Quick Quiz 9

Question 1

Price is the amount
A) an informed buyer offers for a property.
B) that a property actually does bring in the open market.
C) an informed seller asks for a property.
D) that a property might bring on the open market.

Answer 1

B) that a property actually does bring in the open market.

Question 2

The real estate commissioner may require impounding of a purchaser's deposit in a subdivision when the blanket mortgage does not contain an unconditional release clause. This is for the benefit of the
A) purchaser.
B) mortgage holder.
C) lender.
D) owner of the subdivision.

Answer 2

A) purchaser.
In the event there is no release clause in a subdivision that is subject to a blanket encumbrance, one alternative for the real estate commissioner is to require an escrow for all or a part of the purchaser’s money as indicated in Section 11032 (a) of the Business and Professions Code.

Question 3

Which would NEVER be a way an individual could acquire an interest or estate in real property?
A) Escheat
B) Prescription
C) Accession
D) Succession

Answer 3

A) Escheat
Escheat is the reverting of property to the state when there are no heirs capable of inheriting. Therefore, only the state has the right of escheat. Individuals can acquire interests in real property by prescription, succession, and accession.

Question 4

Metal that is used in a roof to prevent water from seeping through is called
A) flashing.
B) lath.
C) soffit.
D) mud sill.

Answer 4

A) flashing.

Question 5

Businesses operating in California can take the form of an individual proprietorship, partnership, or corporation. Each form has its advantages and disadvantages. One of the advantages of operating as a general partnership is that
A) there is less responsibility and more time can be spent away from the business.
B) the personal assets of a partner cannot be touched by creditors of the business.
C) management of the business can be left to the other partner with little concern or care.
D) each partner has the use of the assets of the other partners.

Answer 5

D) each partner has the use of the assets of the other partners.

Question 6

In establishing an estimate of value by appraisal, it is very important to differentiate between the purpose of the appraisal and the
A) function for which the appraisal is being made.
B) appraisal process.
C) principles of appraisal.
D) amenities to the owner.

Answer 6

A) function for which the appraisal is being made.

Question 7

A real estate broker could be held liable to a buyer if he or she
A) executes an agreement with the buyer on behalf of the seller under a power of attorney granted by seller.
B) retains the buyer’s check at the seller’s request after an offer has been accepted by the seller and acceptance has been communicated to the buyer.
C) unknowingly makes a misrepresentation to the buyer based on false information given by the seller.
D) acts in excess of the authority given by the seller under a listing agreement.

Answer 7

D) acts in excess of the authority given by the seller under a listing agreement.

Question 8

What is prima facie evidence of deceptive or misleading advertising in the sale of real estate?
A) A poorly drawn map that would make it difficult to find the location of the subdivision
B) The omission of the purchase price or financial terms
C) Any guaranteed yield or return on a promissory note that does not agree with the advertised interest rate
D) The misspelling of the subdivision’s name

Answer 8

C) Any guaranteed yield or return on a promissory note that does not agree with the advertised interest rate
In real estate law there is an express prohibition against implying any yield or return on a promissory note different from the interest rate in the note itself unless the advertisement sets forth both the actual rate and the difference between the outstanding balance of the note and the price at which it is being offered for sale, that is, the discount.

Question 9

Brewer wants to purchase a home, but is denied financing because of an agency’s credit report. Brewer has repeatedly tried to get a copy of this report, but the agency refuses to give it to him. Brewer can bring action under the California Civil Code to
A) do any or all of these.
B) recover punitive damages up to $5,000.
C) recover enough money to compensate him for damage to his credit.
D) recover attorney fees and equitable damages.

Answer 9

A) do any or all of these.
The Consumer Credit Reporting Agencies Act (Civil Code Section 1785.1–35) requires that, upon request, a consumer credit reporting agency must provide to a consumer disclosures of the files about that consumer. The Code further specifies penalties of actual damages, punitive damages up to $5,000, and reasonable attorney’s fees.

Question 10

Anderson, Baker, and Carroll own property as joint tenants. After Anderson dies,
A) none of these occur.
B) Anderson’s interest terminates.
C) Baker and Carroll receive Anderson’s share through survivorship as tenants in common.
D) Baker and Carroll receive Anderson’s share through succession.

Answer 10

B) Anderson’s interest terminates.
The interest of a joint tenant terminates with death; the surviving tenants are the owners of the interest as joint tenants.

Question 11

What would be included in local building codes?
A) Architectural design of buildings as well as size and height
B) Protecting the health and safety of the city
C) All of these
D) The establishment of building materials that may be used and the costs of materials

Answer 11

B) Protecting the health and safety of the city
The Government Code of the State of California enables the legislative body of a city to “Regulate the construction, repair, or alteration of buildings pursuant to Health and Safety Code § 15153.” Although the city may also “…establish building materials that might be used…”, they cannot dictate “…the cost of the materials used.” The “…size and height…” are functions of zoning (land use), not local building codes.

Question 12

Deed restrictions are
A) general liens.
B) encumbrances.
C) constructive liens.
D) all of these.

Answer 12

B) encumbrances.

All restrictions on the use of property are encumbrances. Only money encumbrances are called liens.

Question 13

Which statement regarding a tax-free exchange is TRUE?
A) A party to the exchange can deduct a loss on the exchange.
B) A rented house cannot be exchanged for an office building.
C) Each party must trade for like property of equal value with a smaller mortgage and receive boot.
D) To be eligible, a property must be held for income or investment or for use in trade or business.

Answer 13

D) To be eligible, a property must be held for income or investment or for use in trade or business.

Question 14

An estate that will continue for a period of six months only, fixed in advance by contractual agreement of the parties, is an
A) estate for years.
B) estate at sufferance.
C) estate at will.
D) estate from period to period.

Answer 14

A) estate for years.
Any lease for a definite period of time creates an estate for years, regardless of the period of time for which it was established.

Question 15

Condominium projects are expected to grow in demand in the future primarily because of which factor?
A) Increased real property taxes
B) Land value
C) Demand for sociability
D) Comfort of unit owners

Answer 15

B) Land value
Condominiums are able to utilize a smaller space for more units and therefore will undoubtedly become more popular due to the increase in land values.

Question 16

Realized gain includes
A) that portion of the gain that is attributable to that tax year.
B) the total gain.
C) that portion of the gain that does not have to be declared in the present.
D) all of these.

Answer 16

D) all of these.

The realized gain is the total gain, which would include both the recognized gain and the deferred gain.

Question 17

Which transaction requires the Real Estate Transfer Disclosure Statement?
A) All of these
B) Transfer of one to four residential units in bankruptcy
C) Sales transaction of one to four residential units
D) Foreclosure of one to four residential units

Answer 17

C) Sales transaction of one to four residential units
Civil Code Section 1102, which requires the Real Transfer Disclosure Statement, applies to any sale of real property with up to four dwelling units. Transfers in foreclosure and in bankruptcy are specifically exempt.

Question 18

Which element is NOT necessary in the formation of a contract?
A) Consideration
B) Performance
C) Acceptance
D) Offer

Answer 18

B) Performance

Question 19

What is the first step in the appraisal process?
A) Make a preliminary survey and appraisal plan
B) Organize the data program
C) Define the appraisal problem
D) Classify the data

Answer 19

C) Define the appraisal problem
Before making an appraisal, an appraiser must define the problem to see what is to be done and how it is to be accomplished.

Question 20

Which would be LEAST likely to make the title of real property unmarketable?
A) Private restrictions in a deed
B) A lis pendens filed by the wife of the owner
C) Cloud on title through adverse possession of the property
D) Public restrictions under zoning ordinances and building codes

Answer 20

A) Private restrictions in a deed
Deed restrictions, as a rule, are initiated for the protection of property owners. They are reasonable limitations on ownership to safeguard property values. An owner is very unlikely to place restrictions on a property that would make the property unmarketable. Zoning is a legally imposed restriction on the use of the site. A site’s highest and best use may not necessarily be any of the uses designated by a zoning ordinance, thereby causing the property to be more unmarketable than in the case of private deed restrictions.

Question 21

The Assessment Roll reflects California policy of establishing real property assessed values as what percent of full cash value?
A) 100%
B) 10%
C) 1%
D) 25%

Answer 21

A) 100%
Since the passage of Proposition 13 in 1978, real property is assessed at 100% of full cash value as of a certain date, increased by an inflationary factor of not more than 2% per year.

Question 22

Mr. Applegate purchased a home in a subdivision through Broker Able. Applegate applied for a loan and on the loan application there were two boxes that he was asked to check. One box was for marital status and the other for race. Applegate may
A) refuse to answer the questions on race and marital status.
B) sue the broker arranging the loan and the loan officer for asking these questions on the loan application.
C) file a complaint with the real estate commissioner.
D) be required to answer these two questions by the lender in order for the loan to be processed.

Answer 22

A) refuse to answer the questions on race and marital status.
The applicant may refuse to answer about race since the information is optional on the typical real estate loan application. Both federal and California law prohibit discrimination on the basis of marital status. Therefore, marital status cannot be considered by the lender to be a material fact. The borrower, then, may refuse to answer the question.

Question 23

An owner of property located near a local airport was constantly bothered by the noise of low-flying aircraft. If the owner were to bring suit to force the city to condemn his or her property because of the noise, this would be an example of
A) eminent domain.
B) condemnation.
C) equitable severance.
D) inverse condemnation.

Answer 23

D) inverse condemnation.
If noise from low-flying aircraft damages the owner in the use of his or her land, this may be a “taking” of property, for which compensation must be paid by the government. This remedy is called inverse condemnation because it is started by an owner who seeks compensation from the agency causing the situation.

Question 24

In making a title search, a title company would most likely search the records of
A) all of these.
B) the county clerk.
C) the county recorder's office.
D) the Federal Land Office.

Answer 24

A) all of these.
Since the policy of title insurance affords protection against matters of record, the title company would search all public records, not only the county recorder’s office.

Question 25

Under authority of a signed exclusive-agency listing, Broker Davis diligently advertised for sale the $165,000 home of owner Johnson. Prior to the expiration date of the listing, the home was sold by Johnson to a friend. Davis was refused payment of any commission whatsoever. Davis is legally entitled to receive from Johnson
A) one-half commission.
B) no commission.
C) full commission.
D) all expenses incurred in advertising the home.

Answer 25

B) no commission.
The broker is entitled to no commission. An exclusive-agency listing is one that employs a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.

Question 26

Under most normal competitive conditions, what would be most likely to influence vacancy factors in apartment buildings?
A) Cost of construction funds
B) Rent schedule
C) Availability of housing units
D) Size and number of units

Answer 26

C) Availability of housing units
When overbuilding results in oversupply, the amount of space may exceed the demand, producing a general increase in vacancies.

Question 27

When a lender sells a promissory note for less than its face value, it is known as
A) discounting.
B) deficiency.
C) reinstatement.
D) yield loss.

Answer 27

A) discounting.

Discounting a promissory note is where a lender sells the note for less than its face value.

Question 28

Under which loan would the borrower be required to apply for term life insurance?
A) Cal-Vet
B) VA
C) FHA
D) Savings and loan company

Answer 28

A) Cal-Vet
The California Department of Veterans Affairs requires each borrower under the Cal-Vet plan to apply for life and disability insurance.

Question 29

An owner of a parcel of real property may have all of these rights EXCEPT
A) eminent domain.
B) riparian rights.
C) littoral rights.
D) severance.

Answer 29

A) eminent domain.
The right of eminent domain is the right of government to take private property for public or quasipublic use, although the U.S. Constitution does require the payment of just compensation. The right of eminent domain is never a part of the bundle of rights comprising the private ownership of property.

Question 30

Rescind most nearly means
A) rewrite.
B) reject.
C) terminate.
D) annul.

Answer 30

D) annul.
Rescind means to annul the contract and restore the parties to the same position they held before they entered into the contract.

Question 31

Regarding warehousing operations with respect to real estate finance, what would apply?
A) Contract for sale
B) Long-term debentures insured collaterally by real estate loans
C) The mortgage banker collecting loans prior to sale
D) Holding notes for investment

Answer 31

C) The mortgage banker collecting loans prior to sale
Mortgage bankers who assemble loans and temporarily hold these portfolios until they can be sold to investors in the secondary mortgage market are said to be warehousing loans.

Question 32

A deed was given by "A" to "B" with oral instructions not to record the deed until "A's" death. The deed was
A) illegal.
B) voidable.
C) valid.
D) void.

Answer 32

D) void.