Simulated Exam 3 Flashcards
1
Q
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
A
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.
2
Q
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
A
B. Conservation easement should be clear based on the questions reference to keeping land in its “natural or historic condition.”
3
Q
Which of the following does not create an agency relationship?
A. Implication
B. Ratification.
C. Express agreement.
D. Coercion.
A
D. Agency cannot be created through coercion.
4
Q
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.
A
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.
5
Q
An agency relationship is not created by:
A. A verbal agreement
B. Ratification.
C. Implication.
D. Subordination.
A
D. Subordination is a financial term that describes a junior mortgage gaining priority through the subordination by a higher priority mortgage.
6
Q
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.
A
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.
7
Q
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
A. Comparable home prices are acceptable information to be shared. However, personal financial information cannot be shared.
8
Q
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
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.
9
Q
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
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.
10
Q
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.
A
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.
11
Q
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.
A
B. Highest and best use is achieved when the properties use maximizes its value and income.
12
Q
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.
A
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.
13
Q
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
A
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.
14
Q
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.
A
D. Unless otherwise instructed, all offers need to be presented until the close of escrow, the point at which the sale becomes final.
15
Q
A lease is classified as a(n):
A. Freehold estate.
B. Estate at sufferance.
C. Personal property interest
D. Remainder in interest.
A
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.
16
Q
Which of the following is an example of an implied covenant under a lease?
A. Possession.
B. Nuisance.
C. Quiet enjoyment.
D. Rental amount.
A
C. The promise of quiet enjoyment is an implied covenant the lesser makes to the lessee. A covenant is a promise.
17
Q
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.
A
B. A sales person license hangs at there supervising brokers primary place of business.
18
Q
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.
A
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.
19
Q
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.
A
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.
20
Q
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. 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.
21
Q
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.
A
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.
22
Q
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
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.
23
Q
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.
A
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.
24
Q
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
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.
25
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.
26
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.
27
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.
28
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.
29
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.
30
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.
31
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.
32
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.
33
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.
34
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.
35
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.
36
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.
37
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.
38
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.
39
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..
40
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.
41
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.
42
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.
43
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.
44
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.
45
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.
46
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.
47
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
48
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.
49
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.
50
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.
51
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.
52
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.
53
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.
54
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.
55
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).
56
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.
57
“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.
58
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.
59
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.
60
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.
61
A land sales contract clause which prohibits any pre-payment at any time after the year of the sale:
A. Is not enforceable.
B. Void the contract.
C. Needs to be compiled with by the vendee.
D. Is voidable at the discretion of the vendee after five years.
A. Prohibiting pre-payment under a land sales contract is unenforceable after the first 12 months following the sale. With both land sales contracts and trust deed loans, there are limits on how long a lender can penalize a borrower for pre-payment of the loan.
62
In a land sales contract, the seller who is also acting as the lender is usually referred to as the:
A. Trustee.
B. Beneficiary.
C. Vendee.
D. Vendor.
D. The seller of real estate is the OR person. The only suitable answer choice is D. Vendor. The principles in a land sales contract are referred to as a vendor and vendee because the transfer involves a contract of sale, think of a vendor in a ball park or a vending machine.
63
A licensees California Bureau of real estate license number does not need to appear:
A. In the licensees car if it is used to drive clients to properties.
B. On listing and employment contracts.
C. On marketing materials and other points of contact with the public.
D. On purchase agreements.
A. As a matter of public protection, agents need to state their license number on all contracts, marketing pieces and points of contact with the public. It does not need to be displayed within a licensee’s car, even if the car is used for business purposes.
64
If a broker is to appraise the property and generate an appraisal report, they need to:
A. Only appraise properties they are listing.
B. Be a licensed or certified appraiser.
C. Charge no more than $500 for the service. D. Advertise their appraisal services.
B. Only licensed or certified appraisers may generate an appraisal report. Therefore, to formally conduct an appraisal, the broker needs to acquire the appropriate license under the California Bureau of real estate appraisers.
65
The owner of a residential property found guilty of discrimination in violation of the Rumford act may be required to:
A. Sell or rent the property to the aggrieved person.
B. Find a similar property to rent to the aggrieved person if one is available.
C. Pay a civil penalty of $10,000.
D. Any of the above.
D. The California Rumford act may carry potential penalties for discrimination violations, including being forced to sell or lease the property to the aggrieved person, locating a similar property for them or civil penalties up to $10,000.
66
A listing agent of a 1 to 4 unit residential property owes an affirmative duty to a prospective buyer to gather or voluntarily provide the buyer with facts about:
A. The properties titled conditions.
B. Observations they made walking conducting their mandatory visual inspection.
C. The suitability of the property to meet the buyers objectives.
D. Defects which may occur in the future.
B. This question presents an opportunity to treat the question logically. Answer choices C and D are unrealistic and outside of the duties of the sellers listing agent. Answer choice A is a concern of the title company and not the responsibility of the seller‘s agent. Only answer selection B makes logical sense as it fills the listing agents general duty to the buyer.
67
The real estate commissioners stated policy is to create a color blind industry that the facilitates voluntary, peaceful, equal opportunities in housing. What does this mean?
A. That race, creed, sexual orientation and color is not a material fact in a real estate transaction.
B. Brokers and sales people are to maintain an attitude that is absolutely free from bias.
C. Separate but equal.
D. Both A. And B.
D. The real estate commissioners goal is to create an industry that is colorblind. Both choices A and B are reasonable descriptions of what is expected of agents with this primary goal in mind. Answer choice C is clearly wrong as it speaks to a time in the past when segregation was acceptable. Thus, answer selection D is the best answer.
68
Title eight, also known as the federal fair housing act, refers to the:
A. Civil rights act of 1968.
B. Unruh act.
C. Civil rights act of 1964.
D. Rumsford act.
A. Title eight, also known as the federal fair housing act, concerns the 1968 civil rights act. Answer selection C. Civil rights act of 1964 relates to voter rights. Answer selection B. Unruh act and D. Rumford act are California laws, not federal.
69
A broker may refuse to present a low offer to their seller when the offer is clearly frivolous or:
A. The broker has clear instructions to not submit an offer below a certain price.
B. The offer is submitted by a buyer with a very large family who intends to occupy the property.
C. The offer is submitted by a member of a protected group.
D. A broker may never refuse to present an offer.
A. The seller has the right to refuse to see offers that do not meet a certain criteria, such as a minimum price requirement. However, the agent is best served by documenting this stipulation in writing from a seller.
70
Though brokers typically hire agents as independent contractors, under labor law, an agent is a(n) ______ of a broker.
A. Employee
B. Advisor
C. Manager
D. Partner
A. A sales person may be an independent contractor for tax purposes, but they are an employee of the broker under labor and real estate law.
71
A transfer by deed is void when:
A. The grantors name is fictitious. B. The grantee is nonexistent.
C. The grantees name is fictitious.
D. The deed is obtained through false representations.
B. A nonexistent grantee is likely an unlawful attempt by the grantor to hide an asset. That is, a deed which transfers ownership to a nonexistent grantee is void as the purpose is unlawful. Ficticious names frequently have a reasonable and legal purpose, and thus answer selections A and C cannot be correct. A deed is obtained through false representation is voidable, but not void at its inception.
72
Which of the following is not considered to be a contract:
A. A net listing.
B. A mortgage.
C. A deed.
D. A land sales contract.
C. A deed is a written instrument which, when signed and delivered (executed), conveys title to real property from one person (grantor) to another (grantee). Listings are employment contracts. Mortgages are loan contracts. A land sales contract is a contract by name.
73
The adjusted basis of a personal residence is the properties:
A. Original cost.
B. Original cost minus improvements plus interest expenses.
C. Original cost plus improvements minus depreciation.
D. Original cost plus improvements.
D. The adjusted cost basis of a personal residence is a number developed for income tax purposes. It requires adding the cost of any improvements made to the property to the original cost paid. Answer selection C. is only correct for non-personal residences. Note there is no depreciation allowance for a personal residence.
74
Consider a loan broker who negotiates a $4000 hard money junior trust deed that is due in three years. The maximum commission fee broker can charge is:
A. $400.
B. $200.
C. $800.
D. $600.
D. The amount of the fee a hard money lender may charge is controlled by the business and professions code. The total fee is limited based on the length of the loan term, whether it is a first trusteed or junior mortgage, and the amount of the loan. On a junior trust deed and notes, the maximum commission for a term less than two years is 5%; for a term of two years but less than three years, the maximum is 10%; and for term three years or greater, the maximum is 15%.
75
Which of the following is least important to an appraiser went appraising a property?
A. Utility of the land.
B. The condition of the improvements.
C. The bundle of rights.
D. The original cost of the property.
D. The utility of the land, condition of the improvements, and the bundle of rights all have significance and will likely affect an appraiser’s final valuation of a property. The original cost of the property has no effect on the current value of the property.
76
A(n) ________ represents both the buyer and the seller.
A. Finders agent
D. Dual agent
C. Free agent
D. Sub agent.
B. When representing both principles in the same transaction, the agent is acting as a dual agent.
77
Failure of the listing agent to provide the seller with the agency law disclosure prior to entering into a listing agreement:
A. Will result in the loss of the brokerage fee on the sale if challenged by the seller.
B. Will not result in the loss of the brokerage fee if later disclosed as an addendum to the purchase agreement.
C. Will subject the broker to criminal penalties. D. Has no effect so long as the agency confirmation to provision is a later time we provided.
A. Failure to provide the seller with the agency law disclosure prior to signing a listing may result in the loss of the brokerage fee if the client wishes to avoid payment of the fee.
78
A broker’s duty to act with the utmost good faith and diligence for the benefit of the principal they are contracted to represent is referred to as a(n):
A. Fiduciary duty.
B. General duty.
C. Duty free.
D. Sub agency duty.
A. Fiduciary duty is the ultimate responsibility owed by the agent in an agency relationship. Among the alternative answer choices, C. Duty free can be easily dismissed as being contrary to public policy, and D. Sub agency duty can be similarly dismissed since the question implies greater care. Answer selection B. General duty is the duty of honesty and fair dealing owed it to the other parties in the transaction.
79
The agency law disclosure needs to be attached to a(n):
A. Commercial lease for one year or less.
B. Purchase agreement offer and exceptance.
C. Property management agreement.
D. Loan application or other financing arrangement.
B. The agency law disclosure applies to a purchase agreement offer and acceptance. The other answer selections are exceptions.
80
A property owner suffers a loss due to the fraudulent misrepresentation of their broker. The owners first action is to:
A. Immediately file a claim with the real estate commissioner.
B. Immediately seek damages from the real estate recovery fund.
C. Sue the broker for damages.
D. Report their brokers misconduct to the buyer’s broker.
C. If an owner suffers a loss due to fraudulent misrepresentation by their broker, the owners first action is to sue the broker. Money losses can only be recovered from the real estate recovery fund after successfully winning a judgment against the broker and being unable to collect from them.
81
Under the agency law, all of the following duties are required of an agent, except:
A. Preparing a five year pro forma for any income property greater than four residential units.
B. Recording all deeds or delivering them to the appropriate party.
C. Disclosing all material facts about a listed property.
D. Treating all parties to a transaction fairly.
A. Answer selection A. Preparing a pro forma is optional and up to the discretion of the agent. It is not a stated requirement under agency law. Further, the agency law disclosure does not apply to residential income property containing more than four units. This question offers an opportunity to notice some of the duties of an agent while also recognizing the limits of responsibility.
82
On the transfer of real property, a previous grant of an unlocated easement is:
A. Valid.
B. Void upon transfer.
C. Voidable by the servient tenement if not used for five years.
D. Voidable by the servient tenement since a deed cannot be the instrument used to create an easement.
A. And easement created by deed cannot be avoided by non-use. None of the alternative answer selections are reasonable, a servient tenement has no authority to avoid an easement.
83
A broker cannot act for more than one party in a transaction without disclosing their dual agency and obtaining:
A. A dual role license.
B. The consent of both clients.
C. A special permit from the department of justice.
D. Approval from the California Association of realtors.
B. An agent needs to obtain consent from all principles to act as a dual agent. This answer can be logically arrived at through elimination. There is no such thing as a unique dual role license. The department of justice is not an entity generally involved with the oversight of real estate activity. A real estate trade union has no authority to make such dual agency decisions on behalf of real estate participants.
84
The property which benefits from an easement is referred to as the:
A. Servient tenement.
B. Diminutive tenement.
C. Dominant tenement.
D. Domiciletenement.
C. A dominant tenement benefits from an easement; a servient tenement suffers from an easement.
85
When land is subject to an easement, it is said to be:
A. Encroached upon.
B. Encumbered.
C. And estate at sufferance.
D. Restricted.
B. The word encumbrance may imply a debt. However it may also be another type of burden, such as a lease or an easement.
86
An acquired right to use land that is less than an estate is known as a(n):
A. Leasehold.
B. Remainder.
C. Riparian rights.
D. Easement.
D. And easement is the specific right to use land, but is not an estate. Alternatively, a leasehold is an estate. A remainder in interest will become and estate when realized. Riparian rights do not include the use of land but the water flowing over or under land, and thus are not applicable to this question.
87
And easement maybe created for what length of time?
A. Perpetuity.
B. An agreed to period of time.
C. The lifetime of a person.
D. Any of the above.
D. There is no limit to the length of time granted for an easement. An easement can be limited to an agreed to period of time, or exist for perpetuity.
88
When a land owner is given the right to take water from another property, the owner receives the right of:
A. Avulsion.
B. Alluvium.
C. Percolation.
D. Appropriation.
D. Appropriation is the action of taking something for one’s own use, such as water from a stream.
89
Chuck wills the family estate to Matt with a provision that title transfer when he marries. This is an example of a(n):
A. Covenant.
B. Restriction.
C. Condition precedent.
D. Condition subsequent.
C. A condition precedent is a provision in an agreement calling for the occurrence of an event or performance of an act before a person is able
To acquire title. In the context of this question, the condition of president is that Matt Mary’s before title to the family estate will transfer to him.
90
An owner of a condominium unit owns:
A. The common walls between the units.
B. Lawns and walkways in the common areas.
C. The common heating system.
D. The air space within their unit.
D. All common elements in a condominium belong to the home owners association, not the individual owners, and are thus the responsibility of the HOA
91
Failure to provide the agency law disclosure in targeted transactions:
A. Puts the agency fee at risk of loss.
B. Renders the transaction invalid.
C. Affects only the listing half of a commission.
D. Affects only the sales person‘s share of the commission.
A. The failure to disclose the agency relationship at the earliest available opportunity puts the agency fee at risk.
92
A licensee takes on the role of an agent in a transaction when they:
A. Represent themselves.
B. Represent the buyer.
C. Represent the seller.
D. Both B. And C.
D. An agent needs to represent someone other than themselves in order for an agency roll to exist. It may occur with the buyer, seller, or both (a dual agency). An agent acting on their own account is acting as a principal, not an agent of themselves.
93
The fiduciary relationship between an agent and the principle is most similar to the fiduciary relationship between a(n):
A. Borrower and lender.
B. Vendor and vendee.
C. Trustee and beneficiary.
D. Property owner and tenant.
C. Fiduciary is a matter of utmost trust and loyalty. This is most closely associated with the relationship between a trustee and beneficiary.
94
Which of these is most likely to require an appraisal?
A. Any sale of real estate.
B. A new subdivision.
C. A US department of Veterans Affairs guaranteed loan.
D. A land sales contract.
C. Of the choices offered, only a US department of veterans administration guaranteed loan is required to have an appraisal to justify the agreed to sales price/loan amount. Consider the alternative answers: if mortgage financing is not needed, and appraisal is likely unwarranted, precluding answer choices A and B from being correct. In the instance of a new subdivision, as is the case with answer selection B, the lender typically commits to funding all completed sales transactions as part of the loan package agreement to when the land was acquired. Provided the buyers credit is adequate, no further appraisal is required.
95
The value of a residential property is best measured by which of the following groups of characteristics?
A. Utility, scarcity, depreciation and desire.
B. Cost, desire, scarcity and transfer ability.
C. Scarcity, demand, feasibility and cost.
D. Demand, utility, scarcity and transferability.
D. Demand, utility, scarcity and transfer ability is known as the elements of value (DUST). Answer selection A fails since, while many may have the desire to own a home, they may not have the financial capacity. Both choices B and C refer to cost, which is not a consideration in the elements of value.
96
The economic life of a frame dwelling is most nearly:
A. 100 years.
B. 50 1/2 years.
C. 39 years.
D. 27 1/2 years.
D. 27 1/2 years is the basis for depreciation under the IRS tax code, and is thus the general economic life of a frame dwelling.
97
For appraisal purposes capitalization is a process used to:
A. Convert future benefits to present net worth. B. Determine both physical and functional depreciation.
C. Establish an appropriate rate of return for the investor.
D. Properly market the property for sale in the multiple listing service.
A. Capitalization is the process to convert future income into a present value. To do this, an appropriate capitalization rate needs to be determined. The Rate is calculated by dividing the net operating income by the price asked or offered for income property.
98
Under California law, a trust deed:
A. Transfers equitable title to the vendee.
B. Names only two parties to the agreement.
C. Automatically records the release of the property when the loan has been paid off.
D. Creates an encumbrance on the property described in the deed of trust.
D. Using what you know about trust deed financing, the only answer choice that is not flawed is D. Trust deeds represent the security for a note and do not transfer equitable title. There are three parties to a trust deed: trustor (borrower), beneficiary (lender) and trustee (holder of naked title). There is no automatic recording of the release of title.
99
An unsuspecting buyer acquires the ownership of real estate without actual knowledge of recorded notice of a pre-existing enforceable purchase agreement held by another buyer regarding the same property is referred to as a(n):
A. Bona fide purchaser.
B. Insolvent purchaser.
C. Piggyback purchaser.
D. Arms length purchaser.
A. A bona fide purchaser is a buyer who lacks knowledge the property they are buying is the subject of the sale to another buyer, and purchases the property for valuable consideration. A bona fide purchaser needs to have made a good-faith effort to discover the existence of the previous transfer. If there is no reasonable way for the second buyer to have known and be put on constructive notice, they will be given title to the property when they record their deed.
100
The primary purpose of any deed is to:
A. Create constructive notice of a transfer or alienation of title.
B. Produce a reported document.
C. Identify the property involved in a real property transfer.
D. Give evidence of the change in title or transfer of an interest in real property.
D. The primary purpose of a deed is to give evidence of a change in title. In order for the deed to provide constructive notice, it needs to be recorded. While answer choice C is correct, it is not the primary purpose of a deed.
101
It is permissible to sell property that is sold as is when:
A. The buyer is told to perform a careful property inspection prior to making an offer and waives any right to challenge the as is clause.
B. The purchase agreement includes an inspection clause.
C. The buyer is provided with a timely transfer disclosure statement and informed of all known property defects prior to making an offer.
D. And as is sale is never permissible.
C. The key to any as is question is the need for disclosure of all known material facts. Provided the buyer is made aware of the problem, it is acceptable to sell the property on that basis. Thus, a property sold as is is really sold as disclosed.
102
A residential buyer needs to be notified about the proximity of a military establishment that contains explosive if the establishment is within ____ miles of the property.
A. 1
B. 2
C. 5
D. 8
A. The existence of a military installation needs to be disclosed if it is located within 1 mile of the subject property.
103
If a residential landlord under a month to month rental agreement desires to increase rent less than 10%, the landlord serves a:
A. 30 day notice of change in rental terms.
B. 60 day notice of change in rental terms.
C. 90 day notice of change in rental terms.
D. Three day notice to pay rent or quit.
A. If a residential landlord under a rental agreement seeks to increase rent in an amount less than 10%, a 30 day notice is required.
104
Various listing contracts create different obligations and promises on the part of the broker and the property owner. Under which contract with the property owner be required to pay a commission, even when they sell the property themselves?
A. A net listing.
B. An exclusive right to sell listing.
C. An open listing.
D. And exclusive agency listing.
B. And exclusive right to sell listing requires the seller to pay a broker fee when a property is sold regardless of who sells it. The guarantee of a commission only comes with an exclusive listing (answer choices B and D). However, answer selection D. And exclusive agency listing allows the seller to pursue sell their property without being obligated to pay the broker a fee.
105
A seller insists on selling their property as is and refuses to disclose known problems on the transfer disclosure statement. The broker is aware the roof leaks, but does not inform the buyer who purchases the property. The buyer can sue:
A. The seller only.
B. The broker only.
C. Both the seller and their broker.
D. No one, since as is is recognized as constructive notice of a problem.
C. If both the seller and broker failed to disclose known material facts negatively affecting the property, both will be held responsible.
106
Under the interstate land sale act, a buyer of real estate has a ___ right of recession.
A. Three business day
B. Four business day
C. One week
D. Two week
A. The interstate land sales act gives the buyer a 3 business day right of rescission.
107
In order to be enforceable, a land sales contract needs to:
A. Be in writing.
B. Include a mediation clause.
C. State the appropriate vesting for the vendee.
D. Have a term no greater than 10 years.
A. Under the statute of frauds, a real estate contract, such as a land sales contract or listing, needs to be written to be enforceable.
108
A broker presents an offer to purchase real property made by a minority buyer. The seller rejects the offer due to the buyers race. Here, the broker may:
A. Explain to the seller that the refusal is a violation of the fair housing act of 1968, and they are open to civil and criminal penalties.
B. Advise the buyer of their right to file a complaint with the department of housing and urban development.
C. Sue the seller for their commission.
D all of the above.
D. If a seller rejects a submitted offer due to the buyers race, all of the answer selections apply. The broker owes their clients seller a fiduciary duty to advise them of the risks inherent in violating a fair housing laws. Further, the broker does a general duty to the buyer to advise them of their rights under the law. Finally, the broker may sue the seller for the earned commission having brought a valid offer to the seller. As a matter of practice, the broker will want to be on record as being opposed to the sellers discriminatory actions.
109
An apartment building owners newspaper advertisement is in violation of fair housing laws if it states:
A. Adults only.
B. No smoking.
C. No pets.
D. Spacious bathrooms.
A. Use of the expression adults only in advertising constitutes age discrimination. The only allowable age discrimination is senior housing.
110
A listing broker can have any of the following agency relationships except:
A. Buyers agent.
B. Sellers agent.
C. Dual agent.
D. Listing agent.
A. As a listing agent, the broker cannot solely represent the buyer under a single agency. They may represent the seller, or both the buyer and seller under a dual agency, but not the buyer exclusively.
111
__________ refers to the placement of a house upon its lot.
A. Orientation
B. Physical location
C. Zoning
D. Subordination
A. How a house is placed on a lot is referred to as its orientation. A house is oriented in a specific manner to best capture sunlight, be sheltered from winds or enjoy a specific view.
112
Which of the following is an acquired right of use, but not and estate, in the land of another?
A. Mortgage.
B. Trespass.
C. Device.
D. Easement.
D. The right to use land without an estate interest is called an easement.
113
An easement that does not specify a location is:
A. Voidable.
B. Unenforceable.
C. Valid.
D. Void.
C. An easement does not need to specify a location in order to be valid. For example, an easement in gross held by utility company does not specify a location.
114
Which of the following is the best example of functional obsolescence?
A. The close proximity of noxious fumes generated by a neighboring property.
B. Adverse zoning within the adjoining neighborhood.
C. No air conditioning in a building located in an area, desert environment.
D. Rotted eaves.
C. Functional obsolescence is a loss of value due to adverse factors within the structure which affect the utility of the structure, and thus its value and marketability. Only choice C. No air conditioning in a building located in an arid, desert environment fits this definition. Answer choice D refers to physical deterioration. Answer choices A and B are located off the property and are out of the control of the owner, both being examples of economic obsolescence.
115
Which of the following type of rental income would be the highest?
A. Scheduled gross income.
B. Gross operating income.
C. Net operating income.
D. Net spendable income.
A. Pre-tax gross income will always be greater than posttax net income, just like with a paycheck. Scheduled gross income is the amount that is charged to the tenant. Gross operating income is a lesser amount as it is scheduled gross income minus vacant rentals and delinquent payments. Net spend double income is developed by subtracting both the mortgage payment and income taxes from the net operating income.
116
Which of the following are classified as finance charges under the federal truth in lending act?
A. Document preparation fees.
B. Loan assumption fees.
C. Title insurance costs.
D. Appraisal fees.
B. Only answer selection B. Loan assumption fees are classified as finance charges. The key words in the question are finance charges. All the alternative answer selections are expenses involving in originating a loan.
117
What does discounting refer to in the context of real estate finance?
A. The process of calculating the annual percentage rate of a given loan.
B. Liquidating real property that secures a debt in default.
C. The loan proceeds disbursed to the lender when reselling a note and trust deed.
D. Subordinating a debt.
C. A mortgage can be resold to and investor after it is originated. In order to convert a future income stream into cash, the lender needs to discount its value. In other words, a dollar in the future maybe worth $.80 cash today.
118
When the federal reserve intends to tighten the amount of money in circulation, it sells government bonds on the open market and:
A. Lowers the discount rate.
B. Raises the amount of reserves required from member banks.
C. Purchases a greater volume of foreign currency.
D. The regulates the mortgage lending industry.
B. The federal reserve can require larger reserves for member banks to sell government bonds to reduce the amount of cash in circulation. This is known as tight monetary policy.
119
The franchise investment law exists to protect:
A. Sub franchisors who have an exclusive geographic territory.
B. Prospective franchisee‘s prior to the purchase of a franchise.
C. Investors in franchise corporations.
D. The general public.
B. The franchise investment law is a public protection for a franchisee, the buyer of the franchise. Laws such as this are designed to protect the buying public.
120
A tenant who remains in possession of the property on expiration of the lease without an agreement or acceptance of rent by the landlord becomes a(n):
A. Tenant at sufferance.
B. Equity purchaser.
C. Tenant in foreclosure.
D. Bona fide purchaser.
A. A tenant at sufferance is a tenant who remains in possession of the property after their right to possession has expired. As a tenant is not an equity owner in the property, answer selections B and C (and thus D) cannot be correct.
121
A(n) ___________reconveys the real estate to the landlord in exchange for cancellation of the lease agreement.
A. Notice of termination
B. Notice to vacate
C. Notice of change in rental terms
D. Surrender
D. A surrender is a mutual cancellation of a lease agreement by the landlord and the tenant. Answer selection C applies to changes in rental terms, which does not relate to the question. Answer choices A and B are notices the lessor would post to begin the process of terminating the lease.
122
Broker Freddy takes and exclusive right to sell listing to sell a home on Monday evening. This listing may be described as an:
A. Implied, bilateral, executed, employment contract.
B. Express, bilateral, executory, employment contract.
C. Oral, unilateral, executory, employment contract.
D. Express, unilateral, executed, employment contract.
B. The scenario in the question illustrates an express, bilateral, executory, employment contract. The listing in the question creates an express agreement and is bilateral, a promise for a promise. The listing contract will not be fully executed until the property is sold and escrow is closed. Thus, the contract in question is also executory.
123
The gross rent multiplier is determined by:
A. Dividing the sales price by the gross scheduled rent.
B. Subtracting the vacancy factor from the scheduled rent.
C. Dividing the price by the number of available rental units.
D. Dividing sales price by net spend double income.
A. The gross rent multiplier is determined by dividing the properties sale price by the gross scheduled rent. When the GRM is multiplied by the gross income of a property, it produces an estimate of the properties value. Each of the alternative answer choices include other elements that are not part of this GRM formula.
124
Which of these documents provides the most protection to a property owner in default?
A. A first trust deed.
B. A mortgage.
C. A land sales contract.
D. A fixed term lease with an option to buy.
B. A mortgage requires a judicial foreclosure and thus offers the greatest protection as the owner is provided a longer period of time to cure the default. A trust deed is generally foreclosed through a non-judicial trustees sale, which can occur more quickly and provide little opportunity for the owner to cure the default. A land sales contract is a quiet title court process, and a default on a fixed term lease with an option to buy is remedied with an unlawful detainer action, both of which are relatively short and simple legal processes.
125
What is meant by an unadjusted basis?
A. The original cost of a property minus losses and depreciation.
B. The original cost of a property plus improvements minus depreciation.
C. The equity built up any property due to amortization
D. The original cost of a property.
D. The unadjusted basis is the original cost of the property. One is generally asked to identify the adjusted basis, which is the original cost of the property plus improvements minus depreciation. This value is required for capital games tax purposes. However, this question is looking for the unadjusted basis.
126
Seller Susie provides carryback financing to buyer Mel secured by a trust deed. Mel goes into default. Which of the following statements is true?
A. Susie can get a court order to force Mel to vacate the property.
B. Susie can treat Mel as a tenant and to find the deed as an invalid security device.
C. Susie can you sue Mel for possession.
D. Mel will have a period of time to redeem the property.
D. With seller carry back financing, the seller (as the mortgage holder) will normally pursue a non-judicial trustees sale to foreclose on the loan. A trustees sale provides the borrower 90 days to redeem the property by paying the default before the sale procedure begins.
127
A published advertisement by a real estate broker needs to include:
A. Their California Bureau of real estate license number.
B. The physical address of their office.
C. The fax number associated with the brokers office.
D. Reference to any negative actions taken against the brokers license.
A. This advertising requirement question relates to what is called a blind ad. Today, a broker is required to state their CalBRE license number on any marketing material and points of contact with the public.
128
Unlike a lease, a license does not include:
A. Rental payments.
B. A termination date.
C. The right to exclude others from entry.
D. All of the above.
D. All of the answer selections distinguish a license from a lease. A license does not provide for the payment of rent, has an open ended duration, and does not include the right to exclude others from entry, such as a public license to cross railroad tracks.
129
When a lease is for a period greater than one year, the contract does not require:
A. Signatures of both the owner and tenant.
B. That the lease agreement be in writing.
C. A specific termination date.
D. A description of the rental and its location.
A. A lease does not require the signature of the owner, only the tenant. Regardless of the length of time, a lease needs to have a termination date (unlike a rental agreement) and a description of the property. Further, the lease needs to be in writing to be enforceable if it is for a term greater than one year.
130
A property owner intending to sell their property wants to add specific instructions to the listing specifying the property is not to be offered it to anyone who is not a Caucasian. The broker is to:
A. Take the listing anyway and wait to see if anyone complains.
B. Tell the owner it is unlikely that a minority member would want to move into the neighborhood.
C. Refuse to take the listing and explain to the owner that this discriminatory activity violates both state and federal laws.
D. Explain to the owner that a licensed broker cannot discriminate, but a private owner can.
C. The broker has a fiduciary duty to their client to inform them of the legal ramifications of discrimination. All the alternative selections are clear violation of fair housing laws.
131
A Vietnamese couple walks into a real estate office. The sales person:
A. Has no obligation to show them homes in non-Asian neighborhoods.
B. Needs to show them a minimum of three homes in a primarily white neighborhood.
C. Does not need to provide any service to the prospects.
D. Needs to treat them like everyone else.
D. The public policy goal behind fair housing laws is that licensees treat everyone equally. Simply stated, it is a color blind philosophy.
132
A real estate sales person tells their buyer, if you buy this property and sell it in three years, you will double your money. Three years after the purchase, the value of the property has not increased. In this situation, the:
A. Buyer has no recourse.
B. Sales person is guilty of puffing which is not a crime.
C. Sales person broker is subject to discipline. D. Sales person and their broker maybe found guilty of fraud.
D. A sales person and their broker may be found guilty of fraud if they make a prediction about the future represented as fact, which later turns out to be incorrect. If the buyer excepted the sales person statement as fact, there are legal consequences. Thus, answer selection A cannot be correct. The definitive representation that the properties value will double in three years rises beyond puffing, and this is also not correct. Choice C suggests responsibility will apply only to the broker, which is not the case.
133
When and interest in property is acquired by prescription rather than adverse possession, interest maybe described as:
A. The right to use land which belongs to someone else.
B. A private brands.
C. Legal title.
D. A cloud on title to the benefiting property.
A. The full name for a prescription is a prescriptive easement. A prescriptive easement is the right to use another’s property established by the ad verse use of the property for a period in excess of five years without a claim of ownership. This is neither a grant or legal title, nor does it cloud the title of the benefiting property. A prescriptive easement does, however, give the right to use land to someone other than the owner.
134
Frank leased a property to Chester. Chester gave Mark and easement over the property. At the end of the lease term:
A. Frank regains the property subject to the rights of Mark.
B. The easement may not extend beyond the term of Chester‘s lease.
C. Mark has an equitable rights to use the land. D. Frank regain control of the property since a tenant cannot grant an easement, only an owner.
B. If an easement is given by a lessee, it ends when the lease is terminated.
135
When a real estate broker fails to address all lawful instructions given by their principal, the broker could:
A. Face criminal charges.
B. Have their drivers license suspended.
C. Be liable for the principles financial losses resulting from their actions.
D. Be compelled to retake the state licensing exam.
C. If a broker fails to abide by the lawful instruction of the principal they represent, they may be liable for the principles financial loss. The failure to follow instructions would rarely rise to the level of criminal charges.
136
The ________ is a succinct restatement of existing agency codes and case law on agency relationships in targeted real estate transactions.
A. Transfer disclosure statement
B. Natural hazard disclosure
C. Agency law disclosure
D. Fair housing law
C. The agency law disclosure is a restatement of agency codes and cases which established the contact of real estate licensees. It is delivered to all parties in targeted sales and leasing transactions. Agency law is distinctively different from material facts regarding the property contained in the transfer disclosure statement, or natural hazards that affect the property contained in the natural hazard disclosure. Fair housing is a series of laws that mandate equal treatment for buyers, tenants and borrowers.
137
Brokerage events triggering a listing agents preparation of a seller‘s net sheet includes:
A. Entering into a sellers listing agreement.
B. Submitting a buyers purchase agreement to a seller.
C. Both A. And B.
D. Neither A. Nor B.
C. The sellers net sheet is a document prepared by a seller’s agent to disclose the financial consequences of a sale when setting the listing price and on acceptance of a buyers price and a purchase offer. A seller may request this at the time of signing a listing or whenever an offer is presented.
138
When is the usefulness of the appraisal cost approach the least appropriate?
A. When appraising homes in a new sub division.
B. When appraising an old structure with many functional deficiency.
C. When appraising raw land intended for future construction.
D. When appraising a mixed use property.
B.The cost approach to appraisal is of least utility when appraising a old structure with numerous functional deficiencies. This is a result of the difficulty in accurately applying accrued depreciation for both age and functional issues. This is of little concerned when appraising newer properties of any kind or estimating future costs for property development.
139
A properties effective gross income is found by deducting which of the following from the scheduled gross income?
A. Property management fees.
B. Vacancies and credit losses.
C. Debt service.
D. Depreciation.
B. To estimate the effective gross income, subtract the vacancies and credit losses from the scheduled gross income. To determine net operating income, subtract operating expenses from effective gross income.
140
Which of the following properties requires the use of a lead based paint disclosure?
A. Single-family residence is built in 1975.
B. Senior citizen housing built in 1986.
C. Homes for the disabled built after the passing of the Americans With Disabilities Act. D. Multi family homes built after 1990.
A. The lead-based paint disclosure applies to residential properties built prior to 1978. The only answer choice that fits within that range is A.
141
A negative declaration issued for an environmental impact report:
A. Indicates no negative influence on the development of their surrounding environment. B. Shows whether the developer had a previous record of poorly designed subdivisions.
C. Is a positive statement made by the government in favor of the developer.
D. Is typically issued by a government authority after an initial review. Period
A. A negative declaration in the environmental impact report indicates there are no negative effects of the proposed development to the environment. The EIR makes no historical or future judgment about the developer. It is issued after the final environmental study is complete.
142
The federal fair housing act prohibits discrimination in the sale, rental and advertisement of:
A. Residential units.
B. Commercial properties.
C. Industrial properties.
D. Land used for the grazing of livestock.
A. Federal fair housing act relates to residential properties only, not commercial or industrial properties or raw land.
143
The preamble of the federal fair housing law states it’s purpose is to eliminate discrimination in housing and to:
A. Provide fair housing for everyone throughout the United States.
B. Establish Fannie Mae.
C. Provide low cost housing for all.
D. Create equal employment opportunity for all protected classes.
A. Federal fair housing laws are broadly designed to facilitate fair access to housing for everyone. Answer selection A has the appropriate scope that may be expected from a preamble as it summarizes the intent of the law. Answer selection C may sound possible, though it regards low-cost housing, not discrimination as identified in the question. Further, answer selections B and A are unrelated to the question.
144
Which of the following requirements made by a landlord is unlawful?
A. Requiring a 600 or better FICO score.
B. Requiring a cosigners for unmarried lessees. C. Requiring each adult occupant to sign a tenant rules agreement.
D. Prohibiting the use of waterbeds in the property.
B. A landlord may not require unmarried tenants to have separate cosigners. Singling out single adults is unlawful. Requirements related to economic and financial questions are appropriate so long as they are applied to everyone equally, as is the case with answer selections A, C and D.
145
Based on the principle of leverage, and investor will:
A. Use their own funds whenever possible.
B. Use borrowed money only to the degree deemed safe and reasonable.
C. Buy income property with a minimum down payment.
D. Invest in rental properties with declining values.
C. Leverage, in the financial sense, requires using as little equity investment as possible. Answer selection A is the reverse of this, B suggests moderation and D is contrary to an investors financial objectives.
146
One year after his real estate license expired, Claude renewed the license. Which of the following is a true statement?
A. Claude can operate under a restricted license during his suspension.
B. Claude has to retake the license examination.
C. Until the license was renewed, Claude was not allowed to participate in anything that required a license.
D. Claude is no longer eligible for a license.
C. Licensees are granted a two your grace period in which to renew their license after it has expired. A fee for a late when you are is higher than an on-time renewal. However, a licensee may not act in any capacity requiring a license during the suspension prior to renewal.
147
If a lessee transfers all of their interests in a property, the transferee that receives the lessee’s interest is classified as a(n):
A. Assignee.
B. Assignor
C. Vendee.
D. Vendor.
A. And assignee is the individual to whom property or interests have been transferred. The assignor is the individual who assigns or transfers the rights or interests they hold and personal or real property. The choices offered are based on ‘vend’ and ‘assign’. Vending is a sale specifically a land sale contract and therefore not applicable to a lease.
148
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When two brokers make a verbal agreement to split a commission, the agreement is:
A. Void.
B. Voidable.
C. Unenforceable.
D. Enforceable.
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D. Oral agreements between brokers to split commissions are valid and enforceable.
149
When the vendee under a land sales contract makes payments which include an impound for taxes:
A. The vendor needs to hold the monies in a trust account.
B. The vendor can use the monies for other uses so long as they pay the taxes when due.
C. The vendor can keep the monies anywhere so long as they don’t convert the funds.
D. The vendor cannot hold the impounds unless they are licensed with the California Bureau of real estate.
A. When a vendee under a land sales contract makes payments which include an impound for taxes, the monies need to be held in a trust account. Answer selection A and C are similar, although C allows the funds to be kept anywhere so long as they are not converted, which is not correct. Answer selection D is unreasonable since most sellers under a land sales contract will not be licensed, and thus the California Bureau of real estate is not involved. Choice B suggests conversion is acceptable, which is not correct.
150
A lease conveys a(n) _________ in real estate to a tenant.
A. Exclusive possessory interest
B. Personal privilege
C. Non-exclusive possessory interest
D. Irrevocable privilege
A. A lease is an exclusive right of possession. Typically, all adult person’s will be named on the lease, and thus it is not personal. Further, a lease is revocable based on a tenants improper behavior, such as committing waste to the property.
