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.
When there is a case involving discriminatory practices taken against a principal and his agent, which U.S. Supreme Court decision is often cited as a precedent? A. Wilson vs. Shaeffer B. Smith vs. Bonnheim C. Jones vs. Mayer D. Title VIII
C. Jones vs. Mayer
In 1968, the Civil Rights Act of 1866, was upheld by the United States Supreme Court in Jones v. Alfred H. Mayer Company, when the court ruled that the 1866 federal law “prohibits all racial discrimination, private and public, in the sale and rental of property.”
Insurance is:
A. substitution of a certainty for an uncertainty.
B. compensation in the event of a certain event.
C. an agreement written by an insurance company.
D. none of the above
B. compensation in the event of a certain event.
Definition: Insurance is indemnification against loss from a specific hazard or peril.
Fire insurance should allow the policy holder to:
A. gain in the event of a claim.
B. make at least 4 claims before cancellation of the policy.
C. neither gain nor lose in the event of a claim.
D. keep his loss to no more than $100,000.
C. neither gain nor lose in the event of a claim.
Insurance provides indemnification against loss from a specific hazard or peril. Most insurance policies contain a pro rata liability clause that prevents the owner from collecting a greater amount than the actual loss.
Which of the following state agencies has the power to investigate and take legal action to prevent acts of discrimination in housing accommodations in California because of race, color, religion, national origin, or ancestry?
A. Real Estate Commission
B. Labor Commission
C. Department of Fair Employment and Housing
D. Division of Housing
C. Department of Fair Employment and Housing
The Department of Fair Employment and Housing investigates housing discrimination complaints in California.
Of the following agencies mentioned, which has the authority to hear complaints of discrimination in housing?
A. Real Estate Board
B. Fair Relations Commission Board
C. Department of Fair Employment and Housing
D. Real Estate Commissioner
C. Department of Fair Employment and Housing
Violations of discrimination in the sale, rental or financing of practically all types of housing are reported to the state Department of Fair Employment and Housing.
A husband and wife owned their home as joint tenants. The husband signed an exclusive authorization and right to sell listing agreement with a broker without disclosing the manner of title holding in the property and without his wife’s signature on the listing. In the event of a commission dispute, the broker:
A. may bring action to force the wife to sell her interest.
B. may sue the husband separately in civil court for his commission.
C. has no right to a commission because he failed to obtain the wife’s signature on the listing.
D. may bring court action against the community estate.
D. may bring court action against the community estate.
The husband binds the community as statutory manager when he fails to disclose the joint tenancy holding.
The due date for the second installment of real property taxes is: A. December 10 B. February 1 C. March 1 D. April 10
B. February 1
Second installment is due February 1, and delinquent if not paid on or before April 10.
If you were asked to prepare newspaper ads for a home in a nice quiet area, $500,000 price range, you would appeal to: A. Prestige B. Higher income families C. Pride of ownership D. All of the above
D. All of the above
Opinion answer of the state exam. We agree with their answer.
A percentage lease is a lease in which the tenant pays a percentage of gross monthly receipts in addition to a base rent. Which statement is correct regarding percentage leases?
A. The higher the gross receipts, the lower the percentage rate.
B. The lower the gross receipts, the higher the percentage rate.
C. The higher the gross receipts, the higher the percentage rate.
D. The lower the gross receipts, the lower the percentage rate.
A. The higher the gross receipts, the lower the percentage rate.
A percentage lease is a lease in which the tenant pays a percentage of gross monthly receipts in addition to a base rent. Usually the higher the gross receipts, the lower the percentage rate.
Which of the following would be considered the least desirable tenant for a shopping center? A. Supermarket B. Hair salon C. Chain variety store D. Department store
B. Hair salon
Since most rents in shopping centers are based upon percentage leases, the key tenants are the large dollar volume producers. Hair salons usually lend themselves to the neighborhood location and not the shopping centers.
Ward owned a lot and had an easement across Lane's property. Ward sold the property to Stevens, but the easement which was appurtenant to Ward's property was not mentioned in the deed. The easement: A. was held by Ward. B. does not run with the land. C. passed to Stevens. D. reverts to Lane.
C. passed to Stevens.
Whether mentioned in the deed or not, the easement automatically passes to Stevens.
In a leasehold estate, the possessory interest in the real property is held by the: A. Lessor B. Lessee C. Beneficiary D. Grantee
B. Lessee
The lessee (tenant) has the right of possession.
A less-than-freehold estate would be: A. An estate in remainder B. A life estate C. An estate for years D. All of the above
C. An estate for years
An estate for years is a lease (one type of less-than-freehold estate). The others are freehold estates.
If a non-riparian owner is given permission by the state to take water from a lake or river, he takes it by: A. Percolation B. Prescription C. Appropriation D. Accretion
C. Appropriation
Where excess water is available to non-riparian users, the state appropriates the water and permits these users to take the excess.
A lease beginning March 1, 1993, and terminating June 30, 1993, is: A. A periodic tenancy B. An estate at will C. An estate for years D. None of these
C. An estate for years
A leasehold having a definite termination date is an estate for years, no matter how short the term.
A corporation may take title to real property: A. as a joint tenant. B. in severalty. C. as community property. D. none of these
B. in severalty.
Since a corporation never dies, it cannot take title where right of survivorship exists as in a joint tenancy.
A condominium is an estate in real property that may be developed as: A. Residential property B. Industrial property C. Commercial property D. Any of the above
D. Any of the above
Civil Code §1351(f) defines a condominium as “an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map, or condominium plan in sufficient detail to locate all boundaries thereof.” Condominiums may be developed as: (a) residential, (b) industrial, or (c) commercial property.
If Alfred deeded a ranch to Marley for the life of Cary:
A. Marley holds a life estate and Alfred an estate in remainder.
B. Marley holds a life estate and Alfred an estate in reversion.
C. Marley holds a fee simple estate and Cary a life estate.
D. Cary holds a life estate and Marley an estate in reversion.
B. Marley holds a life estate and Alfred an estate in reversion.
The law allows the duration of a life estate to be based on the life span of a third party (in this case, Cary). When Cary dies, the estate held by Marley will revert to Alfred.
A lease on real estate is a(n): A. Estate at sufferance B. Estate for years C. Freehold estate D. Co-tenancy
B. Estate for years
A lease for even one month is an estate for years. A leasehold is a less than freehold estate.
All of the following statements concerning condominiums are true except:
A. real property taxes must be billed to the entire project and prorated by the project manager.
B. the unit ownership can be deeded for indefinite duration.
C. condominium ownership may be in residential, industrial, or commercial property.
D. there is non-severability of the “in-common” and “separate interests.”
A. real property taxes must be billed to the entire project and prorated by the project manager.
The county tax assessors issue separate tax bills to each unit owner covering his interest. All the other choices are true.
An appurtenance: A. Runs with the land B. Is personal property C. Is a license to use land D. Is an encroachment
A. Runs with the land
The definition of real property is land, anything used to benefit the land, anything appurtenant to the land, or anything immovable by law.
A lease beginning March 1, 1994, and to terminate April 30, 1994, is: A. a month-to-month tenancy. B. a periodic tenancy. C. an estate for years. D. none of the above
C. an estate for years.
Any leasehold for a specified term, no matter how short the duration, is an estate for years.
Which of the following is not a requirement of a valid homestead?
A. A statement that the claimant is married
B. The name of claimant’s spouse, if any
C. A statement that the claimant is residing on the property at the time of filing
D. A description of the property
A. A statement that the claimant is married
A single person may file a homestead; being married is not a requirement. The other 3 choices are required.
An owner of a single family residence located in a rural area may lease the home for: A. a maximum term of 51 years. B. 99 years C. an unlimited period of time. D. none of the above
B. 99 years
Agricultural land can only be leased for 51 years. All other land can be leased for 99 years. Rural land would not necessarily be agricultural land.
Which of the following is real property? A. Trade fixture B. Washer/dryer C. Emblements D. Running stream
D. Running stream
A riparian owner usually owns to the center of the stream.
A less-than-freehold estate is: A. an interest in joint tenancy. B. an estate for years. C. A life estate D. All of the above
B. an estate for years.
The others are freehold estates.
Starting at the NW corner of the SE 1/4 of Section 16, thence to a point 1,320 feet directly east, thence 660 feet directly south, thence 1,320 feet directly west, thence north to the point of beginning. This description contains how many acres? A. 10 B. 20 C. 40 D. 80
B. 20
The area described is a rectangle 1,320 feet by 660 feet. The total area equals 871,200 sq. ft. divided by 43,560 (an acre) = 20 acres.
A parcel of land 1/4 mile by 1/4 mile is equivalent to: A. 1/16 of a section. B. 1/8 of a section. C. 1/4 of a section. D. none of the above
A. 1/16 of a section.
This would be a 1/4 of a 1/4 of a section, which would be 1/16 of a section.
Which of the following dimensions is equivalent to an acre? A. 43,560 square feet B. 180' x 242' C. 1/640 of a section D. All of the above
D. All of the above
Answers (a), (b), and (c) are all equivalent to an acre.
Which of the following is larger than a section? A. 27,000,000 square feet B. 1/36 of a township C. 16 times 40 acres D. A parcel 5,000 feet by 6,000 feet
D. A parcel 5,000 feet by 6,000 feet
A section has 27,878,400 square feet|5,000 feet x 6,000 feet = 30,000,000 square feet.
How many acres in one section? A. 260 B. 260 C. 420 D. 640
D. 640
There are 640 acres in a section.
How many square miles does a section contain? A. 1 B. 6 C. 36 D. 180
A. 1
A section is 1 mile by 1 mile, 1 mile square, and contains 1 square mile.
A board foot is exactly: A. 2" x 6" x 12" B. 3" x 4" x 12" C. 12" x 12" x 1" D. all of these
D. all of these
Any combination of 144 cubic inches.
A board foot of lumber contains 144 cubic inches. How many board feet of lumber can be obtained from a piece 2" x 4" x 12'? A. 3 B. 6 C. 7 D. 8
D. 8
2” x 4” x 12’ = 1,152 inches divided by 144 cubic inches = 8 board feet.
A subdivider purchased 10 acres for $200,000 with a 10% down payment. The balance was to be in the form of a straight note secured by a deed of trust. The deed of trust contained a release clause providing that, upon each payment of $20,000, one acre would be released free and clear. The subdivider subsequently paid $40,000 on the principal and received a release on two acres of land free and clear. By this transaction, the percentage of his equity in the encumbered property would do which of the following?
A. Increase
B. Decrease
C. Stay the same
D. Decrease when the first four lots were released and increase when the last six are released
A. Increase
When the developer purchased the land, his equity was 10%–the initial $20,000 down payment. ($200,000 - $20,000 = $180,000). Subsequently, the developer reduced the loan by another $40,000 to $140,000. Based on the initial purchase price, the developer’s equity would increase to 30% ($200,000 - $140,000 = $60,000 divided by $200,000).
Assume that the original value of a property was $122,500, with the land valued at $24,500. If the economic life of the improvement was estimated to be 40 years using the straight line approach, what was the book value of the property after 14 years? A. $34,300 B. $63,700 C. $88,200 D. $98,000
C. $88,200
Value of the improvement is $122,500 - $24,500 = $98,000. Then calculate the amount of depreciation. ($98,000 divided by 40 years x 14 years = $34,300. Subtract depreciation from the value of the improvement. $98,000 - $34,300 = $63,700. Since the question is asking the book value of the entire property (not just the improvement) at the end of 14 years, add the depreciated book value of the improvement to the land value to get the book value of the property. $63,700 + $24,500 = $88,200
A 60-acre tract was purchased for $30,000 per acre and divided into 3 parcels and sold for $750,000 each. What was the percentage return on the purchase price?
A. 15
B. 20
C. 25
C. 25
60 x 30,000 = $1,800,000 (cost); $1,800,000 divided by 3 = $600,000; $750,000 - $600,000 = $150,000 divided by $600,000 = .25 (25%).
If 1.86 acres are for sale at 22 1/2 cents per square foot, what is the asking price? A. 18229.86 B. 18267.53 C. 18983.16 D. 19096.16
A. 18229.86
1.86 x 43,560 square feet = 81,021.6 square feet x 22-1/2 cents $18,229.86.
In order to be able to earn $75.00 per month from an investment that yields a 5% return, you must invest: A. $2500 B. $9000 C. $15,000 D. $18,000
D. $18,000
$75.00 per month x 12 = $900 per year.
Bob has a loan for $16,000 with interest to be paid at the rate of $200 quarterly. What is the interest rate on the loan? A. 3% but less than 4% B. 4% but less than 5% C. 5% but less than 6% D. 6% but less than 7%
C. 5% but less than 6%
200 x 4 = 800 divided by 16,000 = 0.05 (5%).
A person sold his home and took back a second trust deed for $3,740. He immediately sold it for $2,431. What was the rate of discount? A. 28% B. 35% C. 55% D. 65%
B. 35%
$3,740 - $2,431 = $1,309 (amount discounted) divided by $3,740 = .35 (35%).
Which of the following measurements are equivalent to a board foot? A. 6" x 12" x 2" B. 6" x 12" x 1" C. 12" x 12" x 2" D. 12" x 12" x 12"
A. 6” x 12” x 2”
Any combination of 144 cubic inches (6 x 12 x 2 = 144).
A real estate speculator purchased a property for $10,000. He paid $1,000 down and executed a non-interest bearing note for $9,000 in favor of the seller. Before the end of the first year and before he had made any principal payments, he sold the property for double what he paid for it. Each $1.00 of his investment is now worth: A. $2 B. $9 C. $10 D. $11
D. $11
The owner’s equity is based upon the difference in value and the loan amount. $20,000 - $9,000 = $11,000. His $1,000 investment is now worth $11,000 or $11 for each $1 invested.
A property is valued at $30,000 and is insured for $24,500 at a rate of 16 cents per $100. The premium for a 3-year policy is 2 1/2 times the premium for 1 year. For a 3-year policy, the monthly cost will be: A. $3.33 B. $4 C. $2.72 D. $2.64
C. $2.72
245 x 0.16 = $39.20 (per year) x 2.5 = $98 (3 years);|$98 divided by 36 = $2.72 (per month).
An individual sold his property for $35,200 and realized a 10% profit over what he paid for it. His profit was: A. $3520 B. $3811 C. $3200 D. $3872
C. $3200
The selling price of $35,200 = cost + 10% or 110% of selling price;|$35,200 selling price divided by 1.10= $32,000;|$35,200-32,000 = $ 3,200 profit.|
A person purchases a $5,000 straight note for $4,500. Interest rate on the note is 6%. What was the percentage of profit made on the investment if the note is paid off in one year? A. 6.7% B. 11.1% C. 17.8% D. 6%
C. 17.8%
$5,000 x 0.06 = $300; $5,000 - $4,500 = $500; $300 + $500 = $800 = divided by $4,500 = 0.178 (17.8%).
A man paid $210,000 for some income units. His tax bill showed the assessments to be as follows: Land $15,120, improvements $35,280. In arriving at a figure to be used for depreciation for income tax purposes, he used his assessment figures as a basis. Which of the following most nearly reflects the depreciable amount? A. $35,280 B. $50,400 C. $147,000 D. $159,000
C. $147,000
Remember, land is not depreciable for tax purposes. First, using the assessments on the tax bill, determine how much the improvement contributes to the property tax bill. $15,120 (land) + $35,280 (improvement) = $50,400 (total property value). The improvement contributes 70% to the total property value. [$35,280 / $50,400]. To determine how much of the $210,000 paid for the property is attributable to the improvements, simply multiply $210,000 by 70%, which is $147,000.
Ms. Bake, the owner of a duplex, leased one of the units for a two-year term beginning June 6, 1993, and received the rent for the last two months of the lease in advance. This prepaid rent should be:
A. declared in her income tax return for 1993.
B. declared in her income tax return for 1995.
C. pro-rated over the term of the lease.
D. none of the above
A. declared in her income tax return for 1993.
Must be reported in the year received.
If a married woman buys a grocery store which includes an off-sale beer and wine license:
A. she must apply to the State Board of Equalization.
B. she must apply to the A.B.C. (Alcohol Beverage Control)
C. she and her husband must apply to the State Board of Equalization.
D. she and her husband must apply to the A.B.C.
D. she and her husband must apply to the A.B.C.
They must be both named on the application to the A.B.C. even if the license is going to be in the wife’s name. If he is an ex-felon this will keep the license from being issued for fear he may participate in the management of the business.
Assume you own a piece of real property with a fixed income and you discover a very serious inflationary trend in the economy. How would this affect your equity in the property?
A. Value of your equity would increase
B. Value of your equity would remain the same
C. You would not be affected by this inflationary trend at all
D. Value of your equity would decrease
A. Value of your equity would increase
Historically, real property has shown a consistent growth in value and remains the best hedge against inflation.
When a completion bond is involved, it is for the protection of the: A. Borrower B. Builder C. Subdivider D. Lender
D. Lender
A completion bond is for the protection of the monied interest or the owner. The best choice available is the lender (monied interest). If this choice were not available it would be for the protection of the owner, which could be the subdivider or the builder.
Assets, liabilities, and net worth are important items when running a business. The liabilities of a business are: A. Claims of the creditors B. Prepaid taxes C. Accounts receivable D. Cash on hand
A. Claims of the creditors
Answers (b), (c), and (d) are considered assets of a business.
Condominium projects are expected to grow in demand in the future due to which basic factor? A. Taxes B. Scarcity of land C. Comfort D. Sociability
B. Scarcity of land
Although high property taxes will force more individuals out of single family residences, the scarcity of land will be the major factor.
The topography of land is the defining of its surface features. A subdivider must give consideration to the topography of the proposed subdivided lands because:
A. some irregularities in the surface are desirable.
B. hilly or irregularly shaped lots reduce the cost of construction.
C. a rolling terrain is more monotonous than a flat terrain.
D. elevated lots are subject to inundation in the winter.
A. some irregularities in the surface are desirable.
Irregularities refer to hills or slopes on the land. Homes with a view or at least not on the same level as the other homes in the same neighborhood usually are more desirable.
Regarding home ownership, which of the following is a tax deduction? A. Interest B. Depreciation C. Repairing the roof D. All of the above
A. Interest
Homeowners can deduct taxes and interest on their income tax returns. The other deductions are allowed on investment property, but not a personal residence.
When a house is placed on a lot to insure the maximum privacy from street noise, this is an example of: A. Orientation B. Plottage C. Assemblage D. All of the above
A. Orientation
Orientation is the placement of a building on its lot in relation to exposure to sun, prevailing wind, traffic and privacy from the street.
A water closet is: A. a room where the water heater is kept. B. Water in a well C. A plumbing fixture D. Used by a surveyor
C. A plumbing fixture
The toilet.
Which of the following is not a type of soil or a soil condition? A. Alkaline B. Expansive C. Adobe D. Deciduous
D. Deciduous
Deciduous is the term used to identify the type of tree that sheds its leaves annually. The other three choices refer to types of soil.
The person most apt to use a bench mark in his profession would be a: A. Lawyer B. Carpenter C. General contractor D. Surveyor
D. Surveyor
A bench mark is a surveyor’s mark made on a permanent landmark that has a known position and altitude.
A homeowner's exemption is: A. $7000 B. $7500 C. $8000 D. $8500
A. $7000
A property owner may claim a Homeowner’s Exemption in California on a residence that is both owned and occupied at 12:01 am on January 1. The exemption reduces the assessed value of the residence by $7,000 and reduces the tax bill by at least $70. [CA State Board of Equalization]
Ms. Daniels was preparing her federal income tax return. Provided she lives on the premises, she is allowed a deduction for all of the following except:
A. real estate taxes.
B. interest on her home loan.
C. painting of a bedroom.
D. uninsured garage door valued at $200 which was stolen.
C. painting of a bedroom.
Real estate taxes and interest are reported on Schedule A. Maintenance expenses on an owner-occupied residence cannot be deducted. Generally casualty and theft losses to a home, household items and vehicles may be deducted on the Federal income tax return. Casualty and theft losses are claimed on IRS Form 4684.
Recording a deed: A. presumes delivery. B. gives actual notice. C. validates a deed. D. none of the above
A. presumes delivery.
Recording does not make a deed valid, but establishes the legal presumption that the deed was delivered. Recording gives constructive notice.
A landowner is advised that a railroad company plans to cross his property with a railroad line. If the landowner refuses, the railroad company can proceed by the use of: A. Police action B. Eminent domain C. Accretion D. Partition action
B. Eminent domain
The law delegates the right to eminent domain to public utility companies.
Which of the following indicates the tearing away of land by the action of water? A. Alluvium B. Avulsion C. Accretion D. Accession
B. Avulsion
Avulsion–tearing away.
Which of the following defines a partition action?
A. Action of water eroding the soil
B. A court proceeding to sever a joint ownership
C. A request for building code variance
D. A court proceeding to dissolve a partnership
B. A court proceeding to sever a joint ownership
The term action indicates a court proceeding. Partition is the division of an undivided interest in common among the individual owners.
Which of the following is permitted to use the county recorder's office and records without the presence of a recorder's officer? A. Bank and savings and loan employees B. Members of tax assessor's office C. Title company employees D. Any of these
D. Any of these
The records of the county recorder’s office are open to the public and any party listed in choices (a), (b), or (c) is permitted to inspect the records.
The opposite of erosion is: A. appurtenant. B. dereliction. C. accretion. D. alienation.
C. accretion.
Accretion is the gradual addition to land from natural causes. Erosion is the gradual wearing away.
When the size of beach property increases because of the permanent withdrawal of the sea, this is: A. Coercion B. Progression C. Regression D. Reliction
D. Reliction
Reliction refers to a recession of water from the usual watermark or waterline causing an increase of the land. Land which was once covered by water becomes uncovered.
The word that means the opposite of avulsion is: A. Accretion B. Erosion C. Alienation D. Acceleration
A. Accretion
Accretion is the increase of real estate by the addition of portions of soil through the action of the sea or river. Avulsion is the tearing away of the soil.
A wife can will: A. All the community property B. 1/2 the community property C. Any community property has not willed D. None of the community property
B. 1/2 the community property
Both husband and wife have the right to will 1/2 the community property.
The NW 1/4 of the SE 1/4 of Section 16, T4N, R4W, SBBM, is an example of what kind of land description? A. Metes and bounds B. Public Land Survey System C. Lot, tract, and recorded map D. None of the above
B. Public Land Survey System
This is a description using the Public Land Survey System.
A gift of real property by will is a: A. Demise B. Devise C. Legacy D. Bequest
B. Devise
A gift of real property by will is a devise, while a gift of money or personal property by will is a bequest or legacy.
Recordation of a deed provides which of the following?
A. Liens shown against property
B. Constructive notice
C. Guarantees ownership
D. Guarantees possessory ownership in the property
B. Constructive notice
Recording gives constructive notice.
All of the following are measurements of land except: A. front feet B. square foot C. metes and bounds D. acre
C. metes and bounds
Metes and bounds is a land description, not a land measurement.
What kind of notice does recording give? A. Actual B. Constructive C. Both a and c D. Neither a and c
B. Constructive
The only way to give actual notice is to notify each person individually.
The county recorder indexes grant deeds:
A. according to phonetic filing system.
B. according to date and time of recording.
C. alphabetically according to grantor and grantee.
D. on microfilm records.
C. alphabetically according to grantor and grantee.
Deeds are indexed alphabetically according to grantor and grantee. Do not confuse indexing with filing.
Losing title to land by the wearing away by action of the water would be: A. accretion B. erosion C. certiorari D. erosion and certiorari
B. erosion
Erosion is the gradual wearing away of the land by natural forces (air and water). One acquires title to land by accretion. One appeals to the U. S. Supreme Court on a Writ of Certiorari.
In one word, the contour of the surface of the land is called: A. Grading B. Topography C. Geography D. Geology
B. Topography
Topography is the various surface features or contours of the land that affect construction costs.
What a leased property would be expected to rent for under current market conditions if the property were vacant and available for rent is: A. contract rent. B. economic rent. C. commercial rent. D. conditional rent.
B. economic rent.
Economic rent is the amount a rental could bring in an open market.
A property located at 147 James Street, Any City, Your State, which is near the corner of Broadway and 3rd Avenue and measures 140' x 200', is: A. a legal description. B. a metes and bounds description. C. a lot, tract, and map description. D. a physical description.
D. a physical description.
External characteristics of a property include location, size, corner influence, thoroughfare condition, exposure, orientation, plottage increment, shape, topography and soil, as well as quality of conveniences; availability of schools, shopping, public transportation, churches; and similarity of land use. These are also known as physical characteristics or a physical description.
The word value, as used in appraising real property, is most nearly comparable to: A. Cost B. Price C. Utility D. Worth
D. Worth
What a property is said to be worth is its value.
When the appraiser is concerned with depreciation in his appraisal report, the method he would use would be: A. sum of the digits. B. 200% declining. C. 150% declining. D. Straight line
D. Straight line
The first three methods are accelerated methods used for income tax purposes. Straight line can be used in appraisal or income tax work.
If a house was built in 1948 and appraised in 1993, it:
A. had an economic life left of 45 years.
B. had a physical life of 45 years.
C. had an effective age of 45 years.
D. none of the above
B. had a physical life of 45 years.
In real estate terminology, a house that was actually 45 years old had a physical life of 45 years, making (b) the best answer.
A nice yard, beautiful trees, and good neighbors usually increase the value of residential property. These things are known as: A. Amenities B. Bi-laterals C. Co-ordinates D. Tangibles
A. Amenities
An amenity is something pleasing or an attractive feature.
In the appraisal of residential structures, the cost approach is best suited to: A. New properties B. Middle-aged properties C. Older properties D. Multi-family dwellings
A. New properties
Depreciation on older properties is the greatest source of inaccuracy in appraising. Multi-family dwellings are most properly appraised by the capitalization method.
When the owner of a commercial property lists it for the purpose of selling, which cost is most often overlooked? A. Economic obsolescence costs B. Utility costs C. Maintenance costs D. Management costs
D. Management costs
Probably because it is the least obvious and is often handled wholly or partially by the owner.
The square footage of a single family residence for appraisal purposes is computed by obtaining the:
A. outside measurement of the house and garage.
B. inside measurement of the house as a whole.
C. outside measurement of the house only.
D. inside measurement of each room and adding them together.
C. outside measurement of the house only.
Square footage would be measured by the outside perimeter of the house. It does not include the garage.
There are three main causes of depreciation. Which of the following finds its origin in social sources, which is the basis for the old axiom that "more houses are torn down than fall down?" A. Economic obsolescence B. Functional obsolescence C. Straight line depreciation D. Physical deterioration
A. Economic obsolescence
Social factors are factors outside the property, hence, economic obsolescence.
An appraiser, in determining the value of real property, would give consideration to which of the following?
A. The desire of a person for the desired thing
B. The relationship of the value of the property in exchange for other property
C. Effective demand, as evidenced by purchasing power, and relative scarcity
D. All of the above
D. All of the above
All of these have an influence on value.
The period of time in which an income property produces enough income to maintain itself and show a profit is known as its: A. productive life. B. economic life. C. depletion life. D. construction period.
B. economic life.
Definition: Economic life is the estimated period over which a building may be profitably used, and it is usually shorter than physical (actual) life.
