QBank Test

Question 1

A broker who is the agent of the buyer should do which of the following?

Answer 1

Advise the buyer if the listing price of the seller’s house is unrealistic.

As part of the fiduciary duties owed a principal, an agent for the buyer should disclose to the buyer if the property is overpriced.

Question 2

All of the following are treated as personal property EXCEPT

Answer 2

an installed dishwasher

Once an item of personal property is attached to real property, it becomes real property. The two exceptions are trade fixtures and emblements.

Question 3

A deed must be signed by the

Answer 3

grantor and grantee

Question 4

Rental listing referral agents are licensed to engage in which of the following activities?

Answer 4

Collecting rental information for the purpose of referring prospective tenants to rental units or locations of rental units.

Question 5

Sally applies to the municipality for permission to open an adult day-care facility in his neighborhood. He may be grant a(n)

Answer 5

condition-use permit.

Question 6

What is a conditional-use permit?

Answer 6

A conditional-use permit usually is granted a property owner to allow a special use of property that is defined as an allowable conditional use within that zone.

Question 7

Land

Answer 7

Earth’s surface to the center of the earth and the airspace above the land, including the trees and water.

Question 8

Real Estate

Answer 8

Land plus permanent human-made additions.

Question 9

Real Property

Answer 9

Real estate plus “bundle of legal rights”

Question 10

Improvement

Answer 10

An improvement is any artificial thing attached to land, such as a building or fence, or improvements such as streets, utilities and sewers.

Question 11

What is included in ownership rights of real property?

Answer 11

1. Right of possession
2. Right to control the property within the framework of the law
3. Right of exclusion (to keep others from entering or using the property)
4. Right of disposition (to sell, will, transfer or otherwise dispose of or encumber the property)

Question 12

Title

Answer 12

1. The right to ownership of the land, including the owner’s bundle of legal rights; and
2. Evidence of that ownership by a deed. Title refers to ownership of real property, not a printed document. The document by which the owner transfers title to the real property is the deed.

Question 13

Deed

Answer 13

The document by which the owner transfers title to the real property.

Question 14

Appurtenance

Answer 14

An appurtenance (runs with the land) is a right or privilege associated with the property, although not necessarily a party of it.

Typical appurtenances include parking spaces in multiunit buildings, easements, water rights, and other improvements.

An appurtenance is connected to the property and ownership of the appurtenance normally transfers to the new owner when the property is sold.

Question 15

Examples of an Appurtenance

Answer 15

Parking spaces in multiunit buildings
Easements
Water rights
and other improvements.

Question 16

Surface Rights

Answer 16

are the rights to use the surface of the Earth.

Question 17

Subsurface Rights

Answer 17

are the rights to the natural resources lying below the earth’s surface.

Question 18

Can an owner transfer surface rights without transferring subsurface rights?

Answer 18

Yes.

Question 19

Mine Subsidence is

Answer 19

the process of downward land shifts due to the collapse of underground mine shafts and groundwater flows, usually resulting in sinkholes or troughs.

Question 20

Air Rights

Answer 20

the rights to use the space above the earth, may be sold or leased independently, provided the rights have not been preempted by law.

Question 21

Water Rights

Answer 21

are special common-law rights held by owners of land adjacent to rivers, lakes, or oceans and are restrictions on the on the rights of land ownership.

Question 22

Personal Property

Answer 22

sometimes called personalty, is property that can be owned and dos not fit the definition of real property.

Personal property is movable.

Question 23

Chattels

Answer 23

items of personal property including such tangibles as chairs, tables, clothing, money, bonds, and bank accounts.

Question 24

Fixture

Answer 24

an article installed by a tenant under the terms of a lease and removable by a tenant before the lease expires.

an item of personal property that has been converted to real property by being permanently affixed to the realty.

item of personal property converted to real estate by attaching it to the real estate with the intention that it becomes permanently a part thereof; may not be removed by tenant.

Question 25

Trade Fixture

Answer 25

item of personal property attached to real estate that is owned by a tenant and is used in a business; legally removable by a tenant.

Question 26

Manufactured Housing

Answer 26

is built at the factory under the following U.S. Department of Housing and Urban Development (HUD) specifications:

1. Nonremoveable steel chassis
2. At least 8 ft wide and 40 ft long
3. At least 320 sq ft of living space
4. Capable of being lived in with or without a permanent foundation
5. Contains a red label indicating that the home has been built in compliance with HUD construction and safety standards

Question 27

Emblements

Answer 27

(fructus industriales) annual cultivated crops of fruit, vegetables and grain generally considered personal property

Question 28

Severance

Answer 28

changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.

Question 29

Annexation

Answer 29

the process of converting personal property into real property

Question 30

Accession

Answer 30

acquiring title to additions or improvements to real property as a result of annexation of fixtures or the accretion of alluvial deposits along banks of streams

Question 31

List the 4 Economic Characteristics of Land that affect its value as a product in the marketplace

Answer 31

1. Scarcity
2. Improvements
3. Permanence of Investment
4. Location or area preference (situs)

Question 32

List the 3 Physical Characteristics of Land

Answer 32

1. Immobility
2. Indestructibility
3. Uniqueness (non-homogeneity)

Question 33

True or False: Real Property is the legal rights of ownership that attach to the physical surface of the land, to what lies above and below it, and to what is permanently attached to it.

Answer 33

True. Real property is the legal rights of ownership (the “bundle of rights”) that attach to the physical surface of the land, to what lies above and below it, and to what is permanently attached to it.

Question 34

True or False: Real Estate is defined as land at, above, and below the earth’s surface, and all things attached to it, whether permanent or chattel.

Answer 34

False. Real estate is defined as land at, above, and below the earth’s surface, and all things permanently attached to it, whether natural or artificial.

Question 35

True or False: Land is defined as earth’s surface extending downward to the center of the earth and upward into space, excluding permanent natural objects such as trees and water.

Answer 35

False. Land is defined as the earth’s surface extending downward to the center of the earth and upward into space, including permanent natural objects such as trees and water.

Question 36

True or False: A property’s air rights are considered unlimited, extending upward into the farthest reaches of outer space.

Answer 36

False. Before air travel was common, a property’s air rights were considered unlimited, extending upward into the farthest reaches of outer space. Today, however, the courts permit reasonable interference with these rights. Pennsylvania law permits local government authorities to obtain aviation easements.

Question 37

True or False: Something that is affixed to the land to be part of the real estate is a fixture.

Answer 37

True. An article that was once personal property but has been affixed to the land or a building in such a way that the law construes it to be a part of the real estate is a fixture.

Question 38

True or False: Land is defined as the earth’s surface extending downward to the center of the earth and upward into space, excluding permanent natural objects such as trees and water.

Answer 38

False. Land is defined as the earth’s surface extending downward to the center of the earth and upward into space, including permanent objects such as trees and water.

Question 39

True or False: Trees and crops are generally considered in two classes. Perennials are considered personal property. Annuals, including emblements, are generally considered real estate.

Answer 39

False. Trees, perennial bushes, and grasses that do not require annual cultivation are considered real estate. Annual plantings or crops of wheat, corn, vegetable, and fruit, known as emblements, are generally considered personal property.

Question 40

True or False: Real estate posses two basic characteristics that define its nature and affect its use: economic and developmental.

Answer 40

False: Real estate posses seven basic characteristics that define its nature and affect its use. These characteristics fall into two general categories: economic and physical.

Question 41

True or False: Something that is affixed to the land to be a part of the real estate is a fixture.

Answer 41

True. An article that was once personal property but has been affixed to the land or a building in such a way that the law construes it to be a part of the real estate is a fixture.

Question 42

True or False: An owner my use a property in a manner that does NOT comply with current zoning by obtaining a conditional-use permit.

Answer 42

True. Each time a plan or zoning ordinance is enacted, new land-use requirements could inconvenience property owners. One way for an owner to use a property in a manner that does not comply with current zoning is to obtain a conditional-use permit. A conditional-use permit authorizes a property to be used for a special purpose.

Question 43

True or False: The planning commission of a municipality is responsible for enacting the comprehensive plan, zoning, and subdivision ordinances in accordance with procedures in the Pennsylvania Municipalities Planning Code.

Answer 43

False. The governing body of a municipality is responsible for enacting the comprehensive plan, zoning and subdivision ordinances in accordance with procedures in the Pennsylvania Municipalities Planning Code. The governing body may appoint a planning commission to be responsible for formulating the recommended plans and ordinances. Public hearings must be held before their enactment by the government body.

Question 44

Margot is a licensed real estate salesperson. Her written contract with broker George specifies that she is not an employee. In the last year, just less than half of Margot’s income from real estate activity came from sales commissions. The remainder was based on an hourly wage paid by George. Using these facts, it is MOST likely that the IRS would classify Margot as which of the following for federal income tax purposes?

a. Part-time real estate salesperson
b. Employee
c. Self-employed
d. Independent contractor

Answer 44

b. Employee

Because her earning were more than half in noncommissions, the IRS would not see her as self-employed but could treat her as an employee.

Question 45

A land contract provides for the

a. sale of unimproved land only
b. conveyance of legal title at a future date
c. sale of real property under an option agreement
d. immediate transfer of reversionary rights

Answer 45

b. conveyance of legal title at a future date

In a land contract, the seller, or vendor, retains legal title to the property.

Question 46

The right of a defaulted taxpayer to recover property before its sale for unpaid taxes is the

a. statutory right of reinstatement
b. statutory right of assessment
c. equitable right of appeal
d. equitable right of redemption

Answer 46

d. equitable right of redemption

Equitable rights of redemption exist because it is only fair (equitable) that a person be permitted to save his or her property before tax sale-or even foreclosure sale-by paying in full.

Question 47

Homeowners may deduct all of the following expenses when preparing their income tax return EXCEPT

a. some origination fees
b. mortgage interest
c. homeowner’s association dues
d. real estate taxes

Answer 47

c. homeowner’s association dues

Real estate taxes, mortgage interest, points for loans, and some origination fees can be deducted on income tax returns.

Question 48

A parcel of property was purchased by two friends, Kevin and Zelda. The deed they received from the seller at closing conveyed the property “to Kevin and Zelda” without further explanation. Kevin and Zelda took title as which of the following?

a. Community property owners
b. Tenants by the entirety
c. Joint tenants
d. Tenants in common

Answer 48

d. Tenants in common

When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common-to avoid the results of accidental join tenancy. Friends are unable to hold community property or be tenants by the entirety as those are both for married couples.

Question 49

Each room of Jan’s house was preassembled at a factory, driven to the building site on a truck, and then lowered onto its foundation by a crane. Later, workers finished the structure and connected plumbing and wiring before Jan moved in. Which term BEST describes the type of home Jan owns?

a. Converted
b. Mobile
c. Manufactured
d. Modular

Answer 49

d. Modular

Complex components (parts) that are assembled to create a large object are called modules. When room-sized components are manufactured for later assembly on-site, modular housing is the result.

Question 50

The sales comparison approach to value would be MOST important when estimate the value of a(n)

a. existing residence
b. new residence
c. apartment building
d. retail location

Answer 50

a. existing residence

A new residence requires the sales comparison approach to be used when applying for mortgages, and existing residences also require the use of the sales comparison approach. While both are correct, the existing residence answer may be most correct since the new residence can also use the cost approach for close support. Also, the cost approach for an existing residence is not as reliable as it is for the new residence with no depreciation.

Question 51

General real estate taxes levied for the operation of the government are called

a. improvement taxes
b. assessment taxes
c. ad valorem taxes
d. special taxes

Answer 51

c. ad valorem taxes

Confusingly, the general real estate tax-the ad valorem tax-creates a specific lien! The word general in this context distinguishes this tax from the special assessment that is for a specific project or neighborhood.

Question 52

All of the following will provide protection against the possibility of mechanics’ liens being filed against property by subcontractors EXCEPT

a. a stipulation against liens filed at the prothonotary’s office
b. a waiver of liens in a construction contract
c. mechanic’s lien insurance
d. a release of liens document

Answer 52

b. a waiver of liens in a construction contract

A waiver of liens in a construction contract protects the title from liens being filed by the general contractor, not subcontractor. A recorded stipulation against liens, a release of liens document, and mechanic’s lien insurance can all be used as a means of protecting the property against claims of subcontractors or suppliers.

Question 53

Kyle and Ursula own a property together. Ursula dies and Kyle now owns the property with her heirs. They owned the property

a. in severalty
b. as tenants in common
c. as join tenants
d. as shareholders in their own corporation

Answer 53

b. as tenants in common

Under tenancy in common, when a co-owner dies, the tenants undivided interest passes according to the will.

Question 54

A tenancy in which the tenant continues in possession after the lease has expired, without the landlord’s permission is a

a. tenancy for years
b. tenancy at will
c. periodic tenancy
d. tenancy at sufferance

Answer 54

d. tenancy at sufferance

Tenants who stay after the end of their lease without their landlord’s permission hold a tenancy at sufferance.

Question 55

Police Power

Answer 55

The government’s right to impose laws, statues, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, and welfare.

Question 56

The use of privately owned real estate is regulated through

Answer 56

1. land-use planning
2. zoning ordinances
3. subdivision regulations
4. building codes
5. environmental protection legislation

Question 57

Comprehensive Plan

Answer 57

(master plan) a plan created by a local government to guide the long-term (perhaps 20 years or longer) physical development of a particular area

usually covers land use, housing needs, movement of people and goods, community facilities and utilities, and energy conservation

Question 58

What does a comprehensive plan include?

Answer 58

a. a general plan that can be revised and updated more frequently
b. plans for specific areas
c. strategic plans

Question 59

Zoning Ordinances

Answer 59

an exercise of police power by a municipality to regulate and control the character and use of property

local laws implementing the land uses designated in the comprehensive plan and typically cover items such as permitted uses, lot sizes, types of structures, building heights, setbacks, style and appearance of structures, density, and protection of natural resources

classifies property by uses and types, such as commercial, industrial, residential, agricultural, and planned unit development (PUDs)

Question 60

Planned Unit Development (PUD)

Answer 60

a planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision

Question 61

Buffer Zones

Answer 61

a strip of land, usually designated as a park or for similar use, separating land dedicated to one use from land dedicated to another use (e.g. residential from commercial)

Question 62

Inverse Condemnation

Answer 62

an action brought by a property owner seeking just compensation for land taken for public use then the taker of the property does not intent to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property’s public use.

Question 63

Nonconforming use

Answer 63

a use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area

Question 64

Conditional-use permit

Answer 64

written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area

Question 65

Variance

Answer 65

permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances

Question 66

Building Codes

Answer 66

ordinances that specify minimum standards of construction for building to protect public safety and health

Question 67

Certificate of Occupancy

Answer 67

permission by the municipal inspector to occupy a completed building structure after it has been inspected and complies with building codes

Question 68

Developer

Answer 68

one who attempts to put land to its most profitable use through the construction of improvements

Question 69

Dedication

Answer 69

the voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools

Question 70

Impact Fees

Answer 70

charges assessed developers by a municipality that relate to expenses incurred by the municipality for additional improvements necessitated by increased development

Question 71

Plat

Answer 71

a detailed map that illustrates the geographic boundaries of individual lots

Question 72

Density Zoning

Answer 72

zoning ordinances that restrict the average maximum number of houses per acre that may be built within a particular area, generally a subdivision

Question 73

Deed Restrictions

Answer 73

a clause in a deed limiting the future use of the property. Deed restrictions may impose a vast variety of limitations and conditions-for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent building from being used for specific purposes or even from being used at all.

Question 74

Restrictive Covenants

Answer 74

a clause in a deed that limits the way the real estate ownership may be used

commonly known as covenants, conditions, and restrictions (CC&Rs).

CC&Rs typically govern the type, height, and size of building that individual owners can erect, as well as land use, architectural style, construction methods, setbacks, and square footage. CC&Rs are enforced by the homeowner’s association.

placed by the current owner in deeds and apply to future owners

referenced in the plat and contained in a separate recorded instrument

if there is a conflict with local zoning, generally the more restrictive control applies

Question 75

CC&Rs

Answer 75

Covenants, Conditions, and Restrictions. Private agreements that affect the land use. They may be enforced by an owner of real estate and included in the seller’s deed to the buyer.

Question 76

Interstate Land Sales Full Disclosure Act

Answer 76

a federal law that regulates the sale of certain real estate in interstate commerce to prevent fraudulent marketing schemes that may arise when land is sold without being seen by the purchases. The act is regulated by the secretary of HUD through the Office of Interstate Land Sales Registration.

regulates the interstate sale of unimproved lots in subdivisions of 25 or more lots of less than 20 acres each

the law does not apply to subdivisions sold solely to developers

land sales are regulated by state law

Question 77

Eminent Domain

Answer 77

land may be taken for public use through the government’s power of eminent domain or condemnation

when the taking of property occurs, the Fifth Amendment to the US Constitution requires that the owner be given just (fair) compensation.

Question 78

Inverse Condemnation

Answer 78

a property owner may claim compensation under inverse condemnation if an adjacent public land use diminished the value of the owner’s property but the property has not been condemned for public use

Question 79

True or False: An environmental impact statement (EIS) must be performed on any project that involves more than 25 acres.

Answer 79

False: An environmental impact statement (EIS) must be performed for any federally funded project.

Question 80

True or False: In Pennsylvania, the Department of Health and Human Services oversees the state’s laws that deal with environmental problems.

Answer 80

False: Although the EPA was created at the federal level to oversee environmental problems, several other federal agencies’ areas of responsibility generally overlap. In Pennsylvania, the Department of Environmental Protection oversees the state’s laws.

Question 81

True or False: The Environmental Protection Agency (EPA) provides for the rehabilitation of contaminated properties that have sat idle because of significant pollution associated with their past use.

Answer 81

False: The Uniform Environmental Covenants Act (UEAC) provides for the rehabilitation or recycling of brownfields, contaminated properties that have long sat idle because of significant pollution associated with their prior industrial use.

Question 82

True or False: Federal standards exist for the amount of permissible mold contamination.

Answer 82

False: Currently there are no federal requirements to disclose mold contamination. Buyers should be aware that sellers cannot disclose what they do not know; buyers should be prepared to discover mold contamination, if that is a concern to them.

Question 83

In what year was the use of lead-based paint in residential structures banned?

Answer 83

1978

Question 84

Strips of land six miles wide that run north and south are called

a. latitudes
b. tiers
c. ranges
d. longitutes

Answer 84

c. ranges

The land on either side of a principal meridian is divided into six mile-wide strips that run north and south parallel to the meridian, and the strips of land are called ranges.

Question 85

In reference to license laws and rules and regulations of the commission, what does the term “broker of record” refer to?

a. A sole proprietor who maintains multiple branch offices and hires associate brokers to manage those offices
b. An employing broker who employs other associate brokers to work on his or her behalf
c. An individual broker responsible for the real estate transaction of a partnership, association or corporation who holds a broker’s license
d. an associate broker authorized to directly control and supervise activities at a licensed branch office

Answer 85

c. an individual broker responsible for the real estate transactions of a partnership, association, or corporation who holds a broker’s license

The broker of record is the individual broker responsible for the real estate transactions of a licensed partnerships, association, or corporation (35.201)

Question 86

Which of the following allows a mortgage to proceed to a foreclosure sale without having to go to court first?

a. hypothecation
b. alienation clause
c. power of sale
d. waiver of redemption right

Answer 86

c. power of sale

A power-of-sale provision in a mortgage permits the lender to foreclose and sell a mortgage property that is in default without petitioning to get the court to conduct the sale. Nevertheless, the procedure is often supervised-although not conducted-by the court.

Question 87

The borrower under a deed of trust is known as the

a. beneficiary
b. trustor
c. trustee
d. vendee

Answer 87

b. truster

A borrower in at the deed of trust system gives a deed of trust to a trustee and a note to the lender, thus becoming a truster on the deed of trust and a maker, or obligor, on the note.

Question 88

When a person obtains a final judgment against a licensee and seeks payment from the real estate recovery fund, what is the time frame for making application for payment from the fund?

a. within six months of the date of violation that resulted in the judgment being issued
b. at any time after termination of the proceeding because no specific time frame is provided by law
c. no more than one year after the termination of the proceedings, including reviews and appeals, in connection with the judgement
d. within 30 days of the initial decision of the court directing the licensee to pay compensation

Answer 88

c. no more than one year after the termination of the proceedings, including reviews and appeals, in connection with the judgment

License law provides that an aggrieved person who has been awarded a judgment by a court of competent jurisdiction must make application to the recovery fund no more than one year after the termination of the proceedings, including reviews and appeals (803(b)(4)).

Question 89

All of the following are economic characteristics of land EXCEPT

a. permanence of investment
b. scarcity
c. area preference
d. uniqueness

Answer 89

d. uniqueness

Uniqueness is a physical characteristic of real estate, along with immobility and indestructibility.

Question 90

Landowner Shelley subdivides her acreage and offers the lots for sale. Broker Ernie tell her that he can sell the lots. After Ernie sells some of the lots, the landowner refuses to pay him a commission. The broker can

a. do nothing
b. file a lien against the landowner’s remaining lots
c. sue the landowner for breach of contract
d. report the landowner to the real estate licensing authorities

Answer 90

a. do nothing

Unless the broker as been employed by the seller under a valid contract, the broker is not entitled to a commission.

Question 91

The final transaction to complete a purchase contract is called a(n)

a. closing in equity
b. installment sale
c. escrow
d. provisional sale

Answer 91

c. escrow

An escrow is a method of closing in which a disinterested third party is authorized to act as escrow agent and to coordinate the closing activities.

Question 92

Whenever the commission is required to satisfy a claim against a licensee with money from the real estate recovery fund, the licensee

a. must repay the full amount plus interest to the account for his or her license to be reinstated
b. must agree to a monthly payment schedule in order to maintain an active license
c. may expect the Pennsylvania Real Estate Commission to foreclose on any property owned by the licensee
d. may continue engaging in real estate activities under the commission’s direct supervision

Answer 92

a. must repay the full amount plus interest to the account for his or her license to be reinstated

If the commission pays an amount in settlement of a claim against a licensee, the license of that person is automatically suspended upon the effective date of payment and will not be reinstated until the licensee has repaid the amount in full plus interest at the rate of 10 percent per year (803(f)).

Question 93

A wooded area with biking and hiking trails is situated between old cotton mills and a housing development. This area is considered a

a. utility easement
b. buffer zone
c. designated park required under federal guidelines
d. variance to the existing zoning

Answer 93

c. buffer zone

Buffer zones, such as parks, are used by municipalities to screen residential areas from non-residential zones.

Question 94

With a tenancy for years

a. a 30-day notice is required to terminate the lease
b. the term of the lease must be for at least one year
c. no notice is required to terminate the lease
d. the lessee has a freehold estate

Answer 94

c. no notice is required to terminate the lease

An estate (tenancy) for years is a leasehold estate that continues for a definite period of time. Because it always has specific beginning and ending dates, notice is not required.

Question 95

A broker who has done a proper CMA discussed the probable market value of the property with the seller, and the seller wants an unrealistic price on the property. The broker may do all of the following EXCEPT

a. take the listing at the proposed seller’s price planning on reducing the price in the future when the seller is more realistic
b. take the listing with the understanding that price reductions may be needed
c. suggest the seller have a formal appraisal done
d. decline to take the listing at the high price

Answer 95

a. take the listing at the proposed seller’s price planning on reducing the price in the future when the seller is more realistic

Whether a CMA is used for a formal appraisal, the figure sought is the property’s market value, and while it is the property owner’s privilege to set whatever listing price he or she chooses, a broker should consider rejecting any listing that is severely out of line.

Question 96

Three years ago, the Henderson’s moved from the house they had owned for 20 years but did not sell it. They decided to travel and bought a mobile home to live in. They now decide to sell the house. How much of the capital gain on the house will be taxable?

a. none of it, if it is less than $500,000
b. all of it, if it is over $500,000
c. 15 percent, depending on their tax bracket
d. 28 percent, depending on their tax bracket

Answer 96

a. none of it, if it is less than $500,000

The Hendersons must have lived in the house two out of the last five years, which they have done, to receive $500,000 exemption from capital gains tax.

Question 97

An unlicensed individual who engages in activities for which a real estate license is required is subject to which penalties upon conviction for a first offense?

a. fine not to exceed $500
b. a fine not to exceed $5,000 and a mandatory prison term not to exceed five years
c. Fine not to exceed $1,000 and one-year imprisonment
d. Civil penalty of $5,000 in addition to other penalties provided by law

Answer 97

a. fine not to exceed $500

Upon conviction for a first offense for practicing real estate without a license, the maximum penalty is a fine not exceeding $500, imprisonment not exceeding three months, or both (303).

Question 98

A suit to quiet title refers to

a. the deposit of a title with an escrow agent
b. a title insurance company’s search of title
c. the removal of a cloud on the title by court action
d. a mortgagor relinquishing title after foreclosure

Answer 98

c. the removal of a could on the title by court action

If there is a gap in the ownership chain, then this cloud on the title makes it necessary to establish ownership by court action; this is called a suit to quiet title.

Question 99

The type of insurance that will protect the owner and heirs is called a(n)

a. owner’s policy
b. certificate of sale policy
c. leasehold policy
d. lender’s policy

Answer 99

a. owner’s policy

An owner’s policy is issued for the benefit of the owner and her heirs, unlike the lender’s policy, which is issued for the mortgage company.

Question 100

In a dual agency situation, a broker may represent both the seller and buyer if

a. the broker informs either the buyer or the seller of this fact
b. this is the only option for the broker to sell the property and get paid a full commission
c. both parties are represented by attorneys
d. both parties give their informed consent, usually in writing, to the dual agency

Answer 100

d. both parties give their informed consent, usually in writing, to the dual agency

Dual agency, in states that allow it, requires informed written consent from both parties.

Question 101

Which of the following is a requirement for relicensure of an individual whose license has been revoked by the commission?

a. if relicensure is permitted by the commission, the individual must comply with all current requirements for licensure before the license is issued
b. the individual must complete 14 hours of mandatory continuing education prior to the license’s being reissued
c. the individual is not permitted to reapply for licensure for a period of at least ten years after revocation
d. the individual must provide certifications from at least three people attesting to the individual’s honesty, integrity and competency.

Answer 101

a. if relicensure is permitted but the commission, the individual must comply with all current requirements for licensure before the license is satisfied

The commission will not authorize relicensure of an individual whose license has been revoked for at least five years. If relicensure is permitted, the individual must comply with current requirements for licensure before the license is issued (35.251).

Question 102

A foreign corporation that owns a building in Pennsylvania decides to sell without listing it for sale. Who may legally handle the transaction on behalf of the corporation?

a. a licensed broker in the state where the corporation is headquartered may handle the sale without being licensed in Pennsylvania
b. A licensed Pennsylvania salesperson may be directly employed by the corporation to handle the transaction
c. Only a licensed Pennsylvania broker may handle the sale of property owned by a foreign corporation
d. An attorney-at-law who renders services to the corporation within the scope of an attorney-client relationship may handle the transaction for the corporation

Answer 102

d. an attorney-at-law who renders services to the corporation within the scope of an attorney-client relationship may handle the transaction for the corporation

An attorney-at-law who receives a fee for rendering services within the scope of an attorney-client relationship is exempt from licensure (35.302(5)) and so may handle the transaction. As an owner, the corporation may designate no more than five of the corporation’s officers to act on behalf of the corporation as the owner.

Question 103

What is the difference between a general lien and a specific lien?

a. a general lien affects all of a debtor’s property, while a specific lien affects only a certain piece of property
b. a specific lien covers real estate, while a general lien covers personal property
c. a specific lien is held by one person, while a general lien is held by at least two people
d. a general lien cannot be enforced in court, while a specific lien can be enforced

Answer 103

a. a general lien affects all of a debtor’s property, while a specific lien affects only a certain piece of property

A general lien affects all of a debtor’s property, both real and personal. A specific lien affects only a particular property.

Question 104

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to

a. make real estate brokers more responsive to buyers’ needs
b. see that buyers know all settlement costs that will be charged to them
c. help buyers know how much money is required
d. make sure buyers do not borrow more than they can pay

Answer 104

b. see that buyers know all settlement costs that will be charge to them

RESPA seeks to ensure that borrowers will know all settlement costs that will be charged to them.

Question 105

Broker Joan shows properties listed for sale with her company to prospect car. Karl has refused buyer representation. Karl is Joan’s

a. customer
b. principal
c. fiduciary
d. client

Answer 105

d. customer

The third party or non represented consumer for whom some level of service is provided is a customer and is entitled to fairness and honesty.

Question 106

Jacob, a bachelor, died owning real estate that he devised by his will to his niece, Koralee. When will full title and possession pass to his niece?

a. immediately upon Jacob’s death
b. when Koralee executes a new deed to the property
c. after his will has been probated
d. after Koralee has paid all inheritance taxes

Answer 106

a. after his will has been probated

Koralee is regarded as the owner immediately upon the testator’s death, but she will not receive possession (as a devisee) until probate proceedings are complete.

Question 107

Regarding agreements of sale, all of the following statements are true EXCEPT

a. the agreement must contain a statement that access to a public road may require issuance of a highway occupancy permit
b. the licensee must furnish a copy of the sales contract to all signatories at the time of execution
c. the licensee must retain copies in his or her files for three years from the date it was signed
d. the agreement must contain a statement identifying the capacity in which the broker is engaged

Answer 107

c. the licensee must retain copies in his or her files for three years from the date it was signed

The broker is required to keep records relating to real estate transactions for three years following consummation or termination of the transaction. Mandatory inclusions in agreements of sale include the following: copy of sales contract given to signatories, statement regarding broker’s services, and statement that access to a public road my require obtaining a highway occupancy permit (statute 608.2 and commission rule 35.333).

Question 108

The following legal description contains how many acres: the S1/2 of the SE1/4 of the NW1/4 of the NE1/4 of Section 7?

a. 20 acres
b. 2.5 acres
c. 10 acres
d. 5 acres

Answer 108

d. 5 acres

Multiply all denominators: 2x4x4x4 = 128; 640 (acres is a section) / 128 = 5

Question 109

Which statement is TRUE regarding agency relationships between licensees and consumers?

a. a broker may not represent both a buyer and seller as an agent in the same transaction
b. if a broker chooses to represent both buyers and sellers under agency relationships, the broker must adopt a policy appointing designated agents
c. all agency relationships must be expressly created by written agreements
d. an open listing agreement creating an agency relationship between a seller and broker may be an oral agreement

Answer 109

d. an open listing agreement creating an agency relationship between a seller and broker may be an oral agreement

Agency relationships may be created either orally or in writing. A written agreement is necessary when the broker is providing a service for a fee. Brokers may represent buyers and sellers in the same transaction with written consent from both parties (606.1(b)).

Question 110

Margie listed her real estate for sale at $100,000. If her cost was 80 percent of the listing price, what will her percentage of profit be when her real estate is sold for the listing price?

a. 25 percent
b. 10 percent
c. 15 percent
d. 20 percent

Answer 110

a. 25 percent

$100,000 (listing price) x 80 percent (cost) = $80,000;
$100,000 - $80,000 = $20,000 (profit);
$20,000 / $80,000 = 25% profit

Question 111

All of the following factors would be important in comparing properties under the sales comparison approach to value EXCEPT differences in

a. appearance and condition
b. dates of sale
c. original cost
d. financing terms

Answer 111

c. original cost

None of the approaches to appraisal considers the original (historical) cost of a property. The other three factors would be relevant to the sales comparison approach-sometimes called the market data approach. Original cost, however, is used in computation of book-value depreciation.

Question 112

A licensed salesperson obtains a listing. Several days later, the salesperson meets prospective buyers at the property and tells them, “I am the listing agent for this property, and so I’m very familiar with it.” He then proceeds to engage in a substantive discussion about their needs and motivations as he shows them the property. Under these circumstances, the sales person has

a. failed to comply with state law regarding disclosure of agency relationships
b. properly disclosed his agency relationship with the seller
c. created a dual agency, which is a violation of the Pennsylvania Real Estate License and Regulation Act
d. made a substantial misrepresentation because the listing belong sot the broker

Answer 112

a. failed to comply with state law regarding disclosure of agency relationships

The salesperson has failed to comply with state law. Prior to engaging in a substantive discussion, the licensee is required to provide the consumer with a consumer notice disclosing information required by law (608).

Question 113

Immediately upon passing the salesperson licensing examination, which activity may an individual legally engage in?

a. holding open houses for the public under the direct supervision of a broker
b. preparing and presenting a comparative market analysis to a prospective seller
c. selling business opportunities to the public
d. negotiating a loan on real estate on behalf of a broker

Answer 113

c. selling business opportunities to the public

A real estate license is not required for the sale of business opportunities. Upon passing the license exam, a candidate is qualified to apply for a license. Until the license is issued by the state, an individual may not engage in any activity for which a license is required. Such activities including holding open houses for the public, preparing comparative market analyses, and negotiating loans on real estate.

Question 114

A bill of sale is used to transfer the ownership of

a. real property
b. appurtenances
c. fixtures
d. personal property

Answer 114

d. personal property

Personal property is conveyed by a bill of sale, while real property is conveyed by deed.

Question 115

Money that serves to compensate a seller in the event of a buyer default is known as

a. liquidated damages
b. consideration
c. escrow funds
d. actual damages

Answer 115

a. liquidated damages

When parties agree that a certain amount of money will compensate the non-breaching party, that money is called liquidated damages. Earnest money typically serves as liquidated damages in case the buyer defaults.

Question 116

What is the formula to find the Capitalization Rate?

Answer 116

NOI (Net Operating Income | Gross Annual Income - Expenses) / Current Market Value