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National Final > National Final Real Estate Test > Flashcards

National Final Real Estate Test Flashcards

1
Q 
A state government has a department called the Bureau of Unclaimed Property to manage property for which no owner can be located. This is most closely related to the power called:
 A.Taxation
 B.Escheat
 C.Police power
 D.Regulation
A

Escheat

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2
Q

All of the following liens must be satisfied in order to transfer clear title EXCEPT:

A.Assumed mortgage
B.Judgments
C.Mechanics liens
D.Federal tax liens

A

Assumed mortgage

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3
Q

A selling agent learns of an undisclosed hail damage claim on a home that the buyer has made an offer on. The agent should:

A.Suggest that the buyer purchase a home warranty
B.Be certain that the buyer has a home inspection
C.Notify the listing agent of the insurance claim
D.Immediately disclose the claim to the buyer

A

Immediately disclose the claim to the buyer

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4
Q

Under which circumstances is an agency terminated with no liability to either party?

A.Renunciation by the agent
B.The seller has unmarketable title
C.Revocation by the principal
D.Expiration of the contract

A

Expiration of the contract

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5
Q

A special type of zoning that allows a builder to use little or no traditional setback while still complying with density requirements (and often found in Planned Unit Development) is:

A.Cluster zoning
B.Spot zoning
C.Nonconforming use
D.Zoning variance

A

Cluster zoning

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6
Q

If a seller is carrying the financing for a buyer for several years, the IRS wants assurance that the interest rate on that note is not below market rates. These rules are addressed under the concept of:

A.Tax free exchanges
B.Imputed interest
C.Installment sales
D.Passive income

A

Imputed interest

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7
Q

Changes to a contract in escrow:

A.Should be signed or initialed by both parties
B.Can never be made
C.Should be signed by both brokerage firms
D.Should be signed by the escrow agent only after verbal verification by both parties

A

Should be signed or initialed by both parties

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8
Q

Which exchange will NOT qualify as like-kind IRS code section 1031?

A.Rental home for vacant land
B.Personal property
C.Four-plex for two rental homes
D.20-unit apartment building for 35,000 square foot office building

A

Personal property

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9
Q

What type of mortgage plan may permit a builder/developer to obtain the release of lots, one at a time, as they are developed:

A.Package mortgage
B.Hard money mortgage
C.Blanket mortgage
D.Open-end mortgage

A

Blanket mortgage

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10
Q

Which transaction is NOT covered by the Consumer Credit Protection Act?

A. A loan for $20,000 to buy a boat
B. A loan on a cooperative
C. A shopping center loan
D. A residential loan of more than $250,000

A

A loan on a cooperative

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11
Q

A statement of compliance with fair housing laws is required in every broker’s office in the form of a:

A.License
B.Signed disclosure statement
C.Brochure
D.Poster

A

Poster

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12
Q

Why do state laws require brokers to maintain trust accounts if they handle any funds that belong to their clients or customers?

A.To simplify the auditing of a broker’s business accounts
B.To make commingling and conversion impossible
C.To ensure that client funds are clearly identified and accounted for
D.To make s easy for the state to track the disposition of such funds

A

To ensure that client funds are clearly identified and accounted for

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13
Q

Which of the following would NOT be a basis for the termination of a listing?

A.Expiration of time
B.Insanity of agent
C.Destruction of the property by fire
D.Death of the listing salesperson

A

Death of the listing salesperson

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14
Q

A qualified fee estate was owned by two persons who wanted to use the property for a purpose that was forbidden in their deed. They went ahead with their plan for the property. The grantor of the estate:

A.Should sue for specific performance
B.Should sue for money damages
C.May be able to regain title to the property
D.Has no recourse available

A

May be able to regain title to the property

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15
Q

Which of these is a specific statutory lien?

A.General lien
B.Mechanic’s lien
C.IRS lien
D.Judgment

A

Mechanic’s lien

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16
Q

A buyer receives a seller’s property condition disclosure in which the buyer’s agent believes the seller has misrepresented the condition of the property.
The buyer’s agent should:

A.Print out his or her concern to the buyer and recommend further inspection or investigation before proceeding
B.Remain silent as the agent does not know for certain that the seller has misrepresented the property
C.Recommend that the buyer withdraw from the transaction
D.Call the listing agent and express his or her concern

A

Print out his or her concern to the buyer and recommend further inspection or investigation before proceeding

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17
Q

A seller does not wish to sell to any Hispanic buyer. The agent:

A.Can have his license revoked by H.U.D.
B.Must advise the seller that this is unlawful and that
he/she cannot accept the mandate
C.Must submit all offers to the client’s instructions
D.May select offers which meet this requirement and
submit only those

A

B.Must advise the seller that this is unlawful and that

he/she cannot accept the mandate

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18
Q

A seller hires broker A under the terms of an open listing contract. Broker B would not agree to list under an open listing agreement, so seller enters into an exclusive right to sell list agreement with broker B. Broker A produces an offer to purchase which is accepted by the seller. The seller must pay:

A.Full commission to both broker A and broker B
B.Full commission to broker A
C.Full commission to be split equally between broker A and broker B
D.Full commission to broker B

A

A.Full commission to both broker A and broker B

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19
Q

A promissory note:

A.Is an instrument of debt
B.Is evidence of the mortgage
C.Is security for a loan
D.Is redeemed at closing

A

A.Is an instrument of debt

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20
Q

A broker has entered into a buyer representation agreement with a buyer.
He presents full agency disclosures and agrees to be paid on a flat service fee. He shows multiple properties to the buyer who chooses a property and places an offer. While in negotiations, the buyer finds another property on her own. The buyer withdraws the first offer and purchases the second property without the broker’s assistance. The broker will NOT receive a commission because the broker?

A.Signed an exclusive-agency buyer agency agreement
B.Did not require a retainer up front
C.Signed an exclusive buyer agency agreement
D.Was required to be paid by flat fee

A

D.Was required to be paid by flat fee Was required to be paid by flat fee

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21
Q

A condominium complex is exempt from the fair housing requirements regarding housing for families with children if it:

A.Houses recovering alcoholics
B.Is intended as an investment
C. Is intended for at least one person 55 years of age or older per unit
D.Is at least 2 years’ old

A

Is intended for at least one person 55 years of age or older per unit

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22
Q

There is a three-day right of rescission under the truth in lending laws for all but which one of the following?

A.A first mortgage loan to buy a new house
B.A 2nd mortgage to finance a line of credit
C.Or reverse annuity mortgage
D.A home improvement loan

A

A.A first mortgage loan to buy a new house

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23
Q

If a salesperson changes brokerage firms, what happens to the salesperson’s listings?

A.They remain with the original brokerage firm
B.They convert to open listings
C.They transfer to the new brokerage firm
D.They automatically expire

A

They remain with the original brokerage firm

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24
Q

The seller has a 320-gallon fuel oil tank that is 70% full of the day of closing. The buyer had agreed to pay for the remainder of the oil in the tank. Current fuel oil prices are $1.12 per gallon. What is the amount of the adjustment at closing?

A.$358.40 debit to buyer
B.$358.40 credit to seller
C.$250.88 debit to buyer
D.$250.88 credit to buyer

A

$250.88 debit to buyer

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25
Q

Which of the following would be an easement by necessity?

A.Right to camp for the weekend on a neighbor’s property
B.A driveway through a neighbor’s property which provides the only access to a public street
C.A right-of-way which provides an alternative, but not the only means of access, to a public street
D.Right to remove soil from a neighbor’s property

A

B. A driveway through a neighbor’s property which provides the only access to a public street

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26
Q

What agency ensures compliance with the Real Estate Settlement Procedures Act?

A. FTC
B. HUD
C. FHA
D. FNMA

A

B. HUD

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27
Q

A building is valued at $1,250,000. If the monthly gross rents are $13,020, what is the gross income multiplier?

A. 96
B. 1%
C. 12.5%
D. 8

A

A. 96

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28
Q

What is the commission rate on a sale of $129,750? The commission was $4,541.25.

A. 3.5%
B. 5%
C. 4.0%
D. 4.5%

A

A. 3.5%

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29
Q

In a listing agreement or other contract for the provision of real estate services, the parties to the contract are always a:

A. Broker and the principal the broker agrees to represent
B. Salesperson and the seller the salesperson agrees to represent
C. Salesperson and the principal the salesperson agrees to represent
D. Broker and the buyer the broker agrees to represent

A

A. Broker and the principal the broker agrees to represent

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30
Q

A life estate may not be:

A. Sold
B. Mortgaged
C. Passed by a will
D. Leased

A

C. Passed by a will

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31
Q

Borrowers applied for a loan on the home of their dreams and were granted very specific terms based on their credit scores and income. At the time of
closing, the interest rate had doubled in the loan documents that were
presented for their signatures. The borrowers were told that this was likely to be their only chance to receive any sort of loan and they MUST sign today. They were told if they did not sign that they would lose the house. This was?

A. Illegal because the terms were changed at the time of closing
B. Acceptable because the purchasers would still get their home
C. Illegal because the terms changed and borrowers were pressured to take the loan
D. Acceptable because the lender did secure some sort of financing

A

C. Illegal because the terms changed and borrowers were pressured to take the loan

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32
Q

An easement can be created by any of the following EXCEPT:

A.Definition within a deed.
B.The parties’ behaving as though there was an agreement
C. Merger of the titles.
D. A written agreement between those involved.

A

C. Merger of the titles.

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33
Q

Broker J has a listing on a large piece of acreage. The lot lines are very irregular and impossible to measure without a complete survey. J has heard rumors that the parcel is not as large as the seller believes it to be and that the fence along the back actually encroaches upon the next parcel. J is showing the land to a prospective purchaser. J should?

A. Inform both the buyer and seller that there may be some questions of survey
B. Disclose nothing about these problems since the rumors have not been verified by a survey
C. Disclose nothing about these problems since it could harm the seller’s chances of a sale and that would be a breach of his fiduciary duty
D. Require the seller to have a survey done to verify the acreage

A

A. Inform both the buyer and seller that there may be some questions of survey

34
Q

In periods of rapidly changing prices, which of the following should be done when preparing a market analysis?

A. Properties sold during more stable times should be used as comparable
B. Properties sold within 6 months should be used as comparable
C. The assessed value of the comparable should be substituted for the sales price
D. The features extraneous to the dwelling itself should not be taken into consideration

A

B. Properties sold within 6 months should be used as comparable

35
Q

For the borrower, the major ADVANTAGE of Private Mortgage Insurance (PMI) for a home mortgage loan is that the:

A. Borrower can finance a larger percentage of the sale price
B. Borrower can obtain a more favorable interest rate
C. Premium can be fully amortized
D. Entire amount of the loan is insured

A

A. Borrower can finance a larger percentage of the sale price

36
Q

An investor wants to purchase a 24-unit apartment house where rents are $360 per month. What is the most that he can pay for the property if he wants his money to earn 12%?

A. $103,680
B. $36,000
C. $72,000
D. $864,000

A

D. $864,000

37
Q

Which term does NOT deal with taxation?

A. Equalization
B. Assessment
C. Ad valorem
D. Prior appropriation

A

Prior appropriation

38
Q

An appraisal represents:

A. The market price of property
B. The maximum loan available on a piece of property
C. An opinion of the value of the property on the date of the appraisal inspection
D. The market value of property as of the rate of the appraisal

A

C. An opinion of the value of the property on the date of the appraisal inspection

39
Q

The law that requires real estate contracts to be in writing to be enforceable is:

A. Statute of Frauds
B. Statute of Limitations
C. Parole evidence rule
D. Law of Descent

A

A. Statute of Frauds

40
Q

Which would not be considered in the Comparison Approach:

A. Accrued depreciation
B. Condition of property
C. Cost per square foot
D. Cost of comparable properties

A

Accrued depreciation

41
Q

A major ADVANTAGE of an FHA loan for a first-time buyer with limited funds is:

A. No loan origination fee may be charged
B. The property may not be foreclosed
C. A relatively small down payment is required
D. No discount points may be charged

A

C. A relatively small down payment is required

42
Q

Two weeks after entering into a listing agreement, a broker learns that the subject property is within an improvement district whose assessment roll has just been confirmed. Both broker and seller now have an obligation to disclose to prospective buyers that:

A. General property taxes in the district will increase substantially this year
B. Future improvements will have to meet a new, stricter building code
C. There is now a special assessment that is a lien against the property
D. The property is scheduled for rezoning in the near future

A

C. There is now a special assessment that is a lien against the property

43
Q

The annual report of XYZ Mortgage Company, issued as a requirement of the Home Mortgage Disclosure Act, shows a pattern of numerous loans made in one area of the city and very few made in another area. The XYZ Company lending patterns might constitute:

A. Usury
B. Steering
C. Redlining
D. Blockbusting

A

C. Redlining

44
Q

X owns a lot that fronts a lake. Y owns the lot directly behind X’s lot. Y procures an easement from X to gain access to the lake. Which of the following is likely to be true?

A. The value of X’s lot is not changed
B. The value of Y’s lot is increased
C. The value of Y’s lot is decreased
D. The value of X’s lot is increased

A

B. The value of Y’s lot is increased

45
Q

A specific lien is:

A. General lien
B. Income tax lien
C. Mortgage
D. Judgment

A

Mortgage

46
Q

Which of the following is a direct benefit of investing in income producing real estate?

A. The tenant is responsible for any tenant improvements
B. 1031 exchanges may be utilized for income properties
C. The depreciation period is shorter than for residential properties
D. The income is always classified as long-term capital gains

A

B. 1031 exchanges may be utilized for income properties

47
Q

A DISADVANTAGE to the broker of an exclusive agency listing is that:

A. Multiple listing services may not be used
B. The commission rate is usually lower than it is with other types of listings
C. If the owner sells the property, the broker will receive no commission
D. If another broker sells the property, the listing broker receives only half of the commission

A

C. If the owner sells the property, the broker will receive no commission

48
Q

As easement allowing access to one’s landlocked parcel over land between a road and the parcel would be an:

A. Easement by prescription
B. Easement by necessity
C. Easement in gross
D. Easement appurtenant

A

B. Easement by necessity

49
Q

Sellers listed their home with a broker. After three months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission. This listing was most likely:

A. A net listing
B. An exclusive right to sell listing
C. An exclusive agency listing
D. An advance fee listing

A

C. An exclusive agency listing

50
Q

Some states establish MAXIMUM limits on the interest rates that lenders may charge on real estate loans. These laws are intended to prevent:

A. Loan fraud
B. Loan flipping
C. Usury
D. Price gouging

A

C. Usury

51
Q

After a salesperson explains the services to be provided, the sellers sign a listing agreement with the salesperson’s realty company and broker. The salesperson also signs the listing form. As a result, an agency relationship is established between or among the:

A. Buyer, the salesperson and the sellers
B. Broker and the sellers
C. Salesperson and the sellers
D. Salesperson and the broker

A

B. Broker and the sellers

52
Q

A contract may be renegotiated after acceptance if the:

A. Inspection reveals items that need repair
B. Seller cannot find a suitable replacement property
C. Appraisal comes in higher than the purchase price
D. Buyer decides he did not get a good deal

A

Inspection reveals items that need repair

53
Q

Purchase of common stock in a corporation gives:

A. An interest that is classified as personal property.
B. The right to order the sale of any corporate real estate.
C. Co-ownership in any real property held by that corporation.
D. Assurance that a decline in values will not affect the value of the stock.

A

An interest that is classified as personal property.

54
Q

When a foreclosure sale of a property does not produce sufficient funds to cover the loan balance, the mortgagee may be entitled to a personal judgement against the mortgagor. This personal judgement is called:

A. A deficiency judgement
B. A default judgement
C. A statutory redemption
D. An equitable right of redemption

A

A deficiency judgement

55
Q

One difference between a competitive market analysis and an appraisal is that the appraisal includes information on:

A. Nearby properties that failed to sell
B. A range of probable values
C. The highest and best use of the property
D. Comparable property presently on the market

A

The highest and best use of the property

56
Q

The grantor’s promise to obtain and deliver any instrument needed to make the title good is the covenant of:

A. Against encumbrances
B. Quiet enjoyment
C. Further assurance
D. Seisin

A

C. Further assurance

57
Q

Errors and Omissions insurance typically covers the broker for:

A. Commissions losses.
B. Unintentional misrepresentations.
C. Intentional misrepresentations.
D. Title defects.

A

B. Unintentional misrepresentations.

58
Q

Antitrust laws prohibit competing agents from all of the following except?

A. Dividing the market to restrict competition
B. Receiving compensation from both the buyer and seller
C. Boycotting other brokers in the marketplace
D. Agreeing to set sales commissions and management rates

A

Receiving compensation from both the buyer and seller

59
Q

Four brokers meet to assign market segments so each can specialize in a certain price range. This is:

A. Illegal under fair housing law
B. Allowed provided there is nothing in writing between the brokers
C. Illegal because of federal antitrust laws
D. Allowed provided the state real estate division approves the arrangement

A

C. Illegal because of federal antitrust laws

60
Q

The Statute of Frauds requires that all of these must be in writing in order to be enforceable EXCEPT:

A. A short term lease
B. A 99-year lease
C. A contract of sale
D. A deed

A

A. A short term lease

61
Q

An agreement between two lenders with the same property as collateral agree to change the priority of their lien is a:

A. Substitution agreement
B. Subordination agreement
C. Subrogation agreement
D. Subliminal agreement

A

B. Subordination agreement

62
Q

The purpose of requiring earnest money in a real estate sales contract is to:

A. Ensure that the broker will receive some compensation if either party defaults.
B. Provide evidence of the buyer’s intention to carry out the contract.
C. Set aside funds to cover the buyer’s closing costs and mortgage insurance premiums.
D. Ensure that the seller will not be bothered by offers from buyers who are unable to qualify for appropriate financing.

A

Provide evidence of the buyer’s intention to carry out the contract.

63
Q

Which of the following statements about discount points is FALSE?

A. They are used to buy down interest rate.
B. They are computed as a percentage of the selling price.
C. They are paid by either the buyer or seller.
D. They are a function of the marketplace.

A

B. They are computed as a percentage of the selling price.

64
Q

In which of the following cases will a formal appraisal ALWAYS be REQUIRED?

A. When the buyer wants to obtain private mortgage insurance
B. When the seller wants to be sure of the home’s value
C. In order to obtain an FHA insured loan
D. To determine a home’s market value

A

C. In order to obtain an FHA insured loan

65
Q

Legal description which gives directions and distances is one by:

A. Lot and block
B. Metes and bounds
C. Perimeter
D. Principal meridian

A

B. Metes and bounds

66
Q

The purchaser has made an earnest money deposit in the agreement, and the buyer and seller have agreed that the seller is to hold it until close of escrow. The proper entry on the closing statement is:

A. Credit buyer and credit seller
B. Credit buyer and debit seller
C. Debit buyer and credit broker
D. Debit buyer and credit seller

A

Credit buyer and debit seller

67
Q

During property showing, an agent notices high water marks behind shelves in the basement. The property disclosure makes no mention of water problems. Before writing an offer, the agent should:

A. Ignore the high water mark, because it is not mentioned in the property disclosure
B. Draw the listing agent’s attention to the problem
C. Independently inspect the home and determine if there is a water problem
D. Inform the buyer of the observation and suggest inspection

A

Inform the buyer of the observation and suggest inspection

68
Q

Which of these is CORRECT regarding taxation?

A. A recording fee of $5 for the first full page of a document and $1 for each page additional is ad valorem in nature.
B. A tax assessed to property according to its value is an ad valorem.
C. A tax assessed equally on all property despite the value is an ad valorem tax.
D. A paving special assessment charged at $28 per foot would be ad valorem.

A

A tax assessed to property according to its value is an ad valorem.

69
Q

Title passes from the grantor to the grantee:

A. When the buyer moves in to the property
B. When the deed is recorded
C. When the seller signs the warranty deed and gives to buyer
D. When the closing begins

A

C. When the seller signs the warranty deed and gives to buyer

70
Q

In a particular jurisdiction, annual property taxes are paid in two equal installments six months apart. What would be the amount due for each
installment of a property assessed at $125,000 using a rate of .95 per $100 of
value (mill rate of 9.50)?

A. $1,187.50
B. $625.00
C. $593.75
D. $118.75

A

C. $593.75

71
Q

An appraiser looks at a house that is in good condition and well kept. Other homes on the street have junked cars and un-kept yards. This is an example of a (an):

A. Physical deterioration
B. Functional deterioration
C. Economic obsolescence
D. Intrinsic depreciation

A

C. Economic obsolescence

72
Q

Property has a net income of $30,000. An appraiser decides to use a 12% capitalization rate as opposed to a 10% rate. Use of the higher rate results in:

A. No change in the appraised value
B. A $50,000 decrease in appraised value
C. A $50,000 increase in appraised value
D. A 2% increase in appraised value

A

B. A $50,000 decrease in appraised value

73
Q

The best way to describe a novation is:

A. An appraisal technique used for new houses
B. A new contract which substitutes for a new contract
C. A method of claiming liquidated damages
D. A 1st contract between the seller and the buyer

A

B. A new contract which substitutes for a new contract

74
Q

A grants J a life estate in a property and the remainder to P.J. He then leases the property to M for 5 years. Which of the following is true?

A. M’s lease is void
B. M has a co-tenancy with J and P
C. J has committed waste and a life estate automatically goes to P
D. M has a tenancy which terminates at J’s death

A

D. M has a tenancy which terminates at J’s death

75
Q

On January 15, a seller paid $960 in AD Valorem tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1st. What will be the seller’s credit for the property taxes already paid if the buyer pays
for the day of closing? Use a 360 day year and a 30 day month:

A. $800
B. $120
C. $160
D. $840

A

A. $800

76
Q

The purchase and sales agreement provides for release of earnest money to the seller after the buyer’s property inspection. The seller requests the earnest money prior to the property inspection. The broker should:

A. Release the earnest money on the buyer’s verbal approval
B. Refuse to release the earnest money
C. Notify the buyer of the broker’s intention to release the earnest money to the seller
D. Release the earnest money to the seller immediately

A

B. Refuse to release the earnest money

77
Q

Emblements are considered:

A. Property of the tenant farmer
B. Property of the land
C . Leasehold property
D. Real Property until harvested

A

A. Property of the tenant farmer

78
Q

A $45,000 house depreciates at twice the average rate of 40 years. What is the value after one year?

A. $42,550
B. $39,500
C. $42,750
D. $36,000

A

C. $42,750

79
Q

Tax deductions on a personal residence include all the following EXCEPT:

A. Loan points
B. Mortgage interest
C. Prepayment penalties
D. Depreciation

A

D. Depreciation

80
Q

A borrower has defaulted on the loan. The mortgage contains an acceleration clause. This allows the lender to?

A. Report the borrower to the Federal Housing Administration
B. Force the borrower to leave the premises
C. Confiscate the borrowers’ personal assets
D. Demand immediate payment of entire note

A

D. Demand immediate payment of entire note

National Final (2 decks)

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