Test Exam #2

Question 1

What rights does a buyer have after a seller has accepted their offer?

Answer 1

What rights does a buyer have after a seller has accepted their offer?

A seller needs to provide approval to a buyer who intends to enter a vacant house prior to the close of escrow. Until escrow closes, the property still belongs to the seller. When the buyer is given permission to enter and make repairs, it creates liability if something happens prior to the close of escrow, such as an injury on the property.

Question 2

California Housing financing agency (CalHFA)

Answer 2

California Housing financing agency (CalHFA)
The California Housing financing agency program offers first time home buyers special consideration. CalVET is not a mortgage program, and US Department of Veterans Affairs and federal housing Administration are insured and guaranteed loans arranged through mortgage brokers and Banks.

Question 3

Executrix

Answer 3

A husband nominates his wife to manage his will. Thus, she will function as an executrix. the term for manager of a will is Executor. As the wife is managing the will, the correct answer is the feminine form of this word: executrix.

Question 4

Exceptions in a grant deed

Answer 4

An exception in a grant deed, excludes part of the property from the grant.
Grant Deeds transfer title to property. When an exception is stated, a portion of the property is not transferred with the grant deed. For example, consider an easement being retained by the owner, or a specific space such as Highway Frontage or Beach Frontage to be held for other purposes.

Question 5

Restrictions in a grant deed

Answer 5

To be valid, restrictions in a grant deed need to be contained in a deed or written agreement. Restrictions, such as conditions covenants and restrictions for a subdivision need to be recorded as a statement on the deed or as a reference to another recorded document such as the subdivision restrictions.

Question 6

Hard Money Loans
First Trust deeds
Junior Trust Deeds

Answer 6

The maximum commission a loan broker May charge to negotiate and $8,000 hard money First Trust deed that is due in two years is $400.

The commission for hard money lenders is set by law within the business and professions code. The size of the loan, the length of the loan term and whether it is a First Trust deed or a junior mortgage affect the commission that may be charged.

On First Trust Deeds - A commission with a term of less than three years is limited to 5%.

For junior trust Deeds, the commission limits are 5% for a term of less than 2 years, 10% for a term of less than three years, and 15% for 3 years are longer.

Question 7

Real estate brokers are required to have written employment contracts

Answer 7

Real estate brokers are required to have written employment contracts with the salesperson’s they employ. Written contracts are required to properly document a broker’s employment of a salesperson. The contract will state the duties of the broker and agent and who is responsible for a variety of issues such as risk management maintenance, insurance requirements and the split of commissions.

Question 8

Broker performing escrow activities

Answer 8

Without being a licensed as an escrow officer, a broker may not handle escrow activities when they are not otherwise involved in a transaction. The broker needs to be involved in the transaction representing one of the principles or themselves in order to act as the escrow officer.

Question 9

real estate commissioner

Answer 9

The real estate commissioner oversees and administers real estate law, the subdivided lands law, and the regulations of the Real Estate Commission. Note these elements are categorized as laws and regulations, not rules, which carry less effect then either regulations or law.

Question 10

direct building costs

Answer 10

Lumber is an example of a direct building cost. Direct building costs are the construction costs incurred for labor and materials. All other expenses are indirect.

Question 11

gore

Answer 11

A gore is a triangular piece of land. This is a question that requires the memorization of an unusual term to earn the point.

Question 12

ostensible agency

Answer 12

When a broker does not disclose their dual agency status, it creates an ostensible agency. Without disclosure of the Dual agency, the actions of the agent will create an ostensible agency relationship due to the appearance of acting as an agent.

Question 13

Estate administration - administrating an estate

Answer 13

When the administrator of an estate sells a parcel, Court approval is required. A sale from an estate involves a court and will therefore require Court approval.

Question 14

Appraiser Licensing - California Bureau of real estate appraisers (Cal Brea)

Answer 14

Appraiser Licensing in California is controlled by the California Bureau of real estate appraisers (Cal Brea) . the California Bureau of real estate appraisers is the entity that controls appraiser Licensing in California. The name should make this an easy point.

Question 15

costs per square foot

Answer 15

When comparing a small house with a large house of similar quality, The small house will cost more per square foot. the overall value of the property includes the land it is situated on. Thus when the house is smaller, the price per square foot will be higher since the cost of the underlined land is divided into fewer square feet.

Question 16

appraisal

Answer 16

When appraising a single family residence, and appraiser observes cracks in the walls and floor. In response the appraiser best recommends a soil engineer’s report. The cracks in walls or floors are more likely to be a soil stability concern rather than a pest issue, and thus are best addressed with a soil Engineers report. The environmental impact report will have no value nor will the home warranty insurance.

Question 17

holder in due course

Answer 17

the maker of a negotiable instrument is able to defend against a holder in due course in the event of both forgery and incapacity. Both forgery and incapacity are a suitable defense against a holder in due course. A holder in due course is one who has taken a note, check or Bill of Exchange in due course: one before it was overdue, 2 in good faith for value, and three without knowledge that it has been previously Dishonored and without notice of any defects at the time it was negotiated.

Question 18

discrimination

Answer 18

the Department of Housing and Urban Development advertising guidelines are violated when someone advertises retirees Dream Home. the suggestion that a property is more suitable to one group of people retirees is viewed as discrimination. Alternatively, it is acceptable to have a requirement for a roommate and state an opinion such as a good neighborhood.

Question 19

buyer/seller consent

Answer 19

A seller’s broker receives and presents a purchase offer that is accepted by the seller. The seller then request the broker to give them the buyer’s deposit check. The broker needs to obtain the written consent of the buyer before releasing the check to the seller. The broker must seek written consent from the buyer before releasing the deposit check to the seller. As the offer has already been accepted, a counter-offer is not possible.

Before closing, a buyer ask their broker for permission to enter the vacant house they will be purchasing in order to paint the kitchen. The broker is to seek approval from the seller. a seller, being the legal owner of the property, needs to decide whether to allow the buyer to make repairs to the property prior to the close of escrow. Allowed in the buyer to enter the property prior to the close of escrow presents to primary concerns liability for something that goes wrong when the buyer is on the property, such as personal injury or damage to the property, and the possibility that escrow may fail to close after the buyer has altered the property.

Question 20

buyer’s listing

Answer 20

For a buyer’s broker to have the ability to negotiate their fee, the buyer’s broker needs to enter into an employment agreement with their buyer called a buyer’s listing. A buyer’s listing is the appropriate contract for the purpose of negotiating fees as the buyer’s broker.

Question 21

copy of the written lease to the tenant Within 15 calendar days

Answer 21

A landlord is required to provide a copy of the written lease to the tenant Within 15 calendar days. A landlord is required to provide a signed copy of the lease to the tenant within 15 calendar days of its execution by the tenant.

Question 22

one board foot

Answer 22

A one board foot is the volume of a piece of lumber that measures 12in by 12in by 1in. Only one answer from the choices has the same amount of volume, 6in by 2in by 12in.

Question 23

Constructive notice and bona fide buyer

Answer 23

Blake sold his home to Frank but remained in possession and negotiated a two-year lease back. Frank did not record the deed. During this two-year period, Blake sold the home to Sam who then recorded the deed. Who owns the home? Sam does, because he recorded his deed. Sam is the owner since he recorded the deed. Constructive notice can be either the recorded deed or possession. Since Blake retained possession, Sam had no way of knowing that Frank previously purchased the house. This makes Sam a bona fide buyer.

Question 24

condition precedent

condition subsequent

Answer 24

Conrad wills the Family Estate to his first son Michael with the provision that if Michael were to divorce in the future, title will pass to Conrad Second Son, Brett. This is an example of condition subsequent. a future divorce is a condition subsequent. The two conditions precedent and subsequent, refer to actions that alienate title, transfer title. A condition precedent is how one gains title, unless and until completion of a specified act or event, – a condition subsequent is how one loses title, the failure or non-performance of a condition.

Question 25

sue both the seller and the broker

Answer 25

A seller of property tells their broker the house is connected to the Sewer. The broker relays this information to a buyer, who later finds that the house has a septic system in need of repair. The buyer would sue the broker and the seller. When a failure to disclose a material fact is later discovered, the appropriate action by the buyer is to sue both the seller and the broker.

Question 26

broker acting as an agent for a principal has as much authority as the principal actually or ostensibly confers upon them

Answer 26

A broker acting as an agent for a principal has as much Authority as the principal actually or ostensibly confers upon them. It is the client who grants the broker the authority to act on the client’s behalf. The Authority granted by the client is limited by what they actually or ostensibly confer to the broker.

Question 27

Patently frivolous offers or the agent is acting on written instructions of their seller the agents fiduciary duty requires them to present every offer received, allowing the seller to decide how to respond

Answer 27

A real estate agent is obligated to communicate any offer to the principal unless the offer is patently frivolous or the agent is acting on written instructions of their seller the agents fiduciary duty requires them to present every offer received, allowing the seller to decide how to respond. However, if the offer is clearly frivolous or the agent receive Specific Instructions from their seller, the agent is not required to submit the offer.

Question 28

Agency

Answer 28

Agency includes relationships between licensed sales agents and their Brokers and finders and their Brokers or principles. agency is the relationship between a licensed agent and principles as well as other Brokers and Finders.

Question 29

Estate for Years, a lease, specific period of time

Answer 29

A lessee rents an apartment from May 1st to July 1st of the same year. The lessees tenancy is best classified as an estate for years. The estate for years need not be an extended period of time or even a full year. However it must be for a specific period of time, as occurs under a lease.

Question 30

independent contractor

Answer 30

A real estate salesperson employed as an independent contractor needs to pay income taxes and Social Security taxes. The independent contractor status of real estate sales for persons is for purpose of tax reporting. Under labor laws, independent contractors are classified as employees. They are always subject to broker supervision.

Question 31

Americans with Disabilities Act

Answer 31

Under the Americans with Disabilities Act, an employer may not discriminate against a disabled person who seeks employment due to that person’s disability. The Americans with Disabilities Act prohibits employers from discriminating against persons with disabilities. Note the question States disabled, a term which appears in the correct answer.

Question 32

Tax Assessors Appraisal

Answer 32

A tax assessors appraisal is the least important factor used to determine the market value of a property. this is a least question. The tax assessor appraisal has little to do with a property’s market value.

Question 33

The seller dies

Answer 33

The seller dies after an offer to purchase their property has been accepted. The sellers grandchild inherits the real estate. What happens to the sale? The grandchild is compelled to sell under the terms of the accepted offer. Once the offer is accepted and the buyer has been notified of the acceptance, the estate is required to honor the sale in the event the seller dies.

Question 34

neutral escrow agent - escrow instructions

Answer 34

After escrow instructions have been signed, the seller asks escrow to return the grant deed to them so they can have an attorney check. In this case the escrow officer cannot return the deed based on the seller’s request. The neutral escrow agent cannot unilaterally make a decision that affects either principle. Once the buyer has deposited money or the seller has deposit the documents, approval by both parties is required before either can be released.

Question 35

prepaid rental listing service

Answer 35

When a prepaid rental listing service intends to relocate, the listing service is required to provide notice of the new address and telephone number to its clients before the move is to occur. The customers of a prepaid rental listing service need to be aware of a company’s location at all times. Therefore, if they move, the company is required to inform customers and clients in advance of the move.

Question 36

elevation sheet

Answer 36

An ELEVATION SHEET used in a subdivision plan shows the drawings of the front and side views of the finished homes. An elevation sheet is a drawing that depicts the appearance of the front and side of a home to be built. It is used in advertisements, brochures and other point-of-sale renderings.

Question 37

corporation enters into a listing agreement

Answer 37

Broker Chuck listed a duplex for sale from a corporate owner. After entering into the listing, the officers of the corporation died in a plane crash. What happens to the listing?

In this case the listing is unaffected. The employment contract is unaffected by the death of corporate officers as the client is the corporation. New officers will be named who need to honor the terms of the listing. The corporation is the client, not the officers.

Question 38

agency relationship requirements

Answer 38

A VALID AGENCY does not require a written agreement, or Express agreement, or an attorney in fact. None of these are necessary for creating an agency relationship. An agency relationship need not be in writing nor expressed. Agency can be created by emergency or implication.

Question 39

appraisal process

The Allocation Approach is the ratio of total value to the site value

Answer 39

The appraisal process which allocates a percentage of a property’s total value to the land and a percentage to the improvements is known as the ratio of total value to site value, or THE ALLOCATION APPROACH. the appraisal process that allocates a percentage of a property’s total value to land and a percentage to the improvements is known as the allocation method. It is the ratio of total value to the site value.

Question 40

One broker authorizes another broker to act as their sub-agent on the approval of the seller

Sub-agent broker

Answer 40

When one broker authorizes another broker to act as their sub-agent on the approval of the seller, the sub agent is primarily responsible to the seller. Unlike a sales agent, the subsequent broker becomes primarily responsible to the seller and not the original broker when they have the sellers approval.

Question 41

Bill of sale is insufficient to transfer an interest in real estate.

Answer 41

A BILL OF SALE is insufficient to transfer an interest in real estate. A lease and a deed and a contract of sale all transfer an interest in real estate. Therefore, this is an insufficient question. The question asked which cannot transfer Real Estate. A bill of sale is used for personal property and thus cannot be used to transfer Real Estate.

Question 42

“Realtor” definition

Answer 42

The term REALTOR denotes membership in a Real Estate Trade Organization.

The term realtor is a trademarked term which denotes membership to a real estate Trade union.