PREP EXAM

Question 1

C holds a life estate for his life and also purchases the interest of the vested remainderman. What interest would C now have?

Answer 1

Fee simple estate

Question 2

An easement appurtenant is an example of

Answer 2

Property necessity

Question 3

When a property is rented for only one month, this is called tenancy…

Answer 3

For years

Question 4

Which of the following would NOT qualify for homestead exemption?

Family who owns a house in the name of a corporation

Single person living in a mobile home that is parked in rented space

Answer 4

Family who owns a house in the name of a corporation

RATIONALE
Homestead exemption is available only to natural entities, people, not companies which do not have “homes”

Question 5

You homestead your property then default on a loan for $50,000 secured with a note and Deed of Trust. How much does the one foreclosed on owe?

Answer 5

$50,000

RATIONALE
He or she owes $50,000. The homestead exemption does not protect against a consensual (voluntary) lien.

Question 6

What would be the holding of title received for the common area of a condo?

Answer 6

Tenancy in common

RATIONALE
The condo owner holds title to the common areas as tenants in common.

Question 7

In order to have a valid deed, the ______ must sign.

Answer 7

Grantor

Question 8

Delivery of a deed legally takes place…

Answer 8

When grantor hands the deed to a third neutral party with conditions and instructions to hand to the grantee

RATIONALE
This is the definition of an escrow delivery (handing the deed to a neutral party with instructions to deliver)

Question 9

In Arizona, a deed must be signed by the

Answer 9

Grantor

Question 10

An affidavit of value would NOT contain

Answer 10

Tax transfer stamps

Question 11

Title would transfer involuntarily to whom?

Answer 11

Executor

Question 12

Who gives instructions to sign the deed of re conveyance

Answer 12

Beneficiary

Question 13

In an agreement for sale it transfers rights ….

Answer 13

An agreement for sale…. Transfers rights to buyers possession

Question 14

What requires lenders to inform borrowers, when buying a home, secured by a mortgage or trust deed, of all finance charges, fees and interest at the time of signing the loan documents?

Answer 14

Reg Z

Question 15

If FHA is to insure a loan placed by a lender for the purchase of real estate what would NOT be required

Answer 15

Government funds must be available is NOT requried

Question 16

FHA is administered by the department of

Answer 16

HUD

Question 17

An apartment complex would be required to keep the common grounds accessible to all the residents. What covers this requirement?

Answer 17

Federal Fair Housing

Question 18

A complex meets the 62 year age requirement and the housing for old person exemption. A resident has a grandchild that would like to move into the complex. What is the status of the grandchild

Answer 18

The grandchild would not be allowed to stay due to the 62 year old exemption

Question 19

Adjusted Gross Income Includes

Answer 19

Rents, minus vacancies, minus credit losses, plus other income

RATIONALE
Adjusted gross income is the same as “Effective gross income” and therefore has the same formula: Potential gross income minus vacancies, bad debts (credit losses) = Effective (Adjusted) gross income.

Question 20

When a tenant does not pay the monthly rent, the landlord’s first step would be to

Answer 20

Send a 5 day notice for non-payment of rent

Question 21

When a tenant causes a material breach in the lease, the owner may issue a formal notice that states

Answer 21

Lease will terminate in 10 days if the matter is not corrected within 10 days

Question 22

A condominium and cooperative would be the same in that

Answer 22

Both pay annual assessments

Question 23

Is an auctioneer auctioning real property required to have a real estate license?

Answer 23

YES

RATIONALE
To auction any real property, business or timeshare a real estate license is required

Question 24

When a broker represents a buyer only, what would be the relationship between the buyer, broker and seller?

Answer 24

Customer

Question 25

An owner sold his listed property himself prior to expiration of the exclusive agency listing. The amount of commission owed is?

Answer 25

Nothing

Question 26

If the buyer dies prior to a contract closing escrow, the contract is

Answer 26

Valid

Question 27

An option once exercised is considered

Answer 27

Bilateral executory

RATIONALE
An option once exercised is considered Bilateral executory. Bilateral because it’s two sided and executory because it hasn’t closed.

Question 28

A couple has an adult son heading to college in Arizona. The wife files for divorce after 27 years of marriage citing irreconcilable differences. The husband executes a lease on a property in Arizona for the son to attend college that begins on August 1, 2014 and terminates December 31, 2015 and converts to month to month unless one party gives 30 days notice. Who must sign?

Answer 28

The lease requires signatures of both parties in the marriage in order for it to be valid.

RATIONALE
A lease longer than 1 year requires signatures of both parties in order to be valid

Question 29

In order to be enforceable, an exclusive listing

Answer 29

Must be signed by the owner and broker

RATIONALE
In order to be enforceable, an exclusive listing must be signed and accepted by the owner and the broker.

Question 30

When you appraise land and add to it the depreciated value of the improved property, what appraisal approach is being used?

Answer 30

Cost

Question 31

The distance around a quarter of section 7 in a specific township would be

Answer 31

2 miles

RATIONALE
A quarter of a section is 1/2 mile by 1/2 mile. 1/2 mile x 4 = 2 miles.

Question 32

A property closes February 3rd, the property taxes would be prorated based on

Answer 32

Last year

Question 33

You are closing on a property at the end of March where the seller has not paid for the 2nd half of the previous year? How would taxes be prorated?

Answer 33

Debit the seller for 9 months. credit the buyer for 3 months.

Question 34

On a closing statement, the amount of the sales price would be

Answer 34

Debit buyer, credit seller

Question 35

What is the primary difference between an agreement for sale and a purchase money mortgage.

Answer 35

The agreement for sale contains the note and the security all in one document.

Question 36

When land is offered interstate, it would be regulated by the Consumer Financial Protection Bureau. What number of lots must be offered for the regulation to take place?

Answer 36

25 or more

Question 37

When land is purchased interstate, how long would a buyer have to rescind under the Federal Interstate Land Full Disclosure Act

Answer 37

Within 7 days of receiving a property report.

Question 38

You purchase acreage at a total price of $125,500. The land is priced at $18,000 per acre. What percent of a section did you purchase.

Answer 38

1%

RATIONALE
A section is 640 acres. 1) 125,500 / 18,000 = 6.97 acres owned 2) 6.97 / 640 = .010 (1% after you move decimal 2 places right)

Question 39

A rectangular property with 8,690 square yards has 318 front feet. How deep is the property?

Answer 39

245.94 feet

RATIONALE
1) 8,690 sq yds x 9 sq ft = 78,210 sq ft 2) 78,210 sq ft / 318 ft = 245.94. The parcel is 318ft by 245 ft. Each square yard has 9 square feet.