Questions - Appendix A Flashcards
1
Q
Which of the following would terminate a residential sales agreement?
A. death of the seller
B. legal declaration of insanity of the seller
C. the sale of the property
D. an assignment
A
AAF-1 C
2
Q
Which of the following statements is NOT correct?
A. A principal is responsible for acts of his agent while engaged in activities concerning the agency.
B. An agent is in a fiduciary relationship to her principal.
C. The agent has no duties to third parties in a transaction.
D. The principal owes cooperation to the agent.
A
AAF-2 C
3
Q
On the broker’s recommendation, a seller accepted an offer that was 8% below the listed price. The broker did not disclose to the listing seller that the buyer was the broker’s brother-in-law. Which of the following is correct?
A. The broker violated his obligations as agent of the seller.
B. The fact that the buyer is related to the broker does not need to be divulged to the seller.
C. The broker would only be obligated to disclose this relationship if the buyer had hired the broker as a buyer agent
D. There is no violation since the seller was in agreement with the terms of the buyer’s offer.
A
AAF-3 A
4
Q
An agent’s responsibilities and duties to a third person include:
A. not to disclose personal information regarding the third party.
B. disclosure of all material facts the agent knows or reasonably should know.
C. disclosure of personal information about the principal.
D. obedience to the lawful instructions of the third party.
A
AAF-4 B
5
Q
An agent, based upon statements made by the seller, tells her buyer that all mechanical systems are in “good working order:” The agent did not personally verify this information. The buyer decided not to have the property inspected since the seller had indicated they were selling “as is:” After the closing, the furnace is found to be defective and must be replaced.
A. The agent is not liable because the buyer opted to not have it inspected.
B. The agent is not liable since he relied upon representation made by the seller.
C. The agent is guilty of an innocent omission of material fact.
D. The agent is guilty of a negligent misrepresentation of material fact.
A
AAF-5 D
6
Q
A real estate agent is typically considered to be in what form of agency relationship?
A. special agency
B. general agency
C. universal agency
D. exclusive agency
A
AAF-6 A
7
Q
Allison is an agent with Miller’s Creek Realty that has a buyer client who wishes to see a listing obtained by her firm. The broker at Miller’s Creek Realty appoints Allison to represent only the interests of the buyer and the listing agent to represent only the interests of the seller. This type of arrangement is an example of:
A. implied agency
B. express agency
C. special agency
D. designated agency
A
AAF-7 D
8
Q
A contract that has no legal standing because it does not meet the minimum standards for a legally enforceable agreement is:
A. unenforceable
B. valid
C. void
D. voidable
A
AAF-8 C
9
Q
A substitution of one contract for another where the original contract is voided is:
A. exchange
B. novation
C. voidable
D. unilateral
A
AAF-9 B
10
Q
A contract in which one party makes a promise of compensation if another party renders a service in return is which of the following?
A. unilateral
B. multilateral
C. trilateral
D. bilateral
A
AAF-10 A
11
Q
Which of the following statements about offers is correct?
A. They must not be illusory.
B. They may not be revoked.
c. They must be accompanied by earnest money.
D. They must be notarized.
A
AAF-11 A
12
Q
A buyer made an offer to purchase a seller’s land at a price to be mutually agreed upon in the future. Which of the following best describes this offer?
A. option
B. illusory
C. unilateral
D. fraudulent
A
AAF-12 B
13
Q
A total transfer of contractual rights and obligations to another party is a(n):
A. novation.
B. assignment.
C. accord and satisfaction.
D. carryover contract.
A
AAF-13 B
14
Q
Ralph and Sandra are both agents at Healdsburg Realty. Ralph presents an offer, on behalf of his buyer client to Sandra, the listing agent. Sandra presents the offer to her seller who counteroffers in writing for more money. Ralph presents this counteroffer to his buyer who signs his acceptance in Ralph’s presence. After the buyer signs, but before Ralph has notified Sandra, she contacts Ralph to inform him that her seller wishes to withdraw the counteroffer and sell to someone else for more money. Which of the following is true?
A. There is a valid contract since Ralph’s buyer accepted in his presence and both Ralph and Sandra are dual agents.
B. Sandra’s seller can withdraw since neither Sandra nor her seller had yet been informed of the buyer’s acceptance.
C. Sandra’s seller can withdraw since the actual paperwork had not yet been returned to Sandra and the earnest money had not yet been deposited.
D. Ralph had no authority to present the counteroffer on behalf of Sandra’s
seller.
A
AAF-14 A
15
Q
A prospective purchaser has made an offer to the owner’s agent who in turn has mailed the offer to his seller. The seller has received this offer, signed it, and now mailed it back to his agent. While the documents are in the mail, another offer for more money is made to the seller’s agent. The agent calls the seller to inform him about this new offer, and the seller instructs him to disregard the signed agreement because he wants to accept this new offer. Which of the following is true?
A. The first offer has been legally accepted because it had been mailed back to the agent.
B. The second offer has been legally accepted.
C. The agent cannot present this new offer until there is resolution to the first offer.
D. The first offer has not been accepted and the seller is free to sell it to the second buyer.
A
AAF-15 D
16
Q
An option to purchase differs from a right of first refusal in that:
A. they are actually two names commonly used to describe the same thing.
B. in an option the purchaser is required to purchase the property if the seller decides to sell.
C. in a right of first refusal the seller is not required to sell if the buyer wants to buy.
D. in an option the seller is not required to sell if the buyer decides to buy.
A
AAF-16 C
17
Q
A buyer made an offer to purchase that stated “this offer shall remain open until 12:00 noon on August 20 at which point it shall become null and void:’ He further stipulates “he will not terminate this offer prior to that time for any reason whatsoever:” On Thursday, August 19, before hearing back from the seller, the buyer contacts the seller to inform him that he has changed his mind. The buyer is:
A. in breach of contract as he agreed not to terminate his offer prior to noon on the 20th.
B. in breach of agreement and will not be entitled to a refund of his earnest money deposit although he cannot be sued in a court of law.
C. not in breach of contract even though he terminated prior to noon on the 20th.
D. not in breach of contract with the seller but is liable for payment of his
buyer agent’s commission if one was agreed to.
A
AAF-17 C
18
Q
On Monday, the buyer, Jeff, signs a full price and conditions offer to purchase Sara’s house and mails it to her for review. Sara receives it in the mail late on Tuesday afternoon, at which time she reads the offer and decides that she will accept it. When Sara gets to the office on Wednesday, she signs Jeff’s offer and mails it back to him at his proper address. Jeff receives her acceptance on Thursday morning. What Sara does not realize is that Jeff had changed his mind and mailed a letter of revocation of his offer early Tuesday morning. Unfortunately, Sara did not receive the letter of revocation until Thursday afternoon. Is there a binding contract of sale?
A. No. Jeff has adequately withdrawn his offer when he mailed the letter of revocation to Sara on Tuesday morning.
B. Yes. Sara created a binding contract when she signed Jeff’s offer on Wednesday and mailed it back to him at his proper address.
C. No. Jeff’s revocation does not count until it is actually received on Thursday.
D. Yes. It was a binding contract when Jeff received the actual acceptance
from Sara on Thursday morning.
A
AAF-18 B
19
Q
As a result of a provisional broker’s negligence in filling in the provisions in a contract of sale, the seller incurred a financial loss. Liability for this loss may be imposed upon:
A. the agent only.
B. the employing broker only.
C. both the agent and the employing broker.
D. neither the agent nor the employing broker.
A
AAF-19 C
20
Q
A listing contract creates an agency relationship in which:
A. the broker is a general agent.
B. the seller is principal.
C. the seller is a special agent.
D. the broker is a universal agent
A
AAF-20 B
21
Q
A seller tells his broker that he is very anxious to sell and will accept $5,000 less than the listed price. The broker may share this information with:
A. sales agents in her office.
B. a cooperating MLS agent acting as a buyer’s agent.
C. the buyer.
D. anyone interested in the property.
A
AAF-21 A
22
Q
Which of the following types of listing agreements allow for the seller to personally sell her own property without having to pay the broker a commission?
A. net and exclusive agency
B. exclusive agency and exclusive right to sell
C. open and exclusive agency
D. open and exclusive right to sell
A
AAF-22 C
23
Q
Amy shows her listing to a buyer who makes an offer that was ultimately accepted by the seller. Before the closing, the buyer has a job transfer that necessitates she move to another town. The seller sympathizes with the purchaser and allows her to withdraw from the contract and releases her from all further obligation. The seller:
A. owes Amy the selling “side” of the commission.
B. owes Amy only the expenses incurred by her in selling the property to this particular client.
C. does not owe Amy a commission since the property was not ultimately closed.
D. owes Amy the full commission even though the seller has released the
buyer from the obligation in this transaction.
A
AAF-23 D
24
Q
The clause that is inserted into a listing agreement that protects the broker in the event the seller and buyer try to delay entering into a contract of sale so they can avoid the commission to the agent is known as:
A. protection agreement clause.
B. automatic removal clause.
C. extender clause.
D. nothing. It is illegal to insert a clause of this type
A
AAF-24 C
25
A pending sales contract agreement can best be described as:
A. bilateral executed.
B. unilateral executory.
C. bilateral executory.
D. unilateral executed.
AAF-25 C
26
Champion Realty has received an offer on one of its listings. The seller lives in Maryland and the offer was emailed to him where he signed electronically to accept the offer with no modifications to the original agreement. Once the form was signed electronically it was emailed back to the listing agent at Champion. The agent at Champion then called and told the buyer agent at XYZ Realty the seller had signed the acceptance with no changes. The next day the seller wants to terminate the sale due to having received a better offer. He is claiming there is no contract since he did not "actually" sign the offer but rather used an electronic means to indicate acceptance. Which of the following best describes this situation?
A. Electronic signatures are legal and it became a contract once the listing agent notified the buyer agent.
B. It is not a contract since there was no "real" signature on the acceptance.
C. An electronic acceptance would be legal only if the buyer had signed electronically as well.
D. Electronic signatures can be legal and this became a contract once the signed offer was emailed back to the listing agent.
AAF-26 A
27
Amy accepted a buyer's verbal offer to purchase her house. A week later the buyer calls to inform her that he wishes to terminate his agreement. Which of the following best describes this situation?
A. This agreement is illegal and has no legal recognition at all.
B. A verbal acceptance to sell real estate is only valid if the offer was made verbally as well.
C. This is a voidable contract since it was not in writing.
D. This is a valid contract and the buyer can be held liable for damages by Amy.
AAF-27 C
28
The type of listing agreement in which the seller agrees to only have the brokerage firm enter the listing in the local MLS and place a sign in the yard might best be described as a(n):
A. open listing agreement.
B. limited services agreement.
C. exclusive agency listing agreement.
D. exclusive right to sell agreement.
AAF-28 B
29
All of the following are considered an example of a property owner's "bundle of rights" EXCEPT:
A. right of possession.
B. right to build whatever you wish on the property.
C. right to sell, lease, or convey.
D. right of quiet enjoyment.
AAF-29 B
30
The owner(s) of the real property may hold title in all of the following ways EXCEPT:
A. tenancy in common.
B. lessees.
C. severalty.
D. joint tenancy.
AAF-30 B
31
Nancy and Kim owned a parcel of property in joint tenancy. Nancy decides to sell her portion to Yvonne, and Kim will continue to own her share. After the transaction closes, how will Kim be considered to hold ownership of her portion?
A. severalty
B. joint tenancy
C. tenancy in common
D. tenancy by entirety
AAF-31 C
32
The type of tenancy in which a tenant remains in possession after the lease term has expired but without obtaining the landlord's consent is an example of:
A. tenancy for years.
B. periodic tenancy.
C. tenancy at will.
D. tenancy at sufferance.
AAF-32 D
33
A property held in the name of a large corporation will likely be held as:
A. severalty.
B. tenancy in common.
C. joint tenancy.
D. tenancy by entireties.
AAF-33 A
34
A trespass on another's land as a result of an intrusion by some structure or other object is an:
A. encroachment.
B. easement.
C. estate.
D. emblement.
AAF-34 A
35
Which of the following statements is correct?
A. Spot zoning is legal in all cases.
B. Protective covenants are enforced by court injunction.
C. Protective covenants are government restrictions.
D. All nonconforming uses are illegal
AAF-35 B
36
Easements are created in all of the following ways EXCEPT:
A. prescription.
B. lis pendens.
C. condemnation.
D. dedication.
AAF-36 B
37
A property owner in a recently re-zoned area was permitted to continue to use his property in a manner that did not comply with the new zoning requirements. This use is described as which of the following?
A. exclusive-use zoning
B. deviation
C. nonconforming use
D. private control of land use
AAF-37 C
38
Wendy has been notified that her property is subject to being acquired by eminent domain. One of the requirements that must be met in order to acquire her property in this manner is that:
A. it must be for a public purpose.
B. she does not have to sell if the price being offered is not suitable to her.
C. she must first be given constructive notice.
D. a lis pendens must first be filed
AAF-38 A
39
Which of the following is an example of an exempt property under the Americans with Disability Act (ADA)?
A. public school building
B. model home in a new subdivision
C. office building
D. personal residence
AAF-39 D
40
Which of the following is NOT an example of a public land use control?
A. protective covenants
B. zoning regulations
C. building codes
D. fire codes
AAF-40 A
41
Which of the following best illustrates the example of an easement appurtenant?
A. a right of way across one property to access the adjoining property
B. a municipal water and sewer line easement
C. a major oil or gas pipeline project easement
D. a purely personal right to walk across a neighbor's property to access the beach
AAF-41 A
42
Regulation Z of the Truth in Lending Act allows which of the following to be placed within an advertisement for a real estate loan without requiring a full disclosure of all credit financing terms?
A. number of payments
B. down payment
C. the full annual percentage rate spelled out in full, that is, not abbreviated as APR
D. dollar amount of the finance charges
AAF-42 C
43
A short sale exists when:
A. the seller owes more than the property will sell for.
B. the seller owes more than the property is worth and the seller is unwilling, or unable, to pay the difference.
C. a property is sold quickly typically for all cash and closes in a matter of a few days.
D. the property is acquired by the lender for nonpayment and re-sold to an investor who buys these type properties in bulk.
AAF-43 B
44
Who is the oldest and largest of the secondary mortgage markets?
A. Federal National Mortgage Association (FNMA)
B. Government National Mortgage Association (GNMA)
C. Federal Home Loan Mortgage Association (FHLMC)
D. Washington National Mortgage Association (WNMA)
AAF-44 A
45
A title theory state is associated with a:
A. mortgage lien.
B. deed of trust.
C. requirement for the acquisition of title insurance.
D. requirement to record title to the property in a public register of deeds.
AAF-45 B
46
A loan-to-value (LTV) is traditionally based upon:
A. the purchase price only.
B. the relationship of the loan amount in relation to the CMA amount.
C. the appraised value or the purchase price whichever is more.
D. the purchase price or appraised value, whichever is less
AAF-46 D
47
A contract for deed (land contract):
A. is when the purchaser acquires possession but no title until the loan is repaid in full.
B. stipulates the buyer acquires legal title upon closing the purchase.
C. stipulates the seller retains equitable title after the closing.
D. is never recorded until the loan is repaid.
AAF-47 A
48
Which of the following is true regarding VA mortgage loans?
A. These loans are not eligible to be assumed.
B. They can only be assumed by another veteran.
C. The unmarried surviving spouse of a veteran who died as a result of service-related injuries can use the VA benefits their previous spouse had acquired.
D. A veteran is allowed to purchase a house as a rental investment using earned VA benefits.
AAF-48 C
49
Which of the following is NOT considered to be one of the six elements considered to constitute a loan application according to RESPA?
A. address of the property pledged as collateral
B. driver's license of the applicant
C. estimated value of the property
D. Social Security number of the applicant
AAF-49 B
50
An alienation clause makes a mortgage:
A. defeasible.
B. non-assumable.
C. unable to be sold in the secondary market.
D. adjustable.
AAF-50 B
51
The primary function of the FHA is to:
A. make mortgage loans.
B. make loans for low-income housing.
C. insure loans that protect lenders from financial loss.
D. purchase mortgages on the secondary market.
AAF-51 C
52
Which of the following regulates the advertisement of credit terms available for a house offered for sale?
A. RESPA
B. Fannie Mae
C. Equal Credit Opportunity Act
D. Regulation Z
AAF-52 D
53
What is the purpose of a deed of trust?
A. secure the payment of a note
B. provide protection for the mortgagor
C. create personal liability of the buyer
D. prevent assumption
AAF-53 A
54
Which lien has priority to mortgage foreclosure sale proceeds?
A. mortgage lien
B. income tax lien
C. real property tax lien
D. mechanic's lien
AAF-54 C
55
Which of the following requires immediate payment of the principal balance when the borrower is in default on a loan?
A. equity of redemption
B. prepayment penalty
C. right of lender to possession
D. acceleration
AAF-55 D
56
In which of the following types of legal description must the description close the loop?
A. government rectangular survey system
B. recorded plat
C. metes and bounds
D. informal reference
AAF-56 C
57
An acre contains how many square feet?
A. 640
B. 4,356
C. 6,400
D. 43,560
AAF-57 D
58
Adherence to which of the following maximizes land value?
A. principle of contribution
B. principle of change
C. principle of anticipation
D. principle of highest and best use
AAF-58 D
59
A competitive market analysis is performed when:
A. assessing property.
B. pricing property.
C. appraising property.
D. condemning property.
AAF-59 B
60
The principle providing that the highest value of a property has a tendency to be established by the cost of purchasing or constructing a building of equal utility and desirability is the principle of:
A. highest and best use.
B. competition.
C. supply and demand.
D. substitution.
AAF-60 D
61
Which appraisal method is most appropriate to a unique property such as a church or post office?
A. market data approach
B. cost approach
C. income approach
D. capitalization approach
AAF-61 B
62
Which appraisal method is most appropriate to vacant land?
A. market data approach
B. cost approach
C. income approach
D. none of the above
AAF-62 A
63
The direct sales comparison approach takes into consideration all of the following factors EXCEPT:
A. comparable properties sold within the last six months.
B. the method of financing of comparable sales.
C. the price the seller thinks the property is worth.
D. the age and condition of comparable properties.
AAF-63 C
64
A gift of real property by will is a:
A. remise.
B. demise.
C. devise.
D. bequest.
AAF-64 C
65
A person has died intestate. As a result, the property will be distributed to:
A. probate.
B. the state the property is located in.
C. his or her heirs.
D. eminent domain.
AAF-65 C
66
Which of the following is NOT a benefit of recording a deed?
A. It protects the grantee against future conveyances by the grantor.
B. It protects the grantee against the grantor's creditors.
C. It provides constructive notice to all that title is now vested in the grantee.
D. It is the point when a deed conveys title from the grantor to the grantee.
AAF-66 D
67
Which of the following would create a defect affecting title?
A. an un-violated protective covenant
B. municipal water and sewer easement
C. a 5-foot-wide maintenance easement for the neighboring property
D. a concrete driveway that extends slightly over the property line
AAF-67 D
68
The type of deed the grantee would want to receive in order to gain the maximum benefit of protection from the grantor would be a:
A. non-warranty deed.
B. quitclaim deed.
C. general warranty deed
D. special warranty deed.
AAF-68 C
69
Title insurance policies protect the lender against:
A. losses due to default by the borrower.
B. losses due to fire and other casualty.
C. losses due to claims against the property.
D. risk of injury by a guest of the property owner.
AAF-69 C
70
The Residential Lead-Based Paint Hazard Reduction Act requires that a buyer of pre-1978 residential property be provided with all of the following EXCEPT:
A. a lO-day period in which to have the presence of lead-based paint determined.
B. a disclosure of any known lead-based paint present in the home.
c. the EPA pamphlet titled "Protect Your Family from Lead in Your Home:'
D. certification by HUD that the home is "lead free:'
AAF-70 D
71
A real estate agent has been showing his buyer client homes in a subdivision when he sees a For Sale by Owner sign in front of a house that contains the owner's phone number. Unfortunately, a search of the records indicates this owner has registered his home phone number on the Do Not Call Registry. Which of the following is correct?
A. The agent may call the owner to request more information because the phone number was posted on the sign.
B. The agent cannot call the owner in order to request more information because the phone number is listed on the Do Not Call registry.
C. The agent can call the owner because the Do Not Call restrictions do not apply to licensed real estate agents.
D. The agent cannot legally call; however, the potential buyer may without
restriction.
AAF-71 A
72
The Fair Housing Act of 1968 prohibits discrimination in the rental of all of the following EXCEPT:
A. offices.
B. apartments.
C. houses.
D. residential lots.
AAF-72 A
73
Inducing an owner to list property by telling the owner that persons of a particular national origin are moving into the neighborhood is called:
A. steering.
B. redlining.
C. blockbusting.
D. profiteering.
AAF-73 C
74
Robert is the manager of an apartment complex that has buildings 1-6 occupied by families with children and buildings 7-10 for those without children. George and Anna, and their two children, are being told by Robert that although they easily qualify for the lease, there aren't any vacancies in a building that allows children. Which of the following best describes this situation?
A. This is legal because there aren't any units available in a "children allowed" building.
B. This is an example of redlining.
C. This is an example of steering.
D. This is an example of blockbusting.
AAF-74 C
75
Which of the following does NOT describe radon gas?
A. It is the second leading cause of lung cancer.
B. A level above 4.0 pico curries is considered to be a material fact.
C. High levels of radon can often be mitigated.
D. It is a gas that is detectable by its sulphur smell.
AAF-75 D
76
Larry Lender is being asked for a mortgage loan on a house in a predominately minority neighborhood. Because of his concern regarding the long term economic potential for houses in that area he charges a higher interest rate and down payment than he normally would charge that particular buyer given his credit score and income. This can be best described as an example of:
A. redlining
B. steering.
C. blockbusting.
D. a legal practice given the economic projection.
AAF-76 A
77
Angela has a listing that is being sold because the prior owner died in the home. Which of the following best describes her responsibility to disclose this fact in her advertising?
A. She has no responsibility to advertise or disclose this fact due to caveat emptor.
B. She has no responsibility to advertise this fact.
C. She must disclose the death as it constitutes a material fact.
D. This must be disclosed by the seller.
AAF-77 A
78
Jackson is in the process of acquiring a new residential listing. He states that the listing fee will be 6% of the sales price. When the seller asks why everyone seems to charge the same rate he should:
A. state that 6% is the "going rate" pretty much all over town.
B. state that is the MLS rate that has been agreed to by its members.
C. state that is the rate that the REALTORS~ all charge.
D. state that each firm sets their own rates independent of any other firm's
rate.
AAF-78 D
79
L.B. is a broker that received a call from a prospective buyer a month ago inquiring about a particular property. When L.B. told the buyer this house has just been sold the buyer asks him to keep him in mind should a similar property come on the market. A house very similar has just been listed but when L.B. goes to call this buyer he discovers that he is registered on the Do Not Call registry. What should L.B. do?
A. He can legally call this buyer because the buyer had asked him 30 days ago to call if a similar property comes on the market.
B. L.B. cannot call this particular buyer as his phone number is on the registry.
C. L.B. can call this buyer for up to 180 days from the date of the first call.
D. L.B. can only call this buyer if he had signed a buyer agency agreement when they first spoke.
AAF-79 A
80
A person living on the managed premises as a salaried employee engaged to rent and lease apartments is called a(n):
A. property manager.
B. rental agent.
C. employee manager.
D. resident manager.
AAF-80 D
81
All of the following are required of property managers EXCEPT:
A. showing and leasing property.
B. deciding owner's objectives.
C. collecting rent.
D. providing for the protection of tenants.
AAF-81 B
82
The first step in creating an owner-manager relationship is which of the following?
A. management proposal
B. management report
C. management agreement
D. management fee
AAF-82 A
83
A property manager's fee is often a combination of a base fee and a percentage of which of the following?
A. gross potential income
B. gross operating income
C. gross effective income
D. net operating income
AAF-83 C
84
Periodic financial reports provided to the owner are called:
A. stabilized budgets.
B. operating reports.
C. management statements.
D. property management reports.
AAF-84 D
85
A property manager's duties typically include all EXCEPT which of the following?
A. maintaining the property
B. collecting rents and security deposits
C. instituting legal actions on behalf of the owner
D. giving the owner legal advice regarding eviction procedures
AAF-85 D
86
In qualifying and selection of tenants the property manager's duties would include all EXCEPT:
A. obtaining a copy of the prospective tenant's credit report.
B. obtaining a copy of the prospective tenant's criminal background check.
C. determining the prospective tenant's "track record" of paying rent and fulfilling rental obligations.
D. inquiring of the tenant's familial status so the prospective tenant can be placed in units where other families with children are located
AAF-86 D
87
The principal functions of a property manager include all of the following EXCEPT:
A. renting space, collecting rents, and paying expenses for the property.
B. investing the owner's proceeds to acquire more quality rental investment properties.
C. producing the best possible net operating income from the property.
D. maintaining and increasing the value of the principal's investment.
AAF_87 B
88
A purchaser has contracted to buy a home for $167,900 and the lender has agreed to make him an 85% LTV mortgage at 6.25%. The appraisal has just been completed and the property appraised for only $165,000. What would be the maximum loan amount the lender will make on this purchase?
A. $139,815
B. $140,250
C. $142,715
D. $143,150
AAF-88 B
89
A buyer has recently contracted to purchase a duplex that rents for $750 per month per side. If closing is to occur on the 21st of the month, how would the resulting entry for rental income appear on the settlement statement?
A. $450 debit - seller, credit - buyer
B. $1,050 debit - seller, credit - buyer
C. $525 credit - buyer, debit - seller
D. $225 debit - seller, credit - buyer
AAF-89 A
90
If a real estate agent listed and sold a property for $90,000 and received 60% of the 7% commission paid to her employing broker, how much did the agent receive?
A. $2,520
B. $2,646
C. $3,780
D. $5,400
AAF-90 C
91
A property was recently sold for $170,000, and the monthly payment on the $160,000 fully amortizing mortgage loan at 6% APR for a 20-year term is $1,146. What would be the outstanding loan balance due after the first monthly payment?
A. $159,654
B. $158,854
C. $159,200
D. $169,654
AAF-91 A
92
In making a mortgage loan of $190,000, a lending institution charged sufficient discount points to increase the yield on the loan from 8% to 8 1/8%. The cost of the points was:
A. $190
B. $237.50
C. $1,900
D. $3,800
AAF-92 C
93
A triangular tract of land is 800 feet deep and has highway frontage of 250 yards. If Ajax Realty Company listed this property at 9% commission and sold it for $15,000 per acre, what was Ajax's commission? (Round sales price and commission to the nearest whole dollar amount.)
A. $18,596
B. $3,099
C. $9,298
D. $27,893
AAF-93 C
94
If the closing date is November 10 and the seller has paid the real property taxes of $2,880 for the current tax year, which of the following is the correct closing statement entry for taxes?
A. seller's debit $2,480; buyer's credit
B. seller's credit $400; buyer's debit
C. buyer's credit $400; seller's debit
D. buyer's debit $2,480; seller's credit
AAF-94 B
95
Kevin is planning to purchase flooring for his large meeting room. He has been told it will require 88.6 square yards of flooring. The room is 20 feet wide. Without taking into account any walls or other waste how long is this room (rounded)?
A. 30
B. 44
C. 13
D. 40
AAF-95 D`
96
Cameron has purchased a house and obtained a mortgage loan of $235,000 at 6.5% interest for a term of 30 years. Her monthly P&I payment is $1,485. If she keeps the loan until it is fully amortized what will be the total amount of interest that she will pay over the life of this loan?
A. $534,600
B. $458,250
C. $299,600
D. $235,000
AAF-96 C
97
Edward is the property manager of an eight-unit apartment building. The units rent for $600 per month each. Last month one of the units was vacant the entire month and another unit was vacant for 10 days. If Edward is paid a 10% management fee, how much did he earn last month?
A. $400
B. $380
C. $360
D. $460
AAF-97 A
98
Ed recently sold his house for $150,000, which is 25% more than he originally paid. How much did he originally pay for the home?
A. $112,500
B. $120,000
C. $150,000
D. $187,500
AAF-98 B
99
Dan has contracted to purchase a home for $269,000 with closing set for September 9. He has paid $2,500 in earnest money deposit and $500 as a due diligence fee at the time of his original offer. He has located a lender who agrees to make him a mortgage of $200,000 at an interest rate of 4.5% with one point for loan origination fee and 1% discount point. Dan will be responsible for the payment of interim interest for September. Property taxes for the year are $3,600 have not yet been paid. The taxes are being required to be paid off by the lender at the closing. In addition, the following items will be paid at the closing by the party who would traditionally pay for them: attorney fees $1,200, title insurance $538, survey $450, deed preparation $80, recording fees $35, and revenue stamps using state rate. Dan has paid $450 for the appraisal and $65 for the credit report during the time of loan application. How much money in certified funds will Dan need to bring to the closing? (Round answer to nearest whole dollar amount.)
A. $75,763
B. $75,263
C. $74,7l3
D. $73,883
AAF-99 D
100
Ella has recently contracted to sell her home for $179,000 and has agreed to pay the broker a sales commission of 5%. The outstanding loan balance as of the March 17 date of closing is $103,650. Property taxes are estimated to be $1,080 and are to be prorated. The seller has agreed to pay $80 for deed preparation in addition to revenue stamps. At the time of the offer,the buyer paid a $1,500 earnest money deposit and a $300 due diligence fee. In addition, the seller has also agreed to pay $250 as a carpet cleaning fee. How much will Ella "net" at the closing?
A. $65,897
B. $65,643
C. $65,481
D. $65,181
AAF-100 D
101
Which of the following does NOT require a real estate license in NC?
A. auctioning of real property
B. a firm selling its own property through the actions of its own employees
C. offering to buy property for another as an agent
D. offering to list property for another as an agent
AAS-1 B
102
An unlicensed salaried assistant of a real estate broker is soliciting listings for her broker. Is this legal?
A. This is legal as long as the broker does the actual listing presentation and contracting.
B. This is legal as long as the assistant is not paid any portion of the commission.
C. It is not legal for the unlicensed assistant to solicit listings for her broker.
D. This is not legal unless the assistant and the broker have permission from the broker-in-charge.
AAS-2 C
103
Betty Broker owns three real estate offices in town. Which of the following is correct?
A. She can be the broker-in-charge of all three offices.
B. She can designate a provisional broker to manage one of the offices under her supervision.
C. She can be broker-in-charge of two or more offices if they are within 5 miles of each other.
D. Each office must have its own broker-in charge
AAS-3 D
104
A broker-in-charge may represent both the buyer and seller in the purchase and sale of a property if:
A. he acts in a designated agency capacity.
B. both parties agree in writing.
C. the broker tells each party that he will be working in this capacity.
D. This is never allowed under North Carolina Real Estate Commission Rules and Regulations.
AAS-4 B
105
The North Carolina Real Estate Commission has the authority to:
A. regulate commissions or fees charged by licensees.
B. discipline a REALTOR®for breach of the code of ethics.
C. fine a licensee for violation of license law.
D. fine a developer whose agent violates the North Carolina Time Share Act.
AAS-5 D
106
Who may legally work at two different real estate firms for compensation in NC?
A. a provisional broker if he or she first has written consent of both firms in advance
B. a non-provisional broker can work at as many firms as he or she so desires assuming the firms are willing to compensate him.
C. a non-provisional broker may work at two separate firms if he or she has written consent of each firm
D. a provisional or non-provisional status broker is not allowed to work at more than one firm at a time
AAS-6 C
107
A licensee must notify the North Carolina Real Estate Commission:
A. within 10 days of a change of his residence address.
B. of all criminal convictions by the time of license renewal.
C. of a change of name within 30 days.
D. of all disciplinary actions taken by any governmental licensing authority within 60 days of the charges being filed.
AAS-7 A
108
Which of the following is correct in regards to the practice of designated agency?
A. No material facts can be learned by either party prior to the agent being named as a designated agent. If either agent has learned any material facts about the other party prior to becoming a designated agent they will be prohibited from becoming designated.
B. A listing agent can practice designated agency with both his or her seller and buyer clients as long as both have consented in writing.
C. Any personal information learned before becoming a designated agent can be kept confidential if both parties agree in advance.
D. A broker-in-charge can practice designated agency with a provisional broker that is associated with another branch office of the firm.
AAS-8 D
109
Larry Agent has reviewed the Working with Real Estate Agents brochure with his buyer. The buyer verbally agrees to have Larry show him some houses as a buyer agent. Larry has located a house listed with his firm that the buyer wants to purchase. At the same time the offer to purchase was prepared, Larry and his buyer also entered into a written buyer agency agreement allowing for both dual and designated agency. Which of the following is true?
A. All agency documentation must have been in writing at the time of first substantial contact.
B. Larry must have had his Dual Agency Agreement in writing before showing the house.
C. Larry should have entered into a verbal Dual Agency Agreement before showing the listing to the buyer.
D. Larry has complied with all required agency disclosure and documentation requirements.
AAS-9 C
110
Barney Buyer is visiting an open house held by Sellsmor Homes Realty. He tours the house but decides this is not really the house for him. Which of the following statements is correct regarding this situation?
A. First substantial contact never occurred and no further agency disclosure was required.
B. First substantial contact occurred as soon as Barney entered the house and he should have been given the Working with Real Estate Agents brochure at the time.
C. The agent was required to have Barney sign a written Buyer Agency Agreement before allowing him to tour the home.
D. The agent was required to at least have an oral Buyer Agency Agreement with Barney before allowing him to tour the home
AAS-10 A
111
After discussion with the buyer, including the preparation of the Working with Real Estate Agents brochure, the broker has agreed to serve in the capacity of a buyer agent. The agent must have the buyer sign a written Buyer Agency Agreement by what specific point in time?
A. at the point when the buyer agreed to have the broker serve as a buyer agent
B. at the point of first substantial contact
C. at the time the broker will present an offer on the buyer's behalf
D. at the point an offer made by the buyer becomes a contract
AAS-11 C
112
A buyer makes an offer to the seller that includes a $2,500 earnest money deposit (EMD) and a check for $1,000 due diligence fee. The buyer's agent em ails the offer to the listing agent who later calls the buyer agent to tell him the seller has signed the offer. The buyer agent discusses with the listing agent how he will drop the EMD and due diligence fees by the listing firm some time tomorrow. That night, when the buyer agent calls the buyer to share the news that the seller has signed his acceptance, the buyer informs his broker that he has changed his mind and no longer wishes to purchase the house. He demands the return of his EMD check and due diligence fee. The seller agrees to the return of the EMD but refuses to agree to the return of the due diligence fee. What should the buyer agent do with the due diligence fee?
A. give it to the listing agent to forward to his seller since it legally belongs to the seller
B. put it in his trust account until both parties sign a release or await court order
C. return it to the buyer
D. forward it to the local clerk of court office within 90 days
AAS-12 C
113
How many days does a provisional broker licensee have to deposit earnest deposits into the trust account?
A. no later than three banking days from receipt
B. no later than three banking days from acceptance
C. the same day received
D. none
AAS-13 D
114
Which of the following is NOT true in order to place trust monies in an interest-bearing account?
A. the broker must have written permission from both the buyer and seller
B. the written permission must stipulate who is to receive all or a portion of the interest
C. the trust account must be located in a bank that is physically located in NC
D. permission must be "highlighted" differently than other parts of a preprinted contract form.
AAS-14 C
115
A buyer makes a written offer to purchase a property and includes a $2,500 earnest money deposit. The seller makes a counteroffer for more money. The buyer verbally accepts. The listing agent deposits the money in the trust account at this point in time. When the buyer receives the seller's counteroffer, he refuses to sign even though he had verbally agreed earlier. The seller is angry and tells the buyer that he will not return the earnest deposit since the buyer has reneged on his word. In fact, the seller demands that the listing agent give him the deposit. What must the real estate agent do regarding the earnest money in this situation?
A. He must give it back to the buyer because the contract was not accepted in writing.
B. He must retain the deposit in the trust account until he obtains written permission from the buyer and seller or await a court order.
C. He must give it to the seller since the seller is his principal.
D. He must return the EMD to the buyer if it is still before 5 p.m. of the due diligence date
AAS-15 B
116
A listing broker advised a prospective buyer that the property the buyer was considering was scheduled for annexation into the city limits. This disclosure constituted which of the following?
A. violation of fiduciary relationship owed to the seller by broker
B. impermissible disclosure of a material fact
C. required disclosure of a material fact to the buyer
D. violation of disclosure of seller's personal information by broker
AAS-16 C
117
Bob owns a building lot in Holly Springs that he and his wife purchased when they both attended graduate school in Raleigh. Although they paid only $10,000 for the lot many years ago, it has a current tax value of $18,000. Bob and his wife now realize they will not be moving back to NC so they decide to sell. They contact Arnold, who is a real estate broker, to list the property. Arnold tells Bob that he has a builder friend who might be interested in purchasing the lot quickly. Two days later Arnold emails Bob a copy of the listing contract for $20,000 and once it is signed he immediately emails a contract to purchase from the builder friend for full asking price. Bob and his wife sign the contract and the property is closed. Three months later Bob learns from an old college friend, who still lives in the area, that these lots are very much in demand and that they are selling for close to $40,000. After some research by Bob he learns that his friend is correct. As a result of this finding:
A. Arnold has not likely violated any rules since Bob could list his property for whatever price he wanted and he seemed happy with the list price at the time
B. Arnold has likely violated his agency duties by not performing an appraisal in order to determine the market value of the lot.
C. Arnold has likely violated his duties to Bob by not performing a CMA in order to determine the probable selling price of the lot.
D. Arnold has not likely violated any rules since Bob has an obligation to do his research before signing an agreement to sell.
AAS-17 C
118
While a broker was inspecting a property for listing, the property owner told the broker the house contained 2,400 square feet of heated living area. Relying on this information, the broker listed the property and represented it to prospective buyers as containing 2,400 square feet. After purchasing the property, the buyer accurately determined that there were only 1,850 square feet and sued for damages for the difference in value between 2,400 square feet and 1,850 square feet. Which of the following is correct?
A. The broker is not liable because he relied on the seller's positive statement as to the square footage.
B. The seller is not liable because the broker, not the seller, represented the property to the buyer as containing 2,400 square feet.
C. Neither the broker nor the seller is liable since it is the buyer's responsibility to check the square footage.
D. Both the broker and the seller are liable
AAS-18 D
119
A broker deposited a buyer's check for $6,000 earnest money in her escrow account. Prior to the closing and at the seller's written request, the broker paid $1,200 from the escrow account for repairs for damage caused by termites in the house. This expense was necessary so the seller could provide the required repairs the buyer had requested resulting from his home inspection. Which of the following statements about this transaction is correct?
A. Since the $1,200 disbursement from the broker's escrow account was made at the seller's request and benefited both buyer and seller, the broker acted properly.
B. The broker's action constituted an act of commingling and was improper.
C. The broker properly disbursed the funds since he did not need permission from either buyer or seller to disburse funds for this purpose.
D. The broker acted improperly since both the buyer's and seller's consent
is needed to disburse any escrow funds before the transaction is closed
AAS-19 D
120
The right to occupy a property for five or more periods of time involving five or more years is considered:
A. a periodic lease.
B. an interest in personal property.
C. a time-share.
D. adverse possession.
AAS-20 C
121
Funds paid to a time-share developer:
A. belong to the seller immediately upon transfer of the money.
B. belong to the buyer for 10 days from date of contract.
C. must be immediately placed with an independent escrow agent to hold in a trust account.
D. must be returned to the buyer if a time-share instrument has not been recorded in 90 days.
AAS-21 B
122
A provisional broker licensee on active status has just taken continuing education classes for the first time. These classes were taken before the deadline for completion. He took the BICUP course and one elective. What will be his license status as of July I?
A. active
B. inactive
C. expired
D. canceled
AAS-22 B
123
A broker licensee on provisional status has just been hired by a local lender to assist them in the preparation of a CMA/BPO. The lender is asking for this assistance in order to help them understand how much the property might be sold for so they can better set the limits for the equity line of credit the borrower is requesting to be set up. Which of the following best summarizes this situation?
A. as long as the provisional broker has local real estate knowledge and access to MLS there should be no problem with this assignment
B. a provisional broker is not allowed to undertake this assignment but a non-provisional broker would be fine with taking this project
C. a provisional broker is not allowed to complete the CMA that is being requested
D. the lender can pay the fee for this CMA directly to the provisional broker
AAS-23 C
124
A broker licensee may be disciplined by the NC Real Estate Commission for which of the following actions?
A. utilizing an offer to purchase and contract form, provided by the buyer, that does not contain all the items listed in Commission rule. 0112
B. in response to a question asked by the buyer the broker discloses there had been a murder in the home after the seller had clearly marked "no representation" on the Residential Property Owner And Disclosure Statement
C. the broker refuses to answer a buyer's question regarding if someone previously residing in the home had been tested and found to be HIV positive
D. drafting a financing contingency addendum at the buyer's request
AAS-24 D
125
Downtown Realty has recently listed a property on January 15, 2017, that closed on March 1,2017. Unfortunately a complaint was filed with the NC Real Estate Commission regarding alleged improper activities in this transaction. After an investigation and hearing, the Commission made their ruling on October 30, 2019, by announcing Downtown Realty was not guilty of any impropriety in this case. What would be the minimum date that Downtown Realty must keep all trust account files associated with this case?
A. March 1,2017
B. January 15, 2020
C. March 1,2020
D. October 30, 2022
AAS-25 D
126
In North Carolina, unpaid property taxes lawfully constitute a lien against the property as of what date?
A. January 1 of the current tax year
B. September 1 of the current tax year
C. July 1, the start of the new fiscal year
D. January 1 of the following year
AAS-26 A
127
According to the NCAR/NCBA Offer to Purchase and Contract form, the final date for the buyer to undertake due diligence in the purchase of a home is best represented by which of the following?
A. the due diligence date, if the buyer wishes to obtain a refund of his due diligence fee and his earnest money deposit
B. the closing date, but the buyer will not be entitled to a refund of his due diligence fee or his earnest money deposit
C. loan commitment date, and there will be no refund of the due diligence fee, but there is a refund for the earnest money deposit
D. due diligence is NOT allowed to be undertaken after the due diligence date
AAS-27 B
128
Which of the following is NOT an acceptable means of paying the (Additional) Earnest Money Deposit in section l d of the NCAR/NCBA Offer to Purchase and Contract form?
A. cash
B. personal check
C. official bank check
D. wire transfer
AAS-28 B
129
According to the North Carolina Good Funds Settlement Act, monies cannot be disbursed until after:
A. the closing statements have been signed by the buyer.
B. the purchaser has first been given a three-day right of rescission.
C. the deed has been recorded.
D. the attorney has completed the settlement meeting.
AAS-29 C
130
Which of the following is true regarding closing statements in North Carolina?
A. The broker is not responsible for its accuracy as long as it is prepared by an attorney.
B. The broker must deliver an accurate closing statement to the buyer and seller at the closing.
C. The Closing Disclosure form is not required to be used as long as the parties use a form that is considered "substantially equivalent" on all federally related mortgages.
D. The broker does not have to personally prepare the closing statement.
AAS-30 D
131
The maximum tenant security deposit that can lawfully be collected on a North Carolina residential lease that is for a nine-month fixed term but mandates the rent is to be paid monthly would be:
A. 1 month.
B. 1 1/2 months.
C. 2 months.
D. no limit.
AAS-31 C
132
According to the Statute of Frauds, which of the following leases must be in writing in order to be enforceable?
A. all residential leases for less than a one-year term
B. all residential leases for more than a one-year term
C. all residential leases in North Carolina
D. a lease for more than three years
AAS-32 D
133
The area occupied by the stairway, in a two-story house, is calculated as a part of:
A. the first floor.
B. the floor from which it descends.
C. both the first and second floor.
D. neither floor.
AAS-33 C
134
Protective covenants would not typically be allowed to restrict which of the following?
A. architectural style
B. building materials used in construction
C. the number of family members who can occupy the property at one time
D. minimum size of the building
AAS-34 C
135
Which of the following statements are NOT true in regards to the North Carolina subdivision streets disclosure law?
A. The developer must declare whether the streets will be publicly or privately maintained prior to selling the lot.
B. Agents must disclose to buyers whether new subdivision streets will be publicly or privately maintained prior to selling the lot.
C. If the street has been dedicated for public use, and construction is approved by the North Carolina Department of Transportation, the street will automatically be publicly maintained.
D. Buyers of new lots must sign a disclosure form indicating if the street is private and explaining that the street will not be constructed to the minimum standards of a publicly maintained street.
AAS-35 C
136
The lowest concrete part of a house is the:
A. slab.
B. footing.
C. pier.
D. sill.
AAS-36 B
137
The vertical masonry structures placed inside the foundation wall in order to support the subflooring are:
A. sills.
B. headers.
C. piers.
D. joists.
AAS-37 C
138
Which of the following are tax-deductible expenses resulting from home ownership?
A. property taxes and insurance
B. maintenance and repairs
C. mortgage interest and property taxes
D. depreciation and replacement costs
AAS-38 C
139
Which of the following is true regarding the $500,000 exemption, in the sale of a personal residence, for a married couple filing jointly?
A. A married couple can use the $500,000 joint exemption ONLY if both meet the ownership and occupancy requirement.
B. A married couple can use the $500,000 joint exemption if only one meets the ownership requirement, but BOTH meet the occupancy requirement.
C. A married couple can use the $500,000 joint exemption only once in a lifetime.
D. A married couple cannot qualify to use the $500,000 joint exemption if EITHER of them has ever used the $250,000 exemption for a single taxpayer.
AAS-39 B
140
A homeowner in NC had constructed a three-bedroom house with two full baths in a rural area that necessitated the installation of an on-site septic system. It was properly permitted at that time. A few years later the homeowner constructed a fourth bedroom, but no extra bathroom, in the basement area. He did not obtain any permits at that time as he was constructing the addition by himself. He now wants to list the property for sale with a broker. What would be the maximum intended occupancy for this house according to NC guidelines?
A. In a rural area there are typically no guidelines for maximum occupancy.
B. 4
C. 6
D. 8
AAS-40 C
