Real Estate and Business Law: Permits, Contracts, and Regulations, Exams of Marketing Business-to-business (B2B)

Download Real Estate and Business Law: Permits, Contracts, and Regulations and more Exams Marketing Business-to-business (B2B) in PDF only on Docsity! 1 GOLD COAST Practice Exams Questions and Answers 2024 Which statement provides the basic justification for zoning? A. There must be regulations in place to prevent pollution B. The government does not want to encourage land development C. The inappropriate use of one's property may affect the value of another D. Professional planners want to control development - Answer- C. The inappropriate use of one's property may affect the value of another What is the rationale behind government planning of real estate development? A. To manage future real estate growth B. To encourage more landscaping C. To limit commercial areas D. To maintain the character of the community - Answer- A. To manage future real estate growth In Florida which entity is primarily responsible for establishing and implementing the roles, processes, and powers of comprehensive planning and future development? A. Florida's governor B. Local government and planning agencies C. Regional planning councils D. State comprehensive planning administrators under the Florida department of economic opportunity - Answer- B. Local government and planning agencies Which zoning classification typically includes single-family homes, small family structures, condominiums, and apartments? A. Commercial B. Residential C. Industrial D. Special use - Answer- B. Residential Which statement best describes the master plan? A. It must be inflexible B. It is prepared by the state legislator C. It stops growth D. It serves as a guide for an area's future growth - Answer- D. It serves as a guide for an area's future growth Which of the following would a church need in order to build in a residential neighborhood? A. Public zoning permit B. Special exception C. Variance D. Nonconforming use permit - Answer- B. Special exception 2 What is the purpose of the zoning board of adjustment? A. To settle monetary claims by property owners B. To grant variances and special exceptions C. To develop the comprehensive plan D. To determine infrastructure requirements - Answer- B. To grant variances and special exceptions Which term is used to describe a property use that predates the current zoning ordinance but is allowed to exist for at least a period of time? A. Legally conforming B. Progressive C. Legally nonconforming D. Capitalized - Answer- C. Legally nonconforming Which statement which best describes a Planned Unit Development (PUD)? A. A PUD offers fewer amenities than are possible with more traditional forms of zoning B. A PUD impacts the environment to a greater degree than most zoning classifications C. A PUD prohibits the use of zero lot line development D. A PUD is also called cluster zoning - Answer- C. A PUD is also called cluster zoning Which statement is correct with respect to a Development of Regional Impact (DRI)? A. A DRI is defined as any development that substantially affects health, safety, or welfare of the citizens of more than one county B. The state of Florida as no authority concerning guidelines for development or review of a developments of regional impact C. The review process for a new DRI is concerned only with residential construction D. The federal government has no influence on local development - Answer- A. A DRI is defined as any development that substantially affects health, safety or welfare of citizens of more than one county Adequate infrastructure available to support growth and development was mandated by Florida's Growth Management Act and is specified in which of the following? A. DRI reviews B. Concurrency rules C. County zoning ordinances D. Local building codes - Answer- B. Concurrency rules What is the category of a business that meets payroll expense by using dollars a generated by persons who live in the immediate vicinity? A. Service B. Basic C. Export D. Regenerative - Answer- A. Service Which of the following would be considered a basic industry when performing an economic base analysis. 5 A. Held by the county until the certificate is sold B. Owned by the county property appraiser C. Foreclosed on by the sheriff D. Sold at public auction for the highest interest rate - Answer- A. Held by the county until the certificate is sold According to Florida's Save amour Homes Act, the assessed value of homestead property cannot be increased in any one year by more than which of the following? A. The lesser of 3% or the CPI B. the greater of 3% or the CPI C. 10 mills D. An amount determined by the county property appraiser - Answer- A. The lesser of 3% or the CPI Homeowners who file itemized tax returns are allowed deductions for which of the following items? A. Real estate taxes and repairs B. Hazard insurance and depreciation C. Real estate taxes and mortgage interest D. Mortgage interest and utilities - Answer- C. Real estate taxes and mortgage interest Which statement is correct with respect to homeowner insurance coverage? A. All losses are covered B. Flood losses are limited to $25,000 C. Personal property is not covered D. Homeowners with multiple policies will not receive the full amount of their loss for each insurer - Answer- D. Homeowners with multiple policies will not receive the full amount of their loss for each insurer Which statement best describes the interest that is payable on tax certificates? A. It is based on the lowest bid received B. It is never lower than 18% C. It is negotiable between property owner and bidder D. It is established by law - Answer- A. It is based on the lowest bid received Why is the process of real estate investment analysis important to an investor? A. It helps an investor select properties that meet personal objectives B. It determines the amount of taxes due on income producing property C. It determines the exact cash flow from an investment property D. It makes possible the best use for a property based on zoning - Answer- A. It helps an investor select properties that meet personal objectives Fixed expenses typically include which of the following? A. Real estate taxes and hazard insurance B. Management fees and depreciation C. Utilities and repairs 6 D. Mortgage payments and income taxes - Answer- A. Real estate taxes and hazard insurance Which of the following statements regarding reserves for replacements is correct? A. They are a cash expense B. They should not be considered in a residential income property C. They are used to pay for normal maintenance of the property D. They are a non cash expense that is used to replace short lived components that wear out from time to time - Answer- D. They are a non cash expense that is used to replace short lived components that wear out from time to time What is the formula to determine the loan-to-value ratio? A. Loan multiplied by value B. Value divided by loan C. Loan divided by value D. Loan subtracted from value - Answer- C. Loan divided by value What type of risk is caused by changes in general business conditions? A. Dynamic B. Equity C. Leverage D. Static - Answer- A. Dynamic If an investor earns a lower rate of return on invested capital than the rate that is paid on borrowed funds, what type of leverage is Indicated? A. Positive B. Neutral C. Negative D. Cumbersome - Answer- C. Negative What is the time period established by the IRS over which non residential investment real estate can be depreciated? A. 39 years B. 27.5 years C. 22 years D. 15 years - Answer- A. 39 years All of the following items are relevant when estimating the value of a business except: A. Personal property owned B. Short-term liabilities C. Business goodwill D. Personal income taxes - Answer- D. Personal income taxes Which document indicates the financial condition of a business as of a particular time? A. Operating statement B. Profit and loss statement 7 C. Balance sheet D. Bank statement - Answer- C. Balance sheet Which of the following statements best describes business brokerage? A. It should not be conducted by real estate licenses B. It cannot be conducted by real estate licensees C. It consists primarily of analyzing financial statements D. It would rarely involve security transactions - Answer- C. It consists primarily of analyzing financial statements Real estate ,ice sees who are engaged in business brokerage might need to have a securities license if the transaction involves which of the following? A. Negotiation of a new mortgage loan B. An analysis of financial statements C. Renegotiation of a. Existing lease D. Transferring shares of stock or limited partnership interests - Answer- D. Transferring shares of stock or limited partnership interests Under the Uniform Commercial Code, what is the document used to secure financing of personal property? A. Deed B. Bill of sale C. Security agreement D. Trust agreement - Answer- C. Security agreement All of the following are considered business assets, except: A. Goodwill B. Notes payable C. Accounts receivable D. Furniture and equipment - Answer- B. Notes payable Which document most closely resembles a deed? A. Bill of sale B. Security agreement C. Balance sheet D. Operating statement - Answer- A. Bill of sale Which of the following is not considered an operating expense for appraisal of income tax purpose? A. Fixed expenses B. Variable expenses C. Reserve for replacements D. Annual debt service - Answer- D. Annual debt service What type of value does an appraiser most commonly estimate? A. Book 10 A. Tables published nationally by appraisal organization B. Rate schedules maintained by lending institutions C. The interest rate paid on Treasury Bills D. The relationship between sales prices and the income of similar properties - Answer- D. The relationship between sales prices and the income of similar properties When making adjustments based on the following information, what should be done with the $2,000? Comparable Sales Price = $40,000 Comparable Property = Two car garage Subject property = No garage Garage value = $2,000 A. It should be added to the price of the comparable property B. It should be added to the price of the subject property C. It should be subtracted from the price of the subject property D. It should be subtracted from the price of the comparable property - Answer- D. It should be subtracted from the price of the comparable property Which of the following best describes the free enterprise system? A. A market system B. A centralized system C. A socialist system D. A communist system - Answer- A. A market system All of the following statements apply to the real estate market, except: A. Situs value is value resulting from location B. Real estate is immobile C. Each parcel of real estate is unique D. The real estate market is National in nature - Answer- D. The real estate market is National in nature How does the real estate market react to shifts in consumer demand? A. Rapidly B. Slowly C. Not at all D. Through changes in zoning laws - Answer- B. Slowly Which of the following market factors will typically result in increased demand? A. A decrease in prices B. A decrease in income C. An increase in mortgage interest rates D. A decrease in population - Answer- A. A decrease in prices In the real estate market, what is a developer considered to be? 11 A. A lender B. A competitor C. A consumer D. A supplier - Answer- A. A supplier The real estate market experiences changed and cycles. What is a term used to describe the phase of the market where there is not enough demand to meet the current over-supply of available housing units? A. An inflationary market B. A buyer's market C. A seller's market D. An expanding market - Answer- B. A buyer's market Two factors that affect a real estate market are supply and demand, which of the following would be a good indicator of the measur snow supply versus demand? A. The population of the community B. Consumer preferences, such as number of bedrooms and bathrooms C. The asking price of a recently listed home in the community D. The vacancy rate within the community - Answer- D. The vacancy rate within the community What is the correct order of the business cycle phases? A. Expansion, trough, peak, and contraction B. Peak, contraction, expansion, and trough C. Expansion, peak, contraction, and trough D. Peak, trough, expansion, and contraction - Answer- C. Expansion, peak, contraction and trough In which conditions does market equilibrium theoretically exist? A. When supply exceeds demand B. When demand e creeds supply C. When costs and prices stabilize D. When supply and demand are in balance - Answer- D. When supply and demand are in balance When estimating supply, it is not necessary to consider which of the following? A. Price B. Availability of materials C. Availability of skilled labors D. Availability of land - Answer- A. Price It had been determined that the value of three lots, each having a value of $10,000 each, is $50,000 as a single tract parcel. Which concept does this illustrate? A. Attachment B. Parceling C. Plottage 12 D. Appreciation - Answer- C. Plottage Which of the following terms is used to describe the relatively new phenomenon in which small families move into older neighborhoods, renovate the properties, and displace poorer residents? A. Putrefaction B. Gentrification C. Stabilization D. Blockbusting - Answer- B. Gentrification What is the correct order in which the criteria for estimating highest and best use a d should be considered? A. Physically possible, legally permissible, maximally productive, and economically feasible B. Legally permissible, economically feasible, maximally productive, and physically possible C. Economically feasible, legally permissible, physically possible, and maximally productive D. Legally permissible, physically possible, economically feasible, and maximally productive - Answer- D. Legally permissible, physically possible, economically feasible, and maximally productive Which of the following might be indicated if a neighborhood appears to have an abundance of "For Sale" signs and an unusually high number if rentals available? A. Neighborhood growth is continuing B. A period of revitalization has begun C. The neighborhood has entered a period of stability D. Decline in the neighborhood may be indicated - Answer- D. Decline in the neighborhood may be indicated Which external force that affects value is indicated by the number of vacancies in an area? A. Social B. Economic C. Governmental D. Environmental - Answer- B. Economic What is the purpose of the closing statement? A. To summarize the financial aspects of a real estate transaction B. To determine the purchase price of the property C. To determine which party pays the brokerage commission D. To report income to the IRS - Answer- A. To summarize the financial aspects of a real estate transaction Which entry would normally appear as a de it on the buyer's statement? A. First mortgage balance being assumed 15 A. Saving associations B. Commercial banks C. Life insurance companies D. Mutual savings banks - Answer- C. Life insurance companies What will be the effect if the Federal Reserve Board decides to purchase government securities in the open market? A. The money supply will decrease and interests rates will increase B. The money supply will increase and interests rates will decrease C. The amount of money that member banks may use for loan purposes will be limited D. A tight money market will be created - Answer- B. The money supply will increase and interests rates will decrease Which group of financial institutions traditionally preferred to make short-term loans for construction? A. Mutual savings banks B. Savings associations C. Life insurance companies using a mortgage broker D. Commercial banks - Answer- D. Commercial banks Which of the following statements best describes the secondary mortgage market? A. It is the market where second mortgages are sold B. It is where loans originated in the primary markets are sold C. It is where loans made only by private parties are sold D. It is the market where second mortgages are originated - Answer- B. It is where loans originated in the primary markets are sold How are mortgage loan originators usually compensated for their Services? A. Monthly loan service fee B. Salary C. Finder's fee or commission D. Share of the borrower's assets - Answer- C. Finder's fee or commission With an adjustable rate mortgage, if a payment is not sufficient to cover the interest amount due, the unpaid interest amount may be added to the loan balance. What is the term used to describe this situation? A. Negative amortization B. Warehousing C. Indexing D. Predatory lending - Answer- A. Negative amortization When does disintermediation occur? A. When deposits exceed the demand for loans B. When depositors withdraw their savings from depository institutions to invest in higher yield alternatives investments C. When the IRS taxes earnings of investments 16 D. When the federal reserve board reduces the discount rate - Answer- B. When depositors withdraw their savings from depository institutions to invest in higher yield alternatives investments Which clauses in a blanket mortgage allows for the release of a single parcel upon payment of a specified sum? A. Defeasance B. Acceleration C. Satisfaction D. Release - Answer- D. Release Which of the following statements regarding types of mortgages loans is correct? A. Both the FHA and the VA make loans B. FHA loans are guaranteed C. The FHA insures loans. VA loans are guaranteed D. Conventional loans are insured by the govefnment - Answer- C. The FHA insures loans. VA loans are guaranteed Interest rates for Federal Housing Administration mortgages are determined by which of the following? A. The market B. FHA C. The government D. Congress - Answer- A. The market The Federal National Mortgage Association was originally formed to purchase what type of loans? A. Conventional B. FHA C. VA D. Deeds of trust - Answer- B. FHA Gerri has a 15 year loan with monthly payments that remain the same amount for the entire loan period. Which type of mortgage repayment plan does Gerri have? A. Adjustable rate B. Indexed C. Partially amortized D. Level payment - Answer- C. Partially amortized If a mortgage payment consists of interest only, what is the final payment (which includes the full amount borrowed) called? A. Monthly payment B. Balloon payment C. Amortized payment D. Term payment - Answer- C. Amortized payment 17 Lenders who make conventional loans where the buyer provides less than 20% down payment will normally require that the borrower pay which of the following? A. Up-Front mortgage insurance premium UFMIP payments B. Uninsured Primary Mortgage Insurance UPMI C. Mortgage insurance premiums MIP payments D. Private mortgage insurance PMI - Answer- D. Private Mortgage Insurance PMI Which legal instrument evidences the debt and states the interest rate, term, payment requirement, and other information related to the loan? A. Promissory note B. Contract C. Lien D. Mortgage - Answer- A. Promissory note What is the function of a mortgage? A. It conveys title to real property B. It secures repayment of the debt C. It creates a personal pledge to repay a loan D. It creates a lien on the mortgagee's property - Answer- . It secures repay,ent of a debt When financing the purchase of real estate, what is the role of the mortgages? A. A mortgagor gives a mortgage to a mortgagee B. A mortgagor takes a Mortgage from a mortgagee C. A mortgagor gives a mortgage to a borrower D. A mortgagor takes a mortgage from a lender - Answer- A. A mortgagor gives a mortgage to a mortgagee Which clause in a mortgage requires the lender to acknowledge performance by the borrower? A. Estoppel B. Acceleration C. Defeasance D. Release - Answer- C. Defeasance In order to qualify for an FHA 203b insured mortgage loan, an applicant's housing expense ratio cannot exceed what percentage? A. 25% B. 28% C. 31% D. 43% - Answer- C. 31% Which statement best describes a short sale? A. A real estate transaction that closes in under 30 days B. A settlement agreement where the lender agrees to a sales price that is below the outstanding loan balance 20 D. Revoke the listing contract - Answer- A. A full commission Which term refers to a type of contract where all terms and conditions are NOT fully expressed? A. Implied B. Bilateral C. Patrol D. Executory - Answer- A. Implied What are the required elements of all valid contracts? A. Lawful subject, competent parties, legal age and offer B. Offer, acceptance, legal age, and lawful subject C. Lawful subject, agreement, consideration, and two or more competent parties D. Meeting of the minds, legal age, offer, and competent parties - Answer- C. Lawful subject, agreement, consideration, and two or more competent parties To which of the following does the phrase "meeting of the minds" refer? A. Offer and acceptance B. Consideration C. Lawful subject D. Two or more parties - Answer- A. Offer and acceptance Which of the following best describes a contract? A. A written instrument B. Legally binding C. Void unless accompanied by earnest money D. Always bilateral - Answer- B. Legally binding What is the term used to describe the party who receives an offer? A. Offeree B. Offeror C. Optionor D. Optionee - Answer- A. Offeree Which of the following terms best describes a contract in which all of the terms and conditions have been fully performed? A. Executory B. Bilateral C. Unilateral D. Executed - Answer- D. Executed Which statute requires a purchase and sale contract to be in writing in order to be enforceable? A. F.S 475 B. F.S. 120 C. Statute of Limitations 21 D. Statute of Frauds - Answer- D. Statute of Frauds What is the term used to describe the consideration given by a buyer to indicate serious intent to buy a property? A. An earnest money deposit B. A check deposit C. Legal tender D. A boot deposit - Answer- A. An earnest money deposit All of the following,ay terminate an offer, EXCEPT: A. Expiration of a reasonable of specified time period B. The death of the offeror C. A counteroffer D. A failure to obtain a binder deposit - Answer- D. A failure to obtain a binder deposit Which of the following establishes the time period for enforcement of a contract? A. Statute of Frauds B. Statute of Limitations C. Real Estate license law D. State courts - Answer- B. Statute of Limitations A buyer who negotiates a contract to purchase property, takes possession and pays the property purchase price in installments, but does not receive the legal title until the full purchase price has been paid. What is this agreement called? A. An obvious attempt to defraud the buyer B. A lease option C. A violation of the Statute of Frauds D. An installment contract, contract for deed or land contract - Answer- D. An installment contract, contract for deed or land contract A real estate license is legally allowed to prepare all of the following types of documents, EXCEPT: A. Purchase and sale contract B. Listings C. Leases D. Option contracts - Answer- C. Leases Which of the following best describes a contract for sale that contains a street address instead of a legal description? A. It is not valid under the Statute of Frauds B. It is only valid if witnessed C. It is valid, but may lead to a future dispute D. It is a violation of the code of ethics - Answer- C. It is valid, but may lead to a future dispute 22 Which method of legal description uses compass bearings to indicate the direction of boundary lines? A. Lot and block system B. Government survey method C. Play maggot D. Surveyor's method - Answer- D. Surveyor's method What is the primary reference point in a metes and bounds description. A. The starting point B. The monument, or permanent marker C. The initial reference point D. The point of first reference - Answer- B. The monument or permanent marker Who should prepare a legal description? A. Land surveyor B. Attorney C. Broker D. Title company - Answer- A. Land surveyor A property description which reads in part "...run N 73° a distance of 26.8'; thence run E a distance of 100.43..." is being described using which method of legal description? A. Government survey B. Plat C. Metes and bounds D. Township - Answer- C. Metes and bounds What is the man north/south line used in the government survey method? A. Prime meridian B. Principal longitude C. Principal baseline D. Principal meridian - Answer- D. Principal meridian Which term refers to the area between meridians? A. Range B. Tier C. Section D. Acre - Answer- A. Range What is the distance between meridians? A. 5 miles B. 6 miles C. 10 miles D. 18 miles - Answer- B 6 miles How many sections does a township contain? A. 24 25 A. Referee B. Benefactor C. Personal representative D. Relative - Answer- C. Personal representative Mary and Louise open a beauty ship in a regional mall. The terms of their lease require that a portion of their business income, in addition to their periodic rent amount, be paid to the landlord. What type of lease do they have? A. Gross B. Step up C. Percentage D. Ground - Answer- C. Percentage Zoning is an example of which government limitation over private property rights? A. Police power B. Eminent domain C. Escheat D. Taxation - Answer- A. Police power Which of the following statements is true regarding an attorney's opinion of title? A. It guarantees the title B. It guarantees the authenticity of the documents C. It is the same as title insurance D. It is rendered after an examination of an abstract - Answer- D. It is rendered after an examination of an abstract Which of the following is required to obtain title by adverse possession? A. Possession of the property for one month B. Pay taxes on the property for two years C. Notorious, open hostile, adverse and exclusive possession of the property for seven or more consecutive years D. Open and continuous use for 20 or more years - Answer- C. Notorious, open hostile adverse and exclusive possession of the property for seven or more consecutive years What type of notice is considered to be the best proof of ownership? A. Actual B. Constructive C. Implied D. Expressed - Answer- B. Constructive A five year lease of a 10,000 square foot warehouse prohibits assignment. After two years, the tenant is unable to continue with the full rent payments and arranged with another tenant to take over one half of the space and pay one half of the rent for the remaining term. What is this arrangement called? A. A violation of the terms of the lease B. A violation of F.S 83 26 C. A lease option D. A sublease - Answer- D. A sublease All of the following estates include legal title to real property, EXCEPT: A. Tenancy for years B. Fee simple estate C. Life estate D. Tenancy by entireties - Answer- A. Tenancy for years Florida timeshare projects are regulated by which organization? A. Florida real estate commission B. Department of community affairs C. Division of Florida condominiums, timeshares, and mobile homes D. Department of housing and urban development - Answer- C. Division of Florida condominiums, timeshares, and mobile homes Able, who holds title in fee simple, deeds land to Baker to enjoy until his death. At that time, Charlie is to receive title to the land. Baker's interest in the land is known as which of the following? A. Fee simple estate B. Life estate C. Remainder estate D. Joint estate - Answer- B. Remainder estate What rights allow a property owner to have reasonable use of water flowing over or through their land? A. Riparian B. Littoral C. Flowage D. Aquifer - Answer- A. Riparian A potential purchases of a new timeshare can cancel the contract without penalty within how many days? A. 10 B. 20 C. 30 D. 40 - Answer- A. 10 Which statement best describes a tenancy at sufferance? A. The tenant suffers from the landlord's failure to maintain the property B. The landlord suffers from the tenant's failure to pay rent C. The lease instrument is valid D. The tenant remained in possession after expiration of a lease - Answer- D. The tenant remained in possession after expiration of a lease Which of the following describes a tenancy at will? 27 A. A lease which can be terminated at the will of the landlord or tenant by giving legal notice B. Any lease for less than a year C. A written lease that provides a definite beginning and ending date D. Any tenancy created by a written lease - Answer- A. Lease which can be terminated at the will of the landlord or tenant by giving legal notice What is the elective share right in Florida? A. 50% of real estate only B. 30% of the real and personal property owned at the time of death C. 30% of all property owned and obtained by the decedent during the marriage D. One-third of all property - Answer- B. 30% of the real and personal property owned at the time of death What does the bundle of rights in real property include? A. Destruction, use and extinction B. Destruction, use and enjoyment C. Use, expatriation, and enjoyment D. Disposition, enjoyment, and exclusion - Answer- D. Disposition, enjoyment, and exclusion Which of the following are the tests used by courts to determine whether an item is real or personal property? A . Intent, relationship of the parties, method of annexation and adaptation B. Intent, abandonment, redemption, and accretion C. Size, annexation, avulsion, and adaptation D. Intent, size, annexation, and redemption - Answer- A. Intent, relationship of the parties, methods of annexation and adaptation What are the four unities required t create a joint tenancy? A. Interest, survivorship, possession, and time B. Possession, deed, title, and time C. Possession, interest, time and title D. Person, use, interest and purpose - Answer- C. Possession, interest, time and title The law of descent and distribution passes what percentage to a surviving spouse if there are no lineal descendants? A. 30% B. 33% C. 50% D. 100% - Answer- D. 100% Which of the following is a form of corporate ownership that allows possession under a proprietary lease? A. Condominium B. Tenancy in common 30 The Fair Housing Act of 1968 prohibits discrimination based on which of the following? A. Age B. Marital status C. Occupation D. National origin - Answer- D. National origin Which legislation prohibited discrimination based on religion? A. Civil Rights Act of 1866 B. Civil Rights Act of 1968 C. Civil Rights Act of 1964 D. 1988 Far Housing Amendment - Answer- B. Civil Rights Act of 1968 What is the maximum fine that may be imposed for a first time violation of the Florida Fair Housing Act? A. $5,000 B. $10,000 C. $25,000 D. $50,000 - Answer- B. $10,000 What is the first step in the eviction process? A. The landlord notifies the tenant that they must cure the problem within a specified time or vacate the property B. The sheriff post a 24 hour notice of removal on the tenant's door C. The county clerk issues an eviction summons D. The landlord files a motion for default - Answer- A. The landlord notifies the tenant that they must cure the problem or vacate the property When may a landlord commingle a tenant's security deposit with other business funds? A. When the landlord pays the tenant 75% of the interest earned B. When the landlord deposits the funds into a non-interest bearing account C. When the landlord posts a surety bond D. When the landlord places the funds into an escrow account controlled by the property management company - Answer- C. When the landlord posts a surety bond What is the purpose of the disciplinary guidelines? A. To extend the meaning of the law B. To specify and implement the law C. To give new meaning to the law D. To give licensees notice of the range of penalties that normally will be imposed for violation of a law or rule - Answer- D. To give licensees notice of the range of penalties that normally will be imposed for violation of a law or rule Who reports findings of facts to the Commission at the conclusion of an administrative hearing? A. An attorney 31 B. The Division of Real Estate investigator C. The Division of Real Estate prosecutors D. The administrative law judge - Answer- D. The administrative law judge What happens if a respondent fails to answer an administrative complaint? A. The defendant will be issued a subpoena B. The Commission will dismiss charges against the licensee C. The Commission will proceed with the hearing D. The Department of Business and Professional Regulation will send investigators to arrest the oicensee - Answer- C. The Commission will proceed with the hearing The range of penalties that may be imposed on a licensee by the commission for violation of law or rules includes which of the following? A. Denial, reprimand, fine, prohibition, suspension, and revocation B. Imprisonment only C. A fine and imprisonment only D. A fine, reprimand, denial, suspension, revocation, and imprisonment - Answer- A. Denial, reprimand, fine, prohibition, suspension, and revocation An appeal of a Commission final order is filed with which of the following? A. Florida Supreme Court B. District court of appeals C. County court D. Department of administrative hearings - Answer- B. District court of appeals Which of the following statements best describes the Probable Cause Panel? A. The Probable Cause Panel is composed of three Florida real estate commission members, no more that one of which may be a lay member B. The probable cause panel is an exercise of the quasi-judicial powers of the Florida Real Estate Commission C. The probable cause palm determines, guilt or innocence, and submits a recommended order to the Florida real estate commission D. The probable cause panel has 30 days from receipt of a complete report to recommend dismissal or issuance of a formal complaint - Answer- D. The probable cause panel has 30 days from receipt of a complete report to recommend dismissal of issuance of a formal complaint What is the charge for anyone found guilty off using false or misleading advertisement? A. Third-degree misdemeanor B. Second degree misdemeanor C. First degree misdemeanor D. Third degree felony - Answer- B. Second degree misdemeanor Which is the maximum amount of money that can be paid from the Real Estate Recovery Fund to three persons who suffered monetary loss as a result of a fraudulent act committed by a real estate licensee and have been awarded a single judgement? 32 A. $150,000 B. $50,000 C. $25,000 D. $10,000 - Answer- B. $50,000 In which of the following circumstances may a citation be issued to a licensee? A. When no substantial threat to the public, health, safety, and welfare exists B. The hearing officer recommends one C. A final order was served on the licensee D. A formal complaint has been received by the Department - Answer- A. When no substantial threat to public, health, safety, or welfare exists What is the maximum fine FREC can impose against a licensee who is found to be guilty of two violations of F.S 475? A. $1,000 B. $5,000 C. $7,500 D. $10,000 - Answer- D. $10,000 What action might the Secretary of the Department of Business and Professional Regulation take against a broker whose actions pose an immediate serious danger to the safety and welfare of the public? A. Suspend the licensee's license for ten years B. Issue a summary suspension C. Issue a cease and desist order D. Place the licensee of probation - Answer- B. Issue a summary suspension What action may be taken if either the Florida Estate Commission or the licensee disagrees with a recommended order submitted by the administrative law judge? A. Seek adjunction B. Submit the matter to mediation C. File exceptions D. Request novation - Answer- C. File exceptions How is the Florida Recovery Fund funded? A. Property tax dollars B. The Florida state treasury C. State intangible taxes D. Fees and fines paid by real estate licensees - Answer- D. Fees and fines paid by real estate licensees What must an unlicensed individual do when ordered to appear before the DBPR? A. Nothing, the department has no jurisdiction over unlicensed persons B. Appear C. File an appeal D. Bring an attorney - Answer- B. Appear 35 A. Tables and chairs are provided for sales association and customers B. The location is used as a shelter to get out of the sun or rain C. Literature which contains the broker's office address is handed out D. Sales associates are permanently assigned to the location - Answer- D. Sales associates are permanent assigned to the location Which statement best describes the sign requirements for a brokerage office? A. Only one sign per firm is required regardless of number of offices B. The location is used as a shelter to get out of the sun or rain C. Literature which contains the broker's office address is handed out D. Sales associates are permanent assigned to the location - Answer- D. Sales associates are permanently assigned to the location Which statement best describes the sign requirements for a brokerage office? A. Only one sign per firm is required regardless of the number of offices B. Each sales associate associates with the firm must have a separate sign C. Every active broker must maintain a sign D. Office signs are permitted but not required by law - Answer- C. Every active broker must maintain a sign All of the following actions are authorized alternatives for a broker to use in order to resolve an escrow dispute, EXCEPT: A. Seek an escrow disbursement order from the commission B. Submit the escrow dispute to mediation or arbitration C. Seek a court decision to resolve the escrow dispute D. Obtain an attorney's opinion - Answer- D. Obtain an attorney's opinion A real estate brokerage firm advertises a listed property. Which requirement is correct? A. The name of at least one sales associates must be included in the ad B. The name of the brokerage must be included in the ad C. An ad may not be prepared by a sales associate D. The names of sales associates may not be included in the ad - Answer- B. The name of the brokerage must be included in the ad Which of the following is an approved depository for earnest money? A. A bank within the state of Florida B. A stock brokerage firm C. A broker's personal checking out D. A safe in a real estate office - Answer- A. A bank within the state of Florida What must a sales associate do upon receiving an earnest money deposit? A. Deposit funds in an insured bank account B. Deliver the funds to their employing broker or owner developer C. Deposit the funds in an escrow account D. Deposit the funds with the Florida Real Estate Commission - Answer- B. Deliver the funds to their employing broker or owner developer 36 What action should a broker take if a commission dispute arises prior to closing? A. Return the deposit to the buyer or seller based on which party asks for it first B. Withdraw the amount of the commission from the escrow account C. Retain the exact amount of the disputed commission in the escrow account until the dispute is settled D. Distribute the escrow funds according to the directions of the company attorney - Answer- C. Retain the exact amount of the disputed commission in the escrow account until the dispute is settled A prospective tenant pays a licensee for a rental information list. What percentage of the fee paid may the prospective tenant receive if the licensee provides inaccurate information? A. 100% B. 75% C. 25% D. 0% - Answer- A. 100% Three individuals decide to open a real estate brokerage office. Which statement best describes the legal requirements? A. Sales associates are not permitted to own stock in the entity B. All sales associates, brokers associates, and brokers who are registered with the firm must be either officers or directors C. If a sales associate wishes to be an officer or director, their license must be placed on inactive status D. At least one officer must be an active broker - Answer- D. At least one officer must be an active broker A buyer drops off am escrow check on Tuesday. To avoid any trouble with the FREC, on which day must the broker deposit the check by close of business? A. The following Monday B. Wednesday C. Thursday D. Friday - Answer- D. Friday Who owes fiduciary duties in a single agency relationship? A. The broker only B. The principal only C. Both parties D. Neither party - Answer- A. The broker only All of the following activities are exempt from the requirement to provide disclosures under the Brokerage Relationship Disclosure Act, EXCEPT: A. Sales staff at a new development center B. Showing property to a party that is not being represented 37 C. A bona fide open house or model home showing that does not involve eliciting confidential information, the execution of a contractual offer or an agreement for representation, or negotiations concerning price terms, or conditions of a potential sale D. Responding to general factual questions from a potential buyer or seller concerning properties that have been advertised for sale - Answer- B. Showing property to a party that is not being represented As an agent, a broker is employed by acts on behalf of whom? A. A buyer B. A seller C. A customer D. A principal - Answer- D. A principal In which of the following situations does a general agency relationship exist? A. When a broker is employed to market a property B. When a sales associate is working with a customer C. When a sales associate is employed by a broker D. When a broker is employed by a buyer - Answer- C. When a sales associate is employed by a broker Broker Joan just received an oral offer to purchase listed property. No earnest money accompanied the oral offer. Which of the following statements is correct? A. Joan must present the offer B. Joan should not present the offer since no earnest money deposit was received C. Joan must advise the customer that an earnest money deposit is required to make an offer valid D. Joan should reject the offer on behalf of the seller - Answer- A. Joan must present the offer Which of the following statements best describes a transaction broker? A. A transaction broker is an agent of both parties B. A transaction broker has fiduciary duties to the seller C. A transaction broker has fiduciary duties to the buyer D. A transaction broker may provide limited representation to both parties - Answer- D. A transaction broker may provide limited representation to both parties An agent failed to advise a principal regarding the value of the owner's property prior to accepting a listing. Which fiduciary duty did the agent breach? A. Loyalty B. Disclosure C. Accounting D. Obedience - Answer- B. Disclosure Broker Tom sold a property which was listed with broker Alice. Tom was unable to attend the closing, so Alice collected the entire commission. Alice refused to pay Tom his share of the commission. What could Alice be charged with? 40 B. A broker can buy the listed property without consent of the principal C. A broker must follow all legal instructions of the principal or withdraw D. A broker must ignore the instructions of a principal when the instructions are not in the best interest of the principal - Answer- C. A broker must follow all legal instructions of the principal or withdraw The Department of Business and Professional Regulation has the authority to issue all of the following, EXCEPT: A. A cease and desist order B. A subpoena C. An injunction D. A notice of non compliance - Answer- C. An injunction What is the maximum number of years a member may serve on the Florida Real Estate Commission? A. 4 B. 8 C. 12 D. No maximum - Answer- D. No maximum Which statement is true regarding the secretary of the Department of a business and Professional Regulation? A. The secretary is a member of the Florida Real Estate Commission B. The secretary is appointed by the governor C. The secretary must be an attorney D. The secretary answers to the state legislature in the performance of duties - Answer- B. The secretary is appointed by the governor Which of the following entities issues real estate licenses? A. The state of Florida B. The Department of Business and Professional Regulation C. The Department of Revenue D. The Florida Real Estate Commission - Answer- B. The Department of Business and Professional Regulation After being active in the real estate business for over five years, a licensee's license expired on a September 30th. What is the status of their license on October 1st? A. Suspended B. Revoked C. Involuntary inactive D. Voluntary inactive - Answer- C. Involuntary inactive The Florida Real Estate Commission held a new meeting for the purpose of passing a new rule. This is an exercise of which commission power? A. Executive B. Quasi-legislative 41 C. Quasi-judicial D. Ministerial - Answer- B. Quasi-legislative Which of the following statements is true regarding the director of The Division of Real Estate? A. The director is appointed by the secretary of the Department of a Business and Professional Regulation B. The director is a member of the Florida Real Estate Commission C. The director is not subject to confirmation or approval by the Florida Real Estate Commission D. The director answers only to the governor in the performance of their duties - Answer- A. The director is appointed by the Secretary of the DBPR The DBPR was created by which statute? A. F.S 120 B. F.S. 455 C. F.S. 475 D. F.S 494 - Answer- B. F.S 455 If an applicant for a real estate license provides false information, they commit which of the following criminal violations? A. First degree misdemeanor B. Second degree misdemeanor C. Second degree felony D. Third degree felony - Answer- D. Third degree felony What action may the DBPR take if it determines that an unlicensed person has operated in violation of a law or rule under state administration? A. None, since the DBPR has no jurisdiction over unlicensed persons B. It may issue an injunction prohibiting such activity in the future C. It may imprison the violator for up to five years D. An administrative fine up to $5,000 - Answer- D. An administrative fine up to $5,000 Educational requirements of applicants for a real estate license are promulgated under what authority of the Florida Real Estate Commission? A. Ministerial B. Executive C. Quasi-legislative D. Quasi-judicial - Answer- B. Executive When is a request for the renewal of a license effective? A. When received by the department B. The day following expiration C. On the date the application is mailed D. On the date indicated on the license - Answer- A. When received by the Department. 42 When does a real estate license expire? A. On the date shown on the license B. Every two years C. On the effective date D. At the end of one year - Answer- A. On the date shown on the license New Commission rules must be approved by which of the following? A. The DBPR B. the Secretary of State C. The governor D. No one - Answer- D. No one How long may a license remain in voluntary inactive status? A. 2 years B. 4 years C. 10 years D. Indefinitely - Answer- D. Indefinitely Which of the following best describes certificates that are entered into court as evidence? A. Of no value B. Disqualified C. Prima facie evidence D. Proof of fact - Answer- C. Prima facie evidence Violations of the Commission rules are prosecuted by which agency? A. Florida BAR association B. DBPR C. Florida state attorney general D. Sheriff of the county in which the violation occurred - Answer- B. DBPR A sales associate is employed by a broker Monday-Friday and for a builder on the weekends. The sales associate feels the added experience is beneficial especially since both employers pay an attractive commission split. Which statement is correct? A. The sales associate must obtain a group license B. Multiple licenses are required in this situation C. This arrangement violates license law D. This is permissible if both employers agree to the arrangement - Answer- C. This arrangement violates license law In what year was the Florida Real Estate Commission created? A. 1932 B. 1925 C. 1923 D. 1919 - Answer- B. 1925 45 B. Is exempt from continuing education requirements to maintain a real estate license C. Is not allowed to simultaneously hold a real estate license D. May be licensed as a broker but not as a sales associate - Answer- B. Is exempt from continuing education requirements to maintain a real estate license What is a broker associate? A. a broker who employs sales associates B. A sales associate C. A broker who is employed as a sales associate D. A sales associate who is employed as a broker - Answer- C. A broker who is employed as a sales associate Florida has an agreement with some other states that recognizes the similarity in education and experience requirements for licensees. What is the agreement called? A. Reciprocity B. Mutual recognition C. Cooperative licensure D. Intrastate licensing - Answer- B. Mutual recognition Which of the following statements is true regarding a plumber who had been appointed by a court to appraise a small business? A. The plumber is in violation of F.S 475 B. The plumber may charge a commission C. The plumber may do so and be paid a fee D. The plumber must first be licensed under F.S 475 part 2 - Answer- C. The plumber may do so and be paid a fee All of the following individuals are exempt from the real estate license law, EXCEPT: A. Employees of a corporation who are paid on a salary basis B. Partners in a partnership who receive a pro rata share of the profits C. Condominium managers who rent units within the complex for periods up to 1 year D. Funeral directors performing duties of real estate for compensation - Answer- D. Funeral directors performing duties of real estate for compensation A Georgia broker with extensive experience in conducting auctions was asked by a local real estate broker to auction a small motel in Jacksonville. The auction did not result in a sale. The Florida broker paid the Georgia broker for out of pocket expenses, but did not pay a commission. Which of the following statements is correct? A. The Georgia broker violated license law B. The Florida broker did not violate license law C. The Florida broker is not subject to discipline by the commission D. The transaction is perfectly within the license law - Answer- A. The Georgia broker violated license law Which of the following statements is true regarding a mortgage loan originator? A. A MLO is the same as a mortgage lender 46 B. A MLO must have a separate license C. A MLO makes loans D. A MLO must have a real estate license - Answer- B. A MLO must have a separate license A real estate appraiser's fee for professional service is based on which of the following? A. A percentage of the property's gross income B. A percentage of the fair market value of the property C. The time and difficulty of the appraisal D. A percentage of the property's sale price - Answer- C. The time and difficulty of the appraisal Which of the following best describes the real estate brokerage business? A. Service business B. Simple business C. Business with few opportunities available D. Construction business - Answer- A. Service business When a developer completes construction of a new subdivision, all streets, electric, water, and sewer installations are finished and deeded to the city or county. What is this process called? A. A quit claim deed B. An easement C. Annexation D. Dedication - Answer- D. Dedication All of the following are responsibilities of a property manager, EXCEPT: A. renting property for an absentee owner B. Collecting rent C. Overseeing maintenance D. Preparing leases - Answer- D. Preparing leases What does the term farming" refer to? A. Specializing in one geographic area B. Working in a cooperative manner C. Specializing in agricultural properties D. Specializing in the sales of orange groves or cattle farms - Answer- A. Specializing in one geographic area Which insurance policies can a real estate licensee offer to the public without additional state licensing? A. Flood insurance B. Fire insurance C. Renter's insurance D. None of the above - Answer- D. Of the above 47 What is the purpose of the National Association of REALTORS? A. Preserve the right of individuals to own real property through an exchange of information B. Organize antigovernment activities C. Promoters unethical practice of real estate professionals D. Award unearned educational designations - Answer- A. Preserve the right of individuals to own real property through an exchange of information A developer contracts to build a home according to the buyer's specifications. This is an example of which type of building? A. Tract B. Custom C. Speculative D. Subdivision - Answer- B. Custom The federal, state, and local governments all play a role in the regulation of real estate. In which of the following areas would the local government have the most impact? A. Property taxes, building moratoriums, and zoning B. Primary and secondary mortgage markets C. Documentary stamp taxes, intangible taxes, and note taxes D. Civil rights enforcement and monetary policy - Answer- A. Property taxes, building moratoriums, and zoning Which of the following best describes licensees who are business opportunity brokerage? A. They must be able to analyze financial statements and understand balance sheets B. They are not required to know much about the business they are selling C. They must have a separate license D. They never become involved in the tax aspects of business - Answer- A. They must be able to analyze financial statements and understand balance sheets Real estate licensees are expected to be knowledgeable in all of the following areas, EXCEPT: A. Marketing B. Valuation C. Property transfer D. Accounting - Answer- D. Accounting Which service provided by real estate licensees requires the most experience and knowledge? A. Property management B. Counseling C. Apprising D. Agricultural sales - Answer- B. Counseling