Real Estate Practice Test

Question 1

In the sale of property, there is often confusion over whether an item is a fixture or personal property. Which is the best way to avoid this confusion?

Answer 1

Specify questionable items of property in the written sales contract.

Question 2

A legal easement can be created by any of the following EXCEPT

Answer 2

Merger of titles

Question 3

A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a forecloser auction to a speculating investor for $88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is false regarding the distribution of funds?

Answer 3

The second mortgagee receives nothing unless he forced the foreclosure auction.

Question 4

Real property can be converted to personal property by

Answer 4

Severance.

Question 5

An owner hired a construction company to build a swimming pool at a new home. The owner failed to pay the bill once the work was completed and the construction company filed a lien to obtain payment of the debt. The encumbrance created is called a

Answer 5

Mechanics lien

Question 6

A judgement has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given

Answer 6

Constructive notice.

Question 7

An ESCHEAT occurs when

Answer 7

A property owner dies without heirs or a valid will.

Question 8

A deed restriction is applicable to the activities of

Answer 8

Present and future owners.

Question 9

An environmental impact statement typically describes the effects of a proposed project on factors such as

Answer 9

Public health and safety.

Question 10

An Environmental Impact Statement (EIS)

Answer 10

Projects the impact on the environment of a proposed project.

Question 11

An appraiser MUST be licensed or certified to handle Federally related work on residential property valuved at more thenn

Answer 11

$250,000.

Question 12

A formal appraisal will ALWAYS be REQUIRED when the

Answer 12

Lender wants to sell the mortgage to the secondary market.

Question 13

A competitive market analysis is MOST often used for

Answer 13

Setting a listing price

Question 14

A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of land, the couple can expect the value of their parcel to increase at some future time. This an example of the principle of

Answer 14

Anticipation (Think of RHPS)

Question 15

Which rule of thumb formula for estimating property value is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000?

Answer 15

GRM (gross rent multiplier)

Question 16

Depreciation is calculated based on the

Answer 16

Cost of the building ONLY

Question 17

Which of these federal laws regulate the advertisement of a lenders credit terms (rates, payments)?

Answer 17

Regulation Z

Question 18

Even if a loans applicants current income seems adequate to qualify for a certain loan, the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the applicants main source of income is

Answer 18

Commission sales.

Question 19

The FHA functions MOST like

Answer 19

An insurance company

Question 20

In helping a buyer to select a lender, if the buyer belieces he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker instead of a mortgage broker for all of the following reasons EXCEPT

Answer 20

More variety of loan programs available

Question 21

When the sellers are lending part of the purchase price, they may secure the debt with either a deed of trust or a mortgage. For the seller, one benefit of the deed of trust is that -

Answer 21

Foreclosure is usually simpler and faster.

Question 22

According to the Truth-In-Lending Act, if any “trigger terms” are used in an ad, all of the following disclosures must apppear in the ad EXCEPT the

Answer 22

Prepayment penalties and rebates.

Question 23

A broker and the buyers he represents are anxiously awaiting the closing on their new home. The closing is scheduled in 4 days. The buyers inform the broker that they just received revised Loan Estimate and Closing Disclosure forms from the lender, indicating the Annual Percentage Rate on their loan has increased by .3%. Based on the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this situation?

Answer 23

Confirm with the seller’s broker, the lender and the closing entity that the closing must be delayed to allow for a new seven day waiting period because of the interest rate revision.