Practice Test 4 Flashcards
How long does the owner have to return a copy of the written lease or rental agreement to the tenant?
15 days
What happens to the value of a parcel of land when the depth of that parcel increases beyond the depth of other lots in the area?
the value per front foot increases
If a lease requires a tenant to pay certain expenses, such as taxes or insurance in addition to the rent, the lease may be called:
a net lease
Private restrictions on real property can be created by:
by deed or written agreement
Mr. Smith is the vendor in a land contract selling his home. One day, shortly after entering into the contract, he noticed that a plumber was installing new plumbing in the home. To protect himself, he should:
post and record a notice of non-responsibility within 10 days
The primary purpose of city building codes is to establish:
construction standards for buildings within the city
A real estate broker must hold all documents for how long?
three years (loan documents must be kept for 4 years)
A “hard money” loan secured by a note and trust deed most nearly means:
a cash loan
A real estate salesman tried to obtain listings by warning owners that minority groups were moving into the area and values would decline. This behavior is:
grounds for discipline by the Real Estate Commissioner
What stage agency acts to prevent discrimination in housing accommodations based on race, color, sex, national origin, or ancestry?
Department of Fair Employment and Housing
Why do brokers have client trust accounts?
in order to separate trust fund money from the broker’s money
A broker who keeps a buyer’s cash deposit in his office safe and refuses to release the money to escrow, the seller, or the buyer, is:
probably going to be subject to discipline by the Commissioner
Property is technically defined as:
rights or interests which a person has in the thing owned (a.k.a. “Bundle of Rights” theory)
An appraiser determining the value of a commercial site would consider which of the following as the most important factor in determining value: zoning, accessibility to airports, purchasing power of the community, convenience of transportation systems for the labor force
purchasing power of the community
The Real Estate Commissioner would most likely issue a final public report even if the subdivision plan lacked:
proof of completion of community recreational facilities, even though financial arrangements to assure completion were provided.
In order to legally transfer fee estate to a parcel of real property encumbered by a trust deed, it is always necessary to do what?
deliver a valid deed from the grantor to grantee
Carson purchased one of 40 lots in a subdivision and signed a contract which stated, “No owner of a lot in this subdivision shall put a ‘for sale’ sign on his lot until all the lots owned by the subdivider are sold.” If Carson wants to sell his lot before the subdivider has sold all of the lots, he may:
use a reasonably sized “for sale” sign because the statement in the contract is illegal
Who has primary regulatory responsibility for approvals under the Subdivision Map Act?
local city and/or county agencies
The effective gross income found in the capitalization approach to appraisal, requires a deduction to be made for:
vacancies
In the financing of real estate, the cash provided by the buyer as part of the purchase price, or by a tenant in real estate as an acquisition cost, is commonly known as:
equity funds
When real estate is sold, property taxes are set at:
1% of full cash value plus an amount for the existing bonded debt
Mr. Brown purchased an apartment building for $1,000,000. The listed price was $1,200,000. Mr. Brown put $200,000 down and acquired a new first trust deed for the difference. Mr. Brown’s cost basis for income tax purposes would be:
$1,000,000
What federal entity would most likely be involved in buying and selling government securities in the open market?
Federal Open Market Committee
Depreciation, when taken, is subtracted from:
the cost basis
The annual property taxes a property owner must pay are determined by:
assessing the land and improvements separately, then multiplying the total by one tax rate
What basic economic characteristic is the best expression of why real estate has inherent value?
maximum utility of available resources
A real estate appraisal is valid for what period of time?
as of a given date
Conditions of a sale will affect the:
price of a subject property
When an appraiser refers to the “orientation” of a structure, he is describing:
the position of a building on land in its relationship to exposure to the sun, privacy from the street, prevailing winds, views, etc.
A real estate licensee may handle the sale of a mobilehome when the mobilehome:
has been registered
The word “tenancy” in real property law, mostly means:
the method or mode of holding title to real property by lessee or owner
The upper limits of value are determined by which approach to appraisal?
reproduction
The appraisal of real property is made as of a “given date” to indicate:
the market conditions influencing the value of the property at that point in time
In arriving at an estimate of value, an appraiser is most interested in the date:
the purchase price was agreed upon
The value arrived at by an appraisal of real property is:
based upon the analysis of facts as of a specific date
Rental schedules for income property are established by:
market comparison
Capitalization:
establishes the value of an asset by dividing the annual net income by the desirable rate of return
The gross rent multiplier is arrived at by dividing:
sales price by gross monthly rental
In the capitalization approach to appraisal, what is not deducted to determine the annual net income?
interest expenses on the loan
The main reason that signatures on a deed are acknowledged is to make the deed acceptable for recording. A secondary reason for having the grantor’s signature acknowledged is:
an acknowledged deed may be accepted as prima facie evidence in court
The square foot, cubic foot, and unit-in-place methods of real estate appraisal are most commonly used in what approach?
cost approach
In the capitalization approach, when capitalization rates go up:
values go down
A seller (or agent for the seller) must give the buyer a “Natural Hazard Disclosure Statement” if the property is within which of the following areas? Special Flood Hazard Area, Very High Fire Hazard Severity Zone, Earthquake Fault Zone, all of the above
all of the above
Who has the right of possession of a home during the redemption period following a judicial foreclosure sale on a mortgage?
mortgagor (borrower)
Sheet metal used to protect a building from water seepage is called:
flashing
The relationship between the thing desired and the potential purchaser is best defined as:
value
While appraising a home an appraiser observes cracks in the foundation and notices that the doors and windows do not close properly. The appraiser would probably recommend that what report be ordered?
a soil engineer’s report
A “turnkey project” describes:
new construction which is ready for immediate occupancy
What item would be warranted by the seller in a grant deed, but not covered by a standard policy of title insurance?
that there are no undisclosed liens against the property placed there by the grantor
The first thing to do when appraising vacant land is to determine:
the highest and best use of the land
What is shown on a plot map?
location of the improvement on the lot and relationship to surrounding structure
What is NOT an example of functional obsolescence?
the proximity of noxious fumes from an adjoining property (this is an external cause = economic obsolescence; social obsolescence would be another external cause)
An “advance fee” contract must be approved in advance by the BRE and must include all of the following, except: a complete description of the services to be rendered, the total amount of the advance fee, guarantees that the sale, lease, or exchange will be completed; the date the fee is to be paid
guarantees that the sale, lease, or exchange will be completed
The term “deciduous” describes what?
trees which lose their leaves in winter
In the capitalization approach to appraisal, what would be subtracted from gross income to determine annual net income?
vacancies
“Economic rent” is defined as the:
rent received for comparable space in the current economic marketplace
When comparing the economic life and the physical life of an improvement, the economic life is usually:
shorter than the physical life
The method which is most commonly used to value land or sites is:
the comparative method
What do appraisers find most difficult to measure accurately?
accrued depreciation
The cause of deprecation which gives us the phrase “more buildings are torn down than fall down,” would be described as?
Social obsolescence (economic obsolescence is another form)
An elevation sheet for a subdivision shows:
front and side views of the homes as they will appear when finished
A standard policy of title insurance protects the insured against:
lack of capacity of a party in the transaction
When real estate is purchased under the California Veterans Farm and Home Purchase Plan, payments are made to and legal title to the property is held by:
the Department of Veterans Affairs
Under the Truth-in-Lending Law terms such as “monthly payment” and “down payment” used in an ad are called:
trigger terms
When may a real estate broker, acting as agent for the seller, refuse to submit a buyer’s offer?
when the owner has given broker express instructions not to submit any further offers
The property tax rate is set each year by:
the county board of supervisors
Which of the following best describes an estate of indefinite duration? a life estate, an estate for years, an estate of periodic tenancy, an estate of inheritance
an estate of inheritance
When a broker takes an exclusive loan listing to negotiate a loan secured by real property, the listing is limited to a term of not more than:
45 days
The method which is most commonly used by appraisers to value land or sites is:
the comparative method
All of the following statements about a lis pendens are false, except: only a court order may remove it; it can be used in any lawsuit; based on the outcome of the lawsuit, it may affect title to real property; “lis pendens” means listen patiently
based on the outcome of the lawsuit, it may affect title to real property
An easement differs from a license in that a license:
may be revoked
An attachment lien is good for:
3 years
An owner of an income property deducted $6,000 from the gross income for depreciation on his federal income tax return. His basis of the property is therefore:
lowered by $6,000
When a piece of land is washed away by a flood or dam giving way, this is called:
avulsion
Who establishes deed restrictions?
the grantor in a deed
The major difference between mechanic’s liens and judgment liens is:
mechanic’s liens may take priority earlier than the date of recording
The action by which the city or county permits an owner to use property in violation of zoning or building codes is known as:
a variance
Broker Hernandez took a listing from an owner, Mr. Nguyen. Mr. Nguyen also gave Broker Hernandez the option to purchase this commercially zoned land within 30 days. On the 27th day of the option period, Broker Hernandez decided to purchase the land. Broker Hernandez must do what before purchasing this property which he has also listed for sale? furnish owner with any material information Broker H. has in his possession concerning the property, disclose to Mr. N any outstanding offers on the property, obtain written consent of Mr. N approving the amount of profit or anticipated profit if any is to be realized, do all of the above
all of the above
The interest acquired in real property through adverse possession is different from the interest acquired by prescription in that the interest acquired by prescription is:
the right to use land which belongs to someone else
A seller sued an agent for making a false promise. In her defense, the agent proved that her listing contract to sell the seller’s home was oral. What will the judge rule?
the agent is liable for any damages as a result of the false promise - they failed to put the contract in writing
Mrs. Johnson told Broker Bob, “While I will not sign a listing for my home, if you can find a buyer who will pay at least $250,000 for it, I’ll pay you a 6% commission.” Three weeks later, Broker Bob found a buyer who gave him a $1,000 deposit on the purchase price of $255,000, along with a signed offer to purchase. When the offer was presented to Mrs. Johnson, she accepted it and then demanded that the deposit be given to her. What is true?
Broker Bob may not give the buyer’s deposit to the seller without the buyer’s written consent
“Drywall” construction uses all of the following except: fiberboard, plywood, gypsum board, plaster
plaster
How many square miles does a section contain?
1
Upon inspection, a pest control company finds no evidence of termite infestation. However, they do find conditions which may lead to infestation. Whose responsibility is it to pay for correcting these conditions?
The buyer, only if he chooses to have the condition corrected
A buyer must bring a lawsuit for breach of written contract against a seller within:
4 years
On April 2 a buyer gave a broker a personal check as a deposit to accompany an offer. The buyer told the broker to hold the check uncashed until after April 15. What should the broker do?
the broker should present the offer to the seller, but must tell the seller about buyer’s instructions to hold the check until after April 15
In a sale-leaseback transaction, the seller does all of the following except: retains possession of the property being sold, guarantees the mortgage payments, receives an infusion of cash, becomes a tenant
guarantees the mortgage payments
A contract obtained through duress, is:
voidable
John gave Mary a grant deed transferring title to Mary “upon condition that” the title would be forfeited and revert back to John if alcoholic beverages were ever consumed on the premises. The title held by Mary can be described as:
fee simple defeasible
For a broker with a nonexclusive listing to be legally entitled to a commission, she must first prove that: she was duly licensed at the time of the sale; she found a buyer ready, willing, and able to buy; she was the procuring cause of the transaction; all of the above
all of the above
What loan is exempt from the Federal Truth-in-Lending Law on the basis of the type of loan itself?
an agricultural loan (these and business loans are exempt from Reg. Z)
What contract must be in writing to be enforceable? a lease for one year, a listing to lease for one year, an agreement by a buyer to assume an existing loan secured by a deed of trust, an agreement between brokers to share a commission
an agreement by a buyer to assume an existing loan secured by a deed of trust
The usual listing contract authorizes a broker to:
find a purchaser and accept a deposit with an offer to purchase
A subdivision of new homes is encumbered by a blanket construction loan. As each of these encumbered homes are sold, the beneficiary should issue what?
a request for partial reconveyance (the trustee then records a partial reconveyance deed)
What contract must be in writing to be enforceable? a listing to sell a business opportunity, a lease of real property for six months, a listing to lease real property for one year, an agreement which is not to be performed within one year of the making
an agreement which is not to be performed within one year of the making
An investor paid $300,000 for an apartment building, making a $30,000 cash down payment. One year later, the property increased 10% in value. This resulted in a $30,000 or 100% gain on the 30% equity. This is an example of:
leverage (the use of borrowed money to the maximum extent possible)
What ad would be permitted under the Federal Truth-in-Lending Law?
assume a 7 1/2 % annual percentage rate mortgage (APR must be disclosed)
The law which gives cities and counties control over the physical design of subdivisions is:
Subdivision Map Act
An ad offering “secured” loans for sale would be regarded as misleading unless:
the ad fully explained how and to what extent the funds would be secured
When commercial banks consider “liquidity” and “marketability” of loans, the are referring to:
the secondary mortgage market
Who is usually responsible for providing streets, utilities, sidewalks, and curbs in a new subdivision?
the builder
Life insurance companies normally deal with borrowers through the services of:
mortgage companies
A seller in a land contract would not likely file a lawsuit based upon which of the following: an agreement not to record, damages, specific performance, any of the above
an agreement not to record
A buyer and a seller initial the liquidated damages clause in a deposit receipt and then the buyer defaults. The deposit is:
divided equally between the seller and listing agent
Under the Federal Truth-In-Lending Law, the cost of credit is expressed as:
the annual percentage rate
A trust deed in the County Recorder’s Office, refers to standard clauses contained in a previously recorded trust deed. The previously recorded trust deed is called a:
fictitious trust deed
A mortgage loan disclosure statement must be given to the borrower:
within three days of receipt of a completed loan application or before the borrower is obligated to take the loan
All of the following tend to increase the available supply of real estate loans except: an increase in the national income, an increase in deposits in savings & loans, an increased demand for an investment liquidity, an increased desire to supply for old age
an increased demand for an investment liquidity
What would usually be true concerning a hard money second trust deed?
it is secured by real estate and given to a third party to obtain a cash loan
The property taxes on homes are determined annually by the:
county assessor
Under the Federal Truth-in-Lending Law, what does not need to be included in the “finance charge” portion of the disclosure statement?
the cost of a credit report and appraisal fee necessary to make the loan
Generally, as the employment rate and the GNP (Gross National Product or GDP - Gross Domestic Product) rise: the personal income rises, new residential developments will increase, sales of existing homes will increase, all of the above will probably occur
all of the above will probably occur
Who sets the county property tax rate?
the county board of supervisors
Which cycle has the phases of “depression, expansion, prosperity, and recession”?
business
If the current and highest best use of a parcel is expected to change, the current use is referred to as:
the interim use
Jack wants to purchase Bill’s property for $200,000 with a deposit of $40,000. He wants Bill to carry back a first trust deed on the property for the balance with payments of $1,290 or more per month. He wants the interest rate to be no more than 9% per annum. He wants to be able to pay off the loan at any time with no penalty. The finance terms portion of the deposit receipt should be completed in what way?
the buyer agrees to execute in favor of the seller a note to be secured by a first trust deed secured by the property in the amount of $160,000, payable $1,290 or more per month including interest of 9% per annum
What would most likely provide an investor with the best hedge against inflation?
ownership of real estate
A subdivider is selling new homes, using land contracts for financing. The subdivider places into the contract a clause whereby the purchaser agrees to not prepay any part of the debt. What statement is true?
the vendee can disregard the clause (because a vendor [seller/lender] is not allowed to “lock-in” a land contract for the sale of 4 or less residential units)
When a buyer buys property “subject to” an existing loan, rather than “assuming” the loan, the buyer will:
have any loss limited to his equity in the property should it go into foreclosure
No title insurance policy offers protection against:
zoning
The relationship between the parties to a real estate transaction and the escrow officer is usually described as which:
agent
Companies that issue private mortgage insurance (PMI) normally raise money frOM:
premiums earned on pooled insurance policies and stock or debt issue
Broker Barbara listed a home for sale for $400,000. The seller told her he would take anything over $350,000. Broker Barbara then found a buyer willing to pay $380,000, but instead of presenting the buyer’s offer, she wrote up her own offer for $350,000, which the seller accepted. She then sold the home to the buyer for $380,000 without informing the seller. Such action would be properly classified as:
secret profit
An agreement to sell community property signed by only one spouse is:
unenforceable
Accretion would result in the acquisition of land by: a prescriptive easement, a neighbor who acquired land by natural causes, the city government following a condemnation action, none of the above
a neighbor who acquired land by natural causes
Mr. Johnson executed a grant deed to Mr. Green & recorded it. Later, Mr. Johnson changed his mind and sought to set the conveyance aside, claiming that there had been no delivery to Mr. Green. Why was Mr. Johnson unsuccessful?
delivery and acceptance is presumed with recording
Which of the following is necessary for a deed to be valid? a granting clause, consideration, an acknowledgment, the grantee is of legal age
a granting clause
Under RESPA, the uniform settlement statement must be delivered:
at or before the settlement date
Usually, an escrow officer is authorized to:
call for the funding of the buyer’s loan
What loan may be described as a “balloon loan”?
a partially amortized loan
Who would most likely pay for the mortgage insurance premium?
a homeowner who assumed an FHA loan (mortgage insurance premiums are only found on FHA loans)
If a broker delegates specific authority to a salesperson to supervise, review, and initial real estate contracts prepared by other salespersons, the delegated salesperson must have:
accumulated at least 2 years full-time experience as a real estate salesperson during the preceding 5 years
Lenders commonly charge points to:increase effective yields, close the gap between fixed interest rates and market rates, help defray the costs of the loan, all of the above
all of the above
Each of the following would be subject to property taxes, except: possessory interest of the lessee in oil, and gas rights in real property owned by the government; a mobilehome installed on a permanent foundation system; intangible personal property; vacant land in an unincorporated section of the county
intangible personal property
When a seller of property allows the buyer to owe him a portion of the purchase price and charge zero interest, the Internal Revenue Code considers:
interest payments to be imputed to the seller and deductible by the buyer
“Kiosk” is a term used to identify:
an information booth in a mall
Which party would be most likely to file an unlawful detainer court action?
an offended lessor - describes an angry landlord. They use an unlawful detainer court action to evict a tenant
When a river suddenly changed course, it tore away a strip of land from the river bank. Such an event is called:
avulsion
Title to personal property is transferred with a bill of sale. A valid bill of sale must:
have the seller’s signature
What can be considered a hidden cost of home ownership?
lost of interest on the owner’s equity
All of the following are common types of misrepresentation, except: innocent, malicious, negligent, fradulent
malicious
An offer which is made contingent upon the buyer’s first obtaining a satisfactory lease on another property is:
a valid offer
When preparing an appraisal of a home, how does the appraiser calculate the square footage of the improvements?
measure the exterior dimensions of the structure
When a real estate broker becomes an agent for a seller or a buyer in a real estate transaction, what type of relationship has been established?
fiduciary
When prospective buyers of a home request a real estate broker’s assistance in obtaining an FHA loan, the broker would most likely contact:
an institutional lender, such as a bank or savings & loan
When does the cost of real property most likely equal its value? in a neighborhood where there is a supply and demand imbalance, when the improvements are new, when improvements on the property represent the current highest and best use of the land; when both b and c are true
when both b and c are true
When deciding whether or not to make a proposed real estate loan, most institutional lenders try to minimize the:
likelihood of a substandard loan becoming a part of their loan portfolio
When a real estate auction is held, the auctioneer usually is acting as the agent for the:
seller
