Simulated Exam 1 Flashcards
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
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
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.
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.
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.
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.
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
The term “kiosk” refers to a(n): A. commercial warehouse. B. Dome frequently found on churches. C. storage warehouse. D. open sided booth.
D. Kiosks are the small stands in the promenade of a shopping mall
Agency relationships may not be solely created by: A. Voluntary offer by the agent. B. Implied contract. C. Ratification. D. Necessity or emergency.
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.
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.
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.
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.
_____________ 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.
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.
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.
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
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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
C. Mineral and water rights are transferred with the sale of the property.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
All of the following are essential to creating a valid contract, except: A. Lawful object.
B. Mutual consent.
C. Capable parties.
D. Written documentation.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
D. Appraisals state factual data about the property and surrounding area, not the financial and loan data.
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.
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.
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.
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.
A mortgage broker’s fee is customarily paid by the:
A. Lender.
B. Seller.
C. Borrower.
D. Under writer.
C. Mortgage broker fees are customarily, though not exclusively, paid by the borrower.
