Section 3 Practice Test - Mod 7-9

Question 1

A typical option contract to purchase real property binds which of the following?
A. both buyer and seller
B. neither buyer nor seller
C. only the buyer
D. only the seller

Answer 1

D. only the seller

Question 2

The total dollar expenditure to develop an improvement is called
A. cost.
B. going-concern.
C. price.
D. use value

Answer 2

A. cost.

Question 3

An increase in demand will typically affect a commodity in what way?
A. a decrease in price
B. an increase in market exposure time
C. an increase in price
D. an increase in supply

Answer 3

C. an increase in price

Question 4

An agreement that is presumed to exist because of the parties’ actions is called an implied contract. In contrast, an agreement that is put into words (spoken or
written) is what type of contract?
A. express contract
B. forbearance contract
C. legal purpose contract
D. unilateral contract

Answer 4

A. express contract

Question 5

Jensen has a sale contract on a property, but it does not state the legal description, and it is not signed by the seller. The contract is
A. implied
B. unilateral
C. valid
D. void

Answer 5

D. void

Question 6

The value according to tax rolls in ad valorem taxation is called
A. assessed value
B. insurable value
C. investment value
D. liquidation value

Answer 6

A. assessed value

Question 7

A portion of the purchase price given to bind the transaction is known as
A. a guarantee certificate
B. a purchase receipt
C. earnest money
D. trust funds

Answer 7

C. earnest money

Question 8

Warner is a tenant and pays a fixed rent, while his landlord pays all of the operating expenses and real estate taxes. What type of lease is this?
A. double net
B. gross
C. net
D. sandwich

Answer 8

B. gross

Question 9

If demand is constant for a particular commodity, what factor of value would make the commodity more valuable?

A. desire
B. effective demand
C. scarcity
D. utility

Answer 9

C. scarcity

Question 10

Jill sold her property interest to her sister Joanna, involving land they jointly owned. Years later, Joanna decided to sell the land, but the buyer wanted
assurance that Jill had no rights to the property. What type of deed would Jill provide in this situation?

A. bargain and sale deed
B. general warranty deed
C. quitclaim deed
D. special warrant dee

Answer 10

C. quitclaim deed

Question 11

The value of an investment property to one particular investor is called
A. investment value
B. market value
C. market value of a going concern
D. use value

Answer 11

A. investment value

Question 12

Rita purchased a timeshare property that included a one-week expense-paid trip to the Cayman Islands as an inducement to buy the property. The trip was valued
at $3,000. If the property sold for $28,000, what is a reasonable cash equivalent price for the property?

A. $25,000
B. $28,000
C. $31,000
D. none of the above

Answer 12

A. $25,000

Question 13

The type of deed that provides the greatest warranty against lawful claims is a
A. deed of trust
B. general warranty deed
C. special warranty deed
D. title insurance certificate

Answer 13

B. general warranty deed

Question 14

A sale that takes place between unrelated parties is considered to be what kind of transaction?

A. arm’s-length
B. cash equivalent
C. reasonable exchange
D. self-interest

Answer 14

A. arm’s-length