Prep Exam 1 Flashcards
Fiduciary applies to the relationships between people in many different positions. It does not apply to which of the following?
A. Trustor to beneficiary
A fiduciary relationship may be terminated by: A. Agreement B. Revocation C. Death D. All of the above
D. All of the above
Answers a, b, and c all terminate fiduciary relationship
What event does not terminate (or dissolve) an agency? A. Death of listing agent (not broker) B. Full performance C. Expiration of term D. Destruction of listed property
A. Death of listing agent (not broker)
Since the broker owns the listing, only the death of the listing brother, not the listing agent, would terminate the listing
In order to record a lease, the document must be acknowledged before a proper official by the: A. Public administrator B. Notary public C. Lessee D. Lessor
D. Lessor
As a requisite of recording, a document must be acknowledged by the party transferring some right in real property, in this case, the lessor
The Statute of Frauds requires that all of the following contracts must be a record in writing to be enforceable except:
A. Agree,not allowing a broker to sell real estate for compensation
B. Lease agreement of one year to commence one month after date of execution
C. Agreement to sell land
D. Agreement between two brokers to split a commission
D. Agreement between two brokers to split a commission
An oral agreement to split a commission is enforceable at law
The maximum length of time for which a valid lease may be written is: A. 99 years on urban property B. 55 years on agricultural property C. Both a and b D. Neither a or b
A. 99 years on urban property
The max lease on urban prop is 99 yrs
A sublease is: A. The same as an assignment B. A full interest in a leasehold C. Less than the entire leasehold D an estate at sufferance
C. Less than the entire leasehold
One thing that distinguishes a sublease from an assignment is that the sublease gives up only part of the leasehold
An option is different from other contracts, such S conventional or conditional sales contracts. The difference is due to what characteristic of an option?
A. Irrevocability
B. Mutuality of obligations to the parties
C. Non-mutuality of obligations of the parties
D. Both b and c
C. Non-mutuality of obligations of the parties
Mutuality of obligations would mean that both parties are obligated to perform, which is the case with most contracts. An option does not have mutuality of obligations in that only the option or is obligated to perform, no the optionee
Which of the following is most correctly the legal meaning of the word “waiver”?
A. Unilateral act and its legal consequences
B. Detrimental reliance
C. The justifiable reliance by one party upon the intentional act or omission of another
D. Estoppel
A. Unilateral act and its legal consequences
The other choices all refer to estoppel, which is the opposite of waiver
Four months ago a seller accepted an offer from a buyer to purchase her home. The contract was in writing. Later, the seller refused to complete the transaction. Under the statute of limitations, so his right to sue does not "outlaw," the buyer must file an action within: A. 90 days B. 1 year C. 2 years D. 4 years
D. 4 years
Statute of limitations on any writ en contract is 4 years
An option to buy is enforceable if:
A. The consideration is $10.00 but by agreement is not delivered
B. Consideration is less than $10.00 but actually has passed
C. The optionee withdraws his offer
D. There is mutuality of interest
B. Consideration is less than $10.00 but actually has passed
A valid option requires actual consideration to pass between the parties. This may be merely a nickel or $1 as long S it passes to the optionor
What is the statute of limitations on filing an action for encroachment? A. 2 years B. 3 years C. 4 years D. 5 years
B. 3 years
If not filed within 3 years from date of knowledge, his right to sue outlaws
A licensee sells property to a young married couple and later learns they are both 17 years of age. This transaction could best be described as: A. Void B. Voidable C. Illegal D. Valid
D. Valid
Married persons under the age of 18 are considered emancipated minors
A lease that specifies that the lessee is the pay the real estate property taxes and the insurance cost, as well as the rent, is called: A. Specific lease B. Sandwich lease C. Net lease D. Percentage lease
C. Net lease
Leases are classified by method of rent payments, such as gross, net, and percentage leases. In a net lease, the tenant pays an agreed-upon sum as rent, plus certain agreed-upon expenses per month (taxes, insurance, repairs)
Lessees is to lease as: A. Optionee is to optionor B.vendee is to vendor C. Vendee is to land contract D. Lessee is to lessor
C. Vendee is to land contract
Vendee (buyer) in land contract only hold an equitable interest. He is not the owner until he has paid for the prop
If a lease is to be recorded, who must acknowledge it? A. The lessor B. The lessee C. The owner D. None of the above
A. The lessor
If a lease is for more than 1 year, it must be in writing and signed by the lessor (landlord). The lessee does not have to sign the lease
Under the Truth in Lending Act, the dollar amount of the finance charge is not required on:
A. Loans to be used for the purpose of financing the purchase of the borrower’s dwelling
B. An agricultural loan to purchase of a farm tractor
C. A personal loan to purchase household furnishings
D. None of the above
B. An agricultural loan to purchase of a farm tractor
Exempt: business, commercial and agricultural loans
Not exempt: consumer and all real estate loans require a disclosure
The truth in lending act is contained in the:
A. Federal broker’s act
B. Business and profession code
C. Federal fair housing act
D. Federal consumer credit protection act
D. Federal consumer credit protection act
The consumer credit protection act of 1968 was landmark legislation that launched truth in lending disclosures of the terms and costs of consumer credit - creditors had to state the cost of borrowing in a common language so that the consumer could determine what the charges are, compare the costs of the loan, and shop for the best credit deal
Consideration is to a contract as endorsement is to a(n): A. Deed of trust B. Promissory note C. Land contract D. Option
B. Promissory note
Endorsement is the symbol of consideration for the negotiation of a promissory note
The terms blank, restricted, and qualified refer to: A. Contracts B. Endorsements C. Leases D. Deeds
B. Endorsements
Signing the owner’s name on the reverse side of a negotiable instrument such as a check or promissory note is a method of transferring title and is called endorsement. A blank endorsement guarantees payment to subsequent holders of the note or check. In insurance policies, a restricted endorsement acknowledges the policy coverage. In FHA loans, a qualified endorsement will indicate that the loan is insured under the national housing act
In checking docs in the county recorder's office, you will find that the recorded deed of trust refers to standard clauses contained in a previously recorded deed of trust. This previously recorded deed of trust is known as a: A. Prima facia deed of trust B. Short form deed of trust C. Master deed of trust D. Fictitious deed of trust
D. Fictitious deed of trust
Nearly all deeds of trust used by banks, escrow, and title companies are the “short form.” This merely recites the trust or’ name, the trustee, describes the prop, and has a place for sig. The terms of th deed of trust are not printed in the short form but refer to an og deed of trust recorded in each county, and it is identified as a fictitious deed of trust. This lists all he terms and conditions in detail
Which of the following real estate terms does not belong with the others? A. Joint tenancy B. Hypothecate C. Subordination D. Second mortgage
A. Joint tenancy
A second mortgage is subordinate to the first mortgage. To hypothecate is to give (personal prop) in pledge as security for a debt. A mortgage is given as security for the note. The one that does not belong is int tenancy
All of the following instruments are commonly recorded, except: A. Deed of trust B. Promissory note C. Mortgage D. Lien
B. Promissory note
Instruments are formal legal docs such as contracts (mortgage or lien), deeds, or Willa which are relied on as the basis, proof or support of anything else. A promissory note is evidence of a debt
It is said real estate has its own language. All of the following terms are closely related except: A. Alienation clause B. Hypothecation C. Third deed of trust D. Tenants in common
D. Tenants in common
Answers a, b, and c all relate to security instruments in real estate. Tenants in common is a method of title vesting
Mr. Noro bought a prop using a purchase money trust deed. A few years later he sold the prop to Ms. Hansen for all cash. Which of the following would not be disclosed by the public records?
A. A grant deed to Mr. Noro
B. The og trust deed that Mr. Noro used in purchasing the prop
C. A reconveyance deed to Mr. Noro
D. A reconveyance deed to Ms. Hansen
D. A reconveyance deed to Ms. Hansen
Since Ms. Hansen paid all cash for the prop, ther would be no need for a reconveyance deed to Ms. Hansen. Therefore, it would not appear on public records
Assume that a property was sold for $20,000 and the buyer assumed the existing first trust deed and note of $8,000, the existing second trust deed of $4,000, and executed a new third trust deed and note in favor of seller for $2,000. Shortly after the purchase, payments were not made on either the second trust deed or the third trust deed and the beneficiary of the second trust deed recorded a notice of default and sent a copy to the seller. Upon receipt of the notice, the seller could take action and obtain: A. A judgment B. An attachment C. A lien D. None of the above
D. None of the above
The seller already has a lien with his trust deed and note. Since he cannot obtain an attachment nor a judgment (this is a purchase money trust deed), the answer is “none of the above”.
Which of the following causes real estate prices to go up? A. Supply and demand are the same B. Supply is greater than demand C. Demand is greater than supply D. Demand is not an issue
C. Demand is greater than supply
An oversupply diminishes value (price) while an undersupply (or increased demand) increases value (price).
CRV is a common phrase used in the financing of real estate. The CRV is issued by the:
A. Fannie Mae
B. U.S. department of veterans affairs
C. Federal housing administration
D. California department of veteran’s affairs
B. U.S. department of veterans affairs
A Certificate of Reasonable Value (CRV) is the VA appraisal required for loans guaranteed by the Department of Veterans Affairs.
A down payment of $1,000 for the purchase of an apartment house valued at $690,000 is a good example of: A. Pottage B. Leverage C. Highest and best value D. None of the above
B. Leverage
The definition of leverage can be viewed as using a small down payment to purchase as much property as possible.
Ms. "A" purchased a piece of property for $200,000, incurring a 30 year loan for $180,000. Inflationary trends caused the dollar to decrease in value. Who would benefit? A. Trustee B. Trustor C. Beneficiary D. Mortgagee
B. Trustor
Trustor–Borrower.
A client contacts you to give you a listing. You look at his papers and discover that he is purchasing the property on a contract of sale. The contract contains no acceleration clause and there are no restrictions in the contract of sale prohibiting resale or assignment. One of the following is the most nearly correct statement. Your client could:
A. Sell his interest in the property but only after first paying off the existing contract of sale
B. Sell or assign his rights but not his duties without approval of the contract seller
C. properly give a warranty deed to the property to the purchaser providing the deed recited “subject to the existing contract of sale.”
D. properly give a grant deed to the property to the purchaser.
B. Sell or assign his rights but not his duties without approval of the contract seller
In (a) he can sell his interest without paying off the existing contract. In (c) and (d) he cannot give a deed of any kind because, as the “equitable owner” only, he has no title to convey.
Under a land contract or a conditional contract of sale, the seller would not normally initiate a legal action based upon: A. Specific performance B. Damages C. An agreement not to record D. Any of the above
C. An agreement not to record
The right to record is protected by law and an agreement to give it away is unenforceable.
The majority of real estate loans are made by institutional investors. Which of the following would be classified as an institutional investor? A. Trust department of a bank B. Insurance company C. University D. Mortgage company
B. Insurance company
Institutional lenders include banks (not bank trust departments), savings and loans, and insurance companies.
A seller takes back a deed of trust and note as part of the purchase price and the buyer immediately defaults. What action could the seller take?
A. Attachment
B. Writ of execution
C. Deficiency judgment
D. Request trustee to record a “Notice of Default”
D. Request trustee to record a “Notice of Default”
The seller could only foreclose since no deficiency judgment is possible on a purchase money deed of trust.
When applying for an FHA loan, which of the following would be given the least credit in determining the qualifications for the loan? A. Husband’s salary B. Wife’s salary C. Outstanding debts D. Husband’s overtime
D. Husband’s overtime
Overtime pay is too uncertain to be given much credit by FHA.
A lender receiving a mortgage or deed of trust as security for a promissory note would be given the best protection by the: A. Credit to the buyer B. Value of the property C. Increase in the value of money D. All of the above
B. Value of the property
Lenders consider the property value their prime protection, particularly when the property is the security for the loan.
A promissory note that provides for the payment of interest only during the term of the note is known as: A. An installment note B. A straight note C. Amortized note D. A non-interest bearing note
B. A straight note
If interest only is paid during the term, the principal will be paid in one lump sum. This type of note is called a straight note.
Which of the following is not a negotiable instrument? A. Promissory note B. Security instrument C. Installment note D. Personal check
B. Security instrument
To be negotiable, a document must be a promise to pay–choices (a), (c), and (d). The security instrument (mortgage or deed of trust) is only the security for the promise to pay.
Which of the following is true?
A. A mortgage may be reinstated within 1 year following the sale
B. The trust deed may be redeemed during the 3 months following notification of defaults
C. The trust deed may be reinstated up until 5 days before a trustee’s sale
D. All of the above
C. The trust deed may be reinstated up until 5 days before a trustee’s sale
Trustor may reinstate the loan up until 5 days before a trustee’s sale.
Which of the following is an institutional lender? A. Mortgage company B. Real estate investment trust C. Insurance companies D. All of the above
C. Insurance companies
Insurance companies are identified as institutional lenders. The others are non-institutional lenders.
When a contractor receives the money from a construction lender in stages of his construction, it is called an: A. Obligatory advance B. Optional advance C. Open end mortgage D. Progressive financing
A. Obligatory advance
The lender may withhold portions of the loan until certain stages of construction have been accomplished, but he is obligated to finally advance the full amount of the loan.
A person can borrow money on personal property with a: A. Bill of sale B. Deed of trust C. Mortgage D. Security agreement
D. Security agreement
In personal property finance, the security agreement is used as security for a loan.
The receipt for a Subdivision Final Public Report must be kept on file by the subdivider or his agent for a minimum of: A. One year B. Two years C. Three years D. Four years
C. Three years
A subdivider must keep a copy of the final public report for three years.
If a zoning law permits the use of a piece of property that is restricted in use and construction by the deed, which of the following prevails? A. Deed restrictions B. The master zoning law C. The variance permit D. The owner’s planned use
A. Deed restrictions
Deed restrictions will take precedence over zoning laws if the deed restriction is more stringent than the zoning law.
Which of the following is not a characteristic of an easement?
A. It is an interest which may be protected against interference by third parties.
B. It is capable of being created by reconveyance.
C. It is considered as a non-possessory interest.
D. It is an interest which may be terminated at will by the possessor of the land.
D. It is an interest which may be terminated at will by the possessor of the land.
The others are all true concerning an easement. Once granted, an easement can not be revoked.
The California Real Estate Law defines a planned development as which of the following? A. A condominium projects B. A co-op apartment project C. A subdivision D. A community apartment project
C. A subdivision
A planned development containing 5 or more lots is defined as a subdivision. A condominium project containing 2 or more units, a stock cooperative having 2 or more shareholders, and a community apartment project containing 2 or more apartments are other forms of subdivisions.
Which of the following terms is not generally associated with encumbrances? A. Easement B. Lien C. Lease D. Claim
D. Claim
A claim is an asserted right, but not an encumbrance.
Which of the following terms is most commonly used in California in reference to liens against real property? A. Specific B. Gross C. Personal D. Appurtenant
A. Specific
Statutory liens for taxes and liens such as mortgages, deeds of trust, and mechanic’s liens are all specific.
In a city, compliance to the State Housing Act is enforced by the city: A. Engineer B. Police department C. Planning commission D. Building inspector
D. Building inspector
The building inspector makes sure that the building complies with local and state building codes.
The party who is responsible for the enforcement of sanitation and sewage requirements in a subdivision is the: A. local building inspector. B. health department. C. local planning commission. D. Real Estate Commission.
B. health department.
It is the health department’s duty to approve the adequacy of the sanitation facilities of a new subdivision.
Who places the restrictions in a deed to a condominium unit in a new subdivision? A. Local planning commission B. Project developers C. Elected governing board D. Unit owners
B. Project developers
Deed restrictions are normally placed in the deed by the subdivider-the original grantor. Project developer is the term used for the subdivider of a condominium project.
A lien may be created by recording: A. A notice of non-responsibility B. A deed of trust C. A restriction D. All of the above
B. A deed of trust
A money encumbrance–a lien.
Ingress and egress are terms used in: A. Appraisal B. Easements C. Land measurements D. Construction measurements
B. Easements
Access by which to go in and go out across the property of another.
As a part of his submittal of documents to the Real Estate Commissioner under the Subdivision Lands Law, the nonresident subdivider must complete a form by which he agrees that, in the event he cannot be located via reasonable and diligent efforts, service can be legally effected by filing with the:
A. Real Estate Commissioner.
B. superior court in the county in which the property is located.
C. county recorder in the county in which the property is located.
D. Secretary of State.
D. Secretary of State.
The CA B&P Code Section 11007 states that every nonresident subdivider shall file an irrevocable consent form that if, in any action commenced against him in this State, personal service of process upon him cannot be made in this State after the exercise of due diligence, a valid service may thereupon be made upon him by delivering the process to the Secretary of State.
How long must a Structural Termite Report be held on file by the Structural Pest Control Board in Sacramento? A. One year B. Two years C. Three years D. Four years
B. Two years
A termite report is not demanded by law, but if one is issued it must be filed in Sacramento and kept on file for two years.
Who enforces anti-discrimination and assures housing accommodations regardless of race, creed, or color?
A. Real Estate Commissioner
B. State Department of Housing
C. State Department of Labor
D. Department of Fair Employment and Housing
D. Department of Fair Employment and Housing
The California Fair Employment and Housing Act (formerly the Rumford Act) prohibits discrimination in the sale, rental, or financing of practically all types of housing. Violations are reported to the state Department of Fair Employment and Housing.
In 1968, the United States Supreme Court handed down a decision in a case involving the matter of fair and open housing. The Supreme Court's decision upheld the Civil Rights Act passed by Congress in the year: A. 1942 B. 1948 C. 1868 D. 1866
D. 1866
Jones vs. Mayer prohibits discrimination based on race by upholding the 1866 Civil Rights Act and the 13th Amendment to the U.S. Constitution prohibiting slavery.
Any complaint as to the violation of the United States Civil Rights Act of 1968 should be filed within how many days of its occurrence? A. 180 days B. 365 days C. 30 days D. 90 days
B. 365 days
The deadline for filing a federal administrative complaint with the United States Department of Housing and Urban Development (HUD) is one (1) year from the date of the last discriminatory incident. [Title 24 §103.35].
If a person is in violation of the Rumford Act in refusing to sell property to a minority person, he could be made to:
A. pay $1,000 in damages.
B. sell the property to the individual if it is still available.
C. sell a similar type property if he has a similar property for sale.
D. any of the above
D. any of the above
The Rumford Act is also known as the California Fair Employment and Housing Act. The Dept. of Fair Employment and Housing will investigate and can order the owner to sell or rent the unit to the complainant; offer to the complainant the next available unit; or pay civil damages up to $10,000 ($25,000 if there has been a prior violation).
Informing a person that he should sell his property because non-whites are moving into the area and decreasing property values can be expressed by all of the following except: A. Blockbusting B. Panic selling C. Illegal conduct D. Legal conduct
D. Legal conduct
Situation describes blockbusting which causes panic selling and is illegal.
