Simulated Exam 3 Flashcards
A(n)__________ belongs to and benefits an adjacent property and is said to run with the land as an interest the adjacent property holds in the burdened real estate.
A. Easement in gross
B.Appurtenant easement
C. Encroachment
D. Personal easement
B.Appurtenance easements are owned by adjoining properties and are often for purposes of ingress and egress. An easement in gross is typically owned by a utility company. It has no specific location and is personal property. An encroachment is a trespass and will not run with the land as an interest in another property.
A(n) ___________ is a voluntary conveyance of the right to keep land in its natural or historic condition.
A. Solar easements
B. Conservation easements
C. Coastal easements
D. Air easement
B. Conservation easement should be clear based on the questions reference to keeping land in its “natural or historic condition.”
Which of the following does not create an agency relationship?
A. Implication
B. Ratification.
C. Express agreement.
D. Coercion.
D. Agency cannot be created through coercion.
The agency law disclosure form is mandated to be presented to all parties when listing, selling, buying, or entering into a long term lease for property containing:
A. 5 or more residential units.
B. Land with a mobile home.
C. Both A. And B.
D. Neither A. Nor B.
D. The only properties not covered by the agency law disclosure rules are residential properties of five units or more and mobile homes that are not on a foundation, considered personal property.
An agency relationship is not created by:
A. A verbal agreement
B. Ratification.
C. Implication.
D. Subordination.
D. Subordination is a financial term that describes a junior mortgage gaining priority through the subordination by a higher priority mortgage.
When a sellers agent takes a listing which does not authorize the listing broker to accept a deposit from a buyer, the broker is to advise their agent that:
A. The broker will not be able to accept a deposit from a buyer.
B. It is an implied right of a broker to accept a deposit on behalf of the seller on any offer.
C. A deposit will be accepted and retained by the broker from the buyer, but only as an agent for the buyer.
D. The deposit has to be paid directly to the sellers agent.
C. When the listing does not authorize receipt of a deposit, an agent can still accept a deposit but only as an agent of the buyer.
When a dual agency is established in a 1-4 unit residential sales transaction, the broker and their agents may pass on information relating to the ________ from one party to the other.
A. Price of comparable homes in the neighborhood
B. Maximum pricing obtainable from the buyer
C. Minimum pricing sought by the seller
D. The terms of payment the seller may be willing to accept.
A. Comparable home prices are acceptable information to be shared. However, personal financial information cannot be shared.
When an opinion is coupled with advice expressing no further need for the buyer to investigate and confirm the prediction, the opinion is elevated to the level of a:
A. Guarantee
B. Distinct possibility.
C. Misnomer.
D. Fact.
A. When an opinion is coupled with advice expressing no further need for the buyer to investigate and confirm the prediction, it rises to the level of a guarantee. Prudence is needed when voicing an opinion as an opinion stated by someone presumed to be an expert may cause this confusion.
The stability of a residential neighborhood is maintained by all of these, except:
A. A high home turnover rate increasing population density.
B. Being Located in the pathway of growth.
C. Having many family households with school aged children.
D. The conformity of residents with similar occupations.
A. Stability and a high turnover may be seen as the converse of one another. The alternative answer selections either support stability or at least do not directly against it.
The cost of a capital improvement and it’s affect on the market value are:
A. Always the same.
B. Never the same.
C. Generally the same.
D. Rarely the same.
D. The cost of an improvement and it’s effect on value our rarely the same. The contribution of improvement is less than the cost. An appraiser is most often concerned with the added value, contribution, of the improvement.
Which of the following basic real estate economic principles is the best expression of how the value real estate is maximize?
A. Anticipation.
B. Highest and best use.
C. Contribution.
D. Overleveraging.
B. Highest and best use is achieved when the properties use maximizes its value and income.
The method of appraisal which emphasizes the present worth to be received by the owner is the:
A. replacement cost approach
B. reproduction cost approach.
C. Summation approach.
D. Income approach.
D. The income approach measures the current worth of future benefits, rental income. There are three approaches to determine value: cost, income and sales comparison.
Consider an appraiser analyzing the site location and three comparable properties. The first property is superior to the subject. The second comparable is to superior to the first comparable but inferior to the third comparable. If the differential were valued at $50,000 for each level of difference, the adjustment will be:
A. Comp 1, -$50,000; comp 2, -$100,000, comp 3 -$50,000.
B. Comp 1, +$50,000; comp 2,+$100,000; comp 3 +$50,000
C. Comp 1, -$50,000; comp 2 -$100,000; comp 3, +$150,000
D. Comp 1, -$50,000; comp 2, -$100,000; comp 3, -$150,000
D. In the sales comparison method, the appraiser adjusts the comparable sales toward the subject. In other words, when a comparable property is superior, the appraiser needs to reduce the comps price by an appropriate amount. In this question, the first comp is superior to the subject so it is adjusted by -$50,000. The second comp is even more superior to the first and the subject so it is adjusted by -$100,000. The third comp is superior to the second and therefore it’s adjustment is -$150,000.
A listing broker needs to present all offers until:
A. An offer is excepted.
B. Escrow is opened.
C. All contingencies are removed.
D. Escrow is closed.
D. Unless otherwise instructed, all offers need to be presented until the close of escrow, the point at which the sale becomes final.
A lease is classified as a(n):
A. Freehold estate.
B. Estate at sufferance.
C. Personal property interest
D. Remainder in interest.
C. A lease is a personal property interest. None of the other answer choices speak to what a lease is. A lease can also be called a less than freehold estate, free hold estate constitutes ownership. A lease at sufferance is not a lease since the occupant has no right to occupy the property. The remainder in interest is future interested that will become a freehold estate once title has been transferred.
Which of the following is an example of an implied covenant under a lease?
A. Possession.
B. Nuisance.
C. Quiet enjoyment.
D. Rental amount.
C. The promise of quiet enjoyment is an implied covenant the lesser makes to the lessee. A covenant is a promise.
The license of an active sales person working at a branch office is held at:
a. California Bureau of real estate headquarters in Sacramento.
B. Brokers primary place of business.
C. branch office.
D. Sales person’s personal residence.
B. A sales person license hangs at there supervising brokers primary place of business.
An owner of an investment firm has a securities dealer license, but not a real estate broker license. The owner advertises and sells real estate for their clients. Transactions required a real estate broker license, who will prosecute the owner for violating the law?
A. The US attorney general.
B. The California Attorney General.
C. The California real estate commissioner.
D. The local district attorney.
D. The local district Attorney is the authority that will prosecute the owner in this case. This is not a federal crime subject to action by the US Attorney General, and the California Bureau of real estate and only discipline licensees. The remaining answer choice is the state attorney general, which is not typically interested in this type of dispute.
A seller sues their broker for making a false promise when they entered into an oral listing agreement. What is the likely outcome?
A. The statute of frauds protects the agent since the listing contract wasn’t in writing.
B. The seller is at fault for allowing the agent to work without a written contract.
C. Oral agreements cannot demonstrate evidence of a false promises.
D. The agent is liable for any damages as a result of the false promise regardless of the statute of frauds since the agent reached their agency duty to the seller.
D. A false promise implies liability on a broker whether the promise was made in writing or orally. The alternative answer selections fail primarily because the court will protect public rather than the agent.
Which of the following is a fiduciary duty of the buyers agent?
A. Acting with the utmost loyalty and care towards the buyer.
B. Steering the buyer to racially compatible neighborhoods.
C. Telling the buyer which lender to use.
D. Overseeing the preparation and delivery of the transfer disclosure statement.
A. A buyers agent owes their buyer a fiduciary duty to act with the utmost loyalty and care toward the buyer. The agent can not dictate which lender the buyer used and steering violates fair housing laws. Preparation and delivery of the transfer disclosure is the responsibility of the seller and the sellers agent.
A federally chartered bank charges an additional $200 fee on loans made to non-English speaking borrowers. This fee is:
A. Permitted if the fee is justified by the additional cost of translating contracts and hiring an interpreter.
B. In violation of the Holden Act.
C. Not in violation at any fair housing laws or regulations.
D. Prohibited under the statute of frauds.
B. The California Holden act makes it unlawful to discriminate in real estate financing by charging additional fees only to a specific group of people.
The fair employment and housing act defines housing accommodations as improved or unimproved real property used or intended to be used as a residence by the owner and which consists of not more than:
A. 4 residential units
B. Ten residential units.
C. One single family residence.
D. 5 or more residential units.
A. Fair housing laws are always based on 1-4 unit residential properties. This is true for lending under the real estate settlement procedures act (RESPA)as well as rental and purchase arrangements handled by a licensed agent.
The homeowners guide to earthquake safety needs to be delivered to the buyer of any 1 to 4 unit residential property built prior to:
A. 1975.
C. 1965.
C. 1960.
D. 1950.
C. The 1960 disclosure date of earth quake safety is true for 1 to 4 unit residential properties. However, There are other applicable dates for specific types of construction.
Ethics is most nearly defined as:
A. A broker’s responsibility to the public, their principal and other brokers.
B. Honesty.
C. Sincerity.
D. Fiduciary.
A. Given the choices offered, answer selection A. A broker’s responsibility to the public, their principal and other brokers is the best description of ethics in real estate. Each of the alternative answer choices may seem appropriate, but not sufficiently inclusive.
Property can be transferred without consideration with a gift deed. However, the transfer by a gift deed may be voided by:
A. The grantee.
B. A creditor of the grantor.
C. A debtor of the grantor.
D. The trustee.
B. Creditors of a grantor may void a transfer by a gift deed. The grantor cannot gift the property to another in order to avoid debt held by a creditor.
The least protection from a defect in a property title is provided by a:
A. Standard policy of title insurance.
B. American land title Association title policy.
C. Guarantee of title.
D. Abstract of title.
D. An abstract of title is simply a report showing the chain of title issued by the title company after a search of title records. It does not provide protection from title defects, and a disclaimer in the report indemnifies the company against any missing or in accurate records. Answer choices A. Standard policy of title insurance and B. American land title Association title policy are both insurance policies. C. Guarantee of title is a formal guarantee by the title company.
For delivery of a deed to occur, a grantor must intend to convey title and the grantee needs to:
A. Record the deed with the county.
B. Accept the deed as immediately effective.
C. Check the public records.
D. Notarize and sign the deed.
B. For delivery of a deed to occur, the grantee needs to except the deed as immediately effective, not effective at a later date.
A grant deed signed with an X is:
A. Valid.
B. Voidable.
C. Unenforcible.
D. Void
A. A grant deed signed with an X is valid. However, it will require proof that the X was an intended signature by the grantor.
In a carryback transaction, the seller as the beneficiary:
A. Lends money to the trustee.
B. Delivers a promissory note to the trustor.
C. Find the trust deed and delivers it to the trustee.
D. Receives the promissory note and trust deed.
D. When the seller extends carryback financing to a buyer, the seller receives the note and trust deed, much like a lender. This is an excellent opportunity to consider what each participant does in a carryback loan arrangement. Both documents are signed by the buyer/borrower. The trustee plays no role at this time.
A dragnet clause in a mortgage covers:
A. Future court actions that might be anticipated.
B. Any additional parties added in the future to the loan.
C. Whatever future advances may be made on the loan.
D. All activities of the heirs and assignees of the borrower.
C. In the context of mortgages, dragnet reflects any future advances made to or on behalf of the borrower.
A clause in a trust deed that declares the total unpaid balance due and payable upon transfer of the property is called a __________clause.
A. Arbitration
B. Liquidated damages
C. Due-on sale
D. Forfeiture
C. A due on sale clause is a trust deed provision used by lenders to call the loan immediately due and payable, a right triggered by the owners transfer of any interest in the real estate, with exception for intrafamily transfers of their home.
Consider a recorded trust deed that refers to a template of standard clauses contained in a previously recorded trust deed. The Previously recorded trust deed is called a ______ trust deed.
A. Disguised
B. Fictitious
C. Preliminary
D. Longform
B. A previously recorded trust deed containing standard clauses is a fictitious trust deed.
Economic rent is rent:
A. Received for similar space in an open market free of duress or otherwise affected by external conditions.
B. The property would produce in a perfect market.
C. Necessary to produce a reasonable return on investment.
D. Allowed by government controls, such as the federal monetary policy for local rent control ordinances.
A. Another name for economic rent is market rent. Given that information, answer choice a seems more obvious. Also, note the length of the answer, an indication that it is likely correct.
Two similar locations are leased on a long basis, one for a government building and the other for a used car lot. Using the capitalization approach to appraise the property, the government building would demand a __________ capitalization rate.
A. Lower
B. Similar
C. Higher
D. Cannot be determined.
A. A government building would demand a lower capitalization rate than a used car lot. Rates move in the same direction as risk and create a change of value to their direction. Thus, a higher risk, such as in the case of a used car lot, will require a greater return on investment i.e. a higher cap Rate, and a lower value.
Which of the following does not contribute to obsolescence?
A. Out dated appliances.
B. Changes in flight pattern from local airport.
C. Misplaced improvements.
D. Physical deterioration.
D. Physical deterioration,
wear and tear, is not obsolescence. Obsolescence is most often seen as items that are out of style are out of date. In a neighborhood, it is something that reduces value, such as a changed flight pattern.
The appraised value of a buildingbuilding is $800,000 it costs $1,200,000 to replace. This difference is in example of:
A. Supply and demand.
B. Anticipation.
C. Accrued depreciation.
D. Remainder depreciation.
C. The difference between cost and value is described as depreciation. Accumulated depreciation overtime is called accrued depreciation.
A dual agent may not release:
A. The last names of either party. B. The size of their fee.
C. Confidential pricing information.
D. Material facts about the property.
C. Confidential pricing information. Material facts, The names of the other principles and broker fees charged me be released by the dual agent.
A dual agency is required to be disclosed to each client:
A. After escrow closes.
B. The moment the conflict arises.
C. Before the party’s meet.
D. Anytime prior to the close of escrow.
B. Dual Agency requires immediate disclosure as soon as it occurs. This is a question that maybe asked in various forms. Certainly answer choice A. after escrow closes and D. Any time prior to the close of escrow are inappropriate. C. Before the parties meet makes little sense since the principles rarely meet.
An agent is in individual, who represents another, called the:
A. Cooperating broker.
B. Principal.
C. Appraiser.
D. Trustee.
B. An agent is an individual who represents another, called the principal. Both salespersons and brokers are agents. However, the representation is a salesperson is indirect since they represent their employing broker who then represents the principal..
Agency, whatever the type, is created by:
A. Membership in a real estate trade union.
B. The conduct of each broker in their agents when interacting with the buyer or seller in a transaction.
C. Membership in a MLS.
D. Acquisition of a real estate license from the California Bureau of real estate.
B. This is an opportunity to be reminded of that agency is something agreed to between a broker and a principal. The membership trade group or union has nothing to do with me.
And easement differs from a license in that a license:
A. Can be revoked.
B. Is Assignable.
C. Is created by a written agreement.
D. Is transferable.
A. A license can be revoked; an easement cannot.
The energy efficient ratio rating concerns:
A. Air conditioning and heating units.
B. Environmental conservation requirements.
C. Electrical energy usage.
D. Utility efficiency of an income producing property.
A. The energy efficiency ratio rating is listed on newer heating and air-conditioning units. Superior rating earn the product an energy star label.
A sewer districts right to run pipes through a homeowners property is an example of a(n):
A. Service the tenement
B. Personal loss.
C. Easement in gross.
D. Riparian rights.
C. Utility easements are classified as easements in gross. An easement in gross is an easement which belongs to an individual and is not appurtenance to or transferred with the property.
In order to obtain an easement by prescription, one must:
A. Use the property.
B. Live on the property.
C. Physically confront the owner of the property.
D. Own the property.
A. The list of requirements to gain a prescriptive easement includes the requirement to use the property for a period in excess of five years without a claim of ownership. One does not need to live on the property or physically confront the owner to acquire a prescriptive easement.
If an appraiser finds the interior walls and the inside of the exterior walls have a similar temperature, this indicates:
A. The doors and windows are well sealed.
B. Insulation is sufficient.
C. More ventilation is needed on the property. D. The heater is sufficient.
B. If interior walls and the inside of the exterior walls have a similar temperature, this indicates insulation is sufficient. When reading the question carefully, notice nothing is said about windows and doors, precluding that answer selection. Answer choices C and D are possible, but the intent of the question is to recognize the value of insulation.
What type of notice is given by recording a deed?
A. Mutual notice
B. Separate notice.
C. Constructive notice.
D. Actual notice.
C. Constructive notice is a matter of recording a document or something that is visually obvious. Actual notice requires personal delivery by mail or in person.
Dale bought a home for $300,000. Since then, the property appreciates 10% each year. What is the value of Dale‘s property after three years?
A. $390,000
B. $399,300.
C. $330,000.
D. $333,100
B. The calculation requires adding 10% to the value after each year
Year 1 $300,000 + $30,000= $330,000
Year 2 $330,000 + $33,000= $363,000
Year 3 $363,000 + $36,300= $399,300
When selling listings of another broker, a sales person is directly responsible to:
A. Their broker.
B. The MLS.
C. The listing broker
D. The owner of the property.
A. A sales person is always directly responsible to their employing broker.
And agency relationship created by an exclusive listing is classified as a(n):
A. Implied agency.
B. Ostensible agency.
C. Express agency
D. Agency by necessity
C. And express agency can be oral or written, but in either case is stated and mutually agreed to. An implied or ostensible agency is not stated orally or in writing. Therefore, a listing, whether open or exclusive, is an express agency.
When a seller writes a counter offer, what happens to the original offer?
A. The original offer becomes a back up offer. B. The Original offer is voided.
C. The original offer is voidable By the buyer.
D. The counter offer cannot be countered.
B. A counter offer constitutes an entirely new offer, which rejects and voids the original offer. An offer is either accepted in its entirety or voided by rejection.
The correct sequential steps to the appraisal process are:
A. Defined the problem, gather the data, analyze the data, reconcile the results, reach a conclusion.
B. Gather the data, reconcile the data, arrive at a conclusion.
C. Analyze the data, define the problem, reach a conclusion.
D. Define the problem, analyze the data, gather the data, reach a conclusion.
A. Define The problem, gather data, analyze the data, reconcile the data , reach a conclusion. Answer selection B has the correct order but is lacking several steps, and is not the best choice.
Which of the following will have the least degree of influence on real estate in the future?
A. The community general plan.
B. Regulation of the real estate industry.
C. Demographics.
D. Weather.
D. All of the answer selection will have an impact on the future real estate market, although weather exerts the least amount of direct influence.
An appraiser noticing an auto salvage yard on the adjoining lot of the property they are appraising. The appraiser should recommend which of the following?
A. A toxic waste study.
B. A zoning change for the property being appraised.
C. A geological study of the surrounding area. D. A land survey.
A. The nature of you joining auto salvage yard will lead the appraiser to recommend a toxic waste study. An auto salvage yard has the potential of the emitting hazardous waste into the neighboring property being appraised, and this toxic waste study is advisable.
A lender can enter into an agreement with both a buyer and a seller for the buyers assumption of the loan and a release of the sellers liability, called a(n):
A. Novation.
B. Indemnity agreement.
C. Substitution of liability.
D. Both A. And C.
D. Both answer selection A. Novation and C. Substitution of liability amounts to the same thing. A novation agreement entered into by a mortgage holder, buyer and seller will substitute liability for a mortgage obligation to the buyer by an assumption.
The real estate settlement procedures act (RESPA) is administered and enforced by the:
A. California Bureau of real estate.
B. Department of housing and urban development
C. Department of business oversight
D. Consumer financial protection bureau.
D. The real estate settlement procedures act (RESPA) mandates lenders disclose all mortgage related charges on mortgages used to purchase, refinance or improve 1 to 4 unit residential properties. RESPA is currently administered and enforced by the consumer financial protection bureau (CFPB), though was previously overseen by the department of housing and urban development (HUD).
A resident of Nebraska who owns property in California dies while in Vermont. The probate procedures for this property are handled in:
A. Nebraska.
B. California.
C. California or Nebraska.
D. Federal court.
B. Property is probated in the state where it is located regardless of the owners residency or place of death.
“Et ux” written into a document means:
A. And extras.
B. And wife.
C. And son.
D. And others.
B. Et in Latin is And; ux means wife or spouse.
Who is primarily responsible for disclosing to a buyer the existence of a mello Roos tax assessment on a parcel of real property?
A. The escrow officer.
B. The listing agent.
C. The selling agent.
D. The seller.
D. All property disclosures are ultimately the responsibility of the seller.
The Alquist Priolo special study zone earthquake disclosure requirement applies only to:
A. Specific types of structures such as residential properties located in known earthquake fault zones
B. Every structure in known earthquake fault zones.
C. Specific building types in all counties in California.
D. Unimproved property is in high-risk areas.
A. Note the question states applies only. Since most disclosures refer to 1 to 4 unit residential properties and it is only necessary in known earthquake zones. Answer selection A is most appropriate. Choices B and C are only partially correct, and D is irrelevant since there are no structures on unimproved properties.
It is acceptable for a real estate license he to refuse to show a home to a minority prospect if:
A. The licensee sincerely believes that showing the property would cause panic in the neighborhood.
B. The owner has stated in the listing that showings may be made only when they are present, and the owner is currently out of town. C. The owner has stated that their home is not available to mimority persons since they are exempt from the 1968 fair housing law.
D. The minority prospect has a criminal record and is on parole.
B. Discriminatory practices are never allowable. The correct answer recognizes that a seller can restrict showings only if they are not discriminatory in nature, such as the requirement to show their property only when they are in town. Here’s a great example of how fair housing laws need to be addressed with sellers and how buyers need to be respected.
