Simulated Exam 1 Flashcards
1
Q
Real estate investments may include:
A. Reduced unemployment.
B. A stable economy.
C. Debt and equity funds.
D. Proposition 13.
A
C. Answer choice C is correct since debt and equity funds are forms of real estate investments. Answer choices A and B may represent the benefits of real estate investments, but are not real estate investments themselves.
2
Q
The federal truth in lending act (TILA) defines the annual percentage rate (APR) as:
A. The total of only the direct costs of credit paid by a borrower.
B. The total of all costs which the borrower needs to pay in order to get the loan.
C. The relative cost of credit expressed in percentage terms.
D. The difference between the 10 year treasury note and a three month treasury bill.
A
C. The annual percentage rate (APR) is stated as a percentage and represents the total cost of credit including the prepaid interest costs (points).
3
Q
In the buyers closing statement, the selling price is listed as:
A. A debit to the buyer.
B. A credit to the buyer.
C. A debit to the seller.
D. A debit to the lender.
A
A. The seller is credited for the sales price in the buyers closing statement; the buyer is debited. The credit to the buyer comes from how the sales price is paid, typically a cash down payment and purchase assist financing.
4
Q
Which of the following deed provisions are enforceable?
A. The property may not be sold to minorities.
B. The property may not be used for religious purposes.
C. The property may be occupied only by females.
D. The property needs to remain with the grantor and their heirs in perpetuity.
A
B. A deed restriction can prohibit religious use of a property but not discriminate against minorities or females.
5
Q
A mortgage broker’s fee is customarily paid by the:
A. Lender.
B. Seller.
C. Borrower.
D. Under writer.
A
C. Mortgage broker fees are customarily, though not exclusively, paid by the borrower.
6
Q
For a sales person to be given the authority to review purchase agreements and contracts by their broker, the sales person granted supervisory powers needs to have:
A. Accumulated two full years experience within the last five years.
B. Accumulated two full years experience within the last 10 years.
C. Accumulated two full years experience as well as two years college education.
D. Been employed by the broker for a minimum of two years.
A
A. This is a required experience question. For a sales person to be given the authority to review documents by their broker, they need to have accumulated two full years experience within the last five years. This is true for broker license fees as well.
7
Q
A group of competing brokers who collectively set commissions based upon an agreed to minimum commission schedule are:
A. In violation of antitrust law.
B. Conducting an aggressive business practices.
C. Not in violation of ethics laws.
D. In violation of trust fund accounting requirements.
A
A. A conspiracy such as the one described in this question is a clear violation of antitrust laws. The laws are designed to prevent the formation of monopolies and encourage competition in the market.
8
Q
The physical loss of land due to the change in location of a body of water is an example of:
A. Correlated users.
B. Avulsion.
C. Ponding.
D.Reliction .
A
B. Avulsion is the loss of land through natural forces. Reliction is the gaining of land area.
9
Q
When representing their client to third persons in a sale, a licensed real estate broker is operating under the law of:
A. Real estate.
B. Agency.
C. Power of attorney.
D. Licensure.
A
B. In the context of representing their client to third person in a sale, the law of agency exists for the purpose of clarifying the conduct of an agent when dealing with a third-party for the benefit of their client.
10
Q
Agency relationships may not be solely created by:
A. Voluntary offer by the agent.
B. Implied contract.
C. Ratification.
D. Necessity or emergency.
A
A. An agency relationship cannot be created solely by the voluntary act of only the agent. The formation of an agency relationship requires a written or oral agreement between both the principal and the agent. Both an implied agency and agency created by emergency needs to be ratified by the principal.
11
Q
A bank loans Lauren $850,000. Part of the loan agreement calls for Lauren to keep $20,000 of the loan funds on deposit with the bank for the life of the loan. This is an example of:
A. Prepaid charges.
B. Yield enhancement.
C. Risk management.
D. Compensating balance.
A
D. This question illustrates the need to select the best answer available. The correct term for what the bank has required is a compensating balance- leaving enough money with the bank to offset potential forclosure costs. It can also be said to improve the yield and reduce the lender’s risk.
12
Q
The term “kiosk” refers to a(n):
A. commercial warehouse.
B. Dome frequently found on churches.
C. storage warehouse.
D. open sided booth.
A
D. Kiosks are the small stands in the promenade of a shopping mall
13
Q
The physical age of the house can be determined best by inspecting:
A. The architectural style
B. County records.
C. The physical condition of the property.
D. The original recorded subdivision map.
A
B. County records are clearly the most accurate way to determine the physical age of the house.
14
Q
A real estate agent needs to elect their agency relationship:
A. As soon as escrow opens.
B. Before escrow closes.
C. As soon as practical.
D. Whenever asked by either principal.
A
C. The election of an agency role needs to be chosen as soon as possible and then confirmed with all participants.
15
Q
Assemblage is closest to:
A. Residual value.
B. Plottage.
C. Contribution.
D. Substitution.
A
B. Assemblage is the act of combining parcels of land to derive an increase in value, called plottage
16
Q
A brokers receipt of any deposit towards marketing costs from the seller is documented:
A. In the broker’s bank statements.
B. And reported to the California Bureau of real estate.
C. In a subaccount ledger.
D. And accounted to the seller.
A
D. Monies advanced to the broker for future marketing costs need to be accounted to the seller.
17
Q
All real estate brokers and sales agents are required to complete _____ hours of continuing education every four years to renew their California Bureau of real estate (CalBRE) license.
A. 15.
B. 30.
C. 45.
D. 50.
A
C. A licensee needs to complete 45 hours of continuing education every four years. Noticed that this question contains an answer to another state question regarding how often a licensee needs to be renewed- every four years.
18
Q
The form style of an appraisal report includes all of the following information, except:
A. A site analysis.
B. A description of the improvements.
C. A market analysis.
D. Loan and financing data.
A
D. Appraisals state factual data about the property and surrounding area, not the financial and loan data.
19
Q
Which of the following is not considered ethical behavior?
A. A broker who approves of a pocket listing policy among their staff that is done for personal gain, not to benefit the client.
B. Keeping complete records of all sales and listings.
C. Resolving disputes between brokers through mediation.
D. Disclosing agency relationships to all interested parties.
A
A. The pocket listing is inappropriate since, for the agents personal gain, the property is not being exposed in the multiple listing service (MLS). The alternative answer selections are all positive ethical decisions, and thus cannot be correct. If the “not” in the question was missed, it may be difficult to choose between the mania remaining incorrect answers.
20
Q
All of the following are essential to creating a valid contract, except:
A. Lawful object.
B. Mutual consent.
C. Capable parties.
D. Written documentation.
A
D. This is an EXCEPT question. An oral contract may be valid, and thus D. Written documentation is the correct answer. A valid contract requires four elements be present: capable parties, consideration, legal object and mutual consent.
21
Q
Who may withdrawl trust funds?
A. And unlicensed person.
B. Any employee of the broker.
C. Any employee authorized by the broker.
D. A notary public administering an oath or affirmation.
A
C. The broker may authorize any employee to be responsible for trust fund withdrawls.
22
Q
Most real estate sales lawsuits are heard in:
A. The Court of Appeals.
B. Small claims court.
C. The state Supreme Court.
D. The state superior court.
A
D. The state superior court is where most real estate lawsuits are heard. Generally real estate cases are too large for small claims court to settle. The Court of Appeals and the state Supreme Court will only hear those cases not settled by a lower court.
23
Q
Mineral and water rights are included in the ____________ which are transferred with the sale of a property.
A. Tenant rights
B. Government rights
C. Bundle of rights
D. Emblements
A
C. Mineral and water rights are transferred with the sale of the property.
24
Q
A buyer purchased a home without being informed the house was on a septic tank system.
The buyer has the right to:
A. Rescind the contract.
B. Have the broker disbarred.
C. See you the escrow company for malfeasance.
D. Report the seller to the California Bureau of real estate (CalBRE) for failure to disclose.
A
A. Only answer selection A. Rescind the agreement is appropriate. This is an excellent example of arriving at the correct answer by eliminating the incorrect answer choices. Choice D fails since the seller doesn’t answer to the real estate commissioner. Choice C fails since the escrow officer is not responsible for disclosures. Choice B fails since most brokers are not members of the State Bar.
25
A fully amortized loan has equal monthly payments. The portion of the payment applied to principle:
A. Goes down each month.
B. Goes up each month.
C. Remains unchanged.
D. Goes up but equal amounts each month.
B. With a fully amortized mortgage, the interest expense is subtracted from the payment first. As a portion of principle is paid each month, the loan balance is reduced and therefore interest portion of the payment goes down. This in turn causes the principal portion to rise.
26
The federal loan estimate is to be delivered to a borrower:
A. Within three business days of receipt of a consumer mortgage application.
B. Within three business days of closing.
C. No more than one calendar day before the close of escrow.
D. At least 10 business days from the date of the loan commitment.
A. The federal loan estimate needs to be delivered to a borrower within three business days of the lenders receipt of a consumer mortgage application.
27
Peter sold his home to Matt. Matt didn’t record the grant deed, but moved into the house. Peter then sold the same property to Isabella, who reviewed the county recorder’s records but did not look at the house. Peter gave Isabella a deed, which she recorded. Which of the following is true concerning title to the property?
A. Matt maintains title.
B. Isabella now owns the property since she reported her deed and Matt did not.
C. Isabella has recourse against Matt for his failure to record.
D. Matt and Isabella are co-owners of the property.
A. Since Isabella failed to look at the property and determine whether it was occupied, Matt retains title. Constructive notice requires that the buyer (Isabella) look at the property as well as the county records.
28
A seller entered into an oral listing agreement to sell real estate with a broker without a follow up written verification.
The payment of a commission to the broker under the circumstances is:
A. Unenforceable.
B. Enforceable.
C. Violation of the regulations of the real estate commissioner.
D. Regarded as contrary to public policy.
A. The only issue regarding an oral listing is that it fails the conditions of statute of frauds which requires the listing to be in writing to be enforceable. As such, the brokers fee is unenforceable in a court action.
29
The relationship between a vendor and vendee under a land sales contract is most similar to the relationship between a(n):
A. Trustor and trustee.
B. Broker and seller.
C. Escrow office and principle.
D. Seller and buyer.
D. In a land sales contract, the seller acts as lender and retains title to the property until paid in full. The relationship most similar to this would be that of the borrower and lender i.e. mortgagor and mortgagee
30
A real estate broker wrote an offer on a property for their buyer that was contingent on the approval of the home by the buyers father. The buyer informed the broker their father was out of the country for an unknown duration. The broker presented the offer to the seller without disclosing that the buyers father was out of the country. The seller excepted the offer. In this example, the brokers conduct was:
A. Unethical
B. Unlawful.
C. Misleading.
D. Acceptable.
B. The misleading nature of the undisclosed factor rises to the level of unlawful conduct as it places the seller in a position in which they can neither sell the property to someone else nor complete the transaction. As with puffing, it is the belief and trust bestowed by the principle that causes the act to move beyond a matter of ethics and become unlawful.
31
Acme development sent postcards to 25,000 AARP members offering prices without disclosing the requirement to visit the retirement community and attend a sales presentation in order to win. Is this legal?
A. Yes, prices are always offered.
B. No, since the developer failed to disclose the need to visit the property and attend a sales presentation.
C. Yes, so long as the offer is open to anyone. D. No, because prices might be used as an encouragement to buy the property.
B. The issue raised by this question is one of disclosure. Prizes and gifts are allowable so long as there is a full disclosure of all the terms and conditions associated with the promotional event.
32
An individual who has been delegated agency duties by an agent of the client, not the client directly, is known as a(n):
A. Principal
B. Amanuensis
C. Subagent.
D. Subtenant.
C. An individual who has been delegated agency duties by the primary agent of the client, not the client themselves, is a subagent. For example, when another broker acts on behalf of a seller at the request of the sellers broker, a sudagency with the seller has been established by the brokers.
33
Compliance with the agency law is required in which of the following transactions?
A. A duplex sold by an owner.
B. Trustee’s sale.
C. A transfer between parent and child.
D. A residential lease with the two-year term.
D. The agency law disclosure is only required on transactions involving a licensed agent and is delivered to all parties in sale transactions or leases exceeding one year on other than five or more unit residential properties.
34
If homes in an area represent the highest and best use of the land and are similar in architectural design, which of the following principles of appraisal apply?
A. Anticipation.
B. Contribution.
C. Conformity.
D. Substitution.
C. There are several principles to real estate value. The principle of conformity holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
35
It is unethical for a property manager’s compensation to be structured as:
A. Payment for significant property repairs performed by the manager.
B. A percentage of gross receipts.
C. A commission on new leases entered into on the premises.
D. Kickbacks or discounts on goods and supplies.
D. A property manager’s compensation may take several forms. However, kickbacks from suppliers or service companies are unethical as those savings rightfully belong to the client.
36
Under the real estate law, a real estate sales person is:
A. An independent contractor.
B. An employee of the broker.
C. And employee of the seller.
D. Self employed.
B. This question requires us to except a dichotomy unique to real estate. A sales person is an employee an agent of the broker for the purpose of the real estate law. However, they are generally classified as an independent contractor for tax purposes.
37
Insulation values are rated as “R.” What does this represent?
A. Resistance to heat flow.
B. Cost.
C. Thickness.
D. Material used.
A. Insulation is designed to avoid the transfer of heat. The higher the installations R factor, the greater the resistance to heat loss.
38
Broker Gary sold a property to Sarah that was marked “as is”. Broker Gary knew that the properties plumbing was in a major state of disrepair but did not tell Sarah. The problem with the plumbing is not apparent to an ordinary, prudent person. If Sarah sued the seller for damages, the court action would likely be:
A. Successful since the duty to disclose a material fact cannot be avoided by an “as is” provision under the state circumstances.
B. Successful since as is refers only to obvious defects.
C. Unsuccessful since the buyer agreed to buy the property in its current condition.
D. Unsuccessful since the “as is” status of the sale shows there is a mutual understanding of possible defects.
A. An “as is” defense by the seller requires full disclosure of all material facts known about a property. “As is” is not synonymous with “no disclosure required”.
39
To make a formal declaration that a statement is true without giving an oath is a(n):
A. Acknowledgment.
B. Affirmation.
C. Affidavit.
D. Deception.
B. Both answer selection A and C are formal declarations that require an oath. Only an affirmation stops short of the oath.
40
A “turnkey” project is:
A. Construction of a property from groundbreaking to completion.
B. A subdivision whose design has been approved by the local planning commission.
C. A franchise sale.
D. A purchase and resale.
A. The term “turnkey“ implies a property is complete and ready for immediate occupancy, requiring nothing more of the property to for fill its intended purpose.
41
Harold wills the family estate to his son Patrick on the condition Patrick marry before title will be transferred. This is an example of a:
A. Covenant.
B. Restriction.
C. Condition precedent.
D. Condition subsequent.
C. A condition precedent is a provision in an arrangement calling for the occurrence of an event or performance of an act before title is transferred.
42
Information about the thickness and material used for the foundation footing of the property are contained in:
A. Elevation plans.
B. Plot plans.
C. Foundation plans.
D. County records.
C. The foundation plans speak to questions related to the building foundation in the same manner that a framing plan illustrates the framing of the property.
43
Amelia deeds a property to Buster which is never recorded. How would Buster transfer title back to Amelia?
A. By destroying the deed.
B. By handing the deed back to Amelia as a reconveyance.
C. By writing “canceled” across the face of the deed and returning it to Amelia.
D. Creating a new deed.
D. A deed becomes valid once it is delivered. To transfer a property to another individual or back to the previous owner, a new deed is to be executed and delivered. Failure to do so may render the ownership and big US and create a cloud on title.
44
Why is the replacement cost appraisal approach generally easier to apply to a new property than an old property?
A. Historic costs are hard to obtain and verify for older properties.
B. It’s difficult to value the land on which the property is situated.
C. Depreciation is more difficult to estimate on an older property.
D. Different building codes may have been in effect when an older property was built.
C. A new property requires no adjustment for depreciation. Under the replacement cost approach, the appraiser determines the dollar amount required to replace an improvement at its current cost. As the property ages, the depreciation is greater. The effective age of a property, which is what depreciation is based on, is affected by remodeling and maintenance variation unique to each property. Thus, replacement cost appraisal approach is generally easier to apply to a new property and than an old property.
45
Unless fraud is involved, an action against a licensee by the real estate commissioner needs to be initiated within ___________ of the occurrence of the alleged violation.
A. Two years
B. Three years
C. Four years
D. Five years
B. The statute of limitations allows a three year. After the alleged violation for the real estate commissioner to initiate an action against a licensee, except in the case of fraud where the limit is three years from the occurrence or one year of the discovery.
46
Fee amounts are always:
A. 6% of the price received for the property.
B. 2% to 8% of the price received for a property.
C. Nonnegotiable and set by law.
D. Negotiable and not fixed by law.
D. Though commonly 6% of the price received for a property, the amounts are always negotiable and not fixed by law
47
A buyers agent prepares an offer for a buyer of the home. When is the buyers agent to give the buyer the agency law disclosure form?
A. As soon as practicable.
B. Before showing the buyer the house.
C. Before preparing the offer for the buyer.
D. At opening of escrow.
A. The three steps in the creation of an agency relationship or to first disclose, then elect who is represented, then confirm that decision. Disclosure is to be made as soon as practicable.
48
The organization responsible for the enforcement of proper sewage and sanitation construction practices in a subdivision is the:
A. State sewage department.
B. Real estate commissioner.
C. Local health department.
D. Department of housing and urban development (HUD).
C. Neither the real estate commissioner nor the federal department of housing and urban development (HUD) have a direct concerned with local sewage management. Further, there is no state sewage department. This, by elimination, that leaves only answer selection C. Local health department.
49
A metropolitan area where the cities with in it have a grown together is known as a(n):
A. Megalopolis.
B. Suburb.
C. Planned unit development.
D. Matrix sprawl.
A. When a metropolitan area grows by the connection of various cities with it it it becomes an megalopolis
50
The employment agreement between a broker and a sales person needs to be retained by the broker and the sales person for:
A. Three years from the date of the execution of the contract.
B. Three years from the date of the termination of the sales person’s employment.
C. Four years from the date of the termination of the sales person’s employment.
D. Five years from the date of the termination of the sales person’s employment.
B. Employment records between a broker and a sales person need to be kept for three years. The three year timeperiod begins to run on the termination of the employment.
51
In the instance of condominium ownership, which of the following may be held in fee title?
A. The outside yard.
B. The public hallways.
C. The individual units.
D. All of the above.
D. Any condominium complex, an individual owner owns their own condo as well as a proportional share of all common areas. They can own both in fee title.
52
A broker relayed property information they received from their seller to a buyer. Upon discovering the information to be false, the broker is to:
A. Inform the seller of the error.
B. Inform the buyer.
C. Informed the escrow officer.
D. Keep silent.
B. If a broker has already communicated false information to the buyer that was not known to the broker to be incorrect, they need to clarify the information with the buyer once they discover it’s inaccuracy. Informing the seller will not resolve the earlier missinformation given to the buyer and the escrow officer is not the person he would duty bound to pass along the correct information to the buyer.
53
A 60‘ x 45‘ building is to be carpeted. 60% of the square footage will be covered at a cost of $6 per square yard.
The total cost of the carpeting will be:
A. $1,080
B. $1,6,200
C. $1,800
D. $9,720
A. $1,080
54
Mark purchased an apartment building for $2 million. The list price was $2,500,000. Mark put $500,000 down and acquired a new first trust deed for the difference. Marks cost basis for income tax purposes is:
A. $500,000.
B. $1,500,000.
C. $2,000,000.
D. $2,500,000.
C. Cost basis is the cost incurred to acquire and improved property and is used primarily for tax reporting and recovery of capital. Loans have no effect on the properties cost basis, and neither does a sellers list price.
55
When a sales person’s employing broker dies, the sales person needs to:
A. Stop all the real estate activity immediately until they find a new employing broker.
B. Continue working for up to 30 days.
C. Continue working if there is an office manager appointed by the broker with two years experience within the last five years.
D. Continue working for up to 60 days or until another broker takes over the office or the office is closed.
A. A sales person needs to work under the supervision of a broker. If their employing broker dies, the sales person may not conduct licensed activity until a new employing broker is named.
56
A real estate broker generally acts from a position of trust for the seller or buyer. This is described legally as a(n):
A. Fiduciary relationship
B. Ostensible alliance.
C. Dual agency.
D. Independent contractor relationship.
A. This protected relationship between the client and the agent is called fiduciary. It is a position of trust that exists between the agent and their client.
57
State licensing of contractors protects the public against:
A. Dishonesty.
B. Incompetence.
C. Fraud.
D. Felonious behavior.
B. State licensing of contractors requires experience and other qualifying requirements to protect the public from incompetent. The skills can be tested to acquire a license. Dishonesty, felonious behavior and fraud are legal concerns dealt with by the district attorney, not the licensing authority.
58
A property was sold netting $410,000 for the seller after a 6% commission was paid. How much was the property sold for?
A. $434,370
B. $386,400
C. $439,180
D. $436,170
D. This is an example of a simple math problem that requires calculation since only answer selection B is clearly wrong. The equation is: $410,000 equals 94% of X. 410,000/94=4361.70. Then $4361.70 x 100 = 436,170.
59
In a 1031 Real estate exchange, “boot” does not refer to:
A. Unlike property received.
B. Cash received.
C. Mortgage relief.
D. Like kind consideration.
D. Boot refers to any consideration in a 1031 exchange of an in like kind. Once again, the answer choices offer the reader important information regarding the subject of this and related questions.
60
A property owner lost their job. The owners loan payments were made for them since they had a:
A. Federal housing administration (FHA)- insured loan.
B. US department of Veterans Affairs (VA)-guaranteed loan.
C. California housing financing agency (CalHFA) loan.
D. CalVET home loan.
C. Under a California housing financing agency loan, the CalHFA will make loan payments for a borrower during a period of unemployment.
61
A listing broker may not be:
A. The sole agent of the owner.
B. The sole agent of the buyer.
C. A dual agent.
D. A loan broker.
B. In no instance would the listing broker represents only the buyer. A listing broker may either represent both the buyer and seller (as a dual agent), or just the seller.
62
If a lessee assigns their lease to someone else, the lessee :
A. Is relieved of all responsibilities under the lease.
B. May be responsible for rent payments.
C. May be responsible for maintenance charges.
D. May be responsible for both rent and maintenance.
D. The assignment of a lease does not relieve the lessee (tenant) of responsibility they may have agreed to under the terms of a lease. Only an assumption of the lease will free the lessee of an agreed to obligation.
63
A home sold for $300,000. The buyer applied and was approved for a loan with an 80% loan to value ratio LTB with a 20% down payment. The property was appraised for $290,000 how much will the buyer need as a down payment?
A. 20% of $300,000
B. 20% of $290,000
C. 20% of $290,000 plus $10,000
D. 20% of $290,000 -$10,000
C. The $300,000 selling price remains the same regardless of how the down payment is calculated. So with the appraisal at $290,000, the buyer will need 20% of this value. Presuming the sales price is not adjusted, the buyer will need to also place the difference between the sales price and the appraisal $10,000 as part of the down payment.
64
Real property that is acquired by a neighbor through natural processes such as erosion is an example of:
A appurtenance
B a prescriptive easement
C accretion
D avulsion
C accretion
65
A brokerage office with a high degree of turnover and failure amongst its staff is most likely a result of:
A. Not enough good listings.
B. Not enough advertising.
C. Lack of supervision and training.
D. To low commission structure.
C. Lack of supervision and poor training create a high degree of turnover in a brokerage office.
66
If evidence of active infestation is found, a structural pest control report is required to be provided:
A. when the home being purchased is financed by a federal housing administration (FHA)-insured loan or US Department of Veterans Affairs (VA)-guaranteed loan.
B. Whenever requested by the buyer, whether or not the seller agreed to do so in the contract.
C. And every sale involving a wood frame residence.
D. In every sale of a foreclosed property that has been occupied for greater than one year.
A. When the home being purchase is financed by federal housing in ministration insured loan or US Department of Veterans Affairs guaranteed loan
67
A real estate agent may not represent all principles in a transaction when:
A. They have obtained the consent of all parties to this dual agency relationship.
B. They have informed all parties they are the agent of each principal.
C. They are collecting commissions from each principal with the knowledge of the others.
D. They failed to disclose their dual agency status the moment arises.
D. In order to represent both principles in a transaction as a dual agent, the agent’s dual agency status must be disclosed as soon as possible.
68
Who pays the points on a CalVet home loan?
A. The buyer.
B. The seller.
C. The state of California.
D. No one pays the points.
D. No points are charged on a CalVet loan. It is a land sales contract.
69
Nathan agreed to list his property for sale with broker Chan. In the listing agreement, Nathan specified broker Chan is not authorized to accept a deposit toward the purchase price from the buyer. What happens if broker Chan produces a buyer?
A. He must refuse to except any deposit.
B. He cannot present the offer as written.
C. If he accepts a deposit, he holds it as an agent of the buyer until the offer is excepted by the seller.
D. If he accepts a deposit and the buyer resend the offer prior to acceptance by the seller, Chan is entitled to 1/2 of the deposit.
C. Due to the lack of seller authorization, broker Chan holds the deposit towards the purchase price as an agent of the buyer until the offer is excepted by the seller.
70
The primary concern of an appraiser when analyzing property is:
A. Supply and demand.
B. Functional utility.
C. The neighborhood.
D. Marketability and acceptability.
D. The best answer is selection D. Marketability and acceptability. Each of the alternative answer selections may play a part in the decision of an appraiser analyzing a property.
71
The expression “company dollar” refers to:
A. Money required to establish a brokerage office from scratch.
B. Money left over after a sales person‘s share of the commission has been paid.
C. Net income after taxes.
D. The desk fee paid by the agent to their employing broker.
B. The company dollar is the remainder of the brokers split of the fee after paying their agents commissions.
72
What is an example of a real estate advertisement that is clearly misleading?
A. Advertising implying a specific yield different from the stated interest rate.
B. Advertising without stating the sales price.
C. Advertising which includes a map incorrectly indicating the property is close to area amenities.
D. Advertising which accidentally miss spells the broker’s firms name.
C. Maps in real estate advertisement that show close proximity to favorable amenities or a greater distance from unfavorable elements are misleading.
73
Marta’s city built a new park in her neighborhood. This may result in a(n):
A. Special assessment.
B. General assessment.
C. Tax rate increase.
D. Income tax increase.
A. In this question, the park is built within a specific neighborhood. If an assessment is made for the cost to build and/or maintain the park, it would apply to just the owners of property in that neighborhood as a special assessment.
74
David listed his house for sale with broker Paulson for $400,000. David told broker Paulson it was imperative that the property be sold quickly. Broker Paulson showed the property to Henry and told him David was financially insolvent and would except $380,000. Based on broker Paulson statement, Henry offered David $380,000 for his property. David excepted the offer. Concerning broker Paulson‘s actions, which of the following is true?
A. Broker Paulson violated his fiduciary obligation to David since he acted in excess of his authority.
B. When David excepted the offer, broker Paulson’s actions were vindicated.
C. Broker Paulson‘s actions were proper since David stated he wanted an immediate sale.
D. Broker Paulson interpreted David’s wishes and produce the sale. Acceptance of the offer made a broker Paulson‘s actions acceptable.
A. The only correct interpretation of agency law is that broker Paulson acted outside his authority and revealed private financial information that may or may not have been true without client permission. The alternative answer selections may have a ring of truth, but the state exam is concerned with legal issues.
75
The four essential elements of an enforceable contract are:
A. Competency, mutual consent, lawful object, consideration.
B. Express, consideration, mutuality, lawful object.
C. Mutuality, written, competent parties, lawful object.
D. Communication, written, competent parties, lawful object.
A. Only answer choice A fulfills all the requirements of an enforceable contract. Not all contracts are written. However, all contracts require consideration, mutual consent and legally competent participants.
76
A walk-up refers to:
A. An apartment building with no elevator.
B. Agricultural land.
C. A drive in restaurant.
D. A trailer park.
A. While uncommon in California and more prevalent on the East Coast, a multi story apartment building without an elevator is referred to as a walk-up.
77
A sellers broker receives a written offer on a listed property. The broker is certain the seller will not except it. Which of the following may the broker not do?
A. Write new terms on the back of the offer and go back to the buyer for approval.
B. Change the offer price to what the broker thinks the seller will except, and initial the change.
C. Present the offer to the seller as written.
D. Present the offer to the seller, but invites them not to except it.
B. The offer is a contract between the principles. Thus, only the buyer or seller may authorize changes to the contract.
78
What is contained in all purchase agreements that states the existence or nonexistence of each brokers fiduciary agency with the various parties to the transaction?
A. Agency confirmation provision.
B. Broker liability agreement.
C. Attorney fee provision.
D. Hold harmless agreement.
A. The agency confirmation provision discloses the agency of each broker in the transaction and is contained in all purchase agreement and counter offers.
79
In order to transfer the title to a parcel of real estate, which of the following is required?
A. All existing loans are to be paid off.
B. Consented to the transferred needs to be obtained from all lenders to hold an interest in the property.
C. A reconveyance deed from the trustee needs to be recorded.
D. Delivery of a valid deed.
D. A more complete answer might say “delivery and acceptance” of a deed. However, given the choice is offered, only D delivery of a valid deed is acceptable.
80
The agency law disclosure does not need to be made to all parties in which of the following transactions?
A. The sale of a commercial building.
B. The sale of vacant land.
C. The sale of a residence.
D. Leases for one year or less.
D. The agency law disclosure is not required for leases of one year or less.
81
Which of the following is false regarding the cost method of appraisal?
A. It is used in computing real estate values of public buildings.
B. It is hard to apply.
C. It is used in new residential homes.
D. It produces the lowest value results.
D. Of the three appraisal approach is to determine a properties value, the cost approach will generally produce the highest value and the income approach will generally produce the lowest. The reason for this is that while the cost approach shows the actual expense to replace the property, the income approach demonstrate the value based on income it generates which is always less. Note that the alternative answer selections maybe useful to remember for other questions.
82
To avoid a taxable gain, a property owner may exchange their commercial property with:
A. A personal residence with a loan on it equal to or greater than the mortgage on their commercial property.
B. Stocks and bonds of equal value.
C. A more valuable apartment building assuming a larger loan and paying cash boot to balance the equities.
D. The less valuable commercial complex receiving money from the other party to compensate for any difference in equities.
C. Like-kind in the context of a 1031 exchange refers to the purpose for holding the property i.e., the replacement property will be used for similar purpose as the subject property. So long as the purpose is the same, the physical variations of the real estate are of no importance.
83
Broker Wallace represented a young man in the sale of his home. After purchase terms have been agreed to and the grant deed had been signed and delivered into escrow, the title company discovered the seller was not yet 18 years old and was not emancipated. The grant deed is:
A. Illegal.
B. Voidable.
C. Void.
D. Valid.
C. Since the grantor was under the age of 18 and therefore not legally capable, the deed is void. As mentioned in the previous question, capable parties are in essential element to the formation of a valid contract.
84
What is not essential to the creation of an agency relationship?
A. Agreement to pay consideration.
B. Competency of the principal.
C. Consent of the principal.
D. A fiduciary relationship.
A. Agency is not necessarily a matter of compensation. The agency relationship between a client and agent exists whether or not the transaction closes and the agent receives a fee.
85
The designation CPM stands for:
A. Common area property management.
B. Corrective property maintenance.
C. Chartered professional manager.
D. Certified property manager.
D. CPM, meaning certified property manager, is a designation that property managers earn after sufficient education and experience. It is not required for providing property management services.
86
Successful marketing materials are generally held to include the following four critical elements:
A. Disclosures, price, location, size.
B. Number of bedrooms, baths, size, and location.
C. Location, amenities, price, and size.
D. Attention, interest, desire, and action.
D. For questions regarding marketing, remember this helpful acronym: AIDA. The essential elements of marketing materials are as follows: attention, interest, desire and location.
87
The task of evaluating a property to qualify it as collateral for the repayment of a loan is completed by a(n):
A. Appraiser.
B. Agent.
C. Broker.
D. Home inspector.
A. An appraiser determines value of a property rather than its condition, which is performed by a home inspector. For the purposes of qualifying the collateral which secures the loan, the lender requires an appraiser’s determination of the property’s value.
88
Who must receive a copy of the structural pest control report?
A. The buyer.
B. The title insurance company.
C. The broker.
D. The escrow company.
A. The only person listed who has a need to know the findings of a structural pest control report is the buyer.
89
In addition to the general duty owed to the other party in a transaction, a licensee owes a _________ to act with the upmost good faith and diligence for the benefit of their principal.
A. Fiduciary duty
B. Partial duty
C. Legislative duty
D. Gratuitous duty
A. The agent’s duty to their client is a fiduciary duty.
90
Wainscoting can be found:
A. As a waterproofing layer added to the exterior of the foundation.
B. As the facade on an office building.
C. On the lower three or 4 feet of an interior wall when finished differently from the rest of the wall.
D. As the lining on the inside of the eaves in areas that experience heavy rains.
C. Wainscoting is a traditional style of wallcovering in which a chair rail divides the lower portion of the wall from the upper portion, which is generally of a different material.
91
The principle that housing passes down to lower economic groups would be:
A. Crane’s law.
B. Supply and demand.
C. Filtering down.
D. Correlative theorem.
C. Filtering down is the correct answer. Notice the correct answer has the word “down” in it just as in the question, which states, “housing passes down.” None of the alternative answer selections appear to relate to the question.
92
A buyers agent submitted an offer to purchase a home to a seller along with a $10,000 personal note as the earnest money deposit. The buyers agent is to:
A. Inform the seller that the earnest money deposit is a personal note prior to the sellers acceptance of the offer.
B. Avoid telling the seller what form the earnest money deposit that accompanies the offer is in.
C. Never except a personal note as an earnest money deposit.
D. Refuse to present the offer.
A. The agent is obligated to inform the client of all material facts. The form of the deposit is a material fact. An agent needs to present all offers unless they are patently frivolous or the seller explicitly instructs the agent to no longer present offers.
93
The existence of which of the following is required under disclosure law?
A. Minorities live next-door to a residential property.
B. The prior tenant at the property with afflicted with AIDS.
C. A death occurred in the house for years earlier.
D. The property is located next to a military ordinance site.
D. This question provides a good opportunity to recognize necessary or improper disclosures.
94
A fictitious business name statement expires:
A. Five years from December 31st of the year recorded.
B. Five years from recordation.
C. Five years from abandonment.
D. Never. A fake Tisha’s business name never expires.
B. The DBA (doing business as), also known as fictitious business name, is based on a calendar year. A fictitious business name statement needs to be renewed every five years.
95
A person or organization named on a trust deed as the beneficiary is most likely the:
A. Trustee.
B. Borrower.
C. Lender.
D. Buyer.
C. The beneficiary on a trust deed is the lender i.e. the holder of a note secured by a trust deed that is entitled to the performance of the provisions in the trust deed. In the context of a mortgage, this is the mortgagee.
96
Appurtenances go with the land. Which of the following is not an appurtenance?
A. Buildings.
B. Swimming pool.
C. Fences.
D. A trade fixture.
D. Trade fixtures belong to a commercial tenant and are to be removed at the end of their tenancy, and thus are not appurtenances. Appurtenances run with the land and are transferred with it on it sale.
97
A real estate sales person may only be paid a commission by:
A. The buyer.
B. The seller.
C. The escrow company.
D. Their employing broker.
D. Only be employing broker can compensate the sales person. The broker receives their broker fee (commission) at the close of escrow and delivers a percentage of the fee to the sales person involved in the transaction.
98
When a broker represents only a buyer in the sale of real estate, this is referred to as:
A. Single agency.
B. Implied agency.
C. Dual agency.
D. General agency.
A. An agent may only be a single agent, representing one party in a transaction, or a dual agent, representing both parties in the transaction. As the broker in this question represents only a buyer, the broker is a single agent.
99
The real estate disclosure law that became effective January 1, 1988 concerns:
A. Agency relationships.
B. People who arrange credit.
C. Disclosures made by property sellers.
D. The federal truth in lending act (TILA).
A. There are several disclosures that became effective around the late 1980s. However, the agency disclosure law is the one that became effective in 1988. The transfer disclosure statement (TDS) became effective in 1987.
100
When a broker solicits and excepts a deposit on the purchase of real property without express written authorization from the owner to sell the property, the broker is:
A. Guilty of converting a customers funds for their own benefit.
B. Guilty of violating their fiduciary duty to the owner.
C. Acting as an agent for the buyer.
D. Acting under a restricted listing.
C. As an agent for the buyer, the broker requires no authorization from the seller to except a deposit on the purchase of property from the buyer they represent.
101
Confidential financial information about a principal obtained by a broker during the course of a real estate transaction needs to be kept confidential for how long?
A. Three years after the close of escrow.
B. Only until the close of escrow.
C. So long as the agency relationship lasts.
D. Forever.
D. Confidentiality has no time limit. Any such confidential financial information needs to be kept secret for perpetuity.
102
Whether property functions as adequate security for a real estate loan depends on the:
A. Value of the US dollar.
B. Value of the property.
C. Consistency of the borrowers income with. D. Quantity of the borrowers income.
B. To establish whether a property represents adequate security for a loan, the value of the property needs to be determined by an appraiser.
103
An express contract is one that:
A. Will execute quickly.
B. Must be in writing.
C. It’s structured in words, delivered in writing or orally.
D. Is quickly negotiated.
C. An expressed contract represents a mutual agreement between real estate participants. An express contract can be oral or in writing.
104
A purchaser of the condominium unit request a copy of the conditions, covenants and restrictions and bylaws. These documents need to be provided within:
A. One week.
B. 10 days.
C. Three weeks.
D. Anytime prior to close of escrow.
B. 10 days.
105
If a sales person withholds a new listing from the MLS in an attempt to sell it themselves, it is called:
A. Attempting a secret profit.
B. Conversion.
C. A pocket listing.
D. And illegal withholding.
C. A pocket listing is the withholding of a listing from the multiple listing service (MLS) for the agents personal gain. This violates the fiduciary duty owed to the client since it limits the properties exposure on the market.
106
An appraisal is valid for what length of time?
A. One year.
B. Six months.
C. 90 days.
D. The date stated in the report.
D. An appraisal report is a snapshot of property and local market conditions. Therefore, an appraisal is only valid on the date stated in the report. As conditions and the market change, and appraisal becomes invalid.
107
If a broker wants to solicit for an advance fee, how many days before use must the broker submit the proposed solicitation to the California Bureau of real estate for approval?
A. 10 days.
B. 30 days.
C. 45 days.
D. 90 days.
A. Before a broker may solicit, advertise for and agree to receive an advance fee, the paperwork material is to be submitted to the commissioner of the California Bureau of real estate for approval at least 10 calendar days prior to use.
108
The lowest closing costs other than the down payment are realized using a:
A. Federal housing administration (FHA)-insured loan.
B. US department of Veterans Affairs (VA)-guaranteed loan.
C. CalVet home loan.
D. Conventional loan.
C. Closing costs are charges related to the transaction that are paid through escrow. The CalVet home loan is a land sales contract and is therefore different from each of the other answer choices. There are no loan charges in this arrangement and that’s the escrow charges are lower.
109
A seller enters into an exclusive right-to-sell listing with an agent but does not receive a copy of the signed agreement. The seller, believing this relieves them of any obligation, personally sells the property while the listing is in effect. What is the outcome?
A. The listing is invalid and the broker is liable to be disciplined.
B. The broker did nothing wrong.
C. The listing is valid and enforceable, but the broker is liable to be disciplined.
D. The broker may be disciplined only if they except the commission
C. The failure to deliver a copy of any signed document is a violation of agency law that they weren’t disciplinary action by the California Bureau of real estate (CalBRE). However, the signed listing contract is still valid and enforceable against the seller.
110
The land residual method of appraisal is used to determine the value of the:
A. Land alone.
B. Building alone.
C. Building and land.
D. Unearned increment.
A. The word “residual” refers to that which is left after subtracting other values. In a land residual appraisal, the cost of the building is subtracted from the property value to determine the value of the raw land.
111
When an appraiser attempts to establish the value of a commercial building, what type of property is least affected by changing economic conditions?
A. A medical building.
B. The video game outlet.
C. An automobile dealership.
D. Fast food franchise.
A. A medical building is the least impacted by changed economic conditions. The tenants of a medical building are generally under long-term leases where no rent is charge based on the volume of receipts, as occurs under a percentage lease. Alternatively, automobile sales decline and fast food restaurants may see a rise in volume during the session.
112
A capitalization rate (cap rate) is least affected by:
A. The return on investment.
B. The return of investment.
C. Current interest rates.
D. Taxes.
D. The capitalization rate (cap rate)is least affected by taxes. The cap rate is the annual rate of return produced by the operations of an income property or stop by an investor, and is therefore in investors demand. Comparisons to current interest rates and requirements for a return on or of the investment are all investor considerations.
113
When advertising on the Internet, the broker needs to:
A. Avoid out-of-state inquiries.
B. Employ only real estate licensees.
C. Report all international inquiries.
D. Exercise proper supervision.
D. Internet advertising by its nature opens the market to an international audience. While the broker need not be sufficiently computer literate to implement the advertising, they do need to properly supervise that which is done in their name by their licensed agent and unlicensed staff.
114
A real property land sales contract does not need to show:
A. The legal description.
B. How a dispute is to be resolved if there is a disagreement.
C. Existing loans encumbering the property.
D. The length of time required to pay off the contract.
B. Each of the other answer selections need to be known by both the vendor and the vendee (seller and buyer) in a land sales contract. A dispute resolution provision is good practice, though not required.
115
\_\_\_\_\_\_\_\_\_\_\_\_\_ occurs when a listing agent deletes provisions on the face of a buyers signed purchase agreement and adds copy to replace the deleted material.
A. Editing
B. Obliteration
C. Interlineation
D. Conformance
C. Interlineation is the best answer as it refers to the process of modifying boilerplate wording in a form by inserting additional language between the printer lines. This is improper conduct when it is performed after the principal has signed the agreement.
116
The calendar date that is of most concern to an appraiser is the date:
A. The loan was originated.
B. Escrow closed.
C. The purchase contract was signed.
D. Escrow was opened.
C. The date that is most critical to an appraiser is the date the contract was signed since the fair market value for a property is established as the purchase price agreed to by the buyer and seller.
117
A lost right caused by an unreasonable delay in the pursuit of a claim is called:
A. Dereliction.
B. Escheats.
C. Laches.
D. Tort.
C. Laches is an unreasonable delay in making an assertion or claim, such as asserting a right, claiming a privilege or making an application for redress, which may result in refusal.
118
Real property that builds up along a river bank is acquired through:
A. A quit claim deed.
B. Escheat.
C. Accession.
D. A quiet title action.
C. Accession is in addition to property through human effort’s or by natural forces. For example, real property that builds up along the riverbank refers to accession by a natural occurrence. The other three answer selections are legal actions. While accession allows for addition by both human and natural forces forces, accretion is by natural forces only. As with this question, you will not be required to decide between the two.
119
The real estate commissioner is primarily concerned with financial arrangements in a subdivision. If the commissioner wishes to rescind approval of the subdivision, they would:
A. Ask the sheriff to arrest the subdivider for fraud.
B. Issue an injunction against future sales of parcels in the subdivision.
C. Issue a desist and refrain order.
D. Suspend the developers license.
C. If the real estate commissioner feels the need to retract approval of a subdivision, they issue a desist and refrain order. There are two laws that relate to subdivisions: the subdivision map act, which is handled locally through the planning department, and the subdivided land law, which is handled by the California Bureau of real estate (CalBRE).
120
Which of the following is true regarding the agency duty held by a buyers agent?
A. The agent represents the buyer only.
B. The agent is a dual agent of both the buyer and seller.
C. The agent may charge an advance fee to the buyer.
D. They’re only agents of sellers in California.
A. The question states the agent is acting as a buyers agent. Therefore, only answer choice A fulfills this description. Agency duty has nothing to do with advance fees.
121
The final step in the appraisal process is to:
A. Reconcile the different approaches and arrive at a conclusion.
B. Average the values from the different approaches to arrive at a conclusion.
C. Assign values and estimate the total.
D. Justify the sales price.
A. Reconciling the appraisal analysis explains how the conclusion of the appraisal report was reached. The reconciliation will weigh the differences between the various appraisal approaches used by the appraiser
122
Which of the following parties is in the weakest position against loss of property due to a claim of title by third-party?
A. The person possessing an unrecorded quit claim deed who does not occupy the property.
B. The person possessing an unrecorded grant deed who occupies the property.
C. The person possessing a certificate of title issued by a title company.
D. The person possessing a recorded deed who rents the property to a tenant.
A. The question speaks to constructive notice. Answer selection A refers to a quick claim deed that is not recorded nor does the person occupy the property. Recording documents as well as physical possession of a property are both cause for someone to recognize and question interest in property.
123
If a newspaper advertisement for the sale of a condominium states only the annual percentage rate (APR):
A. The number of payments need to be included.
B. The down payment amount needs to be included.
C. The total financing charges need to be included.
D. No other disclosures are required.
D. The annual percentage rate (APR) may stand alone as financial information without providing additional financial information in a newspaper advertisement.
124
On appraisals of older apartment buildings, a major problem in the cost method is:
A. That construction methods and styles have changed.
B. That construction materials have changed. C. Determination of accrued depreciation.
D. The determination of rental revenue generated by the property.
C. The quantity of accrued depreciation becomes increasingly difficult as buildings get older, and causes the cost approach to lose its validity. Under the cost approach of appraisal, and appraiser arrives at a properties value based on the present cost of constructing the present improvements and acquisitions of the land.
125
California’s energy conservation disclosure requirements require that buyers of newly built homes receive a disclosure concerning the:
A. Type of windows installed.
B. Gold star rating assigned to the property.
C. Energy consumption of the HVAC units.
D. R-value of insulation used.
D. The rating of the insulation installed in a property needs to be disclosed to buyers of newly built homes. The alternative items can be visually observed by the buyer.
126
As opposed to condominium ownership, cooperative ownership has the disavantage that:
A. Owners could lose their equity if the other cooperative owners fail to make their tax and loan payments.
B. Owners cannot deduct tax payments made to the cooperative.
C. Owners costs are greater than in a condominium.
D. Owners have less control over the exterior of their property.
A. Cooperative ownership co-op is a corporate ownership of the property. Thus, individual owners have a lease on the apartment unit and a share of stock in the corporation that owns the property if the other shareholders do not meet their mortgage and property tax obligations, the corporation may default on the mortgage and the lender may foreclose, causing all the owners to lose their equity.
127
An appraiser was hired by Whitney to appraise DuPont’s property. With whom does the appraiser discuss their findings?
A. Whitney.
B. Dupont.
C. Any lender interested in the property.
D. Mr. DuPont’s attorney.
A. An appraiser can ethically share the contents of an appraisal report with the client or anyone named by the client, a peer review committee and a court of law.
128
If an appraiser uses improper valuation methods or is negligent in completing a government loan assignment, they may be guilty of:
A. Violating appraisal ethics.
B. Violating real estate law.
C. Committing a felony.
D. Both a. and c.
D. Both ethics violations and possibly fraud have occurred. The keyword “may” in this question allows for the possibility of intent. Negligence is an ethics violation. Fraud is a felony. Real estate law does not apply since this is an appraisal issue not related to brokerage activity.
129
A loan that allows the borrower to make monthly payments less than the interest accruing is referred to as a(n):
A. 80/20 loan.
B. Straight loan.
C. Hybrid bone
D. Option adjustable rate mortgage (ARM).
D. The option adjustable rate mortgage (ARM), which results in negative amortization, is the correct choice.
130
Which of the following is not true regarding a notary acknowledgment contained in a grant deed?
A. It does not need to be notarized by the grantee.
B. The notary needs to stamp it with their official seal.
C. The notary needs to keep a record of the identification of the person acknowledging the deed.
D. It does not need to be signed by the grantor.
D. A grant deed is signed by the grantor and the records of the proof of identity are kept by the notary. This is another example of a question that offers potentially useful information that may be helpful when answering other questions on the state exam.
131
What must an appraiser do when they are hired to appraise a property owned by a corporation in which the appraiser owns a share?
A. Refuse the assignment.
B. Disclose their ownership interest in the property and except the assignment.
C. Disclose their ownership interest in the property and seek approval of the client before excepting the assignment.
D. Ignore the issue unless they hold a majority interest in the property.
B. Disclosure is the necessary action as it provides the client the opportunity to select a different appraiser if they feel the appraisers interest in the property is too significant. The presumption to this question is that the ownership is minimal. Were the ownership interest greater, requirement maybe to obtain the clients approval.
132
Why are warranty deeds rarely used in California but commonly used in other states?
A. Warranty deeds are prohibited in California.
B. The buyer may recover treble damages when a grant deed is used.
C. Express covenants in a grant deed run with the land. Covenants in a warranty deed are personal to one particular buyer.
D. Recourse against a title company under a grant deed is more effective than trying to collect from the grantor under a warranty deed.
D. A warranty deed places the liability on the grantor rather than a title company. It is often difficult to find the seller after the escrow has closed. To sue and hope for a judgment against the seller is impractical.
133
The proper order of events in a court proceeding is:
A. Judgment, attachment, execution.
B. Attachment, judgment, execution.
C. Judgment, execution, attachment.
D. Execution, judgment, attachment.
B. The order of events in a court proceeding are as follows: the attachment of the property comes first to ensure its availability if judgment is awarded. Then, after judgment has been made, it is executed.
134
A residential mortgage primarily for personal, family or household use and secured by a deed of trust on a dwelling is known as a:
A. Consumer purpose mortgage.
B. Adjustable rate mortgage.
C. Public project loan.
D. Swing loan.
A. A debt incurred primarily for personal, family, or household purposes and secured by a parcel of real estate containing 1 to 4 residential units is known as a consumer mortgage.
135
Which of these is considered least important when appraising old residences?
A. The original cost of the residence.
B. The purpose of the appraisal.
C. The physical condition of the structure.
D. The suitability of the residents to the site.
A. The original price or value of anything is of little concern when determining its present value. Thus, the original cost of a residence is not of importance when conducting an appraisal.
136
Which of the following will not terminate an agency relationship?
A. Mutual consent.
B. Death of the agent or seller.
C. Estoppel.
D. Distruction of the property.
C. This is a not question. Estoppel, the principle that prevents a person from asserting something contrary to what is implied by previous actions or statements, will not terminate the relationship. Each of the alternative answer selections will terminate an agency relationship.
137
In order to form a binding agreement, an offer or counter offer:
A. Needs to be excepted in its entire ready and without conditions.
B. Needs to be excepted with minor changes in conditions.
C. May be excepted with minor changes if both parties agree to address the conditions within 15 business days.
D. Must contain a provision that specifies which state law controls the transaction.
A. Any changes to a contract void the original contract. Thus, in order to be binding, both principles need to agree to and sign the contract without changes.
138
How soon must a broker deposit a client check that is made out to the broker’s trust account?
A. One business day.
B. Two calendar days.
C. Three business days.
D. One week.
C. Three business days is the time allowed to deposit a client’s check into the broker’s trust account.
139
A broker presented a written offer to their seller from a buyer. The offer stated that upon acceptance, the buyer would deposit $25,000 in escrow. The seller made a counter offer but did not change the amount of the deposit and sent it back to the buyer. The buyer agreed to all the changes but lowered the amount of deposit to $10,000. Which of the following statements is not correct?
A. The broker needs to get the sellers acceptance of the counter offer.
B. The buyer has created a counter offer due to the change deposit amount.
C. The contract is fully enforceable.
D. No contract exists.
C. Until both the buyer and seller have reached a mutual agreement and a meeting of the minds, there is no contract, and thus the answer selection c. The contract is fully enforceable is not correct.
140
A real estate commission is normally calculated as a percentage of the:
A. Selling price.
B. Listing price.
C. Sellers equity in the property.
D. Down payment or earnest money deposit paid by the buyer.
A. The price paid for a property establishes what the commission due to the broker will be.
141
A(n) ______________ is an individual’s opinion or estimate of the properties value on a specific date.
A. Termite inspection
B. Home inspection
C. Appraisal
D. Open house
C. An appraisal is an individual‘s opinion of a property’s value on a specific date, documented in an appraisal report.
142
Alienation of title refers to:
A. A cloud on title.
B. Angering another.
C. Recording a homestead declaration.
D. Transferring an estate.
D. Alienation of title refers to a transfer of ownership.
143
A violation of a condition in a homeowners association (HOA) conditions, covenants and restrictions is:
A. More severe than the violation of a covenant.
B. The same as the breach of the covenant.
C. Less severe than a violation of the covenant.
D. Unaffected by the restrictions.
A. The violation of a condition in a homeowners association’s conditions, covenants and restrictions is considered more serious than a violation of the covenant. The violation of the condition may result in the loss of title or as a covenant is simply a promise, the breaking of which will not result in the loss of title.
144
Agency disclosure is handled in the following sequential steps:
A. Disclose, confirm, elect.
B. Confirm, elect, disclose.
C. Disclose, elect, disclose.
D. Disclose, elect, confirm.
D. The agency relationship options are first disclosed. Then the agent elects what the relationship will be and finally confirms that choice with all participants involved in the transaction.
145
Housing expenses are one of the largest denominators in the consumer price index (CPI) since:
A. Housing is one of the largest expenses for consumers.
B. More people buy homes than by businesses.
C. CPI is based upon all consumer purchases.
D. Housing impact the economy.
A. The answer is part of the question. Housing is the largest single expense for most consumers.
146
A contract has been fully executed when it has been:
A. Entered into.
B. Signed, notarized and recorded.
C. Signed and delivered.
D. Completely and fully performed.
D. Execution of a contract occurs when it has been completely and fully performed.
147
Which of the following is least likely to be true regarding a property that is transferred through intestate succession?
A. The owner of the property died with no will.
B. The owner of the property died with a will.
C. The property will be transferred through probate court.
D. The property transfer requires court approval.
B. Interstate means a property owner dies with no will. Under such conditions, the transfer generally requires a court approved transfer through probate court, unless a revocable transfer on death deed has been recorded.
148
If the newspaper advertisement run by a licensee fails to identify their name or license number, this is referred to as:
A. Misleading conduct.
B. Violation of the Truth-in-Lending act (TILA).
C. A blind ad.
D. Unethical behavior.
C. A blind ad is marketing material that fails to alert the reader to the fact that the advertisement was placed by a licensed real estate agent or broker.
149
When the do on clause in a trust deed is triggered, the lender may recast or call the loan, also known as:
A. Subordination.
B. Waiver by proxy.
C. Reconciliation.
D. Acceleration.
D. The due-on clause accelerates the pay off of the loan. Only answer choice A also pertains to loans, but it allows a new loan to become senior to an existing mortgage.
150
What appraisal license is required to appraise a 10 unit apartment building valued at $1 million?
A. Residential license.
B. Certified residential license.
C. Certified general license.
D. Apartment specialist license.
C. There are four levels of appraisal licenses. Anything other than a 1 to 4 unit residential property requires a certified general appraiser license.
