Prep Exam 2

Question 1

A person designated in a written power-of-attorney, to legally act for another in his stead is typically called a(n):

A. Fiduciary
B. Principal
C. Attorney-in-fact
D. Agent

Answer 1

C. Attorney-in-fact

Any person may give another the authority to act on his or her behalf. The legal document that does this is called a power of attorney. The person holding the power of attorney is an attorney-in-fact.

Question 2

A broker who is employed by the seller is liable to the buyer if:

A. he acts under a power of attorney for seller.
B. he acts in excess of the terms of his contract.
C. the offer is accepted but the contract is not performed.
D. the listing agreement has no termination date.

Answer 2

B. he acts in excess of the terms of his contract.

A broker’s contract ordinarily makes him the agent of the seller. If he performs an act which his contract does not authorize him to do, he is the agent of the other party, the buyer.

Question 3

In describing an agency contract, which is most nearly correct?

A. Most multiple listings are exclusive listings
B. An open listing without a termination date is unenforceable
C. Often multiple listings are net listings
D. An exclusive agency need not contain a termination date

Answer 3

A. Most multiple listings are exclusive listings

Choice (a) is the most nearly correct answer because most multiple listing groups require exclusive right to sell listings, which is a type of exclusive listing.

Question 4

An agreement to sell community property, signed by the husband alone, is:

A. Void
B. Voidable
C. Valid
D. Legal

Answer 4

B. Voidable

Both husband and wife must sign any transfer or encumbrance of community property. CC Section 1102(a).

Question 5

You agree to lease a property for 10 years for $12,000 total rent, at $100 per month. You pay the first and last months’ rent of $200. Which of the following terms would be inappropriate in the lease?

A. Condemnation conditions
B. Compliance with the federal laws
C. Third party liabilities
D. Escalator clause geared to the cost of living

Answer 5

D. Escalator clause geared to the cost of living

This would be a straight lease, which has no need for an escalator clause. The escalator clause would be found in a graduated lease.

Question 6

If a lease is to be recorded, it must be acknowledged before a proper official by the:

A. County recorder
B. Notary public
C. Lessee
D. Lessor

Answer 6

D. Lessor

The lessor (landlord)owns the property and signs the lease to give possession and use to the lessee (tenant). Leases for longer than one year (1 year plus 1 day) must be in writing and must be signed by the lessor, but not necessarily by the lessee.

Question 7

A solemn declaration by a person whose religious beliefs forbid the taking of an oath is:

A. an affidavit.
B. an acknowledgment.
C. an affirmation.
D. none of the above

Answer 7

C. an affirmation.

An affirmation is a declaration as to the truth of a statement, and is used in lieu of an oath by a person who objects for personal or religious reasons.

Question 8

An affirmed statement sworn to is:

A. an affidavit.
B. an acknowledgment.
C. an affirmation.
D. delivered.

Answer 8

A. an affidavit.

An affidavit is a sworn statement written down and made under oath before a notary public or other official authorized by law to administer an oath. Its purpose is to help establish or prove a fact, and it is a complete instrument within itself.

Question 9

When a lease is assigned, the assignee becomes a(n):

A. Tenant
B. Lessor
C. Landlord
D. Assignor

Answer 9

A. Tenant

When a lease is assigned, the primary liability shifts to the assignee and he becomes a tenant. When a leased property is sublet, the primary liability remains with the original lessee and the person to whom the property is sublet becomes the sublessee.

Question 10

Which of the following would identify a rider?

A. People
B. Amendment
C. Encroachment
D. Donee

Answer 10

B. Amendment

A rider is an addition or an amendment to an existing document.

Question 11

Which of the following is not legally required of a lease?

A. The legal expression “to let and demise”
B. Signature of lessor
C. Description of property
D. Term of lease

Answer 11

A. The legal expression “to let and demise”

To let and demise is a legal term but not legally required in a lease.

Question 12

Which of the following is correct?

A. Maximum lease on city property is 51 years
B. Maximum lease on agriculture property is 99 years
C. Maximum lease on non-agriculture is 51 years
D. None of the above

Answer 12

D. None of the above

Just the opposite: Agriculture-51, city and non-agriculture-99.

Question 13

A lease to a lessee is comparable to that of:

A. a deed of trust to a trustee.
B. an affiant to a deponent.
C. a land contract to the vendee.
D. a mortgage to a mortgagee.

Answer 13

C. a land contract to the vendee.

A lease gives the lessee the right of possession and use of the property. Under a land contract the buyer also receives use and possession together with an additional right of future title.

Question 14

Which term or terms would most completely commit the signers?

A. Individuality
B. Jointly
C. Severally
D. Jointly snd severally

Answer 14

D. Jointly snd severally

Jointly as a group and severally as individuals.

Question 15

A lessor and lessee agree to the terms and the lessor draws up a 5-year lease, signs it, and mails it to the lessee. The lessee does not sign it, but moves in and pays 2 months’ rent. After 2 months, the lessee decides to move out and informs the lessor. Which of the following is true?

A. There is a valid lease as only the lessor has to sign
B. There is a valid lease as lessee had moved in and paid 2 months’ rent
C. The lease is invalid, as the Statute of Frauds states that a lease for more than 1 year must be in writing and signed by both the lessor and lessee
D. The lease is invalid as there is no contract to enforce

Answer 15

B. There is a valid lease as lessee had moved in and paid 2 months’ rent

Lessee does not have to sign the lease to be bound to it as long as he either takes possession or pays rent in advance.

Question 16

The phrase, prima facie, means:

A. first in priority.
B. primary evidence.
C. front of the house.
D. principal.

Answer 16

B. primary evidence.

Prima facie means at first sight, or on first appearance but subject to further evidence or information. Of the answers given, “primary evidence” is the best choice.

Question 17

The Real Estate Settlement Procedures Act pertains to federally related loans used to purchase 1-4 single-family property used as a personal residence. RESPA regulates:

A. credit practices.
B. disclosures regarding settlement costs.
C. interest rate disclosures.
D. all closing practices for real property sales.

Answer 17

B. disclosures regarding settlement costs.

RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers certain disclosures regarding settlement procedures and costs. This helps consumers understand settlement services.

Question 18

Which of the following loans is exempt from the Truth in Lending Act on the basis of the type of loan itself?

A. An agricultural loan
B. FHA loan to buy a home
C. A VA loan to refinance a veteran’s home
D. $25,000 loan from a credit union for home improvement purposes

Answer 18

A. An agricultural loan

Business loans and agricultural loans are exempt from the Truth in Lending Act.

Question 19

Discount points paid for a loan would affect the:

A. principal amount.
B. taxes.
C. interest paid on the loan.
D. impounds.

Answer 19

C. interest paid on the loan.

Discount points paid for a loan are considered interest that is paid in advance.

Question 20

In real estate financing, lenders will sometimes find it necessary to refer to nominal rate when granting a loan. This means:

A. that the rate of interest in the final granting of the loan will be greater than the commitment.
B. points will be required because the rate required by the lender would exceed the legal rate of interest.
C. the term used by lenders when the maximum rate of interest allowed by law is obtainable on financing a property.
D. it is the rate of interest specified in the promissory note.

Answer 20

D. it is the rate of interest specified in the promissory note.

The word nominal stems from the word name and is the rate named in the note.

Question 21

In real estate financing, reference is sometimes made to take out loans. This refers to:

A. net amount after points and prepaid interest are deducted.
B. a blanket encumbrance.
C. a construction loan.
D. long term loan taken out after construction.

Answer 21

D. long term loan taken out after construction.

A take out loan is the long term financing that replaces the interim construction loan. It takes the construction lender out of the financing picture.

Question 22

Mr. Small sells his house for $100,000 and takes back a trust deed and note for $50,000. Needing cash, he immediately sells the trust deed and note at a discount to Mr. Big for $35,000, assigning the trust deed and endorsing the note “without recourse.” If the trustor defaults before making any principal payments (disregarding costs of collection), by which method would Mr. Big get the greatest amount in the shortest period of time?

A. Foreclosure by trustee’s sale to collect $35,000
B. Sue for specific performance
C. Recover from Mr. Small because the transaction was usurious
D. Foreclosure by trustee’s sale to recover $50,000

Answer 22

D. Foreclosure by trustee’s sale to recover $50,000

The fact that Mr. Small sold this purchase money encumbrance at a discount in order to obtain ready cash does not change the face value of the note.

Question 23

When a deed of trust is properly prepared and executed, the power of sale of the secured property is given by the:

A. beneficiary to the seller.
B. buyer to the trustor.
C. trustor to the lender.
D. trustor to the trustee.

Answer 23

D. trustor to the trustee.

Naked or legal title, along with power of sale, is conveyed through the deed of trust by trustor to trustee.

Question 24

In new construction financing, the lender will usually release the final payment to the borrower when the:

A. owner has accepted the property.
B. lien period has expired.
C. work has been completed.
D. notice of completion has been recorded.

Answer 24

B. lien period has expired.

The lender does not usually release the final payment until the mechanic’s lien period expires.

Question 25

A man had a promissory note in the amount of $200,000 secured by a second mortgage. He sold it to a friend for $150,000. This would be known as:

A. a prepayment
B. hypothecation
C. usury
D. discounting

Answer 25

D. discounting

Promissory notes sold for less than the unpaid balance are said to be sold at discount.

Question 26

Of the following, a primary source of funds for residential financing is:

A. the Federal Home Loan Bank.
B. Freddie Mac.
C. mortgage companies.
D. the Federal Housing Administration.

Answer 26

C. mortgage companies.

By far, one of the largest sources.

Question 27

The trustor under a deed of trust is the party who:

A. lends the money.
B. receives the note.
C. holds the property in trust.
D. signs the note as maker.

Answer 27

D. signs the note as maker.

The trustor is the one who borrows the money and therefore, promises to repay the loan.

Question 28

Will needs $2,000 to close an escrow. He holds a $6,000 promissory note secured by a second mortgage on a farm. Manny agrees to lend him the necessary amount if Will puts up the note as security. This type of security is known as a:

A. pledge
B. chattel mortgage
C. purchase money mortgage
D. subordination clause

Answer 28

A. pledge

Pledge is the depositing of personal property by a debtor with a creditor as security for a debt.

Question 29

Mortgage companies, which operate primarily as mortgage loan correspondents of life insurance companies, mutual savings banks, and others, are usually regulated by:

A. federal law.
B. state law.
C. county ordinances.
D. Federal Housing Administration.

Answer 29

B. state law.

Mortgage companies operating primarily as mortgage loan correspondents are not considered to be institutional lenders and are not subject to the same controls. Organized under state laws, they are subject to minimum supervision.

Question 30

Brokers are required to retain a copy of the Mortgage Loan Disclosure Statement in their office files for a period not less than:

A. 1 year
B. 2 years
C. 3 years
D. 4 years

Answer 30

C. 3 years

The Mortgage Loan Disclosure Statement (RE Form 882) states, “A copy of the form signed by the borrower must be retained by the broker for a period of three (3) years.”

Question 31

Subordinate is most opposite to:

A. Superior
B. Inferior
C. subrogation
D. Novation

Answer 31

A. Superior

Subordinated loan will come second. Opposite would be superior or first.

Question 32

A long term loan to be issued by one lender upon completion of the interim construction financing by another lender is known as a:

A. discount loan.
B. redemption loan.
C. takeout loan.
D. takeout loan.

Answer 32

C. takeout loan.

Takeout loan takes out the construction loan.

Question 33

Who signs a deed of reconveyance?

A. Trustor
B. Trustee
C. Beneficiary
D. Mortgagee

Answer 33

B. Trustee

Reconveying legal title back to the trustor.

Question 34

The least complicated loan to assume would be:

A. institutional
B. Cal-Vet
C. FHA
D. Savings bank

Answer 34

C. FHA

There are two federal agencies and one state agency that help make it possible for people to buy homes they would never be able to purchase without government involvement (the FHA and the VA, and the Cal-Vet loans). Ease of assumption by the FHA is described in “Loans” chapter.

Question 35

A federal act that provides protection against foreclosures of real property owned by a person in the service is:

A. Serviceman’s Readjustment Act of 1944.
B. Servicemembers Civil Relief Act.
C. Moratorium Relief Act of 1968.
D. Release of Obligation Act of 1947.

Answer 35

B. Servicemembers Civil Relief Act.

The SCRA (Servicemembers Civil Relief Act) is a federal law designed to protect persons who enter military service with mortgaged property from losing their property. If they are unable to pay their loan obligations due to the down-scaling of pay after entering the military service, the court has wide discretionary powers to protect the defaulting military service person.

Question 36

Of the following, the largest number of home loans are made by:

A. savings banks.
B. the Department of Veterans Affairs.
C. FHA.
D. commercial banks.

Answer 36

A. savings banks.

Currently savings banks are the largest single resource for residential mortgage credit.

Question 37

You, as an agent, have sold a home for which you negotiated a first loan with a bank and a second loan to be taken back by the seller. You have been requested to record a Request for Notice of Default on the first loan. This is usually to protect:

A. trustee of the first loan.
B. trustee of the second loan.
C. trustor of the second loan.
D. beneficiary of the second loan.

Answer 37

D. beneficiary of the second loan.

The purpose of a request for notice of default is if the trustor (borrower) defaults on the first loan, the trustee of the first loan must notify the beneficiary (lender) of the second loan of the trustor’s default. In this case the lender of the 2nd loan is the seller.

Question 38

Which security instrument is most valuable to a buyer who may fall on temporary hard times or default on payments?

A. First deed of trust
B. Second deed of trust
C. Financing agreement
D. Mortgage

Answer 38

D. Mortgage

A mortgage would give the buyer more time to redeem himself.

Question 39

A lender’s fee required of a buyer to obtain an FHA loan is called an:

A. accommodation fee.
B. originating fee.
C. acceptance fee.
D. application fee.

Answer 39

D. application fee.

One of the costs in setting up a home equity line of credit is similar to that which a borrower pays when he or she buys a home. It is an application fee (or lender’s fee).

Question 40

Which of the following documents is not a negotiable instrument?

A. Check
B. Draft
C. Mortgage
D. Promissory note

Answer 40

C. Mortgage

A mortgage is a security instrument, not a negotiable instrument.

Question 41

Mortgages and deeds of trust are considered:

A. real property.
B. personal property.
C. chattels real.
D. estates.

Answer 41

B. personal property.

A “chattels real” is a lease.

Question 42

What is the maximum loan available on a VA loan?

A. 80% of appraisal
B. 90% of appraisal
C. $45,000
D. Amount on CRV

Answer 42

D. Amount on CRV

Means Certificate of Reasonable Value. This is the appraised value.

Question 43

A certain easement lies outside of and adjoins the land which it benefits. The land benefited would be the:

A. dominant tenement.
B. servient tenement.
C. encumbered fee.
D. property subject to the easement.

Answer 43

A. dominant tenement.

The owner of the easement controls the use of the adjoining land and dominates its use. The property subject to the easement serves the easement holder.

Question 44

Which of the following is the least enforceable requirement of a subdivision improvement?

A. A minimum dollar value
B. A minimum lot size
C. A minimum area requirement
D. A maximum height restriction

Answer 44

A. A minimum dollar value

The other choices are common and enforceable. It would be very difficult to enforce a requirement stating one had to spend a certain amount of money in the improvements as one may be able to build just as beautiful and big a house as someone else and for less money.

Question 45

Which of the following statements is true with respect to planning commissions?

A. All members are elected.
B. Members must have had real estate or subdivision experience.
C. They are authorized to give advice to the city council on subdivisions.
D. Members must be real estate brokers.

Answer 45

C. They are authorized to give advice to the city council on subdivisions.

Members of the planning commission should be knowledgeable in the field of real estate and city planning, but this is not a prerequisite for being a member. The members are appointed and it is their job to develop a master plan and advise the city council in this area.

Question 46

Mr. Land owned two pieces of property and sold one parcel bordering on the road to Ms. Crow, reserving in the deed an easement for ingress and egress to and from the remaining real property for himself. After 5 years of non-use, Land attempted to use the easement, but was prohibited from doing so by Crow. A court would rule in this case that:

A. the easement was forfeited because it was not used for 5 years.
B. the easement was still valid because non-use never terminates any type of easement.
C. Ms. Crow could institute a quiet title action on the easement and probably be successful.
D. the easement was still valid since it had been created by deed.

Answer 46

D. the easement was still valid since it had been created by deed.

Only an easement acquired by prescription may be lost through non-use.

Question 47

The Real Estate Commissioner’s Subdivision Final Public Report expires:

A. one year from the date of the report.
B. never, unless a material change occurs.
C. five years from the date of the issuance of the report.
D. three years from the date of the issuance of the report.

Answer 47

C. five years from the date of the issuance of the report.

Matter of law, unless there is a material change. The term of a final public report shall be limited to 5 years. [B&P Code §11228]. If during the life (5 years) of a final public report, the subdivision offering undergoes a “material change” (e.g., change of ownership, change in purchase money handling procedure, change in use, etc.), the subdivider must apply for an amended public report. [Material change-C.Reg. 2800 (a) through (r)]. The developer shall amend or supplement its disclosure documents and registration information, to reflect any material change in any information and notify the commissioner within 20 calendar days of the material change. [B&P Code §11226(f)(1)].

Question 48

The California State Housing Act, which contains minimum code requirements, is found in the:

A. State Contractor’s Code.
B. Uniform Commercial Code.
C. Health and Safety Code.
D. Fair Housing Act.

Answer 48

C. Health and Safety Code.

The State Housing Law outlines minimum construction and occupancy requirements. Local building inspectors enforce the construction regulations and local health officers enforce the occupancy and sanitation regulations (Health and Safety Code Section 17910, et seq.).

Question 49

With permissive use, an easement by prescription can be created within:

A. 2 years
B. 10 years
C. 20 years
D. None of the above

Answer 49

D. None of the above

Must be hostile use, not permissive use.

Question 50

A master plan may also be described as a(n):

A. Elevation plan
B. Environmental plan
C. General plan
D. Specific plan

Answer 50

C. General plan

A comprehensive or master plan, known as a General Plan is adopted for long-term physical development in seven major categories: land use, circulation, housing, conservation, open space, noise, and safety.

Question 51

A preliminary subdivision report terminates:

A. upon receiving the final subdivision report.
B. at the end of one year.
C. upon a material change.
D. all of the above

Answer 51

D. all of the above

Preliminary public reports allow taking reservations for the subdivision, but not accepting any non-refundable money or entering into any binding contracts until receipt of the final report from the commissioner. Preliminary public reports have a one-year term and may be renewed.

Question 52

When seeking a variance, an owner would petition the local:

A. police force.
B. Board of REALTORS.
C. building department.
D. planning commission.

Answer 52

D. planning commission.

The owner may ask the city or county (local planning commission) for a waiver or zoning variance.

Question 53

A telephone company places poles and strings wire across privately owned land. This would be an example of a(n):

A. Specific lien
B. Encumbrance
C. Appurtenant easement
D. General lien

Answer 53

B. Encumbrance

This would be an example of an easement in gross, which is an encumbrance.

Question 54

Three of the four following real estate terms are closely associated. Which of the four terms does not belong with the group?

A. Deed of trust
B. Lien
C. Judgement
D. Claim

Answer 54

D. Claim

Individuals claim many things, but they are not necessarily liens. A deed of trust and judgment would be liens.

Question 55

Real estate syndicates have recently come under the jurisdiction of the Real Estate Commission. A real estate syndicate can operate as:

A. all of the following.
B. a real estate investment trust.
C. a partnership.
D. a corporation.

Answer 55

A. all of the following.

Real estate syndicates may operate as partnerships, corporations, or real estate investment trusts.

Question 56

Which of the following is true about the Real Estate Law?

A. It is enforced in a court of law
B. It is enforced by local real estate boards
C. It is enforced by the California Association of Realtors
D. It is enforced by the Real Estate Commissioner

Answer 56

D. It is enforced by the Real Estate Commissioner

The license law is only effective if it can be enforced. The Commissioner can only investigate non-licensed persons, but can discipline licensed persons.

Question 57

How long must a structural termite report be held on file by the Structural Pest Control Board in Sacramento?

A. 1 year
B. 2 years
C. 3 years
D. 4 years

Answer 57

B. 2 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.

Question 58

A real estate licensee under federal law should not take restrictive listings or advertise dwellings which suggest discrimination because of the:

A. Code of Ethics.
B. Rumford Act.
C. Title VIII of the Civil Rights Act of 1968.
D. Unruh Civil Rights Act.

Answer 58

C. Title VIII of the Civil Rights Act of 1968.

Definition: Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together constitute the Fair Housing Act, which prohibits discrimination based on rate, national origin, color, religion, age, sex, and handicap status.

Question 59

Which of the following is a true statement?

A. Since a broker is an agent, he may discriminate if his principal authorized it
B. As of this date, there is no law against discrimination by an agent
C. Businesses are precluded from discrimination against customers by the Unruh Civil Rights Act, and since a real estate office is a business, the broker cannot discriminate
D. Discrimination is most effectively prohibited by N.A.R.’s Code of Ethics

Answer 59

C. Businesses are precluded from discrimination against customers by the Unruh Civil Rights Act, and since a real estate office is a business, the broker cannot discriminate

The Unruh Civil Rights Act covers discrimination in business. It is against the law for anyone to deny a person the right to business products and services. The Unruh Act applies to a real estate brokerage because it is a business and may not discriminate against clients or customers.

Question 60

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

Answer 60

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 Fiar Employment and Housing.

Question 61

Which of the following covers Federal Fair Housing laws?

A. Rumford Act
B. 13th Amendment to the U. S. Constitution
C. Unruh Civil Rights Act
D. Title VIII, Civil Rights Act of 1968

Answer 61

D. Title VIII, Civil Rights Act of 1968

The Rumford Act is the State Fair Housing Law.

Question 62

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

Answer 62

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.

Question 63

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

Answer 63

B. 365 days

An aggrieved person may file a complaint directly to a U.S. District Court within one year of the alleged discriminatory practice, whether or not a verified complaint has been filed with the Secretary of HUD.

Question 64

In a bankruptcy, which of the following debts would be dischargeable?

A. Debts or creditors not listed on the schedules filed at the outset of the case
B. Child support and alimony
C. Gambling debts
D. Most student loans

Answer 64

C. Gambling debts

To the extent that gambling debts are legal and enforceable, they can be discharged in bankruptcy. That is because bankruptcy discharges ALL debts other than those specifically made non-dischargeable—and gambling debts are not among those exemptions. The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor’s

Question 65

Informing a person that he should sell his property because non-whites are moving into the area, decreasing property values, can be expressed by all of the following except:

A. Blockbusting
B. Panic selling
C. Illegal conduct
D. Legal conduct

Answer 65

D. Legal conduct

Situation describes blockbusting which causes panic selling and is illegal.

Question 66

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

Answer 66

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.”

Question 67

Which of the following would have priority?

A. A first deed of trust recorded March 14, 1992
B. A homestead recorded April 1, 1992
C. An assessment lien for street improvement, recorded April 5, 1992
D. An unrecorded mechanic’s lien

Answer 67

C. An assessment lien for street improvement, recorded April 5, 1992

Government liens (assessment, property tax, etc.) have priority over all other liens.

Question 68

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

Answer 68

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.

Question 69

Which of the following would you associate with unlawful detainer?

A. Trustor
B. Lessor
C. Grantor
D. Mortgagor

Answer 69

B. Lessor

This is used in removing someone from a less-than-freehold estate. Trustor, grantor, and mortgagor are all terms used in freehold estates.

Question 70

The remedy of unlawful detainer would be used by the offended:

A. holder of a note in default.
B. Tenant
C. Lessor
D. Lessee

Answer 70

C. Lessor

Unlawful detainer action is the legal remedy by a landlord (lessor) to remove a tenant (lessee) who is in default under the terms of the lease. It is also known as an action in ejectment.

Question 71

Which of the following “runs with the land?”

A. An appurtenance
B. An encumbrance
C. A lien
D. A lis pendens

Answer 71

A. An appurtenance

Upon the sale of a property, the appurtenances, usually an easement, go with the sale.

Question 72

Which of the following would not create an estate in property?

A. Grant deed
B. Contract of sale
C. Security instrument
D. Gift deed

Answer 72

C. Security instrument

A security instrument (deed of trust or mortgage) does not create an estate in property.

Question 73

Unless specified otherwise, a husband and wife take title to property:

A. as joint tenants.
B. as tenants in common.
C. in community property.
D. any of the above

Answer 73

C. in community property.

Property acquired by a married couple during marriage, if not specified otherwise, is presumed community property.

Question 74

A homestead may be filed on real property wherever there are “structural improvements.” Which of the following properties would not be eligible for a homestead?

A. An apartment house in which the declarant owns and lives in one of the units
B. A dwelling with an adjacent vacant lot on which the owner later plans to build and rent the new addition
C. A home that is presently under construction
D. A single family residence owned as a tenant in common with another

Answer 74

C. A home that is presently under construction

One of the requirements of a homestead is that you live on the property. A homestead may be filed on all of the other types of property listed in choices (a), (b), and (d).

Question 75

Which of the following must be recorded to be valid?

A. Easement
B. Real estate sales contract
C. Homestead
D. Lease

Answer 75

C. Homestead

California has two types of homesteads: automatic and declared. A declared homestead must be recorded to be valid. Of the choices listed, the homestead may have to be recorded to be valid. The other choices do NOT have to be recorded to be valid.

Question 76

Which of the following would be a freehold estate?

A. Estate in fee
B. Estate at will
C. Periodic tenancy
D. Leasehold estate

Answer 76

A. Estate in fee

The others are less-than-freehold estates.

Question 77

An appurtenance is:

A. an easement in gross.
B. stock in a mutual water company.
C. an attachment.
D. all of the above

Answer 77

B. stock in a mutual water company.

Transfers with the land. Stock in a mutual water company would be the water rights of the land and must transfer with the land.

Question 78

Property is:

A. real if an estate.
B. personal if a fixture.
C. personal if not real.
D. all of the above

Answer 78

C. personal if not real.

An estate of real and personal property can exist. A fixture is real property. If it is not real property then it would have to be personal property.

Question 79

Which of the following is an estate for an indefinite period of time?

A. An estate at will
B. Holdover tenancy
C. An estate for years
D. An estate at sufferance

Answer 79

A. An estate at will

An estate at will is the only less-than-freehold estate that is for an indefinite period of time.

Question 80

Elements of time, relationship, and interest are most relevant to:

A. joint tenancy.
B. tenants in common.
C. community property.
D. all of the above

Answer 80

C. community property.

No relationship required in joint tenancy or tenants in common. Elements of joint tenancy are possession, interest, time, and title. The only element required in a tenancy in common is possession.

Question 81

Bill Jones and Sally Jones, husband and wife, would most likely indicate title held as:

A. joint tenancy.
B. tenants in common.
C. community property.
D. tenants in partnership.

Answer 81

C. community property.

Any property acquired during marriage is presumed community property.

Question 82

Joint tenancy and community property have which of the following in common?

A. Right of survivorship
B. Equal interest
C. Both (a) and (b)
D. Neither (a) nor (b)

Answer 82

B. Equal interest

Right of survivorship means you cannot will your share. In community property, both spouses have a right to will 1/2 of the community property.

Question 83

Real property which houses a business constitutes for the lessee a(n):

A. freehold estate.
B. less than freehold estate.
C. freehold business.
D. interest in the property, but not an estate.

Answer 83

B. less than freehold estate.

The lessee holds a leasehold or less-than-freehold estate.

Question 84

An estate of inheritance or perpetual estates are referred to as a(n):

A. estate in fee.
B. life estate.
C. estate at will.
D. estate for years.

Answer 84

A. estate in fee.

The most complete form of ownership is an estate in fee, Since an owner may dispose of an estate in fee during his/her lifetime or after death by will, it is also known as an estate of inheritance or a perpetual estate.

Question 85

A joint tenancy interest in real property would be changed to a tenancy in common interest by:

A. death of one of three joint tenants.
B. death of one of two joint tenants.
C. one of two joint tenants giving his interest to the other.
D. one of two joint tenants selling his interest to a third party.

Answer 85

D. one of two joint tenants selling his interest to a third party.

When there are two joint tenants, the sale of an interest to a third party terminates the joint tenancy because the third party is coming into the tenancy at a different time.

Question 86

The holding of real property is:

A. Tenancy
B. Tender
C. Taken for granted
D. Tenement

Answer 86

A. Tenancy

The holder is the tenant.

Question 87

Property is valued at $240,000 using a capitalization rate of 10%. What would the value of the same property be using a capitalization rate of 12%?

A. $210,000
B. $200,000
C. $240,000
D. $220,000

Answer 87

B. $200,000

$240,000 x 0.10 = $24,000 divided by 0.12.= $200,000.

Question 88

Inventory in a store cost $9,200 net. It was sold for 25% profit; however, 15% of the gross profit was lost due to bad credit risks over a period of one year. How much profit did the store owner make that year?

A. $1955
B. $920
C. $345
D. None of the above

Answer 88

A. $1955

$9,200 x 0.25 = $2,300 x 0.15 = $345; $2,300 - $345 = $1,955.

Question 89

How many square feet of cement would be needed for a 7-foot wide continual sidewalk around the OUTSIDE EDGE of a 60 foot by 90 foot corner lot? Side A is 60’ long and Side B is 90’ long.

A. 1,050 square feet
B. 1,099 square feet
C. 420 square feet
D. 630 square feet

Answer 89

B. 1,099 square feet

Remember,the sidewalk is on the outside edge. Side A: 60’ x 7’ = 420SF. Side B: 90’ x 7’ = 630SF. Don’t forget the corner which is 7’x7’ or 49SF. Add the 3 parts: 420SF + 630SF + 49SF = 1,099 square feet.

Question 90

A person has a lot that he purchased for $20,000. He has been asked to build an apartment house with a projected income of $18,000 per year. His accountant estimates all expenses, including proper management, repairs, etc., to be $10,000 per year. The man wants an 8% return on his investment. Which of the following is nearest to the amount he can afford to pay for the erection of the building?

A. $90,000
B. $100,000
C. $110,000
D. $120,000

Answer 90

A. $90,000

$18,000 (annual gross income) - $10,000 (expenses) = $8,000 (annual net income);|$8 000 divided by .08 = $100,000. (value of building and land);|$100,000 - $20,000 = $80,000 (for erection of the building).| (Closest answer available is (a)).

Question 91

Mr. Bill pays $152,400 for a home. If it costs 12% to sell his home before he could sell it at a profit, how much would it have to appreciate?

A. $20,780
B. 100%
C. 34%
D. $2828

Answer 91

A. $20,780

152,400 = 88% (100%-12%)|$152,400 divided by 88% = $173,181.81|$173,181.18 - $152,400 = $20,781.81.

Question 92

Ms. Pat purchased a house in a run-down condition and spent an amount equal to 10% of the purchase to fix it up and bring it to its present value. The house is now worth $165,000. The cost of the house is equal to the existing loan of the property. The amount of the loan is:

A. $158,000
B. $148,500
C. $150,000
D. $164,500

Answer 92

C. $150,000

$165,000 = 100% purchase price + 10% fix-up money;|$165,000 divided by 110% (1.10) = $150,000.

Question 93

Tom buys a piece of property as an investment for $10,000. Tom’s capital investment is $1,000. He pays 6% interest on a loan of $9,000, and the property appreciates 8%. After one year the property is sold. What percent of profit did he realize on his initial invested capital?

A. 12%
B. 10%
C. None of the above
D. 26%

Answer 93

D. 26%

$10,000 x 8% = $800; $9,000 x 6% = $540; $800 - $540 = $260 (profit involved);| $260 divided by $1,000 (investment) = 26%.

Question 94

The entire stock of a retail store was sold for $8,400 to Sam Jones. Mr. Jones then sold the stock for 25% more than he paid for it, but due to some debts he lost 15% of the selling price. The net profit on Mr. Jones’ investment was:

A. $525
B. $2,100
C. $8925
D. 15%

Answer 94

A. $525

$8,400 x 25% = $2,100 (profit);|$8,400 + $2,100 = $10,500 x 15% (loss) = $1,575 loss;|$10,500 - $1,575 = $8,925 (sales price less 15% loss);|$8,925 - $8,400 (purchase price) = $525 (net profit).

Question 95

Mr. Smith sells a piece of land. It is free of all encumbrances. The broker will receive a 6% commission and Mr. Smith’s total escrow charges are $215.30. Mr. Smith received a check at the close of escrow for $15,290. The selling price was approximately:

A. $17,200
B. $17,000
C. $16,270
D. $16,495

Answer 95

D. $16,495

$15,290 (check received by Mr. Smith) + $215.30 (escrow fees) = $15,505.30 (94% of sales price); 100% sales price - 6% broker’s commission = 94% to owner; $15,505.30 divided by 94% = $16,495 (approximate gross selling price).

Question 96

A loan was made for $14,000 at an interest rate of 6% per year for a 20-year period. The total interest that would be paid over the entire loan period if the monthly payment for this fully amortized loan is $7.17 per $1,000, would be approximately:

A. $18,000
B. $16,000
C. $10,000
D. $14,000

Answer 96

C. $10,000

$7.17 per $1,000 x 14 thousands = $100.38 monthly payment;|20 years x 12 months = 240 monthly payments;|$100.38 x 240 = $24,091.20;|$24,091.20 - $14,000 (money borrowed) = $10,091.20 total interest paid.

Question 97

Assume Mr. Kelly owns his home and borrowed money to buy it with a loan payable at $114.63 per month. The balance on the loan for the last month was $16,500. $32.13 was applied on his principle on his last payment. What was the interest rate on the note in these circumstances?

A. 16.6%
B. 6%
C. 5.25%
D. 9.2%

Answer 97

B. 6%

$114.63 (monthly payment) - $32.13 (principal part of payment) = $82.50 (interest);|$82.50 x 12 months = $990 interest per 1 year;|$990 divided by $16,500 (loan balance) = 6%.

Question 98

Several years ago, Mr. Moss bought property for $10,000, paying $1,000 in cash with the seller taking back a trust deed for the balance of the purchase price. Before any payments had been made on the trust deed note, he sold the property several months later for $20,000. His invested dollar in these circumstances is worth:

A. $100
B. $11
C. $10.10
D. $1.10

Answer 98

B. $11

$10,000 (purchase price) - $9,000 (trust deed) = $1,000 (cash paid); $20,000 (sales price) - $9,000 (trust deed) = $11,000 (cash from sale); $11,000 divided by $1,000 = $11.00.

Question 99

The number of linear feet on each side of an acre of land that is almost square would be approximately:

A. 150
B. 209
C. 320
D. 410

Answer 99

B. 209

Actually 208.7 feet. Take the square root of 43, 560 (square feet in an acre) to get 208.7 (use square root symbol on calculator).

Question 100

A farm measures one-half mile by one-half mile. How many acres does the farm contain?

A. 20 acres
B. 40 acres
C. 160 acres
D. 320 acres

Answer 100

C. 160 acres

The farm is 1/4 of a section. 1/4 of 640 acres is 160 acres.

Question 101

Measurements of a driveway are 24’ x 36’. How much would it cost to replace the driveway if a concrete slab 4” thick cost $15.00 a cubic yard to install and the cost of labor amounted to $272.00 over and above the cost of the concrete?

A. $820
B. $432
C. $542
D. $752

Answer 101

B. $432

First, convert the 4” into 1/3 foot. Next, calculate the cubic feet. 24’ x 36’ x 1/3’ = 288 cubic feet. Convert the cubic feet into cubic yards. Remember, there are 27 cubic feet in 1 cubic yard. 288 cubic feet / 27 cubic feet = 10.67 cubic yards. The cost of the concrete is $160 (10.67 cubic yards x $15.00/cubic yard). The labor is $272, so the total cost to replace the driveway is $432.00.

Question 102

If you were to divide a one acre parcel of land into four equal sized rectangular lots, parallel to each other and each measuring 200’ in depth, what is the approximate width of each lot?

A. 55’
B. 63’
C. 212’
D. 84’

Answer 102

A. 55’

43,560 square feet in one acre divided by 200 feet equals 217.8 feet total frontage divided by 4 sides equals approximately 55 feet.

Question 103

A man owns a lot with 15,400 square feet. It has a depth of 140 feet. He buys two more lots that are adjacent to his lot, both with a depth of 140 feet. Together, the two new lots contain 4,200 square feet. What is the total front footage of all the lots combined?

A. 140 feet
B. 170 feet
C. 180 feet
D. None of the above

Answer 103

A. 140 feet

15,400 square feet + 4,200 square feet = 19,600 square feet;|19,600 divided by 140 = 140.

Question 104

A buyer assumed a note secured by a deed of trust. The balance of the note was $9,000 with an annual interest rate of 7 1/2% payable quarterly. The interest on the note was to be prorated upon possession of the property. If the interest on the note had been paid to March 15, and he took possession February 15, he would owe how much prorated interest?

A. $168.75
B. $56.25
C. 675
D. None of the above

Answer 104

B. $56.25

One month’s interest from February 15 to March 15.|$9,000 x 0.075 = $675/year divided by 12. = $56.25/month.

Question 105

One cubic yard of concrete is equal to how many cubic feet of concrete?

A. 9 cubic feet
B. 12 cubic feet
C. 27 cubic feet
D. None of the above

Answer 105

C. 27 cubic feet

3’ x 3’ x 3’ = one cubic yard = 27 cubic feet.

Question 106

There was fire insurance on a building valued at $9,000. The cost of the policy was $158.40 for a three-year period. The policy became effective on March 1, 1992. On November 16, 1992, the owner sold the building and canceled the policy. What was the value of the unused portion of the policy?

A. $116.60
B. $121
C. $123.10
D. $125.50

Answer 106

B. $121

$158.40 divided by 36 (months in 3 years) = $4.40 per month; $4.40 per month x 8.5 months = $37.40; $158.40 - $37.40 = $121.00.

Question 107

A person has an investment in a 20-unit apartment building that is adjacent to a freeway. Because of its proximity to the freeway, the owner lost $200 per month rent. If the capitalization rate were set at 12%, the loss in value to the property was:

A. $20,000
B. $2,400
C. $24,000
D. $22,000

Answer 107

A. $20,000

12 months x $200 (rent loss for the building each month) = $2,400, divided by 12%= $20,000.

Question 108

A man sold real property at a profit. For which of the following classes of property would he pay the most federal income tax on the gain?

A. Investment property
B. Property held for sale to customers
C. Property used for the production of income
D. Property used in his business

Answer 108

B. Property held for sale to customers

The seller of property held for sale to customers is considered to be a dealer and is taxed at ordinary rates. The seller of properties listed in choices (a), (c), and (d) would be entitled to capital gains benefits.

Question 109

The main duty of the county assessor is to determine:

A. the amount of tax to be paid by a property owner.
B. the proportion of tax to be paid by a property owner.
C. the tax rate to be applied to the assessed value.
D. how taxes can be reduced.

Answer 109

B. the proportion of tax to be paid by a property owner.

The assessor appraises the property to establish the basis on which the tax is to be paid. The amount of tax is set by the county Board of Supervisors.

Question 110

The commission paid to a real estate licensee for the sale of a home can be deducted on the seller’s federal income taxes as a(n):

A. standard deduction.
B. expense of sale.
C. long term capital gain.
D. casualty loss.

Answer 110

B. expense of sale.

The standard deduction is the 10% allowance granted to individuals who do not use the “long form” and itemize their charitable contributions, taxes, interest, etc. The commission paid for the sale of the home is deducted from the actual sale price as an expense of the sale to arrive at the gain or loss from the sale.

Question 111

An individual purchased an older apartment house as an investment. Since this was his first venture in real property investments, he is uncertain as to the depreciation schedule. If the former owners had been deducting depreciation, the new owner, for income tax purposes:

A. must use the same depreciation schedule.
B. may use the sum-of-digits method.
C. can ignore the depreciation schedule of the former owner and establish his own.
D. can only depreciate the improvements based on the former owner’s remaining life.

Answer 111

C. can ignore the depreciation schedule of the former owner and establish his own.

As the purchaser of investment property, the new owner may establish his own economic life and schedule his depreciation on this life.

Question 112

An owner of a 20-unit apartment house decides to have a $4,000 swimming pool installed for the benefit and convenience of his tenants. If he completes the installation he can handle the expense for income tax purposes by:

A. deducting the full cost as an operating expense in the year it was installed.
B. adding it to his cost basis as a capital improvement.
C. depreciating the improvement along with the land.
D. deducting it as an expense and cannot depreciate it over the life of the pool since it does not add to the life of the apartment.

Answer 112

B. adding it to his cost basis as a capital improvement.

This expense would be considered a capital improvement and the expense must be depreciated over the life of the pool. It is not depreciated with the land, since the land is not depreciated.

Question 113

Tax consciousness should begin:

A. before depreciation schedule is set by accountant.
B. before acquisition of the property.
C. after acquisition of the property and before the tax year ends.
D. after acquisition of the property and after the tax year ends and before the new tax year begins.

Answer 113

B. before acquisition of the property.

People considering the purchase of real property must examine the tax benefits and burdens of their purchase. Many times, the tax implications will seriously affect a sale and cause a buyer or seller to realize that - because of the taxes - full value of ownership may not be possible.

Question 114

Mr. Gurley is delinquent on his 2007-2008 real property taxes. The “sale to the state” took place on his property at the time prescribed by the law. Mr. Gurley took steps in 2008 to pay his delinquent taxes. What is the proper procedure for Mr. Gurley to redeem his property?

A. Mr. Gurley should make his payment, then receive and record a comptroller’s receipt, because the redemption period still applies
B. Make his payment and receive a tax deed
C. Record a full tax payment and reconveyance
D. Make his payment and record a tax clearance receipt

Answer 114

A. Mr. Gurley should make his payment, then receive and record a comptroller’s receipt, because the redemption period still applies

While the property is in a tax-defaulted status, the owner does not actually lose title and keeps possession for five years. If the taxes are not paid within that five-year redemption period a tax sale takes place, and the property may be sold at public auction to the highest bidder for cash.

Question 115

The number of times a given item will sell in a given period of time is known as:

A. turnover
B. goods sold.
C. inventory decrease.
D. all of the above

Answer 115

A. turnover

Definition: Turnover is the frequency with which real property in a given area is sold and resold.

Question 116

On which date all over the State of California is all real property encumbered with a lien?

A. 4/15/2020
B. 4/30/2020
C. 1/1/2020
D. 3/15/2020

Answer 116

C. 1/1/2020

On January 1st of every year, taxes become a lien on real property in the state.

Question 117

For street improvements, lots are assessed according to:

A. Front foot
B. Square footage
C. Market value
D. Performance

Answer 117

A. Front foot

According to county regulations, assessments for street improvements are based upon the front foot dimensions of the lot.

Question 118

The Street Improvement Act gives a property owner _______ to pay the special assessment tax before it goes to bond.

A. 30 days
B. 45 days
C. One month
D. 60 days

Answer 118

A. 30 days

He may pay all, part or none of it.

Question 119

Mr. Cho purchased a brand new piece of income property for $190,000. The listed price was $220,000. Mr. Cho considered this a good deal on his part, since he only put $10,000 down and acquired a new loan for the difference. The tax assessed value was indicated at $150,000. Mr. Cho’s cost basis for income tax purposes would be:

A. $180,000
B. $150,000
C. $190,000
D. None of the above

Answer 119

C. $190,000

Cost basis for income tax purposes (book value) is the price paid for the property, not the actual values in this case, $190,000.

Question 120

For the purpose of computing federal income tax, the “cost basis” may be used to determine:

A. Depreciation
B. Interest
C. Economic life
D. Capital assets

Answer 120

A. Depreciation

The cost basis is synonymous with book value and is used to determine depreciation for income tax purposes.

Question 121

Which of the following properties could not be depreciated on a federal income tax return?

A. An apartment house
B. A home rented to a welfare recipient whose rent is paid by the county
C. A duplex
D. A single family residence in which one resides

Answer 121

D. A single family residence in which one resides

You can only depreciate income or investment property, not your residence.

Question 122

Which of the following qualifies as artificial monuments?

A. Rocks and streets
B. Streets and canals
C. Trees and rocks
D. None of the above

Answer 122

B. Streets and canals

Artificial (man-made).

Question 123

Which of the following legal procedures is dependent upon first attaining a money judgment?

A. Unlawful Detainer Action
B. Writ of Attachment
C. Writ of Execution
D. Writ of Seizure

Answer 123

C. Writ of Execution

After receiving a judgment, one may get a Writ of Execution to collect on that judgment.

Question 124

An old land registration system used in the State of California was called:

A. the Regions Title Insurance.
B. Land Locators Insurance.
C. County Recorder’s Insurance.
D. Torrens Title Insurance.

Answer 124

D. Torrens Title Insurance.

Torrens Title Insurance no longer used in California.

Question 125

Avulsion is:

A. the gradual deposit of soil by moving waters which increases land area.
B. the sudden detachment or tearing away of the land by action of the water.
C. alluvion
D. Any of the above

Answer 125

B. the sudden detachment or tearing away of the land by action of the water.

Avulsion is the loss of land as a result of its being washed away by a sudden or violent action of nature.

Question 126

When a property is sold by the court, and the proceeds are divided among the owners, this is called a:

A. split action.
B. divided interest action.
C. partition action.
D. reverse action.

Answer 126

C. partition action.

Partition action is a court proceeding to settle a dispute between co-owners about dividing their interests in real property. The court can physically divide either the property or the money derived from its sale.

Question 127

If a man died intestate, his separate property would go to:

A. his wife alone and nothing to his children.
B. 1/2 to his wife and 1/2 divided among his children and closest relatives.
C. 1/3 to his wife and 2/3 divided among his children, share and share alike if he had more than one child.
D. his children alone and nothing to his wife.

Answer 127

C. 1/3 to his wife and 2/3 divided among his children, share and share alike if he had more than one child.

If there were only one child the separate property would be divided half and half. With more than one child it is divided 1/3 to the spouse and 2/3 to the children share and share alike. CA Probate Code 6401(c)(3)(A).

Question 128

Which of the following is incorrect in regards to a metes and bounds description?

A. Using a river as a boundary
B. Using a fence and edge of a farm as a boundary
C. Using rocks and trees as boundaries
D. Metes are boundaries and bounds are measurements

Answer 128

D. Metes are boundaries and bounds are measurements

The metes are measurements and the bounds are the boundaries.

Question 129

Art and Bud are partners. Art dies and leaves all of his estate to Charlie. Which of the following is correct?

A. Bud and Charlie are now partners.
B. Charlie has the right to Art’s share of the assets of the partnership but no right to the management of the business.
C. A partner cannot will his share of the business.
D. None of the above is correct.

Answer 129

B. Charlie has the right to Art’s share of the assets of the partnership but no right to the management of the business.

A partner can will his share of the assets, but the heir will have no right to the management of the business.

Question 130

The seizing of property by the sheriff to be held as a security for a legal action is known as a(n):

A. Writ of Seizure.
B. Writ of Execution.
C. Writ of Possession.
D. Attachment.

Answer 130

D. Attachment.

A writ of attachment is the process by which the court holds the real or personal property of a defendant as security for a possible judgment pending the outcome of a lawsuit.

Question 131

Which of the following is true concerning a township?

A. It always contains the same amount of land.
B. It always has 36 square miles.
C. It always has 36 equal sections.
D. Its boundaries are range and township lines

Answer 131

D. Its boundaries are range and township lines

The boundaries of a township are its range and township lines. However, due to the curvature of the earth there is a distortion in each township’s area as the range lines curve northward. Therefore, each township does not contain exactly 36 square miles. Each township contains 36 sections but they are not always equal in area. Some are called government sections and could not be less than the 640 acres of a standard section.

Question 132

Referring to land descriptions:

A. Public Land Survey system, Recorded Track Map or Lot and Block System, and Metes and Bounds are all considered legal descriptions.
B. a Metes and Bounds description is not a measurement of land.
C. there are three intersections of base and meridian lines in California.
D. all of the above are correct statements

Answer 132

D. all of the above are correct statements

All statements of fact. Metes and Bounds is a method of land description, not measurement. The three intersections in the State of California are Humboldt, Mt. Diablo, and San Bernardino.

Question 133

The NW 1/4 of the SW 1/4 of Sec. 8, T1N, R2E, SBBM:

A. is a 40-acre parcel.
B. is a 1/16 of a section.
C. is 1,320 feet on each side.
D. all of the above are correct

Answer 133

D. all of the above are correct

This land description is from the Public Land Survey System (formerly the U.S. Government Section and Township Survey. All the statments are correct.

Question 134

Which of the following statements concerning title is incorrect?

A. Title can be obtained without the use of a deed.
B. Title is classified as a bundle of rights and may exist in personal property as well as real property.
C. Title may not be transferred without the consent of the fee owner.
D. Title may be transferred from one person to another even though it is encumbered with a lien.

Answer 134

C. Title may not be transferred without the consent of the fee owner.

Involuntary alienation transfers title against the wishes of the owner. An example is adverse possession. Title to land may be obtained by adverse possession which would be without the consent of the fee owner.

Question 135

The recording system was established to show the sequence of transfers or other actions affecting property. All of the following are correct statements concerning recordation, except:

A. recording a deed does not affect its legality.
B. public records may be inspected by anyone without an employee of the recorder’s office being present.
C. recording a deed imparts actual notice to all future purchasers.
D. a deed to real property that is recorded in a county other than that in which the property is located does not provide constructive notice.

Answer 135

C. recording a deed imparts actual notice to all future purchasers.

Recording a deed imparts constructive notice, not actual notice.

Question 136

Prescription is a method of acquiring an easement, whereas adverse possession a method of acquiring title. Which of the following statements is correct?

A. Dedication of land for use by the public could result in creating an easement by prescription.
B. In a claim of title by adverse possession, establishing residence on the property would be a necessary element.
C. Granting grazing rights in excess of five years on agricultural land could result in prescriptive rights to an easement.
D. None of the above are correct statements.

Answer 136

D. None of the above are correct statements.

Answer (a) would be an easement by statutory dedication. In adverse possession it is not necessary to establish residence, only to hold and occupy the land continuously for five years. In an easement by prescription, the user of the property must be hostile to the owner. In answer (c) the owner is giving permission to use the property.

Question 137

Which of the following will a standard policy of title insurance insure against?

A. Forgery
B. Unrecorded restrictions
C. Unrecorded easements
D. Unrecorded liens

Answer 137

A. Forgery

A standard policy covers recorded matters, forgery, and capacity, but never any unrecorded matters.

Question 138

To obtain the most accurate report of the actual gross income of an apartment, an appraiser should:

A. rely on the seller’s statement.
B. have seller’s statement confirmed by the apartment manager.
C. obtain a statement from each tenant as to the amount of rent he pays.
D. contact the local apartment association.

Answer 138

C. obtain a statement from each tenant as to the amount of rent he pays.

The persons indicated in choices (a) and (b) could be prejudiced.

Question 139

A real estate appraisal made by an MAI is an estimate of value based upon:

A. replacement costs only.
B. analysis of data as of a specific date.
C. income data collected over the past 6 months.
D. tax assessor’s records over the past 5 years.

Answer 139

B. analysis of data as of a specific date.

Any appraisal is an estimate of value as of a specific date. MAI is an appraiser designation conferred by the Appraisal Institute.

Question 140

In analyzing a vacant parcel of land to estimate its value, the first logical step is to determine:

A. its listed price.
B. price the owner paid for it.
C. highest and best use.
D. prices of comparable improved properties.

Answer 140

C. highest and best use.

Until you first determine its highest and best use, other comparisons are futile.

Question 141

Which of the following is not a “non-property characteristic” used by an appraiser?

A. Date of sale
B. Arm’s length transaction
C. Original price paid by the seller
D. Unusual financing

Answer 141

C. Original price paid by the seller

Price paid has nothing to do with the characteristics of the property.

Question 142

How would the replacement cost of a warehouse be determined?

A. Cost per square foot
B. Cost per square inch
C. Cost per cubic foot
D. Cost per cubic inch

Answer 142

C. Cost per cubic foot

Warehouses and other buildings that have volume, such as a grain silo, use the cost per cubic foot method to determine cost.

Question 143

An appraiser has been requested to appraise a residential home. Although the home is actually 10 years old it is in excellent condition, so the appraiser places its age at 6 years. This would be known as:

A. actual age.
B. effective age.
C. undepreciated age.
D. remaining life.

Answer 143

B. effective age.

Actual age is the real age of the building. Effective age is not determined by the actual age of a building, but by its condition and usefulness.

Question 144

Trend is defined by appraisers as a process of change:

A. discounted during appraisal.
B. which can be observed on national levels.
C. created by a chain of cause and effect.
D. caused by economic and political actions affecting the market.

Answer 144

C. created by a chain of cause and effect.

This is defined in A.I.R.E.A.’s handbook.

Question 145

When do real estate values decline?

A. Before a recession
B. After a recession
C. During a boom
D. During a period of stability

Answer 145

A. Before a recession

Actually before and during a recession.

Question 146

The “depth table rule” is mostly used in appraising:

A. industrial property.
B. commercial property.
C. residential property.
D. all of the above

Answer 146

B. commercial property.

Definition: Depth tables are used by tax assessors seeking to achieve uniformity in assessment practices when estimating the value of commercial properties.

Question 147

All of the following are considered forces of value. Which is least important in its effect on value?

A. Social forces and demands
B. Original cost
C. Economic considerations
D. Government regulations

Answer 147

B. Original cost

The clue word is least important. Original cost has very little effect on value.

Question 148

Which of the following would be considered economic obsolescence?

A. A newly remodeled home in a deteriorating neighborhood
B. A home in need of repairs
C. A mental hospital built in a new up-scale neighborhood
D. A home painted purple and yellow

Answer 148

C. A mental hospital built in a new up-scale neighborhood

A mental hospital built in a new up-scale neighborhood is an external or economic force that would cause a loss in value for the homes nearby.

Question 149

An appraiser’s opinion of value of a property may be lowered by nearby nuisances. When this occurs, it is known as:

A. functional obsolescence.
B. economic obsolescence.
C. financial obsolescence.
D. physical obsolescence.

Answer 149

B. economic obsolescence.

Economic obsolescence is caused by factors outside the property.

Question 150

If two nearby homes cost the same to build, but one is worth considerably less than the other, the cause would be:

A. social obsolescence.
B. political obsolescence.
C. economic obsolescence.
D. functional obsolescence.

Answer 150

D. functional obsolescence.

The condition of the property or out of date style will affect the value.