Real Estate and Property Law: Comparable Sales, Zoning, and Leases, Exams of Real Estate Management

Download Real Estate and Property Law: Comparable Sales, Zoning, and Leases and more Exams Real Estate Management in PDF only on Docsity! Calibri Real Estate (Real Estate Express) Fi nal Exam Review Questions & Answers. Broker Jane has been accused of a law violation regarding commissions. Which of the following might result in her being found guilty? A) Jane paid a commission to her licensed personal assistant. B) Jane paid a commission to the wife of one of her licensees who was recently killed in an auto accident. The deceased licensee had earned the commission prior to his death. C) Jane paid a commission plus a bonus to one of her licensees. D) Jane paid a commission to a Florida licensee who is not liken - Correct answer D) Jane paid a commission to a Florida licensee who is not licensed in Georgia for licensing activity in Georgia. Any salesperson can legally receive her share of the commission on a sale from A) Her employing broker only. B) Any cooperating broker with whom she completes a sale. C) A builder she represents in a sale D) The purchaser of the home in a successful sale. - Correct answer A) her employing broker only. Which of the following is NOT a protected class under Georgia fair housing law? A) Sexual preference B) Familial status C) Religion D) Race - Correct answer A) Sexual preference Syed is an inactive licensee. He just moved to a new home across town. What must he do? A) Call the Commission and give it his new address. B) Report the address change when he's ready to reactivate his license. C) Send a written notice to the Commission within 30 days. D) Notify the post office to send a change of address notice to the Commission. - Correct answer C) Send a written notice to the Commission within 30 days. How many hours of continuing education must a licensee complete for each year of licensure? A) 8 hours B) 9 hours C) 5 hours D) 4 hours - Correct answer B) 9 hours P a g e 1 | 42 Glenda is the office manager for a local real estate firm. She is responsible for coordinating the paperwork flow through the office, preparing ads and supervising the clerical staff. Glenda is A) Required to have a salesperson's license. B) Violating license law. C) Required to have a broker license. D) Exempt from the license law. - Correct answer D) exempt from the license law. Hare is working with his buyers to draw up a written offer on a property they want to purchase. Which of the following items is not required in the offer? A) The property description B) The mortgage lender C) The method of payment D) Special stipulations the offer requires - Correct answer B) The mortgage lender Kenia just bought and closed on a new home that cost $195,000. Her mortgage amount is $165,500. How much is the intangible recording tax on Kenia’s property? A) $585 B) $195 C) $165.50 D) $496.50 - Correct answer D) $496.50 *An intangible recording tax is due and payable on each instrument securing one or more long-term notes at the rate of $1.50 per each $500 $165,500 ÷ $500 = 331 331 x $1.50 = $496.50 Salesperson Gordon refuse to accept an offer to purchase his home from buyer Juan Valdez of Columbia because Gordon feels the earnest money of $100 is not enough. Which of the following statements about Gordon's refusal is correct? A) Gordon is in violation of fair housing law because he discriminated on the basis of national origin. B) Since Gordon refused on the basis of the earnest money, he is not in violation of fair housing law. C) Gordon is in violation of civil rights law because he dis - Correct answer B) Since Gordon refused on the basis of the earnest money, he is not in violation of fair housing law. Jada is a community association manager. Which of the following would be one of her duties? P a g e 2 | 42 A) Jim deals with multiple owners. B) Dick has a single client. C) Jim interacts with his owner frequently. D) Dick must have day-to-day contact with his client. - Correct answer D) Dick must have day-to-day contact with his client. Ben is a broker who is selling his own home. When advertising his home for sale, all of the following is true about the ad EXCEPT that it A) Must use the firm's name. B) Must be honest. C) Must clearly indicate that Ben is a licensed broker. D) May use Ben's own name. - Correct answer A) must use the firm's name The Department can revoke salesperson Tobias's license if he does which of the following actions? A) Sells his home without using his employing broker. B) Represents a buyer in a real estate transaction. C) Persuades a seller to list with him in an exclusive agency arrangement. D) Deposits an earnest money check in his personal account. - Correct answer D) Deposits an earnest money check in his personal account. Which of the following situations is NOT a proper situation for earnest money disbursal? A) Seller rejects the purchase offer. B) Buyer withdraws a purchase offer two days after acceptance. C) All parties to the transaction sign a written agreement allowing the disbursal. D) The transaction closes. - Correct answer B) Buyer withdraws a purchase offer two days after acceptance. Sarah wants to sell her own home. Which statement is true? A) She does not need a license to sell her own home. B) Sarah must have a real estate salesperson's license. C) She can get a temporary license from the Commission to sell her home. D) Sarah may sell her; home without a license as long as she is an attorney. - Correct answer A) She does not need a license to sell her own home. Salesperson Martha has signed a brokerage engagement with tenant Gale to find her an apartment to rent. Martha doesn't charge her tenant clients a fee because she gets her commission from the landlords. Martha tells one of the landlords that Gale can pay more rent than what the landlord is asking for. Which statement is true? A) Its okay that Martha told that to the landlord, since he will be paying the commission. P a g e 5 | 42 B) Martha violated her duty of confidentiality to her client, Gale. C) It was w - Correct answer B) Martha violated her duty of confidentiality to her client, Gale. Melinda lives in South Carolina. She wants to get a Georgia real estate salesperson's license. Which of the following is NOT a requirement for Melinda? A) She must be at least 18 years old. B) Melinda must furnish proof of completion of 75 hours of approved real estate courses. C) She must establish residency in Georgia. D) Melinda must take and pass the Georgia real estate exam. - Correct answer C) She must establish residency in Georgia. Mike, a partner in a partnership, has a widely known reputation of being a liar and untrustworthy. Which of the following is true? A) Mike cannot apply for a license. B) The Commission can deny the partnership a license based on his bad reputation. C) The Commission cannot deny him a license based on reputation alone. D) Mike can apply for a salesperson license but not a broker license. - Correct answer B) the Commission can deny the partnership a license based on his bad reputation. *The Commission may deny a license to a partnership if a partner who owns more Thant 20% interest in the firm does not have a good reputation for honesty, trustworthiness and integrity. The term imputed knowledge could mean what an agent A) Knows and must disclose about a property. B) Should have known about a property because her broker knew it. C) Knows but is not obligated to disclose. D) Discovers by performing her own inspection. - Correct answer B) should have known about a property because her broker knew it. The phrase "engaging in the real estate business" means acting for another in exchange for a fee in all but which of the following situations? A) Building a home for another B) Reselling a mobile home C) Auctioning real estate D) Performing property management services - Correct answer A) Building a home for another Which type of agency is NOT recognized in Georgia? P a g e 6 | 42 A) Single agency B) Undisclosed dual agency C) Designated agency D) Buyer's agency - Correct answer B) Undisclosed dual agency Broker Philippe has been found guilty of committing ten discriminatory housing practices over the past five years. The court may fine him up to A) $10,000 B) $25,000 C) $50,000 D) $100,000 - Correct answer C) $50,000 Theresa wants to apply for a CAM license. She must meet all BUT which one of the following requirements? A) She must pass the written real estate exam with a score of 70% or higher. B) She must have completed at least 25 hours of a community association manager course. C) She must be 18 years old. D) She must have a high school diploma or equivalency certificate. - Correct answer A) She must pass the written real estate exam with a score of 70% or higher. Broker Tara has an offer to purchase a home listed with her firm. After the buyers sign all the paperwork and Tara accepts their earnest money, what must she do? A) Deposit the earnest money in her personal account for safekeeping. B) Fill out a special earnest money form for the buyers to give to their lender. C) Hold the offer until she receives at least one more before presenting to the seller. D) Give the buyers a copy of the agreement right away. - Correct answer D) Give the buyers a copy of the agreement right away. What is true about brokerage engagements in Georgia? A) A brokerage engagement can only be drawn up by an attorney. B) A promise of compensation automatically creates a brokerage engagement. C) They must be on specially-designed and approved forms. D) They must be in writing to be enforceable. - Correct answer D) they must be in writing to be enforceable. Salesperson Mona is selling her own home. Which of the following is always true? A) Mona must list the property with her employing broker. B) The Commission will require that Mona list the property with a licensed broker. C) The employing broker must grant permission for Mona to sell her property. P a g e 7 | 42 D) Providing the required proof to the Commission within one year of her original licensure. - Correct answer B) Taking 9 hours of continuing education during her first year of licensure. Under what conditions could Bill be affiliated with more than one broker? A) If the broker is in another country B) If the broker is in another Georgia county C) If the broker is in another state that allows affiliation in both states and Bill has his Georgia broker's written permission D) Under no circumstances, since affiliation with multiple brokers is prohibited by Georgia license law - Correct answer C) If the broker is in another state that allows affiliation in both states and Bill has his Georgia broker's written permission A tenant's broker knows that his client (the tenant) has recently lost his job and that his financial situation is less than perfect. The tenant is interested in a landlord's property but the rent is so high the broker does not think the tenant would be able to afford it for very long. Can the broker tell the landlord about the tenant's financial situation? A) Yes, the broker must tell the landlord. B) No, the broker must not tell the landlord. C) The broker may tell the landlord only if the l - Correct answer A) Yes, the broker must tell the landlord. *Under BRRETA, a tenant's broker must disclose to a prospective landlord all material facts actually known by the broker regarding the tenant's financial ability to perform the terms of the lease or letter of intent to lease. A home sold for $175,000. The buyers assumed a $60,000 mortgage. What will the transfer tax be on this sale? A) $60 B) $175 C) $59 D) $115 - Correct answer D) $115 $175,000 - $60,000 = $115,000 $1 for the first $1,000 $114,000 ÷ $100 = $1,140 $1,140 x 0.10 = $114 $114 + $1 = $115 Broker James has a listing based on net price. Which statement is true? P a g e 10 | 42 A) This will be a more profitable listing for James. B) This listing is illegal in Georgia C) This listing is legal if the seller agreed to do it. D) James must get permission from the Commission to have this listing - Correct answer B) This listing is illegal in Georgia Generally speaking a listing broker has earned his or her commission A) At the closing table. B) When the listing agreement is signed. C) When a ready, willing and able buyer is found on terms acceptable to the seller. D) When a sales contract is signed. - Correct answer C) when a ready, willing and able buyer is found on terms acceptable to the seller. Which of the following statements is NOT true? A) A transaction broker has an obligation to all parties in a transaction. B) A transaction broker does not represent either party in a transaction. C) Transaction brokers charge a flat fee instead of a commission. D) A transaction broker is not a dual agent. - Correct answer A) A transaction broker has an obligation to all parties in a transaction. Which situation is NOT EXEMPT from the provisions of federal fair housing laws, assuming no discriminatory advertising is used and a licensee is not involved? A) A developer of a condominium community who will sell only to persons age 62 or older. B) An owner-occupant of a duplex who will lease the other unit only to a white woman. C) A private club rents apartments in a building it owns only to members in good standing. D) A property owner rents his single-family home but refuses to allow chill - Correct answer B) An owner-occupant of a duplex who will lease the other unit only to a white woman. Who would be obligated to complete a property disclosure report or notice? A) A builder B) A listing agent C) A seller D) A selling agent - Correct answer C) a seller An investor takes out a mortgage to buy a rental property he's able to repay the loan with the rent he collects while also earning income from the investment, this is an example of P a g e 11 | 42 A) Liquidity. B) Leverage. C) Depreciation. D) Marketability. - Correct answer B) leverage. Seller Harry signs a contract with broker Barry that Barry will be paid a 6% commission even if Harry sells the house to a co-worker without any help from Barry. What type of listing agreement did Harry sign? A) Exclusive agency B) Exclusive right to sell C) Open listing D) Net listing - Correct answer B) exclusive right to sell Seller Vaughn is very pleased with the way his home sale was handled by salesperson Brad. Vaughn decides to give Brad a bonus. On what condition can Brad accept this bonus? A) Brad can receive this bonus if he is an independent contractor. B) Vaughn may pay the bonus directly to Brad. C) Vaughn may pay the bonus to Brad's broker, who may then pay Brad. D) Brad may not accept the bonus under any circumstance. - Correct answer C) Vaughn may pay the bonus to Brad's broker, who may then pay Brad. The Smiths and the Johnsons share part of a driveway. To ensure that each family can enjoy use of the driveway and share the maintenance costs, they most likely have what type of easement? A) Easement by necessity B) Easement by agreement C) Easement by implication D) Easement by condemnation - Correct answer B) Easement by agreement What should Hannah be aware of regarding the asbestos coating on her water pipes? A) Removal is required if asbestos is found in a residential property. B) Asbestos can contaminate the house further if removal is done improperly since airborne particles are the issue. C) Asbestos is dangerous only when wet and therefore should be encapsulated in waterproof material. D) Asbestos is inexpensive to remove. - Correct answer B) Asbestos can contaminate the house further if removal is done improperly since airborne particles are the issue. Cathy bought a house for $285,000. She made a $60,000 down payment. After 5 years the balance of the loan was $150,000. Assuming no depreciation in the property, how much equity does Cathy have? P a g e 12 | 42 A) "Like being on vacation every day" B) "Loveliest Street in the whole town" C) "Magnificent chef-inspired kitchen" D) "three-car garage with room for a workshop" - Correct answer D) "three-car garage with room for a workshop" Friable particles from asbestos are most likely to be a danger to one's health when they are A) Encapsulated B) Inhaled C) Touched D) Wet - Correct answer B) inhaled Kim is the title officer handling the transfer of Greg and Ashley's house to buyers Alex and Amanda. As they gather at the settlement table, Kim has stacks of documents that need to be signed in order to complete the transaction. Who signs the deed? A) Alex and Amanda B) Greg and Ashley C) Greg, Ashley, Alex and Amanda D) Greg, Ashley and Kim - Correct answer B) Greg and Ashley Which is an example of steering? A) A licensee tells homeowner that their property values will drop when a foreign family moves in. B) A mortgage banker refuses to make loans for a particular inner-city neighborhood. C) A property manager suggests a prospective tenant would be happier in a more diverse building. D) A seller tells his listing agent to find buyer prospects only of a specific ethnicity. - Correct answer C) a property manager suggests a prospective tenant would be happier in a more diverse building. Lester leases a storefront for his candy business. The rent the first six months was $500 and is set to increase 10% every month for the next 18 months as business takes off. Lester has what kind of lease? A) Graduated lease B) Ground lease C) Index lease D) Percentage lease - Correct answer A) graduated lease Baxter lists his property through Murray, a licensee at ABC Realty. Murray's broker charges 6.5% commission, offering a 40% split to a cooperating broker. Murray gets P a g e 15 | 42 45% of what ABC earns. The house sells for $462,000. How much does Murray make (round to the nearest dollar)? A) $8,108 B) $8,316 C) $9,910 D) $12,012 - Correct answer A) $8,108 $462,000 x 0.65 = $30,030 total commission $30,030 x .60 = $18,018 $18,018 x .45 = $8,108 Matthew lives in a house on the shores of Lake Erie. He has ________ rights, which means that he ________ the land under the water. A) Littoral / does own B) Riparian / does own C) Littoral / does not own D) Riparian / does not own - Correct answer D) riparian / does not own Licensee Hal is launching a new brokerage. He purchases a list of prospective clients and prepares to do his first mass email in an attempt to get some business in the door. To comply with the law, what must Hal include in his email solicitations? A) Information about filing a complaint with the Federal Trade Commission B) A link to a scanned image of his real estate license C) An option to opt-out of receiving future email D) A price list of the services offered by his brokerage - Correct answer C) an option to opt-out of receiving future email Which form of real property ownership is the MOST comprehensive? A) Defeasible fee estate B) Fee simple estate C) Leasehold estate D) Life estate - Correct answer B) fee simple estate Licensee Patti is having lunch with an old school friend, Janet. Janet tells Patti, "It's time to downsize, I sure wish I could sell my house." Patti responds, "Well I have just the person for you. Make sure you're home at 7:00 this evening." Identify the statement that best describes the situation. A) Janet cannot assume any relationship B) Janet could be Patti's client through express agency P a g e 16 | 42 C) Janet could be Patti's client through implied agency D) Janet has just made Patti her universal age - Correct answer C) Janet could be Patti's client through implied agency Which is NOT a necessary element for a valid and enforceable purchase contract? A) Consideration B) Contractual capacity C) Earnest money deposit D) Mutual agreement - Correct answer C) earnest money deposit Which statement about a comparative market analysis is FALSE? A) A CMA can assist a buyer in determining a fair price to offer for a home. B) A CMA can assist a seller in determining an appropriate listing price. C) A CMA may be used to determine property value for a federally regulated loan. D) A CMA should evaluate properties currently listed, recently sold or with expired listings. - Correct answer C) A CMA may be used to determine property value for a federally regulated loan. When Dave and Lucy get married, they decide to sell each of their homes and buy one house together. Lucy's house sells for $700,000; Dave's house sells for $300,000, and they're going to buy a $1 million house. If Lucy wants a 70% interest in the new house, what form of ownership must they take? A) Joint tenancy B) Tenancy in common C) Tenancy by the entirety D) Tenancy in severalty - Correct answer B) tenancy in common A property is listed for $200,000. The broker gets an offer from Gina for $150,000 cash with a closing in 90 days, one from Tim at $155,000, subject to the buyer getting a first mortgage for $130,000, an offer from Shari at $190,000 subject to the owner taking back a purchase money mortgage with closing in 30 days. The broker should disclose which offer(s)? A) all of the offers B) None of the offers, as they are all below the asking price C) Only the first offer until the seller makes a decision - Correct answer A) all of the offers An acceleration clause in a mortgage allows the lender to A) charge a penalty if the borrower misses a payment. B) charge a penalty if the borrower pays off the loan early. C) Declare the loan due if the borrower defaults. P a g e 17 | 42 Market value can be defined as the A) Amount a buyer paid to purchase a property. B) Cost in materials and labor necessary to construct property. C) Most probable selling price in a typical transaction. D) What a property actually sold for. - Correct answer C) most probable selling price in a typical transaction. A real estate licensee has actual knowledge of structural damage to the floor boards of a home he has listed due to termite infestation. He informs the buyer's agent that there are no termites or termite damage in the home. The buyer signs a contract to purchase the property. Is the listing agent susceptible to claims of fraud? A) No, because the buyer should have discovered the termite damage. B) No, because the buyer's agent should have been looking out for the buyer. C) Not as long as there - Correct answer D) yes, because he intentionally withheld a material defect. A buyer offers a seller $189,500 for his house. The seller accepts. The appraisal comes in at $188,000. If the buyer's lender requires a loan-to-value ratio of 80%, how much of a down payment must she make? A) $37,600 B) $37,900 C) $39,100 D) $39,500 - Correct answer C) $39,100 The lender will use the lesser of the sales price or the appraisal to consider how much it is willing to lend. In this case, the appraisal is lower. With a loan-to-value of 80%, the lender will loan $150,400 ($188,000 x 0.80). That means she must make a down payment of $39,100 to purchase this house: $189,500 (sales price) - $150,400 (loan amount) = $39,100 (down payment). Legally, the presence of a sexual offender in the neighborhood is considered A) Confidential information that a licensee cannot disclose. B) An immaterial fact that a licensee is not required to disclose. C) A material fact that a licensee must disclose. D) A material fact that the seller must disclose. - Correct answer B) an immaterial fact that a licensee is not required to disclose. An investor paid $330,000 for a small strip mall, plus $20,000 in closing costs. The land on which it sits is valued at 45%. What is the total amount that he will be able to deduct next year as depreciation (rounded)? P a g e 20 | 42 A) $3,808 B) $4,038 C) $4,654 D) $4,936 - Correct answer C) $4,654 Depreciation does not count the land value, but is based on 55% of value of the improvements, or $181,500 ($330,000 x 0.55). Divide that by the recovery period of 39 years for nonresidential rental property to find $4,653.8461, rounded to $4,654. Which obligation has first priority in the event of a foreclosure sale? A) Ad valorem taxes B) First mortgage C) IRS tax lien D) mechanic's lien - Correct answer A) ad valorem taxes Abandoned private property redeemed by the local government is an example of A) Eminent domain. B) Escheat. C) Police power. D) Taxation. - Correct answer B) escheat. Which situation represents a blind ad? A) A broker includes the NAR logo on his business card, but he is not a REALTOR®. B) A broker includes a national franchise logo in an ad, but she has no affiliation with it. C) A homeowner is selling her house FSBO but puts a local broker's name on the yard sign. D) A licensee places a for sale sign in his client's yard with only his phone number on it. - Correct answer D) A licensee places a for sale sign in his client's yard with only his phone number on it. Which statement about FHA-insured loans is TRUE? A. FHA loans are targeted to low-income borrowers. B. FHA loans require a smaller down payment than conventional loans. C. FHA provides funds directly to borrowers. D. Only first-time homebuyers can qualify for an FHA loan. - Correct answer B. FHA loans require a smaller down payment than conventional loans. A subject property has 4 bedrooms; a comparable property has 3. A bedroom in that neighborhoods valued at $5,000. The comp does not have a basement; the subject does. The basement is valued at $8,000. The comp has a pool; the subject does not. A pool is valued at $4,000. The comp sold for $260,000. What is the subject's estimate of value based on this comp? P a g e 21 | 42 A. $247,000 B. $264,000 C. $269,000 D. $273,000 - Correct answer C. $269,000 When making adjustments, add the value of a missing feature to the value of the comparable property, and subtract the value of any extra feature from the comp. The comp sold for $260,000. Add $5,000 for the bedroom and $8,000 for the basement that the subject has but the comp does not. Then subtract $4,000 for the pool the comp has but the subject does not. The adjusted value for the comp is $269,000, which is then an estimate of the subject's value. A dual agent who represents both buyer and seller in the same transaction CANNOT A. estimate the closing costs that each should expect to pay. B. make arrangements to gather documentation in preparation for settlement. C. recommend an amount to offer or counteroffer. D. perform a comparative market analysis of similar properties and present it to both. - Correct answer C. recommend an amount to offer or counteroffer. A woman with a disability applies to rent a single- family house. She states that she needs to install grab bars in the shower and a ramp into the house from the garage. The landlord would violate federal fair housing laws if he A. insists pay the woman make the renovations and remove them when her lease is up. B. makes the renovations at his own expense. C. makes the renovations but requires the woman to pay for the materials and labor. D. refuses to allow the woman to make the renovations. - Correct answer D. refuses to allow the woman to make the renovations. A is buying B's house. A and B, their attorneys, and the settlement officer attend the closing where title is of the house is transferred to A. What must occur to provide constructive notice of A's ownership? A. The attorneys must sign an affidavit attesting to the fact. B. The new deed must be recorded in the public records. C. The settlement officer must file the new title with the county clerk. D. Nothing; those attending the closing already have constructive notice. - Correct answer B. The new deed must be recorded in the public records. For which property would the comparable sales approach be LEAST useful? A. multi-family residential property B. retail property C. single-family residential property D. special purpose property - Correct answer D. special purpose property P a g e 22 | 42 farmland is subdivided. What type of zoning exception would allow the nursery and tree farm to continue operation? A. area variance B. conditional use C. nonconforming use D. special exception - Correct answer C. nonconforming use A home sells for $327,650. If the state transfer tax is 50 cents per $500 of value or fraction thereof, what will the seller owe the state in transfer tax at closing? A. $327.65 B. $328.00 C. $490.50 D. $492.00 - Correct answer B. $328.00 First find the number of $500 units: $327,650 ÷ 500 = 655.3. You need to round up to 656 to account for the "fraction thereof." The state portion is 50 cents for every unit, so the state transfer tax is $328 (656 x 0.50 = $328). Which actions, if taken by the Federal Reserve Board, would MOST LIKELY cause an increase in interest rates? A. decrease the reserve requirement, increase the discount rate, and buy government securities B. decrease the reserve requirement, decrease the discount rate, and sell government securities C. increase the reserve requirement, increase the discount rate, and buy government securities D. increase the reserve requirement, increase the discount rate, sell government securities - Correct answer D. increase the reserve requirement, increase the discount rate, and sell government securities A small strip mall has an effective gross income of $44,000. Operating expenses are $26,000, and debt service is $8,800. If the desired capitalization rate is 10%, how much would a buyer be willing to pay for the property? A. $32,400 B. $92,000 C. $172,000 D. $180,000 - Correct answer D. $180,000 $44,000 - $26,000 = $18,000 NOI. $18,000 ÷ 0.10 = $180,000. Debt service is not considered when finding NOI. A licensed real estate broker takes a seller's listing, but later decides he wants to buy the property himself. He can purchase the property for himself P a g e 25 | 42 A. if he gets someone else to represent the seller. B. if he discloses to the seller that he is the buyer. C. only after the listing agreement expires. D. never; a licensee cannot purchase one of his own listings. - Correct answer B. if he discloses to the seller that he is the buyer. A and B sign a purchase agreement. Prior to closing, it is discovered that A was legally incompetent when she signed the contract. What is the status of the contract? A. executory B. valid, unless there was fraud C. void D. voidable by an only - Correct answer C. void The idea that an informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with equal utility is based upon the principle of A. conformity. B. highest and best use. C. increasing and decreasing returns. D. substitution. - Correct answer D. substitution. An investor owns a small commercial building that he rents to a chef, who installs a pizza oven and opens a restaurant. Four years later, the owner sells the property to a different chef, who wants to start his own restaurant. When the tenant's lease is up, who owns the pizza oven? A. the new owner, since the oven is an improvement that transfers with ownership B. the original owner, since the oven was attached when he owned the property C. the tenant who installed the pizza oven D. It's imposes - Correct answer C. the tenant who installed the pizza oven In an advertisement for a home, which of the following statements would MOST LIKELY be considered discriminatory? A. "beautiful home in an exclusive neighborhood" B. "cozy home with a fabulous view of the bay" C. "excellent location; lots of amenities; near bus stop" D. "four-bedroom charmer, fenced lot, on a quiet cul-de-sac" - Correct answer A. "beautiful home in an exclusive neighborhood" Local governments exercise control over the permitted use of private property primarily through A. building codes. P a g e 26 | 42 B. covenants, conditions, and restrictions (CCRs). C. deed restrictions. D. zoning ordinances. - Correct answer D. zoning ordinances. Which element of an adjustable rate mortgage determines whether the interest rate goes up or down? A. cap B. index C. margin D. rate - Correct answer B. index A man signs a one-year lease on a high-rise apartment. Six months into the lease, he is transferred out of state. He signs over the remaining six months of his lease to a co- worker. She pays the property manager directly, relieving the original lessee of primary liability. This is an example of A. assignment. B. novation. C. sublease. D. surrender. - Correct answer A. assignment. A brokerage practices designated agency. A licensee brings in a listing for a seller's house. The seller then asks that same licensee to represent her in her search to find a new house, signing a buyer agency agreement with the brokerage. This makes the licensee a A. designated buyer's agent only. B. designated seller's agent only. C. designated seller's agent and designated buyer's agent. D. dual agent. - Correct answer C. designated seller's agent and designated buyer's agent. A homeowner makes up posters advertising his house for sale. He posts them on telephone poles around the neighborhood. On the poster, he indicates that he will pay 2% of the sales price to any broker who brings the buyer. What type of listing might this be considered? A. exclusive agency B. exclusive right to sell C. net listing D. open listing - Correct answer D. open listing A borrower's stable monthly income is $4,200. She has three monthly debts: $350 car payment, $120 student loan payment, and $80 credit card payment. What is the maximum monthly mortgage payment she would qualify for on a conventional loan? P a g e 27 | 42 D. 12.9% - Correct answer A. 8 $200,000 (Sales Price) ÷ $25,000 (Gross Annual Income) = 8 GRM. A buyer's agent submits a signed offer to purchase to a listing agent, indicating a price of $200,000 and a closing within 30 days. The seller accepts the price, changes the closing to 60 days, initials the change, and signs the offer. The listing agent gives it to the buyer's agent, who delivers it to the buyer. Is this a valid contract? A. Yes; it is in writing and signed by both parties B. Yes; the seller initialed his changes. C. Yes; they agreed on the price. D. No; there was no meeting of - Correct answer D. No; there was no meeting of the minds. A deed contains the following property description: "Beginning at the northeast corner of Oak and Elm streets, thence 15 degrees east to the embedded steel pin, thence North 90 degrees ..." What type of legal description system is this? A. government survey B. lot and block C. metes and bounds D. plat map - Correct answer C. metes and bounds A homeowner lists his property through a licensee of ABC Realty. The brokerage charges 6.5% commission and offers a 40% split to a cooperating broker. The licensee gets 45% of what ABC earns. The house sells for $462,000. How much does the licensee make (round to the nearest dollar)? A. $8,108 B. $8,316 C. $9,910 D. $12,012 - Correct answer A. $8,108 First, determine the total commission: $462,000 x .065 = $30,030. ABC keeps 60% of that: $30,030 x 0.60 = $18,018. The licensee gets 45% of that: $18,018 x .45 = $8,108. What condition is required to claim title to land through adverse possession? A. The possessor must cultivate annual crops. B. The possession is hostile and continual. C. The possessor must pay consideration to the property owner. D. The property is possessed with the owner's knowledge and consent. - Correct answer B. The possession is hostile and continual. Which best describes the process of judicial foreclosure? P a g e 30 | 42 A. After advertising, a public auction of the property is held, and then the sale is confirmed. B. Debtors lose the property by mutual agreement and return it voluntarily before final court action. C. Debtors proactively deal with a personal financial situation that has become unmanageable. D. Lenders forfeit all interest charged past, present, and future to the borrower in exchange for the property. - Correct answer A. After advertising, a public auction of the property is held, and then the sale is confirmed. When the borrower repays a loan according to the terms in the note, what clause protects his rights to the property, making the mortgage null and void? A. cognovits B. defeasance C. habendum D. subordination - Correct answer B. defeasance A single woman buys a home. Several years later, she gets married and changes her name. Now she wants to sell the property. To clear the cloud on the title caused by having a different name on the deed used to convey the property to someone else, she can file a A. bargain and sale deed. B. limited warranty deed. C. quitclaim deed. D. referee's deed. - Correct answer C. quitclaim deed. The primary value of leverage to an investor is that is allows her to A. avoid paying federal income tax. B. control the expenses on her property. C. get an accurate estimate of income. D. increase her profit by using borrowed money. - Correct answer D. increase her profit by using borrowed money. Which of these phrases would LEAST LIKELY be evidence of conspiracy to commit an antitrust violation if said by a licensee? A. "Every brokerage in town charges a standard 7% commission." B. "Our brokerage won't work with them because they discount all of their services." C. "We would like to suggest that you use our attorney for the closing." D. "Why don't you handle the business on the west side of town and leave the east side to our brokerage?" - Correct answer C. "We would like to suggest that you use our attorney for the closing." P a g e 31 | 42 A management agreement creates an agency relationship between a real estate broker and a (n) A. affiliated licensee. B. buyer. C. home seller. D. owner of investment property. - Correct answer D. owner of investment property. R wants to call D, a previous client, to see if she's interested in retaining him for additional services. According to the established business relationship exemption in the Do Not Call Registry, R can call her ____________ from the time of their last business transaction. A. for up to 3 months B. for up to 6 months. C. for up to 18 months D. R cannot call her at all if she's on the Do Not Cellist. - Correct answer C. for up to 18 months Which federal law prohibits discrimination against borrowers whose source of income is public assistance? A. Equal Credit Opportunity Act (ECOA) B. Fair Housing Act C. Real Estate Settlement Procedures Act (RESPA) D. Truth in Lending Act (TILA) - Correct answer A. Equal Credit Opportunity Act (ECOA) A shopkeeper pays $1,200 in rent every month for her storefront. At the end of the year, the property owner evaluates her sales records to determine whether she owes any overage rent. What type of lease does she have? A. graduated lease B. Gross lease C. net-net lease D. percentage lease - Correct answer D. percentage lease It is a violation of the federal Fair Housing Act to exclude potential tenants because of A. criminal history. B. having children. C. poor credit history. D. possession of pets. - Correct answer B. having children. A mortgage that is used to also finance personal property such as furniture or vehicles is called a P a g e 32 | 42 D. the lender agrees to a novation. - Correct answer B. Y buys the property subject to the mortgage. A woman is transferred out of state for her job and does not have time to sell her house. She signs a document granting her sister the authority only to list her house and negotiate with prospective buyers. The sister would most likely be considered what type of agent? A. general agent B. implied agent C. special agent D. universal agent - Correct answer C. special agent A homeowner wants to install a laminate floor in her cottage kitchen. The room measures 12' x 18', and the flooring will cost $18.50 per square yard. How much will the materials cost? A. $444 B. $1,332 C. $1,998 D. $3,996 - Correct answer A. $444 First, find the square footage: 12 feet x 18 feet = 216 square feet. Divide by 9 to find square yards: 216 ÷ 9 = 24. Now, multiply the square yards by $18.50 to find the cost: 24 x $18.50 = $444. What would be the expected impact on the housing market of a large influx of people into a community? A. It would be impossible to predict. B. It would likely result in a buyer's market. C. It would likely result in a seller's market. D. It would not affect the market - Correct answer C. It would likely result in a seller's market. J, K, and L co-own a property as joint tenants. J and K are killed in a car accident. What is L's interest in the property? A. L is a joint tenant with 100% interest. B. L owns the property in severalty. C. L still owns 33%, and the rest is split between the J and K's heirs. D. The estate ends at the death of the majority of the co-owners. - Correct answer B. L owns the property in severalty. As the net operating income of a rental property increases, what happens to the value of that property? P a g e 35 | 42 A. It decreases. B. It fluctuates. C. It increases. D. It stabilizes. - Correct answer C. It increases. Which of these is LEAST LIKELY to be a ministerial act when performed by a licensee for a buyer customer? A. advise a buyer on an appropriate offer price B. complete factual information for a buyer on a purchase offer C. provide a buyer with a list of home inspectors D. respond to questions about a property at an open house - Correct answer A. advise a buyer on an appropriate offer price Which of these tenancies could describe a landlord- tenant relationship? A. entirety B. freehold C. periodic D. severalty - Correct answer C. periodic To the owner of the land it runs across, an easement is considered a (n) A. attachment. B. encroachment. C. encumbrance. D. trespass. - Correct answer C. encumbrance. A borrower takes out a home equity loan for $50,000. This is a fixed rate loan with an interest rate of 12%. The borrower makes monthly payments of $514.31. What is the balance of the loan after TWO monthly payments? A. $49,985.69 B. $49,971.24 C. $49,956.64 D. $49,941.90 - Correct answer B. $49,971.24 $50,000 x 0.12 = $6,000 annual interest. $6,000 ÷ 12 months = $500 interest for month one. $514.31 payment - $500 interest = $14.31 in principal. $50,000 - $14.31 = $49,985.69 balance after first payment. $49,985.69 x 0.12 = $5,998.32 annual interest. $5,998.28 ÷ 12 months = $499.86 interest for month two. $514.31 payment - $499.86 interest = $14.45 in principal. $49,985.69 - $14.45 = $49,971.24 balance after second payment. P a g e 36 | 42 Which buildings would NOT be exempt under Title III of the American with Disabilities Act? A. government buildings B. historical buildings C. places of worship D. private clubs - Correct answer A. government buildings The sale of a property will close on March 20. Property taxes are $3,450 per year and are paid in arrears. How will this be reconciled on the settlement statement, assuming a 365-day year? A. $746.71 Debit Seller / $746.71 Credit Buyer B. $746.71 Credit Seller / $746.71 Debit Buyer C. $2,703.29 Debit Seller / $746.71 Credit Buyer D. $746.71 Debit Seller / $2,703.29 Credit Buyer - Correct answer A. $746.71 Debit Seller / $746.71 Credit Buyer First calculate the cost per day ($3,450 taxes / 365 = $9.4520 daily rate). Next, determine the number of days the seller owned the property (January=31 + February=28 + 20 days in March = 79 days). Multiply the number of days by the daily tax rate to find the amount the seller owes: 79 x $9.4520 = $746.71. The seller is debited and the buyer is credited for $746.71 in property taxes. An option to purchase is considered binding on which party to the contract? A. buyer only B. seller only C. both buyer and seller D. neither buyer nor seller - Correct answer B. seller only A woman gets a deed of trust from a bank to finance the purchase of a house in a new subdivision. While the loan is outstanding, who holds the title to her property? A. the bank B. the borrower C. the developer D. the trustee - Correct answer D. the trustee Which statement about an oral lease is TRUE? A. An oral lease is enforceable only for commercial property, not residential property. B. An oral lease is enforceable only if it renews an earlier, written lease. C. An oral lease for less than one year is generally enforceable. D. An oral lease is never enforceable. - Correct answer C. An oral lease for less than one year is generally enforceable. P a g e 37 | 42 C. tell the buyers about the leak. D. terminate the listing contract. - Correct answer C. tell the buyers about the leak. Carrie, age 17, is selling the house that she inherited from her grandparents. George has agreed to buy the property and both have signed a purchase agreement. What is the status of this contract? A. valid B. void C. voidable by Carrie D. voidable by George - Correct answer C. voidable by Carrie Jonah lists his home with PDQ Realty, allowing them to put a sign in the yard, list it in the local multiple listing service, and advertise it in the local newspaper. During the listing period, Jonah sells the home to his brother and is not obligated to pay PDQ any commission. What type of listing did Jonah have with PDQ? A. exclusive agency B. net listing C. non-exclusive right to sell D. open listing - Correct answer A. exclusive agency Many documents are signed and exchanged when property is conveyed from one person to another and several of them are filed with the county in which the property is located. The purpose of recording the documents is to A. ensure the validity of the documents. B. give constructive notice to the public. C. make the documents legal and binding. D. provide proof that money exchanged hands. - Correct answer D. provide proof that money exchanged hands. Licensee Lucy is hosting an open house for her seller client. Buyer Bonnie visits the house and tells Lucy that she is interested in the house but is not interested in having an agent. Lucy does NOT owe Bonnie the duty of A. accountability of funds. B. honesty. C. disclosure. D. obedience. - Correct answer D. obedience. The government sends Frank a notice stating that his house and neighborhood will be demolished to build a much needed water treatment plant. What is the government required to offer Frank in exchange for condemning his property? A. Just compensation P a g e 40 | 42 B. Nothing, since it is for the public good C. Whatever Frank asks for D. Whatever they decide is reasonable - Correct answer A. Just compensation Kelsey has a signed listing agreement with Tom Smith Realty. Licensee Ivy is her agent. Which event would NOT terminate the listing agreement? A. Ivy transfers her license to a different brokerage. B. Kelsey declares bankruptcy. C. Kelsey's house burns down. D. Tom Smith's license is suspended. - Correct answer A. Ivy transfers her license to a different brokerage. Of these, which would be considered a voluntary, specific lien? A. mechanic's lien. B. mortgage lien. C. property tax lien. D. special assessment lien. - Correct answer B. mortgage lien. A recently built home has four bedrooms and only one bathroom. This could BEST be described as an example of A. accrued depreciation. B. external obsolescence. C. functional obsolescence. D. physical deterioration. - Correct answer C. functional obsolescence. Which is NOT an example of the government's police powers? A. adopting building codes B. enforcing environmental regulations C. levying property taxes D. passing zoning ordinances - Correct answer C. levying property taxes A 1.75 acre lot sells for 40 cents per square foot. What is the selling price? A. $17,424 B. $21,780 C. $30,492 D. $76,230 - Correct answer C. $30,492 1 acre= 43,560 sq. ft. 1.75 acre= 76,230 sq. ft. 76,230 x 0.40= 30,492 P a g e 41 | 42 A standard form of title insurance policy protects against loss resulting from each of the following EXCEPT A. the person signing the deed was considered mentally incompetent. B. the planning board rezoned the neighborhood. C. the legal description of the property indicated the wrong lot number. D. a title abstractor missed an outstanding lien searching the public records. - Correct answer B. the planning board rezoned the neighborhood. Calculate the number of acres in the parcels described as the N 1/2, NW 1/4 of section 30 and the N 1/2, and NE 1/4 of section 31 A. 40 B. 80 C. 100 D. 160 - Correct answer D. 160 As defined in local zoning ordinances, the distances between lot lines and improvements are known as A. metes and bounds B. plats C. encumbrances D. setbacks - Correct answer D. setbacks The illegal rezoning of a single parcel of land or a small area to benefit one or more property owners rather than carry out objectives of the plan is known as A. easement B. spot zoning C. escheat D. condemnation - Correct answer B. spot zoning P a g e 42 | 42