Real Estate Exam Practice Flashcards
Where can agents and brokers find additional rules and restrictions for various forms of advertising options?
- Do not Call lists
- MLS IDX (Internet Data eXchange)
- NAR Membership Marks Manual
Under the __________ of recording, title passes when the conveyance is registered on the title certificate.
Torrens System
Who first reviews the request for arbitration?
The professional Standards Committee
Note, May be the Grievance Committee
Why is designated agency a good alternative to traditional dual agency?
Even though the same broker represents each party, both the buyer and the seller have a licensee who exclusively acts as their agent in the transaction.
An exclusive listing agreement may contain _________
Listing term of less than one year
What can exclusive listing agreements NOT contain?
- Automatic renewal clauses
- Options by the broker to purchase the listed property
(Both May be construed as unfair to the seller partly due to the agent’s experience and their superior knowledge about real estate contracts)
Which of the following statements are TRUE with regard to ethics?
Ethics or a system of principles governing morality and acceptable conduct.
What are laws?
Legal documents setting forth rules governing a particular kind of activity
What are regulations?
The principles or conditions that customarily govern
What are Standards?
The ideal in terms of which something can be judged; a basis for comparison; a reference point against which other things can be evaluated.
What are Ethics?
The principles of right and wrong that are excepted by an individual or social group; a system of principles governing morality and acceptable conduct
Which of the following would be an example of personal Ethics?
Respect for the autonomy of others.
What are personal Ethics?
Concern for the well-being of others; Respect for the autonomy of others; Trustworthiness and honesty; Willing compliance with the law; Being fair; Refusing to take unfair advantage; Doing good; Preventing harm
How does Planned Unit Development Zoning differ from ordinary zoning?
It requires that multiple tracks of land be developed according to a single design for efficient use of space.
The system of land ownership in the United States is known as what?
The Allodial System
The term “Business Ethics” applies to which of the following statements?
A form of applied ethics that examines ethical principles that arise in a business environment.
Which buyer would likely replace the original buyer who could not qualify for a home purchase in a multiple bid situation?
First and Backup Buyer
Agency that is based upon old English Common Law is also known as ________
Common Law Agency
An agent can do what in a dual agency situation?
Show properties to the buyer that are not owned by the same seller
The assessed value of Sydney’s home is $350,000 but the home was recently appraised at $225,000. As a result, Sydney believes her tax bill is way too high. What options does Sydney have?
She can file a complaint with the local board of assessment review.
What happens if a realtor or realtor associate member violates the NAR Code of Ethics
They can be subject to sanctions by their local Association through procedures established by NAR
One or more licensees designated by the employing broker, with the consent of the principal, to act exclusively as the agent is described as a ____________
Designated Agent
Ownership of a property reverted to the grantor of the estate when its usage failed to conform to a standard condition in the grant. What type of estate existed?
Fee simple defeasible.
Who is authorized to practice law in Kentucky?
Lawyer
A person who is 16 years of age does not meet the agency relationship or contract requirements covered under which answer?
Legal capacity
What is the most common description when a licensee accidentally deposits client funds into the wrong bank account?
Commingling
Vicky was posing as a customer of establishment Realty. However, she was really there to see if establishment realty was following fair housing laws. Vicky was a ___________
Tester
Broker Joey just signed a listing agreement with the seller. When should Joey schedule an office tour?
Within a week after the listing is taken
What can an injured party in a breach of contract situation due to attempt to minimize the damage?
- File a civil lawsuit
- Request an injunction in court that prevents the seller from attempting to sell the property to another party
- Politely request the full return of the buyers earnest money deposit
According to article 2, which of the following statements are true?
Realtors must disclose all known material facts but are not obligated to discover latent defects in the property.
Escrow money should be held in the brokers ___________
Escrow Account
How many square feet are there in an acre?
43,560
Seller Sam’s house is about to be foreclosed. The reduction in market price due to the pressures of a threatened foreclosure is an example of a _________
Distressed property
Lisa owns a contaminated property and the EPA is conducting an environmental audit. In what phase of audit is the actual cleanup (assuming it is needed)?
Phase III
What is the agency relationship formed when a client asks a broker to handle multiple transactions for them over a relatively long period of time such as a property management situation?
General Agency
What is general Agency?
Handling one or more real estate transactions for a certain client over a relatively long period of time.
How many square miles are there in a township?
36
Which item below can help protect against a home with a listed incorrect street address or legal description in public records?
- Standard Coverage Title Insurance Policy
2. Extended Coverage Title Insurance Policy
If broker Marco is showing property that was the site of a murder/suicide five years ago, he _________
Is NOT required to disclose the act.
Under what type of contract is a seller obligated to sell, but the buyer is not obligated to buy?
Option
Under the rectangular survey system, which direction do the principal meridian lines run on a map?
North-South
What is typically used to find boundaries for properties?
Land Surveys
What is the difference between the Articles of the Code and the Standards of Practice?
The Articles are broad statements of ethical principles while the standards support, interpret, and amplify the Articles under which they are included.
What type of insurance is mandatory for all active licensees?
Errors and omissions insurance
••••••A realtor knows his friend wants to make an offer on a property he has listed so he holds another offer he has received to present to the client until his friends offer arrives. Is this allowed?
Yes, as long as both offers are presented at the same time.
What is the standard of practice 16?
Realtors shall submit offers and counteroffers objectively and as quickly as possible.
A party’s failure to perform a specific action or obligation included in a written contract can later be construed as what by the other party in the agreement?
Breach of Contract
What year did the FDIC amount increase on a temporary basis to the current amount today?
2008
What is the most common agency form code for an agent who solely represents the buyer in a residential transaction?
EBAA
Real estate licensees should know enough about building ordinances to be able to ________
Alert clients of potential problems in a home.
Broker Hannah just received a $5,000 escrow money deposit. How long does she have to deposit it under Kentucky law?
“Without Unreasonable Delay”
Should a licensee who represents both the buyer and seller tell the buyer about material defects on the seller’s property?
Yes, any defects known to the broker should have been disclosed to the buyer.
How many square feet are there in 1/2 acre?
21,780
What is the most important item that a seller must deliver to the buyer at closing?
Marketable title
When may a Realtor accept a rebate for services or suggest the use of services of a business entity in which they have direct interest in?
Only with their clients knowledge and consent.
What was the maximum FDIC bank account insurance protection limit in early 2008?
$100,000
What is the name of the national survey system that was first established many years ago to classify giant land parcels before naming an independent owner?
Public Land Survey System
What is the oldest and largest survey method used in many parts of the nation that classifies land parcels before naming an owner, especially for rural and undeveloped land.
The Public Land Survey System (PLSS)
Who can be liable for the actions of the principal or client in an agency relationship such as a listing agreement?
- Principal
- Listing Agent
- Listing Agent’s Broker
Which agent below is most likely to work with more than one client?
Dual Agent
What is another description for a “restrictive covenant”?
Deed Restrictions
A broker who spends their client’s $10,000 earnest money deposit on their office’s monthly expenses such as rent, utilities, etc has engaged in the act of what?
- Conversion
2. Criminal Fraud
What is it called when a broker commingles funds with his/her personal accounts?
Conversion
What is the act of spending the client’s funds on personal or business expenses instead of applying the client’s funds towards the buyer’s designated escrow account?
Conversion (also fraud)
When may a realtor provide information regarding the racial, religious or ethnic composition of a neighborhood?
Never
An Accountant, Lawyer, Insurance Agent, and Principal Broker all share what types of relationships with their clients?
Fiduciary
What is the current FDIC coverage limit per bank account?
$250,000
Who is the least likely person to be involved in a fiduciary relationship?
Contractor
Which of the following is an example of a difference between an Article and a Standard of Practice?
An Article supports, interprets, and amplifies the Standard it represents
What should a Principal Broker do when he wants to add new unique clauses to a complex commercial real estate purchase contract to minimize his risks?
Seek out the advice of a trusted real estate attorney
As it pertains to Article 13 of the NAR’s Code of Ethics, what must agents not do in contractual situations?
Engage In the unauthorized practice of law
The highest price a buyer is willing to pay and the lowest price the seller will accept for a property is known as what?
Market Value
Smart growth strategies promote what type of living options?
High Density
An ethics complaint hearing requires screening by the _____________
Grievance Committee
In which type of agency agreement may a principal work with multiple brokers to purchase or lease a property?
Non-Exclusive Buyer Agency Agreement
Which advertising guidelines do most agents need to follow the most closely?
The Broker’s Office Policy Manual
How many acres are there in a 1/4 township region?
160
What is 160 acres equal to?
25% of a township
A Realtor is preparing a valuation of a property for a few on a sliding scale depending on what value of the property he comes up with. Is this allowed?
No, fees for preparing appraisals or other valuations must not be contingent upon the amount of the appraisal or valuation.
What is the Standard of Practice 114?
Fees for preparing appraisals or other valuations shall not be contingent upon the amount of the appraisal or valuation.
Broker Dean realizes he has relocation buyers. What is something he should focus on with these buyers?
On finding a property with a good resale value
Who is likeliest to be an individual holding either a standard or reciprocal license and who is employed as a full-time employee for a real estate developer at a new housing tract?
Building-owner salesperson
Which party is likeliest to hold equitable title to a home?
Mortgage Lender
What is one of the main definitions of equitable title interests?
A mortgage lender with beneficial interest in the property has the potential future right to obtain legal title to the property should the owner ever default on their mortgage payments.
A Realtor keeps all monies in one business account that he uses for all business expenditures and transfers monies out at appropriate times during a transaction, is this allowable?
No, a Realtor must keep monies coming into their possession in trust for other persons in separate special accounts in an appropriate financial institution.
••••What does Article 8 specify?
Realtors shall keep (monies) in a special account in an appropriate financial institution, separated from their own funds, monies coming into their possession in trust for other persons, such as escrows, trust funds, clients’ monies, and other like items.
Which type of paperwork automatically will increase the buyers offer price above the highest competitive offer within a certain dollar amount range?
Escalation Clause
What is an escalation clause?
In multiple offer scenario is a motivated buyer with lots of access to cash or bank loans my offer to pay $5000 above the highest offer price and a bidding war type of transaction even if it is $20,000 or more about the buyers original purchase offer price
•••••Which party or parties below generally (does not have) management of authority of others in the office?
- Associate Broker
2. Salesperson
What would be a valid reason for a bank to back out of a deal for a buyer client after the bank’s underwriter’s have fully approved the buyer personally?
- An appraisal price below the offer price
- A home inspection report that uncovers black hold
- The buyer’s home insurance company refuses to insure it
What year did the temporary FDIC increase become “permanent”?
2010
When did congress make the FDIC account limit of $250,000 a permanent increase?
2010
Mary abandon her property by failing to pay its property taxes and the property reverted to the state. This is an example of _________?
Escheat
What is another name for Usual Authority?
Implied Authority
What is implied (or usual) authority?
Authority is based upon spoken words or actions.
When must a licensee have completed the mandatory continuing education by each year?
December 31st
Commercial Law governs _________
Agency Law
_______________ is governed by Commercial Law which also covers several other types of fiduciary relationships built upon trust and confidence.
The Law of Agency
Which group’s website generally offers the most options for guidelines for the use of real estate forms in Kentucky?
KREC
Where is the most likely place that a real estate licensee Can be attacked, robbed, raped, and murdered while working?
A property showing in a rural area
Who is most often the main closing agent in Kentucky purchase deals?
Title Officer
Which party is the best represented by the listing agent in a single agency relationship?
The Seller
Which of the following is true regarding a financed investment property?
After-Tax cash flows identify what the investor actually yields from the investment
Which of the following is an environmental exposure pathway?
Soil
Gerold is 55, single, and resides on his 3 acre property. Why will Gerold qualify for a homestead exemption?
Because he lives on the property
What is the timeframe in which a request for arbitration must be filed?
Within 180 days of the closing of the transaction, or 180 days from when the fact of the request could have been known, whichever is later.
The most important factor determining whether a broker will specialize in commercial brokerage or remain a generalist is what?
The size of the commercial property market.
What officially started the public land survey system?
The Land Ordinance of 1785
When reviewing disciplinary action for violations of the code, when might the preamble be used as the basis for disciplinary action?
Never, it only describes subjective ideals, not measurable standards.
What can happen to an agent who does not present a clients purchase offer?
- He may lose his client
- The agent may end up with a suspended license
- The client might file a lawsuit against the licensee
Which of the following types of land is generally considered unsuitable for agricultural use?
Dryland
Who has the most liability in a fiduciary relationship dispute over a real estate transaction?
Principal Broker
