the home inspection report the WB-41 Notice Relating to Offer to Purchase should also be sent to the seller. Please refer to lines 206-208 of the WB-11 Residential Offer to Purchase.
Shoreland zoning regulates land located within:
A. 300 feet of a private, man-made lake
B. 1,000 feet of the ordinary high water mark of a lake, pond, or flowage
C. 300 feet of a man-made rain garden
D. 1,000 feet of ordinary high water mark of a river or a stream
B. The DNR defines the Shoreland zone as land located 1,000 feet of the ordinary high water mark of a lake, pond, or flowage; within 300 feet of ordinary high water mark of a river or a stream; the landward side of the floodplain, whichever is greater.
A neighborhood is improved with new curbs and gutters. If the curbs and gutters were funded by a special assessment, which home would most likely be charged the most?
A. A house with the highest assessed value
B. A house located in a cul-de-sac
C. A house with an existing curb and gutter that are damaged
D. A house on a corner lot
D. Special assessments for curb and gutter improvements will most likely be charged per linear foot. The house on the corner lot would have the most street frontage and the highest special assessment.
Without the written consent of the supervising broker, an agent has the authority to:
A. Amend a buyer agency agreement to exclude commercial and agricultural properties
B. Amend the commission amount
C. Enter into a mutual agreement to terminate the buyer agency agreement
D. Shorten the term of the buyer agency agreement
A. Termination section of WB-36 Buyer Agency Agreement, “Agents for Firm do not have the authority to enter into a mutual agreement terminate this Agreement, amend the compensation terms or shorten the term of this Agreement, without the written consent of the agent(s)’ supervising broker.”
According to the terms of the WB-1 Residential Listing Contract, how many days does the seller have to provide a new listing firm with the former listing firm’s list of protected buyers?
A. One week
B. Five days
C. Seven days
D. Ten days
C. According to the terms of the WB-1 Residential Listing Contract, the seller has seven days to provide the new listing firm a list of the protected buyers.
A salesperson may practice real estate for:
A. the firm with which the licensee is associated
B. any seller who is willing to sign a listing contract
C. only one seller at a time
D. multiple firms as long as each firm is aware of the other firms
A. Wis. Stat. § 452.30(7) A salesperson may be associated with only one firm at a given time. (b) A salesperson may not engage in independent real estate practice and may engage in real estate practice only when associated with a firm.
Which of the following would NOT create a protected buyer under a listing contract?
A. A buyer that stopped at an open house
B. A buyer that negotiated directly with the seller
C. A buyer that attended an individual showing
D. A buyer that submitted an offer to purchase
A. Buyers may be protected for listing protection in one of four ways. If (1) the buyer submitted a written offer to purchase or (2) viewed the property with the seller or negotiated directly with the seller, the listing protection is automatic and the first listing firm would not have been required to perform any additional steps to protect the buyer for the override period. If, during the term of the listing (3) the buyer attended an individual showing or (4) negotiated with a firm, the buyer will be protected only if the listing firm delivered the buyer’s name to the seller within three days of the expiration of the first listing contract. “Negotiate,” for these purposes, means that the buyer discussed the potential terms upon which the buyer may acquire an interest in the property.
Jane is showing a home to prospective buyer Lester. Jane shows Lester the warped steps of the back porch stairs, describing it as “country charm.” She then shows him the “beautifully landscaped herb garden,” while pointing to patch of overgrown weeds. Which term below describes Jane’s actions in describing the property to Lester?
A. Fraud
B. Concealment
C. Negligent misrepresentation
D. Puffing
D. Any prudent buyer can see that the warped back porch stairs and overgrown weeds are what they are, rather than how Jane described them. Thus, Jane’s statements are considered to be “puffing.” Agents must be careful that they do not make any statements in a way to harm the buyer, or to take advantage of the buyer’s lack of knowledge. Statements that harm the buyer or take advantage of their lack of knowledge constitute fraud.
According to the Truth in Lending Act (TILA), what should be disclosed to a borrower?
A. All liens and encumbrances on the property
B. The annual percentage rate (APR)
C. The name of the property insurance company that the borrower must use
D. Financial statements of the mortgage company
B. The primary disclosures required under the Truth in Lending Act (TILA) are the financing charges, the annual percentage rate, the total amount financed, and total payments that will be made.
A seller lists a house with Salesperson A. The buyer attends Salesperson A’s open house and decides to write an offer. The buyer does not have an agency agreement with Salesperson A and she asks Salesperson A to write the offer. Which of the following CORRECTLY identifies the relationship between the buyer and Salesperson A?
A. Salesperson A is the buyer’s agent
B. The buyer is Salesperson A’s customer
C. The buyer is Salesperson A’s client
D. The buyer is the principal of Salesperson A
B. Salesperson A has a listing contract with the seller. The buyer does not sign a buyer agency agreement with Salesperson A. Salesperson A provides brokerage services to the buyer as a customer.
The WB-11 Residential Offer to Purchase states that title evidence shall be given by the seller in the form of a/an:
A. promissory note
B. deed
C. abstract
D. owner’s policy of title insurance
D. The Title Evidence section of the offer, “Seller shall give evidence of title in the form of an owner’s policy of title insurance in the amount of the purchase price on a current ALTA form issued by an insurer licensed to write title insurance in Wisconsin. Seller shall pay all costs of providing title evidence to Buyer. Buyer shall pay the costs of providing the title evidence required by Buyer’s lender and recording the deed or other conveyance.”
Which of the following statements is true of property held in joint tenancy?
A. Joint tenants do not have the right to file a lawsuit asking for partition of the property
B. If a joint tenant dies, the surviving tenant or tenants receive the interest of the deceased joint tenant
C. A deed will not convey any interest unless signed by both spouses
D. The deceased joint tenant’s interest passes to the heirs of the deceased
B. Survivorship between owners is a key element of a joint tenancy.
A buyer purchases a property for $129,550. How much is the transfer fee for this transaction?
A. $387.00
B. $388.65
C. $388.80
D. $388.50
C. The transfer fee on a $129,550 purchase is $388.80. To calculate the transfer fee, round the purchase price up to the nearest $100 and multiply times .003. Round $129,550 up to $129,600 and multiply by .003 = $388.80.
There are fair housing laws recognized at the federal, state, and local levels of government. A licensee should abide by the law:
A. that offers the most protection
B. at the state level
C. at the local level
D. at the federal level
A. Local levels of government have the legal ability to enact fair housing laws as long as the local laws recognize the classes protected under the state law. However, not all local levels of government will have their own laws and unfortunately, some will have laws that contradict the state/federal law and allow discrimination under certain situations. A licensee must follow the law that offers the most protections.
Which of the following is NOT an essential term of a real estate sales contract?
A. The price
B. The signatures of the parties
C. The identity of the parties
D. An inspection contingency
D. An inspection contingency is not an essential term of a real estate contract. Wis. Stat. § 706.02 Conveyance of Real Property requires the following of a contract: identifies the parties, identifies the land, identifies the interest conveyed and any material term condition, is signed by or on behalf of each of the grantors, is signed or joined in by separate conveyance by or on behalf of each spouse, and is delivered.
A real estate agent signs a contract with a non-licensed individual. In that contract, the real estate licensee agrees to pay the non-licensed individual $50 for every referred person that signs a listing contract. What type of contract is this?
A. Voidable
B. Void
C. Unenforceable
D. Valid
B. A contract as described in this question is a contract to pay referral fees to a non-licensed individual. Payment of real estate related fees including commissions, finders fees, and referral fees is illegal fee-splitting in Wisconsin. Therefore this contact is for an illegal purpose and is void.
Layla has a large apple tree growing on her property. The branches of her tree extend across the lot line into her neighbor’s yard. Layla’s tree is an example of an:
A. eminent domain
B. escheat
C. encroachment
D. egress
C. A tree or a structure that is physically extending across the lot line onto a neighbor’s property is an encroachment. An encroachment is an example of an encumbrance.
Which of the following situations requires a written earnest money disbursement agreement prior to disbursement of funds when the earnest money is held by the listing firm?
A. The seller has not accepted the offer and the offer has expired
B. The seller rejects the offer
C. A buyer is not able to obtain financing
D. A party makes a counter-offer not acceptable to the other party
C. The listing firm cannot do anything with the earnest money for 60 days after the scheduled closing date unless the parties reach a written agreement for the disbursement of the earnest money. The listing firm may wish to write a memorandum or letter to the buyer and seller and their respective attorneys, if any, pointing out Disbursement if Held By a Firm section of the WB-11 Residential Offer to Purchase and explaining that this is how the earnest money disbursement must be handled. It is then up to the parties to work out their differences by negotiation or by going to small claims court.
A condominium owner has to pay a condominium fee each month. The condominium fee is calculated on an annual basis and then is paid monthly in equal installments. The fee paid is 1% of the assessed value of the unit, which is $240,000. The fee is due on the first of every month. How much would the owner of the condominium have paid in condominium fees as of June 1?
A. $200
B. $2,400
C. $240
D. $1,200
D. $240,000 assessed value x .01 = $2,400. $2,400 / 12 months = $200 monthly fee. $200 x 6 = $1,200 paid in condominium fees through June 1.
Bob changed his mind about purchasing 456 Right Here Avenue. The seller has accepted the offer. The offer has not been delivered to Bob. What is the effect on the transaction if Bob’s licensee calls the seller and says the deal is off?
A. Breach of contract
B. Counter-offer
C. Rejection of the offer
D. Withdrawal of the offer
D. A buyer may withdraw an offer any time prior to binding acceptance.
What term describes a debt secured by an item of personal property?
A. A bill of sale
B. A real estate mortgage
C. A security interest
D. A deed
C. A security interest is an interest a creditor holds in an item of personal property when the debt is secured by that item of personal property. A lender may have a security interest in a car, a tractor, machinery, or restaurant equipment for example. A security interest is also know as a chattel mortgage though security interest is the more common term.
What must a firm provide to its licensees?
A. Business cards
B. Legal assistance in transactions
C. Reasonable access to a supervising broker
D. Copies of the approved forms
C. A firm must provide its licensees with access to a supervising broker. The access must be reasonable and can be via phone, email, text, or other means if suitable.
A licensee who is writing an offer for a buyer-customer on another firm’s listing is a:
A. buyer’s licensee
B. listing licensee
C. client
D. selling licensee
D. A licensee writing an offer for a buyer-customer on another firm’s listing is a selling licensee. A licensee who is writing an offer for a buyer-client is a buyer’s licensee.
A licensee is selling the licensee’s own house. What must the licensee do?
A. Pay the selling agent the going market rate of commission
B. List it with a different form
C. Advertise it in the local paper
D. Inform all prospective purchasers that the licensee is the owner and is a licensed real estate agent
D. Wis. Admin. Code § REEB 24.05(5): A licensee acting as a principal in a real estate or business opportunity transaction shall disclose his, her, or its license status and intent to act in the transaction as a principal at the earliest of all of the following: 1. The first contact with the other party or an agent representing the other party where information regarding the other party or the transaction is being exchanged. 2. A showing of the property. 3. Any other negotiation with the seller or the listing firm.
When would a licensee NOT have to provide agency disclosure?
A. A listing licensee is showing a commercial listing to a buyer
B. A selling licensee is negotiating an offer to purchase with a buyer
C. A property manager negotiating a lease with a tenant
D. A listing licensee answers a prospective buyer’s basic questions at an open house
D. Agency disclosure to a client needs to occur either prior to entering into an agency agreement with the client. Agency disclosure to a customer must occur prior to negotiations. Holding an open house and answering a buyer’s basic questions does not automatically constitute brokerage services. If the conversation went into more detail where a buyer was starting to discuss the terms under which the buyer would purchase the property, then an agency disclosure would need to be given.
At closing, the seller needs to give a credit to the buyer for property taxes. Last year’s taxes were $3,700 and there are 242 days from the first of the year through the day of closing. How much will the buyer’s tax credit be?
A. $2,443.02
B. $2,453.15
C. $2,346.15
D. $2,587.03
A. $3,700 / 365 day year = $10.1370 daily proration. $10.1370 x 241 days between January 1 and the day prior to closing = $2,443.02.
After entering into a sales contract a seller discovers a defect on the property, the:
A. seller must comply with the terms of the sales contract
B. buyer can direct the seller on how to repair the defect
C. contract becomes null and void at the buyer’s discretion
D. seller must update the real estate condition report and give a copy to the buyer
A. A real estate condition report is used to disclose defects known by the seller prior to the acceptance of the offer. After the offer is accepted, the sales contract dictates how the parties must proceed.
A licensee is working with a person who is deaf. The individual needs an interpreter to understand the real estate contracts. Who is required to pay for the interpreter?
A. Housing and Urban Development
B. The seller
C. The buyer
D. The firm
D. A public accommodation must provide auxiliary aids to individuals with disabilities who have physical or mental impairments, such as vision, hearing, or speech impairments that substantially limit the ability to communicate. A real estate office is a public accommodation and is required to incur the expense of the auxiliary aid
unless it results in an undue burden.
The owner of a property just found out that the municipality is going to be putting in sidewalks. The cost of the sidewalks is going to be assessed at $18.00 per linear foot. The owner has a 120-foot lot excluding the driveway. How much will the property owner’s special assessment be?
A. $1,750
B. $2,160
C. $1,970
D. $2,000
B. 120 feet x $18 = $2,160.
Which of the following documents does NOT have to be delivered promptly to the parties after it is signed?
A. Lease agreement
B. Counter-offer
C. Amendment to offer to purchase
D. Offer to purchase
A. Wis. Admin. Code § REEB 15.02 Copies of documents - A licensee shall promptly provide an exact and complete copy of any document utilized, prepared, or received by the licensee in real estate practice to any person who has signed the document. A broker or salesperson shall promptly distribute an exact and complete copy of a lease or rental agreement which has been accepted and signed by all parties to the tenant upon execution of the lease or rental agreement when the tenant leases the property and to the landlord upon the
landlord’s request.
Zoning laws may NOT be used to regulate which of the following?
A. The placement of interior partitions
B. The height and bulk of a building
C. The purpose for which a building may be constructed
D. The number of persons a building may accommodate
A. The placement of interior partitions does not affect public safety. The purpose of zoning is to protect public safety and welfare.
A selling agent has given the buyer information on the real estate market and suggested a purchase price for the buyer’s offer. The selling agent has likely created what type of agency with the buyer?
A. Single
B. Implied
C. Express
D. General
B. By treating the buyer like a client, the selling licensee has likely created an implied agency agreement and possibly undisclosed multiple representation.
Which of the following likely constitutes secondary mortgage market fraud?
A. A loan officer telling the seller and buyer to enter into a side agreement that will not be shared with the secured lender.
B. A seller agreeing to give the buyer a purchase money mortgage at closing.
C. A real estate licensee drafting an amendment indicating that the seller will be escrowing cash at closing to pay for repairs.
D. A buyer applying for a loan even though it will be difficult to make the monthly payments.
A. Mortgage fraud occurs anytime a participant in a real estate transaction misrepresents facts with the intent to swindle another party of money. The key to committing mortgage fraud is keeping terms of a transaction away from the secured lender. Licensees should never draft paperwork that misrepresents the terms of a transaction and they are obligated to disclose all terms of a real
estate transaction to the secured lender.
Where on the WB-1 Residential Listing Contract does a listing agent indicate the seller agrees to multiple representation with designated agency?
A. Line 123
B. Line 128
C. Line 125
D. Line 157
A. The seller’s indicate on line 123 that they allow ABC Realty to participate in multiple representation with designated agency.
In the WB-1 Residential Listing Contract, who has the authority to accompany a home inspector during a home inspection?
A. An appraiser
B. The buyer’s parents
C. The buyer’s attorney
D. The buyer
D. The WB-1 Residential Listing Contract authorizes the buyer to accompany a home inspector during the inspection.
Which of the following is the way that title appears on public records?
A. Record
B. Reduction
C. Marketable
D. Merchantable
A. Record title is the way that the title appears on public records.
When marketing properties, a licensee’s liability for providing information regarding lot lines, lot sizes, or room dimensions may lead to all of the following EXCEPT:
A. a selling bonus
B. lawsuits for substantial damages
C. rescission of the transaction
D. possible filing of disciplinary complaints with the DSPS
A. Mistakes by licenses may lead to lawsuits for substantial damages, and/or rescission of the transaction, and possible filing of disciplinary complaints with the DSPS.
Where do a seller and a firm agree to the compensation the listing firm will offer to cooperating firms?
A. Commission
B. Compensation to others
C. Extension of listing
D. Marketing
B. Lines 58-59 of the WB-1 Residential Listing Contract is where the seller and the listing firm agree to the amount of compensation the listing firm will offer to cooperating firms.
When a listing firm lists a property, the seller is:
A. a client
B. an agent
C. an employee
D. a customer
A. In a listing contract, the seller is the one who has hired the firm. Thus, the seller would be the principal/client in a listing contract.
To ensure compliance with the lead-based paint (LBP) disclosure law, licensees:
A. conduct lead-based paint testing on behalf of the buyer
B. refuse to list the property unless the seller has a lead-free certificate for the home
C. must inform the seller of the seller’s obligations under the federal LBP laws
D. pay for a lead inspection
C. To ensure compliance with the LBP disclosure law, licensees must inform the seller of the seller’s obligations under the federal LBP laws, ensure that the seller has performed all activities required by law, and provide the necessary disclosure documents for the seller to sign and
provide them to the buyer as well.
Which of the following is NOT a penalty for a licensee who breaches a duty to a client?
A. Disciplinary action under real estate license law
B. Loss of MLS membership
C. Rescission of the contract
D. Forfeiture of commission
B. The remedies for breach include loss of commission, rescission, and the client’s ability to sue for damages. The REEB may order disciplinary action against the licensee as well.
A buyer has selected multiple representation without designated agency. A seller has selected multiple representation with designated agency. The buyer wants to buy that seller’s house. Which of the following is true?
A. The buyer’s licensee can tell the buyer that the property is overpriced.
B. The seller’s licensee can tell the seller that the buyer has been pre-approved for far more than the list price.
C. The firm must assign a designated agent for the seller and a designated agent for the buyer.
D. The firm and all of its licensees must remain neutral.
D. If one party selects multiple representation with designated agency and the other party selects multiple representation without designated agency, the agency choices do not match. That means the firm and all its licensees must remain neutral.
Which of the following MUST a licensee disclose to a party in a transaction?
A. There have been improvements made to the property without proper building permits
B. A murder took place on the property
C. The third-party inspection report received by the parties, disclosed that there were significant problems with the basement foundation
D. There is a community-based residential facility containing teenage males next door
A. Wis. Stat. § 452.23(2) A licensee is not required to disclose any of the following to any person in connection with the sale, exchange, purchase or rental of real property; 1) That the property was the site of a specific act or occurrence, if the act or occurrence had no effect on the physical condition of the property; 2) information relating to the physical condition of the property or any other information relating to the real estate transaction, if a written report that discloses the information has been prepared by a qualified third party and provided to the person; 3) the location of any adult family home, community based residential facility, or nursing home in relation to the location of the property.
Firm A’s supervising broker and Firm B’s supervising broker were overheard at lunch discussing raising their commission rates. This is a violation of:
A. antitrust laws
B. company practice
C. RESPA
D. MLS regulations
A. The Sherman Act makes it illegal to conspire to restrain trade or the free flow of goods and services in a market place.
When using an approved form, a licensee may:
A. add new numbered lines to the form
B. charge a fee for preparing the form
C. cross out provisions to reflect the agreement of a party to a transaction, provided that the deleted provisions remain legible
D. delete form language on a computer before printing the form
C. Wis. Admin. Code § REEB 16.06. A licensee cannot all additional lines. Any language that the party does not want included in the approved form may be stricken in such a way that the original language remains legible. Licensees cannot delete language from a form so that a party to the transaction is not aware of the deleted language. Licensees may never charge for completing a form.
A buyer may be protected under a previous firm’s listing contract in all of the following ways EXCEPT:
A. the buyer discussed the potential terms of purchasing the property directly with the seller
B. the buyer submitted an offer to purchase
C. the buyer saw the property at an open house
D. the buyer attended an individual showing of the property
C. See lines 215-229 of the WB-1 Residential Listing Contract. Protected Buyer means “a buyer who personally, or through any Person Acting on Behalf of Buyer, during the term of this Listing: 1) Delivers to Seller or the Firm or its agents a written offer to purchase, exchange or option on the Property; 2) Views the Property with Seller or negotiates directly with Seller by communicating with Seller regarding any potential terms upon which the buyer might acquire an interest in the Property; or 3) Attends an individual showing of the Property or communicates with agents of the Firm or cooperating firms regarding any potential terms upon which the buyer might acquire an interest in the Property, but only if the Firm or its agents deliver the buyer’s name to Seller, in writing, no later than three days after the earlier of expiration or termination (lines 273-281) of the Listing. The requirement in 3), to deliver the buyer’s name to Seller in writing, may be fulfilled as follows: a) If the Listing is effective only as to certain individuals who are identified in the Listing, by the identification of the individuals in the Listing; or, b) If a buyer has requested that the buyer’s identity remain confidential, by delivery of a written notice identifying the firm or agents with whom the buyer negotiated and the date(s) of any individual showings or other negotiations. A Protected Buyer also includes any Person Acting on Behalf of Buyer joined in interest with or otherwise acting on behalf of a Protected Buyer, who acquires an interest in the Property during the extension of listing period as noted on lines 230-234.”
Which of the following is CORRECT regarding a property owner who holds a real estate license?
A. The property owner must pay interest on the security deposit equal to the standard interest rate paid at a federal reserve member bank.
B. The property owner may spend the security deposits as long as they have the money available at the end of the lease.
C. The property owner may place security deposits into a real estate trust account.
D. The property may automatically place security deposits into their personal account.
C. Wis. Admin. Code § REEB 18.031 A licensee having an ownership interest in a rental property shall either place security deposits related to that property in a real estate trust account or shall provide in a lease for security deposits to be held in an account maintained in the name of the owner or owners.
A licensee is required to disclose:
A. material inconsistent with or materially contradictory to the seller’s statements or the inspection report of a third party
B. the location of any adult family home, community-based residential facility, or nursing home in relation to the property
C. that the property was the site of a specific act or occurrence, if the act or occurrence had no effect on the physical condition of the property or any structures located on the property
D. the information disclosed on third party inspection reports
A. Wis. Admin. Code § REEB 24.07(6): If a licensee’s reasonably and diligent inspection reveals facts materially inconsistent with or materially contradictory to the seller’s statements or the inspection or investigation report of a third party, the inconsistency shall be disclosed in writing and in a timely manner to the parties.
What type of mortgage law is recognized in Wisconsin?
A. Abstract theory
B. Intermediate theory
C. Lien theory
D. Title theory
C. Under lien theory, the buyer has legal title and the lender has the right to place a lien on the buyer’s property given as collateral for the loan.
Which of the following activities can an unlicensed personal assistant do?
A. Conduct an open house
B. Complete an offer for a buyer
C. Schedule appointments
D. Attend showings
C. An unlicensed personal assistant cannot do any activities that would require a real estate license such as showings, open houses, or completing forms. An unlicensed assistant can complete activities that do not require a license such as scheduling appointments.
A firm is responsible for:
A. brokerage services that occurred within the last thirty days but not brokerage services provided before that time
B. all acts of the firm’s licensees
C. any brokerage service provided on behalf of the firm by its licensee
D. brokerage services provided to sellers but not services provided to buyers
C. Firms are responsible only for the brokerage services provided on behalf of the firm by any licensee who is associated with the firm.
A licensee is listing a 4-bedroom, two-story house. Which of the following would be the most suitable comparable property?
A. A 4-bedroom, two-story house that was recently foreclosed on
B. A 3-bedroom, two-story house that was recently sold in the same neighborhood as the listed property
C. A two-story mixed use property
D. A 4-bedroom, two-story house that is currently for sale in the neighboring town
B. A comparable property is a similar property currently being sold. The maximum value of a property tends to be established by value of similar properties that have recently sold. A foreclosed property does not provide a good comparison because it is not an arm’s length sale.
How must a supervising broker delegate supervision to another broker?
A. In a written statement signed by both brokers
B. With a notarized Delegation of Supervision statement from the Department of Safety and Professional Services
C. The delegating broker must transfer all ownership in the company to the receiving broker
D. By email
A. A firm can delegate supervision responsibility in writing as long as the delegation is signed by both the broker/firm delegating and the recipient of the delegated authority.
Chain of title refers to:
A. a series of links measuring 7.92 inches
B. a summary or history of all instruments and legal proceedings affecting a specific parcel of land
C. the succession of conveyances from some starting point whereby the current owner derives title to the real estate
D. an insurance policy that protects the holder from challenges to the policyholder’s ownership
C. The chain of title for a property is the succession of conveyances from some starting point whereby the current owner derives title to the real estate. A chain of title may start with the original grant of ownership from the United States to the first private owner and all subsequent conveyances up to the current owner.
According to the terms of the Extension of Listing section of the WB-1 Residential Listing Contract, how long is the listing contract extended for protected buyers?
A. 15 months
B. Two years
C. One year
D. Six months
C. Line 230 of the WB-1 Residential Listing Contract states, “The Listing term is extended for a period of one year as to any Protected Buyer.”
The extension portion of the WB-1 Residential Listing Contract can be found on lines:
A. 215-225
B. 157-160
C. 169-176
D. 230-234
D. This is the area of the listing contract that describes how the firm’s listing contract is extended for a period of one year for protected buyers.
The listing contract states that the washer and dryer are included in the sale. The offer to purchase does not mention the washer and dryer anywhere. At the time of closing the washer and dryer:
A. must be removed
B. are included in the sale
C. will be purchased separately
D. must be on the property
A. Lines 483-485 of the WB-11 Residential Offer to Purchase state “At time of Buyer’s occupancy, Property shall be in broom swept condition and free of all debris, refuse, and personal property belonging to current tenants, or that sold to Buyer or left with Buyer’s consent.” The offer to purchase determines what property is included or excluded in the transaction. Since the washer are dryer are personal property, if they are not addressed in the offer to purchase they must be removed at closing.
How can a seller terminate a listing contract?
A. Written notice to the DSPS
B. Only with a notarized statement from the seller to the listing firm’s MLS
C. With a phone call to the listing firm
D. In writing, delivered according to the terms of the listing contract
D. Lines 273-281 of the WB-1 Residential Listing Contract.
What would a buyer’s licensee NOT have to disclose to the buyer-client?
A. The property the buyer is interested in purchasing will be difficult to sell in the future.
B. The sellers are getting divorced and need to sell the house quickly.
C. There is a leak in the basement.
D. There are negotiation strategies that may benefit the buyer more than the seller.
B. The sellers’ divorce is the sellers’ confidential information and cannot be disclosed to the buyer.
A licensee with a plumbing background notices a defect with a seller’s plumbing that is not mentioned on the Real Estate Condition Report or the home inspection report. What should the licensee do?
A. Inform the listing firm so the firm can update the seller’s condition report
B. Inform the buyer and seller in writing of the defect
C. Inform the buyer’s attorney so the buyer’s rights are protected
D. Inform the seller and ensure that the real estate condition report is amended to reflect the defect
B. Wis. Stat. § 452.23(3) A licensee shall disclose to the parties to a real estate transaction any facts known by the licensee that contradict any information included in a written report. Wis. Stat. § REEB 24.07(2) A licensee when engaging in real estate practice, shall disclose to each party, in writing and in a timely fashion, all material adverse facts that the licensee knows and that the party does not know or cannot discover through a reasonably vigilant observation, unless the disclosure of the material adverse fact is prohibited by law.
Which of the following is a CORRECT statement regarding Antitrust Laws?
A. A conspiracy exists whenever a competing company acts according to an independent business decision.
B. The Sherman Antitrust Act was designed to maintain and preserve business competition.
C. A conspiracy to restrain trade occurs when a firm independently decides to offer only buyer agency.
D. When a company changes its commission structure the process should not be documented.
B. The Sherman Antitrust Act was designed to maintain and preserve business competition.
Which of the following advertisements does NOT violate fair housing laws?
A. “No children under the age of 16.”
B. “Security deposit - $700 or $800 for tenant’s with children.”
C. “Room available, shared bathroom, female only.”
D. “Perfect for young families.”
C. The Fair Housing Act and Wisconsin law make it unlawful to print or publish any statement, notice, or advertisement with respect to the sale or rental of a dwelling that indicates a preference of a federally protected class. An advertisement can mention gender if there will be shared living space such as someone renting out a room in a person’s home.
Four condominium units are valued at $200,000; $215,000, $220,000; and $225,000. Together the annual property maintenance fees for the condominiums are $8,500. What is the total value of the units?
A. $415,000
B. $465,000
C. $860,000
D. $868,500
C. The total value of the four condominiums is $860,000.
A borrower is obtaining an adjustable rate loan where the initial rate is fixed for three years. After the initial period, the loan will adjust every six months. What is the borrower’s initial principal and interest payment is based upon?
A. The interest rate at which the ARM is originated
B. The interest rate obtainable for a 30 year fixed loan
C. An approximation of the interest rate in three years
D. The interest rate at which the loan is originated plus two points
A. When calculating a principal and interest payment for an adjustable rate loan, one would use the interest rate at which the loan is originated.
What is a planned unit development?
A. A regulatory process which promotes unified development for a development specially approved by the zoning authority for the developer
B. A regulatory framework for protecting land near bodies of navigable water
C. A development where single family homes are owned as condominiums
D. A process for a government to take private property for a public development
A. A planned unit development (PUD) is a regulatory process which promotes large scale, unified land development by means of mid-range, realistic programs in chase of physically curable, social and economic deficiencies in land and cityscapes. A developer seeking to create a PUD must obtain approval for the relevant land use and zoning authorities.
When purchasing a condominium the buyer has the right to a copy of the condominium declaration bylaws within how many days prior to closing?
A. 15
B. 25
C. 20
D. 10
A. Wis. Stat. § 703.33(1): Not later than 15 days prior to the closing of the sale of a unit to a member of the public, the seller shall furnish to the purchaser a copy of the proposed or existing declaration, bylaws and any rules or regulations, together with an index of the contents.
A buyer wants to have the interest earned on their earnest money deposit. Which of the following statements is most correct?
A. The firm cannot draft an escrow agreement for the buyer and seller.
B. The firm can give the interest to the buyer if the offer to purchase states that the buyer gets the interest.
C. The firm cannot hold the earnest money but they may draft an escrow agreement for the buyer and the seller
D. The firm can give the interest to the buyer with written permission from the seller.
A. Wis. Admin. Code § REEB 18.06 If the parties to a transaction do not desire that the firm hold the earnest money in the firm’s real estate trust account, and wish to designate an escrow agent other than the firm, the firm may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney. The firm may not hold the funds in the firm’s real estate trust account, nor may the firm act in any way as custodian of the funds for the parties. The funds, pursuant to the escrow agreement, shall be held by some other party, such as a bank, a savings and loan association, a credit union, or an attorney.
Which of the following statements is INCORRECT regarding a licensee’s duty to inspect real estate?
A. A licensee must conduct a reasonably competent and diligent inspection of accessible areas of a structure and immediately surrounding areas of the property to detect observable, material adverse facts.
B. A licensee, prior to listing a property, shall make inquiries of the seller on the condition of the structure, mechanical systems and other relevant aspects of the property as applicable.
C. A selling agent is also required to inspect a property prior to or during the showing of the property.
D. A licensee cannot write an offer for a buyer without attending a showing.
D. A licensee, when engaging in real estate practice that involves real estate improved with a structure, shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts. While it may not be advisable, it is not illegal for a licensee to write an offer for a buyer without attending a showing. A buyer may have already seen the property or perhaps is willing to write an offer sight unseen. The real challenge for a licensee in drafting an offer without seeing a property is knowing what contingencies to include.
The WB-36 Buyer Agency Agreement provides that the buyer’s firm has the exclusive right to:
A. negotiate for property
B. act as an attorney
C. locate property
D. act as a buyer’s agent
D. The WB-36 Buyer Agency Agreement provides that the buyer’s firm has the exclusive right to act as a buyer’s agent. The form would need to be modified to create and exclusive right to locate or negotiate.
Which of the following is established by the time and date a document was recorded?
A. Priority
B. Quit claim
C. Marketable title
D. Chain of title
A. The date and time of recording a document establishes priority. For example, the priority of liens is established by the date and time the lien is recorded.
The Real Estate Settlement Procedures Act (RESPA) regulates:
A. new first mortgages on residential 1-4 family transactions
B. seller financed transactions
C. land contracts
D. commercial and residential properties
A. The purpose of RESPA is to ensure that borrowers in mortgage loan transactions have knowledge of all settlement costs. It applies to all federally related new first mortgages on residential 1-4 family transactions.
Four condominium units are valued at $200,000; $215,000; $220,000; and $225,000; a total value of $860,000. The four condominiums have an annual property maintenance fee $8,500. If the amount of the property maintenance fee owed by each unit is based upon the unit’s value, what percentage of the total fee does the most expensive unit owe?
A. 3.8%
B. 26%
C. 25%
D. 26.5%
B. The most expensive unit is $225,000. The total value of all the units is $860,000. $225,000 / $860,000 = .2616 or 26%.
The period in which a mortgagor may redeem title to real estate after a foreclosure judgment is the:
A. doctrine of equity
B. redemption period
C. writ of attachment
D. statute of frauds
B. The redemption period is the period during which the defaulted borrower can continue to live in the property and attempt to pay off the debt resulting from the foreclosure judgement. State statute determines the redemption period.
Wisconsin fair housing laws prohibit discrimination in housing based on all of the following EXCEPT:
A. religion
B. race
C. marital status
D. conviction record
D. Conviction record is not a protected class under Wisconsin fair housing laws.
If a licensee is asked about the existence of any known sex offenders in the area, to achieve immunity from having to disclose this information, the licensee may:
A. ask the seller to interview neighbors to find out if they are sex offenders
B. ignore the question
C. provide the Department of Corrections’ contact information in writing
D. never have immunity from such disclosures
C. Wis. Stat. § 452.24 Disclosure duty; immunity for providing notice about the sex offender registry. (1) If, in connection with the sale, exchange, purchase or rental of real property, a licensee receives a request from a person to whom the licensee is providing brokerage services in connection with the sale, exchange, purchase or rental for information related to whether a particular person is required to register as a sex offender under s. 301.45 or any other information about the sex offender registry under s. 301.45, the licensee has a duty to disclose such information, if the licensee has actual knowledge of the information. Notwithstanding sub. (1), the licensee is immune from liability for any act or omission related to the disclosure of information under sub. (1) if the licensee in a timely manner provides to the person requesting the information written notice that the person may obtain information about the sex offender registry and persons registered with the registry by contacting the department of corrections. The notice shall include the appropriate telephone number and Internet site of the department of corrections.
All of the following would constitute a basis for disciplinary action under Wisconsin’s license law EXCEPT:
A. the listing agent accepting a bonus from the buyer
B. paying a referral fee to another licensee without disclosing the fee
C. the listing firm advertising a property with the consent of the seller after the listing contract has expired
D. attempting to represent both buyer and seller without their written consent
B. Representing both the buyer and the seller without written consent is a violation of duties of licensees. Licensees can pay referral fees to other licensees without disclosure. A listing agent can only accept payment from the listing agent’s firm. Advertising a property without the seller’s consent is a violation of Wis. Admin. Code Ch. REEB 24.
How long does a licensee have to notify the DSPS of a misdemeanor conviction?
A. 10 days
B. 48 days
C. 48 hours
D. 24 hours
C. A license who is convicted of a misdemeanor or a felony must notify the DSPS of the conviction within 48 hours of the conviction.
Licensees shall advertise in a manner which is:
A. false
B. true
C. misleading
D. deceptive
B. Licensees shall not advertise in a manner that is false, misleading, or deceptive.
Which of the following real estate licensees/firms is NOT required to ensure compliance with the federal LBP disclosure law?
A. A selling licensee paid by the selling firm
B. A selling firm receiving a commission
from a cooperating firm
C. A listing firm paid by the seller
D. A buyer’s firm paid by the buyer
D. Under the federal LBP law, an agent means any party who enters into a contract with a seller or lessor including any party who enters into a contract with a representative of the seller or lessor, for selling or leasing target housing. This term does not apply to purchasers or any purchaser’s representative who receives all compensation from the purchaser.
Which of the following form of asbestos is likely to be considered the largest health risk?
A. Asbestos floor tiles that have been covered by new vinyl flooring
B. Deteriorating asbestos insulation wrapped around water pipes
C. Asbestos shingles found underneath fiberglass shingles
D. Asbestos insulation that was friable and has been encapsulated
B. The deteriorating asbestos is most likely going to be friable and would be the largest health risk. Asbestos, which has been covered or encapsulated so that the fibers cannot become airborne, would be considered the safest.
Which of the following is NOT a federally protected class?
A. Age
B. Color
C. Gender
D. National origin
A. The federally protected classes are race, color, religion, gender, national origin, disability, and familial status.
Which of the following is NOT viewed as an encumbrance that must be disclosed to a buyer?
A. A neighbor’s encroaching fence
B. A recorded right of first refusal
C. A recorded easement
D. Back taxes that the seller will be paying off at closing
D. Any encumbrances that are going to be removed at closing do not need to be disclosed. This would commonly include taxes, mortgage loans, and other liens that will be paid off at closing with the seller’s proceeds.
A radioactive gas in the air that comes from the natural breakdown of uranium in soil, rock and water is:
A. radium
B. methamphetamine
C. mold
D. radon
D. Radon is a gas that comes from the natural (radioactive) breakdown of uranium in soil, rock, and water and gets into the air.
What must firms provide to their licensees?
A. Training for how to develop and grow a real estate business
B. A written statement of procedures under which the firm and licensees associated with the firm shall operate with respect to transaction documents
C. Onsite supervising during normal business hours
D. An arbitration manual for alternative dispute resolution
B. A firm must provide licensees associated with the firm with a written statement of procedures under which the firm and licensees associated with the firm shall operate with respect to handling documents relating to a real estate transaction.
A listing firm and a seller can modify an Exclusive Right to Sell Listing Contract to create any of the following EXCEPT:
A. net listing
B. one-party listing
C. exclusive agency
D. open listing
A. Wis. Admin. Code § REEB 24.10: Licensees shall not obtain, negotiate or attempt to obtain or negotiate any listing contract providing for a stipulated net price to the owner with the excess over the stipulated net price to be received by the firm as commission. Wis. Admin. Code § REEB 16.06(6): A licensee may alter an approved exclusive right to sell listing contract to create an exclusive agency listing or an open listing.
What state agency owns the interest earned on a firm’s Interest Bearing Real Estate Trust Account (IBRETA)?
A. The Department of Financial Institutions
B. The Department of Administration
C. The Department of Agriculture, Trade and Consumer Protection
D. The Department of Safety and Professional Services
B. Interest earned from a firm’s IBRETA account belongs to the Department of Administration.
An agent pays her unlicensed personal assistant a percentage of each commission she earns. What is this called?
A. Independent contractor negotiation
B. Fee-splitting
C. Hourly wages
D. Net listing
B. Paying an unlicensed individual a portion of a licensee’s commission is fee-splitting. Fee-splitting is illegal.
Which of the following creates a multiple representation relationship?
A. A buyer’s licensee presents an offer to a seller
B. A buyer’s licensee writes an offer for a buyer on a property listed by the buyer’s licensee’s firm
C. A listing licensee presents a counter-offer to a buyer
D. A listing licensee writes an offer for a buyer on one of the listing licensee’s listings
B. Multiple representation occurs when a firm has an agency contract with both the buyer and the seller in the real estate transaction. The phrase “a buyer’s licensee” tells us that the buyer has an agency agreement with the firm. “A property listed with the buyer’s licensee’s firm” tells us that the seller also has a listing contract with that firm. The buyer’s licensee’s firm has an agreement with both the buyer and the seller.
What form would be used to allow a seller to negotiate with more than one buyer at the same time?
A. Multiple Counter-Proposal
B. Amendment to Offer to Purchase
C. Notice Relating to Offer to Purchase
D. Counter-Offer
A. The multiple counter-proposal allows a seller to negotiate with several buyers at one time by issuing a non-binding proposal to each buyer. If the buyer accepts the seller’s multiple counter-proposal, it becomes an offer from the buyer to the seller that can be accepted by the seller, thus creating a binding sales contract.
Which of the following does the Department of Natural Resources (DNR) describe as providing critical habitat for wildlife, water storage to prevent flooding and protect water quality, and recreational opportunities for wildlife watchers, anglers, hunters and trappers and boaters?
A. Shorelands
B. Water frontage
C. Piers
D. Wetlands
D. The DNR describes wetlands as providing critical habitat for wildlife, water storage to prevent flooding and protect water quality and recreational opportunities for wildlife watchers, anglers, hunters and trappers and boaters.
A licensee is purchasing a home. When completing the offer to purchase how should they handle the agency information on line 1-2 of the WB-11 Residential Offer to Purchase?
A. All of the agency information should be stricken because the licensee is acting as a principal not an agent.
B. The form should be drafted to indicate that the licensee is representing the buyer.
C. “Agent of seller” and “agent of buyer” should be stricken because the licensee acts in multiple representation when personally involved in real estate transactions.
D. If the agent wants a commission from the seller then the licensee should strike “agent of buyer” and “agent of buyer and seller.”
A. A licensee cannot act as a principal and an agent at the same time. Therefore, the agency information found at lines 1-2 of the WB-11 Residential Offer to Purchase should be stricken completely.
The WB-11 Residential Offer to Purchase indicates the seller shall provide title evidence in the form of:
A. warranty deed
B. title insurance
C. abstract of title
D. gap endorsement
B. Seller shall give evidence of title in the form of an owner’s policy of title insurance in the amount of the purchase price.
A buyer’s firm writing an offer as a cooperating firm is an example of:
A. single agency
B. coercion
C. multiple representation
D. an illegal action
A. A buyer’s firm is only representing one party, the buyer. The seller is represented by another firm.
Jimmy and Sara, a married couple, are selling their primary residence. Both Jimmy and Sara must sign all of the following EXCEPT:
A. any amendments to the offer
B. the offer to purchase
C. the listing contract
D. any deed transferring title
C. The listing contract, unlike the other contracts, does not require the signature of both spouses in order to be valid. The courts have held that the party signing the contract is responsible for the commission. If only Jimmy signs the listing contract, Jimmy is stating that he alone is responsible for the commission.
The Delivery of Documents and Written Notices section of the WB-11 Residential Offer to Purchase:
A. allows the parties to designate alternative recipients for delivery by U.S. Mail
B. requires that fees for commercial delivery always be prepaid to an account
C. does not permit delivery by email
D. no longer allows personal delivery except by legal process server
A. WB-11 Residential Offer to Purchase Lines 576-577 allow the parties to designate an alternative recipient for delivery of documents.
Current municipality land uses and resources, forecasts community growth, and sets objectives for the development that is desirable for the community’s vision of its future defines the:
A. master plan
B. town administrator plan
C. county development plan
D. zoning plan
A. The zoning plan defines allowable uses for zoning districts. Zoning districts are based on the master plan.
A firm may charge for services in all of the following ways EXCEPT:
A. a single flat fee
B. commission based upon a percentage of the selling price
C. hourly rate
D. agreement with other firms in the area to charge a certain rate
D. A firm may charge a single flat fee, a commission based upon a percentage of the selling price, or an hourly rate. The practice of getting together with other firms in an area and agreeing upon a certain rate to charge for services rendered is a violation of antitrust laws.
“Time is of the essence” means that:
A. The action required in the contract must be performed by the date stated in the contract or the party awaiting performance could call the contract void
B. A breach of a stated deadline automatically voids the contract
C. The parties are given a reasonable time to perform upon breach of a stated date
D. Under no circumstances will an extension of time be given if a date is missed
A. Lines 88-93 of the WB-11 Residential Offer, “If ‘Time is of the Essence’ applies to a date or deadline, failure to perform by the exact date or Deadline is a breach of contract. If ‘Time is of the Essence’ does not apply to a date or Deadline, then performance within a reasonable time of the date or Deadline is allowed before a breach occurs.”
Title insurance does NOT insure over:
A. facts disclosed by survey
B. defects found in public records
C. forged documents
D. incorrect marital statements
B. The grantee was already aware of the defect before the transfer of title and the grantee had the ability to discover the defect prior to the purchase of the property.
The right of a governmental body to take ownership of real estate for public use is called:
A. police power
B. eminent domain
C. escheat
D. condemnation
B. Eminent domain is one form of police power and is the power of a governmental body to take ownership of real estate for a public use.
All of the following may legally terminate a listing contract EXCEPT:
A. a rise in interest rates
B. fulfillment of purpose
C. condemnation
D. mutual consent
A. A rise in interest rates may make a property more difficult to market but it would not legally terminate the listing.
If a buyer has properly given a Notice of Defects and the seller does NOT have the right to cure, what is the status of the contract?
A. Unenforceable
B. Breach by the buyer
C. Seller must cure
D. Null and void
D. Lines 222-226 of the WB-11 Residential Offer to Purchase. Specifically, lines 222-223, “This Offer shall be null and void if Buyer makes timely delivery of the Notice of Defects and written inspection report(s) and: (1) Seller does not have a right to cure…”
A seller accepts an offer for $91,575 with a $10,000 mortgage carried by the seller for the buyer. After adjustments between the parties were made on the closing statement, the buyer ended up owing the seller $78,500 in cash on closing day. What was the amount of transfer tax paid by the seller?
A. $274.80
B. $244.80
C. $274.72
D. $235.50
A. $91,600 x .003 = $274.80.
All of the following are true regarding discount points EXCEPT:
A. all loans have discount points associated with them
B. discount points vary according to the specific loan program
C. they increase a lender’s profit
D. they are paid to the lender to make up for the difference between the market rate of a loan and the origination rate of a loan
A. Not all lenders offer discount points to borrowers.
Which type of loan does the federal government guarantee?
A. Adjustable rate mortgage
B. Conventional loan
C. Department of Veterans Affairs (VA) loan
D. Federal Housing Administration loan (FHA)
C. The guarantee feature on a VA loan promises lenders that in the event of deficiency in a foreclosure the lender will be compensated by the VA for any losses incurred in the foreclosure and subsequent sale of the property up to the limit of the guarantee.
Which of the following does NOT create a voidable contract?
A. An amendment signed under duress
B. A counter-offer signed by an authorized power of attorney
C. An offer to purchase signed by a minor
D. A listing contract signed by an incompetent party
B. An authorized power of attorney would have the authority to sign contracts on behalf of the principal.
A selling licensee can receive a commission from the:
A. buyer’s firm
B. seller
C. buyer
D. selling firm
D. Wis. Stat. § 452.14(3)(f) Disciplinary proceedings shall be conducted by the board if it finds that a licensee accepted from any person except the firm with which the licensee is associated, if the licensee is associated with a firm, a commission or valuable consideration for the performance of any act specified in this chapter or as compensation for referring a person to another licensee or to any other person in connection with a transaction.
When trying to determine if an advertisement violates the Fair Housing Act, what test(s) is applied?
A. Ordinary Reader Test
B. Ordinary Day Test
C. Extraordinary Human Being Test
D. Extraordinary Reader Test
A. In determining if an advertisement violates fair housing, the ordinary reader test is applied. Essentially, if the add appears to prefer or “dis-prefer” individuals because of their membership in a protected class, it might be discriminatory.
Which of the following tests would NOT be used to determine if a hot tub is a fixture or personal property?
A. Intent of the parties
B. Adaptation of the article
C. Relationship between the parties
D. Method of attachment
C. The four tests a court will use to determine a property’s classification are how is it attached, how is it adapted, what was the party’s intent, and any agreement between the parties regarding the item.
The existing firms in town have decided not to work with a new firm that charges less commission. This is likely:
A. price-fixing
B. Commission structuring
C. a group boycott
D. MLS policy
C. A group boycott is competitors conspiring against another business or agreeing to withhold their patronage to limit competition.
Which of the following is not considered real property?
A. Fences
B. Growing shrubs
C. Built-in appliances
D. Farm equipment
D. Shrubs, bulbs, trees, fences, and built-in appliances are all considered real property. Farm equipment, because it is not attached, is considered personal property like a car, trailer, or snowmobile.
Which of the following would violate advertising rules for real estate licensees?
A. Advertising a property that has already been sold
B. Advertising a home warranty offered by the seller
C. Advertising the square footage according to the assessor
D. Advertising in a price range agreed to by the seller
A. Wis. Admin. Code § REEB 24.04(1) states, “Licensees shall not advertise in a manner which is false, deceptive, or misleading.”
Binding acceptance occurs:
A. when all parties have signed an identical copy of the offer to purchase
B. when all parties have signed an identical copy of the offer to purchase and it is delivered to the party who made the offer
C. at closing
D. upon signature
B. Lines 39-40 of the WB-11 Residential Offer to Purchase, “The Offer is binding upon both Parties only if a copy of the accepted Offer is delivered to Buyer on or before ___________________________.”
Which of the following is NOT a right associated with property ownership?
A. The right to use the property as collateral for a debt
B. The right to use the property in any manner desired by the property owner
C. The right to sell or convey the property
D. The right of enjoyment
B. A property owner has the following six rights: disposition, encumbrance, quiet enjoyment, control, possession, and exclusion. A property owner has a right to use the property but that right does not extend to using the property in an unlawful manner.
When renting commercial property to tenants, the property owner or property manager:
A. needs to be aware of any local equal opportunity ordinances that may affect commercial or industrial properties
B. must disclose knowledge of lead-based paint to potential tenants under the lead based paint disclosure law
C. must take into consideration the Federal Fair Housing Laws
D. if licensed, must use the state-approved commercial lease form
A. Federal fair housing laws do not apply to commercial property. Lead-based paint disclosure is only applicable to target housing, which is housing built before 1978. Wisconsin does not have approved leases for commercial or residential property. Licensees must follow local fair housing or equal opportunity laws and those might apply to commercial properties.
Which of the following are NOT considered client funds?
A. Earnest money
B. Advanced fees
C. Promissory notes
D. Downpayments
C. Wis. Stat. § 452.13(a) “Client funds” means all downpayments, earnest money deposits, or other money related to a conveyance of real estate that is received by a licensee on behalf of a firm or any other person. “Client funds” does not include promissory notes.
The commission on the sale of 123 Anywhere Drive was $18,500, based on a 6.5 percent commission rate. What was the final selling price of the property? Use whole numbers.
A. $28,462
B. $2,846,154
C. $2,846
D. $284,615
D. $18,500/ .065 = $284,615.
A firm has a contract with a person to pay a finder’s fee if the person finds a buyer for the firm’s listing. This is permissible if the:
A. person is an unlicensed personal assistant
B. person has a salesperson’s license
C. person acts as a property manager for the listing
D. transaction closes
B. Wis. Stat. § 452.19No licensee may pay a fee or a commission or any part thereof for performing any act specified in this chapter or as compensation for a referral or as a finder’s fee to any person who is not licensed under this chapter or who is not regularly and lawfully engaged in the real estate brokerage business in another state, a territory or possession of the United States, or a foreign country, unless the person was licensed under this chapter when the commission was earned or when the referral fee arrangement was made. (2) If a licensee is associated with a firm, all fees or commissions and any part thereof for performing any act specified in this chapter and all compensation for a referral or as a finder’s fee shall be paid to the firm.
The penalty for knowingly or willfully violating the federal lead-based paint disclosure rules can be:
A. $11,000 fine and imprisoned for up to one year, or both
B. prison up to one year only
C. $11,000 fine only
D. 10-year prison sentence
A. Penalties for knowingly or willfully violating the federal lead-based paint disclosure rules can be up to $11,000 for each violation and imprisonment for up to one year, or both.
On what line does the buyer indicate they wish the seller to pay for a gap endorsement as part of the title insurance policy?
A. Line 362
B. Line 400
C. Line 300
D. Line 390
B. A buyer would indicate on line 400 of the WB-11 Residential Offer to Purchase that they wish for the seller to provide a gap endorsement at the seller’s cost.
A buyer orders a title insurance policy. The title insurance provider searches the public records for the title examination. The title company notifies the buyer in writing of the condition of the title with the:
A. chain of title
B. title insurance commitment
C. abstract of title
D. deed
B. The title company notifies the buyer of the condition of title in writing with the title insurance commitment. This document is also sometimes called a preliminary report or the title insurance binder but in Wisconsin it is most commonly referred to as the title insurance commitment.
Betty and Sam were in negotiations regarding property 789 Pear Street. Betty made an offer to purchase including earnest money of $5,000. Sam rejected Betty’s offer. Who receives the disbursement of the $5,000 earnest money?
A. Neither Sam nor Betty because the listing firm receives the earnest money
B. Betty receives $5,000
C. Sam receives $5,000
D. Sam, Betty, and the listing firm each receive one-third of the $5,000
B. Lines 67-69 of the Offer to Purchase – Disbursement states, “If negotiations do not result in an accepted offer, the earnest money shall be promptly disbursed (after clearance from payer’s depository institution if earnest money is paid by check) to the person(s) who paid the earnest money.
Which of the following transactions must include a real estate condition report?
A. A seller selling a duplex that the seller has never lived in
B. A personal representative selling property that the personal representative has never lived in
C. New construction that has never been inhabited
D. A transfer of property where the transfer is exempt from the transfer fee
A. According to Wis. Stat. Chapter § 709 transactions involving the following properties are exempt from the real estate condition report requirements: property that has not been inhabited; transfers exempt from the Wisconsin transfer fee; transfers by personal representative, trustees, conservators, fiduciaries who are appointed by, or subject to the supervision by the court as long as the person has never occupied the property. There is NOT an exemption for a seller that does not live on the property or is not familiar with the condition of the property.
Which of the following would a licensee have to disclose to all parties in the transaction?
A. Receiving a referral fee from another licensee for the referral of a listing
B. A buyer’s licensee is representing the licensee’s sister in the purchase of a property
C. A buyer’s firm is receiving commission from the buyer
D. A seller is paying an incentive to a buyer at closing
B. A license acting as an agent in a real estate or business opportunity transaction may not act in the transaction on behalf of the licensee’s immediate family without the prior written consent of all parties to the transaction. The buyer’s licensee is an agent representing in this case a family member; therefore, they must disclose this interest.
A seller lists a house with Salesperson A. A buyer attends Salesperson A’s open house and decides to write an offer after signing a buyer agency agreement with Salesperson A. Which of the following correctly identifies the relationship between the buyer, the seller, and Salesperson A?
A. Salesperson A has a single agency relationship with the buyer.
B. Salesperson A has a multiple representation relationship.
C. Salesperson A has created an illegal relationship with the seller and the buyer.
D. Salesperson A has a single agency relationship with the seller.
B. The buyer and the seller each have a signed agency agreement with Salesperson A, thus creating a multiple representation relationship.
Which of the following is NOT a duty owed to a customer?
A. Acting in an honest and fair manner
B. Confidentiality
C. Reasonable skill and care
D. Disclosure of material facts
D. The requirement to disclose material facts only applies to a client. A licensee must disclose material adverse facts to all parties in the transaction.
Which of the following is a duty owed ONLY to a client?
A. Safeguard trust funds
B. Objective presentation of contract proposals
C. Loyally represents interests
D. Disclose material adverse facts
C. The duties owed to a CLIENT include: Loyally represent the client’s interest, provide information and advice on matters that are material to the client’s transaction, disclose all material information, fulfill any obligation required by the agency agreement that is not in conflict with the law, and the duty to negotiate on behalf of the client, unless waived.
Which of the following allows a property owner to use property in a way that was once allowed but is no longer permitted under current zoning regulations?
A. Nonconforming use
B. Spot zoning
C. Variance
D. Conditional use
A. A nonconforming use is a use of property was once permitted but is no longer permitted under current zoning regulations. The use is considered “grandfathered” in and the property owner can preserve nonconforming use status by continuing to use the property in the nonconforming way. An agent can list and sell a nonconforming use and the new owner typically needs to use the property in the same way to preserve the status as a nonconforming use.
An offer to purchase for the sale of a home meets all of the requirements established in the listing agreement. Which of the following statements is true?
A. The owner may reject the offer.
B. The listing contract would be terminated.
C. The owner must sell the property to the buyer.
D. The owner must sign the offer to purchase or be sued for specific performance.
A. The listing contract is an employment agreement. The seller does not promise in the listing contract to consider or accept an offer, only to pay the firm a commission if the firm procures a buyer.
According to the WB-1 Residential Listing Contract, which of the following parties is responsible to prepare the property to minimize the likelihood of injury?
A. The buyer’s firm
B. The selling firm
C. The listing licensee
D. The seller
D. Lines 263-272 of the WB-1 Residential Listing Contract state, “Seller is aware that there is a potential risk of injury, damage and/or theft involving persons attending an ‘individual showing’ or an ‘open house.’ Seller accepts responsibility for preparing the Property to minimize the likelihood of injury, damage and/or loss of personal property. Seller agrees to hold the Firm and its agents harmless for any losses or liability resulting from personal injury, property damage, or theft occurring during ‘individual showings’ or ‘open houses’ other than those caused by the negligence or intentional wrongdoing of the Firm or its agents.”
A licensee associated with a firm wants to place an advertisement in the local newspaper. A licensee must use the firm’s name in all advertising UNLESS:
A. for situations where the licensee is paying for 100% of the advertisement
B. the licensee also has a firm’s license
C. the licensee is advertising for tenants for personally owned rental property
D. the seller asks that the firm’s name not be included
C. Wis. Admin. Code § REEB 24.04: Except for advertisements for the rental of real estate owned by the licensee, a licensee firm shall disclose the firm’s name as it appears on the firm’s license or disclose a trade name previously filed by the department.
The duties to all parties include all of the following EXCEPT:
A. provide brokerage services with reasonable skill and care
B. negotiation
C. safeguard trust funds
D. disclosure of material adverse facts
B. Duties to all parties: Safeguard trust funds, provide brokerage services honestly and fairly, present contract proposals in an objective and unbiased manner, confidentiality, provide accurate information about market conditions within a reasonable time after the person’s request, provide brokerage services with reasonable skill and care, disclosure of material adverse facts. The duty of negotiation is just for clients.
For how long must a Wisconsin firm retain transaction documents related to a transaction that did not close?
A. Two years from the date of the offer
B. Two from the date the listing contract was signed
C. Two years from the date the listing contract expired
D. Two years from the date the earnest money was disbursed
C. Wis. Admin. Code § REEB 15.04 A firm shall retain documents for at least two years. The two years runs from the date of closing. If the transaction does not close, it is two years from the date the expiration of the agency agreement.
Discount points enable a borrower to:
A. reduce the principal of the loan
B. reduce the term of the loan
C. buy a house with less money down
D. reduce the initial interest rate of the loan
D. The buy down provisions on a loan allow the borrower to pay points. The borrower purchases points to originate a loan at a lower than market interest rate.
Where must a firm deposit client funds?
A. Company savings account
B. Mandatory interest-bearing real estate common trust account (IBRETA)
C. Mandatory non-interest bearing trust account
D. Required business account
B. Wis. Stat. § 452.13(2)(c) A firm shall deposit all client funds in the interest-bearing common trust account.
Four condominium units are valued at $200,000; $215,000; $220,000; and $225,000; a total value of $860,000. The four condominiums have an annual property maintenance fee $8,500. The amount of the property maintenance fee owed by each unit is based upon the unit’s value in relation to the total value of all four units; what is the monthly maintenance fee of the most expensive unit?
A. $2,125.00
B. $184.17
C. $177.08
D. $708.33
B. The most expensive unit is $225,000. The total value of all the units is $860,000. $225,000 / $860,000 = .2616 or 26%. The annual maintenance fee for all the units is $8,500. $8,500 x .26 = $2,210 per year for the most expensive unit. $2,210/12 months determines the monthly maintenance fee of the most expensive unit is $184.17.
A builder completed a new home and is going to live in it for 3 weeks prior to closing of the sale to a buyer. Must the builder complete a real estate condition report?
A. Yes, because the property will establish a pattern of sales for the builder.
B. No, because the property is new construction and is exempt.
C. No, because the property is not listed with a firm.
D. Yes, because the property meets the definition of one-to-four dwelling units.
D. Sellers of vacant land or real estate containing one-to-four dwelling units, whether listed with a firm or for sale by owner, are required to complete a real estate condition report. There is an exemption for a property that has never been lived in but if the builder is living in the home prior to closing, the builder is not exempt and must complete a real estate condition report.
Which of the following sales would need to include a lead-based paint addendum to the Offer to Purchase?
A. Housing for the elderly built prior to 1978
B. An efficiency apartment without bedrooms built prior to 1978
C. A duplex built prior to 1978
D. Housing for persons with a disabling condition built prior to 1978
C. The LBP disclosure addendum is required on all transactions involving target housing. Target housing includes any housing built prior to 1978 except for housing for the elderly or persons with disabilities and 0-bedroom dwellings.
What event would NOT terminate a listing contract?
A. The seller decided not to sell the property at this time.
B. A lender foreclosed on the seller’s property.
C. A sales contract failed to close.
D. The seller declared bankruptcy.
C. A listing contract can be terminated by: death or incapacity of the principals, destruction or condemnation of the property by eminent domain, expiration of the term, mutual agreement, breach, operation of law, or completion. Bankruptcy and foreclosure are examples of operation of law. The seller has the power to cancel the listing contract at any time. A sales contract that fails to close would not have any effect on the listing contract.
A Listing Contract is signed July 1, 2021. An Offer is presented to the seller on July 14, 2021 and the seller accepts the Offer July 15, 2021. The transaction closes on September 15, 2021. The listing firm must keep transaction documents for this transaction until:
A. September 15, 2023
B. July 15, 2023
C. July 1, 2023
D. July 14, 2023
A. Wis. Admin. Code § REEB 15.04: A firm shall retain for at least two years exact and complete copies of all listing contracts, offers to purchase, leases, closing statements, deposit receipts, cancelled checks, trust account records and other documents or correspondence received or prepared by the firm in connection with any transaction. The retention period shall run from the date of closing of the transaction.
What does private mortgage insurance do?
A. Protects the lender from defaults on FHA mortgages
B. Protects the lenders from losses in conventional mortgage defaults
C. Insures the buyer for losses from defects in the title
D. Ensures that a borrower’s loan will be paid in the event the borrower runs into financial problems
B. Private mortgage insurance insures the top 20% of a loan to cover the extra risk to the lender for making a loan to a borrower with less than 20% down.
A rural property is currently being used as cropland. However, the assessed value reflects the property’s worth as if it was being used for residential housing. The principle of value being applied is:
A. progression
B. highest and best use
C. conformity
D. increasing returns
B. The principle of value being used is highest and best use, which is the most profitable use to which a property is adapted. The use must be legally permitted, financially feasible, physically possible, and maximally productive.
An offer is written and subsequently rejected. The buyer gave earnest money with the offer. What would be the proper procedure to return the earnest money?
A. The earnest money can be returned after an amendment to the offer to purchase is signed directing the listing firm to return the earnest money to the buyer.
B. The earnest money can be returned to the buyer.
C. The earnest money can be returned after a Cancellation Agreement and Mutual Release is signed.
D. The earnest money can be returned after an earnest money disbursement agreement is signed by both the seller and the buyer.
B. Generally, the firm must deposit earnest money in a real estate trust account within 48 hours of receipt. Wis. Admin. Code Chapter REEB 18 allows for the disbursement of trust funds upon rejection, expiration or withdrawal, prior to binding acceptance, of an offer to purchase, Therefore, if the offer is rejected, withdrawn or expires prior to the 48 hours, the firm may return earnest money to the buyer. It would be prudent practice to make a photocopy of the earnest money check and document the return.
Salespeople can use which of the following forms:
A. a State Bar Land Contract
B. a residential offer to purchase prepared by the buyer’s attorney
C. a Uniform Commercial Code form
D. a form prepared and approved by the Department of Safety and Professional Services
D. Wis. Admin. Code § REEB 16.03: Salespeople can use approved forms, forms prepared by governmental, quasi-governmental, and tribal agencies for use in their programs, forms for real estate transactions in other states provided that the licensee is physically in Wisconsin, and property management agreements prepared by the broker or landlord.
A two-story home has exterior wall measurements of 40 feet by 90 feet. There is no basement. What is the total square footage of the home?
A. 260 square feet
B. 3,600 square feet
C. 7,200 square feet
D. 10,800 square feet
C. Multiply length by width. 40 feet x 90 feet = 3,600. 3,600 x 2 = 7,200. Remember to be aware of how many stories the building has before you complete the calculation. In this case, you must multiply by 2 because there are two floors to the home. Thus, each floor is 3,600 square feet. Added together the two stories reflect the answer of 7,200 square feet.
What kind of agency relationship is created when a seller signs a listing contract and prohibits the firm from representing the buyer too?
A. Multiple representation
B. General agency
C. Implied agency
D. Express agency
D. A listing contract creates an express, special agency relationship because it is in writing and it allows the listing agent to represent the seller in one specific transaction.
A listing contract is best described as a:
A. special fiduciary relationship that lacks trust and confidence in the firm
B. contract where specific performance is an available remedy
C. personal service contract
D. contract where damages are not an available remedy
C. A listing contract is a personal service contract based upon a special fiduciary relationship of trust and confidence in the firm. Specific performance is not an available remedy for breach of a listing contract. However, damages are an available remedy for breach of a listing contract.
What document does a seller use to convey ownership of personal property to a buyer?
A. A bill of sale
B. An abstract of title
C. A warranty deed
D. An evidence of ownership
A. A bill of sale is used to transfer ownership of personal property from one party to the new owner. You can think of a bill of sale as the “deed” for personal property. Ownership of real estate is transferred using a deed and ownership of personal property is transferred using a bill of sale.
A builder or developer consults the building codes to:
A. allow the builder to restrict the use of the building
B. keep from paying the city inspectors
C. advertise that the builder meets all building codes
D. ensure that the builder complies with safety requirements
D. Building codes ensure public safety by requiring that improvements meet minimum standards of construction.
In the WB-1 Residential Listing Contract, a seller does NOT agree to:
A. allow a lockbox on the property
B. make the property available for showings
C. provide accurate information required in connection with the sale
D. reimburse the listing firm for all advertising if the property does not sell
D. The listing contract does not require the seller to compensate the listing firm for any advertising.
When comparing an appraisal to a market analysis which of the following is most correct?
A. An appraisal justifies value by using past events
B. A market analysis takes value into consideration
C. A market analysis is an objective opinion of value
D. An appraisal determines value
A. An appraiser is trained to provide an unbiased estimate of value. The appraiser will justify the value of the real estate by looking at past events such as what have buyers paid for this type of property in the past.
If the amortization factor is 4.77, what will the Buyers’ monthly principal and interest payment be? Round the monthly principal and interest payment to the nearest dollar.
A. $965
B. $820
C. $1011
D. $1002
B. To calculate the monthly principal and interest payment, take the loan amount times the factor and then divide by 1000. The buyer would like to obtain a loan for 85% of the purchase price, which is $171,912.50. Multiply $171,912.50 by the factor of 4.77 and then divide by 1000 to get the monthly principal and interest payment of $820.02, which is $820 when rounded to the nearest dollar.
How much will the Sellers’ credit the Buyers at closing for property taxes? Use a 365 day year and round to the credit nearest dollar.
A. $750
B. $755
C. $771
D. $776
C. To prorate taxes using last year’s tax bill, divide the tax bill of $1876 by 365 days to get the daily tax rate of 5.1397. Carry your division for the daily tax rate to four decimal places. Multiply the daily tax rate of 5.1397 by 150 days. Pearson Vue does not give you a calendar, so you have to remember how many days there are in the months. There are 31 days in January, 28 days in February, 31 days in March, 30 days in April and 31 days in May but the transaction closes on May 31 so the day of closing is not included in the seller’s credit. The WB-11 Residential Offer to Purchase line 364: “Any income, taxes or expenses shall accrue to the Seller, and be prorated at closing, through the day prior to closing.”
On what line of the WB-11 Residential Offer to Purchase does the agent drafting the offer for the buyer enter “378 Fox Run in Middleton, Wisconsin, 53562”?
A. Line 585
B. Line 4
C. Line 329
D. Line 586
C. The Buyers need to sell their current home to purchase the Sellers home. The agent drafting the offer for the Buyers would include the Closing of Buyer’s Property Contingency by checking the box on line 328 and by entering the Buyers’ address on line 329. Line 4 is for the address of the property the Buyers are seeking to purchase. Lines 585-586 are for the mailing addresses for the Sellers and Buyers if they were including U.S. Mail as a form of delivery. The Sellers and Buyers in this narrative are not including U.S. Mail as a form of delivery so lines 585-586 should be blank or marked n/a.
On what lines in the WB-1 Residential Listing Contract – Exclusive Right to Sell would the listing agent enter “Salesperson C from XYZ Realty”?
A. Lines 166-167
B. Lines 173-174
C. Lines 58-59
D. Lines 336-337
A. The sellers would like to restrict access to the property for Salesperson C from XYZ Realty. The listing agent would enter this information on lines 166-167 of the WB-1 Residential Listing Contract – Exclusive Right to Sell.
What should be struck from lines 1-2 of the WB-11 Offer to Purchase drafted August 15?
A. Agent of Seller and Buyer
B. Agent of Seller/Listing Firm Agent of Seller/Listing Firm
C. Agent of Seller and Buyer
D. Agent of Buyer and Agent of Seller and Buyer
D. The agent drafting the offer is a subagent of the listing firm. The agent would strike (Agent of Buyer) and (Agent of Buyer and Seller) and leave (Agent of Seller/Listing Firm) unstruck.
On what line of the WB-11 Offer to Purchase would the Buyer acknowledge receipt of the Sellers’ Real Estate Condition Report?
A. Line 107
B. Line 48
C. Line 330
D. Line 1
A. When a buyer has received the seller’s Real Estate Condition Report prior to submitting an offer, the buyer acknowledges that by listing the date of the seller’s Real Estate Condition Report on line 107 of the WB- 11 Residential Offer to Purchase.
What is the deadline for the Buyers to issue a notice of defects under the Buyers’ home inspection contingency?
A. August 30
B. October 1
C. October 2
D. August 31
D. The buyer has 15 days from acceptance, which occurred on August 16, to deliver a notice of defects. When counting deadlines, exclude the day of the event and count subsequent calendar days. Therefore, Day 1 of the 15 days is August 17 and 15 days after acceptance is August 31.
What should be on lines 20-23 of the Buyers’ WB-11 Offer to Purchase?
A. Water softener and security system
B. Refrigerator
C. Washer and dryer
D. Primary bedroom curtain rods and wall mounted television with its brackets
A. Lines 20-23 is where a buyer lists the fixtures that the buyer is not purchasing, such as the seller’s rented water softener and security system.
What was the sale price of the home?
A. $449,900
B. $499,460
C. $494,890
D. $404,100
C. $449,900 x 110% = $494,890
What was the commission received by the buyer’s agent?
A. $7,423.35
B. $14,846.70
C. $29,693.40
D. $8,908.02
A. $494,890 x 6% = $29,693.40 (total commission). $29,693.40 x 50% = $14,846.70 (compensation to buyer’s firm). $14,846.70 x 50% = $7,423.35 (commission to buyer’s agent)
How much will the seller credit the buyer at closing for the property tax proration?
A. $1,662.50
B. $1,700.00
C. $1,675.00
D. $1,687.50
C. $4,562.50/365 = $12.50 for the daily tax rate. $12.5 x 134 = $1,675 credit to the buyer at closing.
What was the amount of the loan obtained by the buyer? The property’s appraised value is equal to the purchase price.
A. $314,930
B. $148,467
C. $346,423
D. $134,970
C. $494,890 x 70% =$346,423.
