Sales Exam 5 – Flashcards
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A salesperson may advertise a property for sale only if: (A) The salesperson pays for it out of his or her commission; (B) The salesperson personally listed the property; (C) The name of the broker is stated in the ad; (D) The broker is a "Realtor"
answer
(C) The broker's name must be part of the ad or the ad is a blind ad. Blind ads are not permitted.
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If a lot is 220 feet wide and 330 feet deep, it contains approximately: (A) 3/4ths of an acre; (B) 1 3/5 of an acre; (C) 1 acre; (D) 1 2/3rds of an acre
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(D) Length x width= area 43,560 square feet= 1 acre (you must knowthis) 220 x 330 = 72,600 square feet 72,600 I 43,560 = 1.67 acres
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The federal right to cancel notice must be given to a borrower by the agent if: (A) A commercial building is being used for the security for the loan; (B) The loan is not secured by the borrower's dwelling and more than $25,000 is being borrowed; (C) The borrower's residence is the security for the loan; (D) The money will be used for a business expansion
answer
(C) Statement of fact under the Truth in Lending Law.
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All of the following could be a negotiable instrument, except:. (A) An installment note; (B) A draft; (C) A personal check; (D) A trust deed
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(D) A trust note is negotiable; the trust deed is not.
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When the real estate appraiser is concerned with the "present worth of future potential benefits" in appraisal, he is concerned with: (A) Market data; (B) Income; (C) Cost; (D) Financing
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(B) "Present worth of future potential benefits" refers to the income approach in appraising. It converts income to value.
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When a tenant who has rightfully come into possession of a property by means of a lease agreement, retains possession after the termination of said lease without permission of the owner, it is called: (A) Estate for Years; (B) Estate at Sufferance; (C) Periodic Tenancy; (D) Estate at will
answer
(B) Definition of an Estate at Sufferance.
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A house sells for $150,000. The buyer assumes an existing loan against the property for $130,000. The documentary transfer tax for this county is $.55 per $500 of consideration. The transfer tax is: (A) $11; (B) $22; (C) $33; (D) $44
answer
(B) Documentary transfer tax is $1.10 per $1,000. It is not charged on an assumed loan. $150,000 purchase price - 130,000 assumed loan = $20,000 20 (one thousands) x 1.10 = $22 documentary transfer tax
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Which of the following would be the best and most complete definition of the term "encumbrance"? (A) The degree, quantity,. nature, and extent of interest which a person has in real property; (B) The use of property by a debtor to offer a creditor security for a debt; (C) Any action taken relative to property, other than acquiring or transferring title; (D) Anything which affects or limits the fee simple title to property
answer
(D) Definition of an encumbrance.
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One of the essential elements for a contract that is to create a binding and enforceable principalagency relationship for the sale of any right, title, or interest in real property is: (A) A written instrument; (B) A written agreement as to the amount of commission; (C) An authorization to accept a deposit; (D) A written authorization to accept offers on the property
answer
(A) Listing agreements, which create the agency relationship, must be in writing to be enforceable.
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The owner of real property grants a broker an exclusive authorization to sell. The broker expends time and money attempting to find a buyer. The owner then refuses to allow the broker to proceed with the agreement. The broker's remedy is to: (A) Continue performance and disregard the owner's refusal to cooperate; (B) Consider the owner's refusal to cooperate as a breach of contract and claim the entire commission amount as liquidated damages; (C) Consider the owner's refusal to cooperate as a breach and sue for damages; (D) Construe the owner's refusal to cooperate as causing impossibility of performance which will relieve the owner of liability
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(C) Civil suit would be the remedy for breach of contract. "Liquidated damages" refers to a clause in the offer to purchase between buyer and seller. It relates to forfeiture of deposit if buyer defaults on contract.
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Which of the following conditions would not cause a building to be declared substandard? (A) There is dampness in the habitable rooms; (B) The electrical wiring does not comply with present code, but it did when it was installed and it is now safe and is working properly; (C) There is no heating; (D) The heating duct system is faulty
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(B) As long as the codes were met when the building was built and the electrical wiring is safe, it would not cause a building to be declared substandard.
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A charge imposed upon real property to insure the payment of a debt or to insure the performance of a specific act is a definition of: (A) An encumbrance; (B) A lien; (C) An easement; (D) A restriction
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(B) A lien is used to collect money. The property is collateral for payment. Nonpayment will result in loss of title.
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Salesperson Maxwell is discharged by Broker Hansen for a misrepresentation of a material fact in the sale of an apartment building. How quickly must Hansen notify the Real Estate Commissioner? (A) Within five business days; (B) Immediately; (C) Within 10 days; (D) Within thirty days
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(B) B Statement of fact.
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A broker was employed under a listing agreement which expressly authorized him to accept a deposit Upon receiving• a deposit, and prior to acceptance of the offer by the seller the broker misappropriated the funds. Under these circumstances the risk of loss would be: (A) On the buyer since the broker is his agent for the purpose of taking deposits to the seller; (B) On the seller since the broker acts as his agent With specific authority to receive deposits; (C) Borne equally by the buyer and the seller since neither is at fault regarding the loss; (D) On the buyer since he is able to control the possibility of misappropriation by making his check payable either to a neutral escrow or to the seller
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(B) The broker is an agent of the seller under the listing agreement. When he has the authority to accept a deposit, he does so for the seller. The seller is responsible for all acts of the agent when the agent is acting Within authority conferred by the principal.
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Which of the following defines the term "equity": (A) The owner's interest in real property, over and above all liens against it; (B) The difference between the loan amount and the value or price of the property; (C) The initial down payment on the property; (D) Any of the above
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(D) All of these choices are good examples of equity - difference between value and liens.
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An appraiser is appraising a single family residence arid notices an abandoned gas station next door. The appraiser would logically recommend which of the following: (A) A structural pest control report; (B) . A toxic waste report from the EPA; (C) Rezoning of the property; (D) A soils report by a civil engineer
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(B) Toxic waste is a potential problem for property used as a gas station. A toxic waste report should be ordered.
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When a document is signed by officers acting in behalf of their corporation, a seal is attached that: (A) Makes it eligible for recording; (B) Shows that consideration has been paid; (C) Implies authority of person signing; (D) All of the above
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(C) A corporate seal implies the authority of those signing - it is not an acknowledgment.
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Anderson completes a purchase contract and receipt for deposit and inserts in the financing clause that the offer for the home is "subject to" buyer Leon obtaining a second trust deed. The seller accepts the offer and escrow is opened. During the escrow process, Leon was turned down for the second trust deed. In this case: (A) The seller may retain one-half of the deposit; Leon's deposit will be returned to him in full; (C) The seller may use the liquidated damages clause and retain the entire deposit; (D) The seller is entitled to file a specific performance lawsuit against Leon
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(B) This is a condition of the contract. If a condition cannot be met, there is no liability on either party.
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A percolation test is often conducted in a new proposed subdivision to ascertain the: (A) Ability of the soil to absorb water; (B) Width and depth requirements of footings; (C) Quantity and quality of well water; (D) Approximate size of the water storage tank needed to service a given size house or farm building
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(A) Statement of fact.
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There are no two parcels that are identical in size and features and are consequently non substitutable; therefore the courts use this basis to render their decision in: (A) Quiet title action; Lis pendens; (C) Specific performance; (D) Decrees of partition
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(C) A suit for specific performance asks the court to enforce a contract for the sale or purchase of a parcel of land on which either the buyer or seller has defaulted. The basis of the suit is that land is one-of-a-kind and not substitutable.
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Buyer Jacob has presented an offer on a home and the seller has accepted. During the escrow period, Jacob wants to begin making repairs on the property. The proper way to arrange this is: For the buyer and the seller to execute an amendment to the escrow instructions; (B) To ask the listing broker to allow Jacob to enter the property; (C) To have the seller agree to allow Jacob to make the repairs; (D) For the buyer to proceed with the repairs
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(A) Since this was not agreed upon when the escrow instructions were executed, the instructions should be amended. This would protect both seller and buyer.
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A freehold estate consists of: (A) A fee estate; (B) An estate at will; (C) An estate from period to period; (D) A leasehold estate
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(A) Freehold estate, fee estate, fee simple estate and fee simple absolute mean the same.
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If a licensee placed the following ad in a newspaper, which of the following would describe the ad? ''Three bedroom, two bath, pool and spa, large lot - $167,000. 555-1234." (A) This is false advertising; (B) This is misleading advertising; (C) The violates Regulation Z; (D) This is a blind advertising
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(D) A blind ad has no broker's name. This is required in real estate advertising.
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On June 10, a prospective buyer gave a deposit to a broker and signed the usual form of an offer to purchase property. The deposit form included the statement, "This offer is irrevocable for five days." On June 11, and before the offer had been accepted by the seller, the buyer contacted the broker and withdrew his offer and demanded the return of his deposit. The broker: Has until June 16 to obtain the seller's acceptance; (B) Has until June 15 to obtain the seller's acceptance; (C) Must return the deposit to the buyer as demanded; (D) Must place the deposit in a neutral escrow until the five day period expires
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(C) An offer may be revoked any time prior to acceptance being communicated to buyer.
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An owner sold a property for a $100,000 profit. The $100,000 represents a 25% profit. What was the selling price? (A) $250,000; (B) $300,000; (C) $375,000; (D) $400,000
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(D) Made I Rate = Paid $100,000 I 25% = $400,000.
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Which is true concerning promissory notes? (A) They are used as security for trust deeds; (B) They are recorded at the county recorder's office; (C) The are always used when real estate is sold; (D) They are evidence of the debt
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(D) The note is evidence of the debt. Trust deeds are the security
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Sue Cane owns a home that has a current market value of $100,000 and an existing first trust deed and note of $40,000 payable $350 per month including interest at 8 1/2%. The existing loan contains no alienation clause. It is her desire to sell the home to her favorite nephew and wife for $100,000 and make the financing as low as possible. She enters into a sales agreement that calls for a $10,000 cash payment and for the nephew and wife to execute a new trust deed and note for $90,000 in her favor, payable $750 per month including interest at nine percent. She plans to keep the existing $40,000 loan in effect and will continue to make the $350 monthly payments herself out of the monthly payments received from the nephew. This new $90,000 trust deed and note would be known as: (A) • Blanket encumbrance; (B) Wraparound mortgage; (C) Real property sales contract; (D) Participation loan
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(B) A Wraparound loan includes the underlying note.
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Changes in which of the following would have a tendency to effect the real estate market in the future? (A) Popularity of consumerism issues; (B) Land use controls; (C) The real estate industry; (D) All of the above
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(D) Changes in any of these could effect the real estate market in the future.
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A standard policy of title insurance insures against: (A) A recorded deed in the chain of title that was not properly delivered; (B) Claims of persons in possession of the property; (C) Easements by prescription; (D) Losses sustained on improved property
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(A) The standard policy insures against risks of record. When a deed is recorded it is presumed delivered.
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Agent Brown often refers to tax shelters when discussing a property with a customer. Agent Brown is primarily referring to: (A) Real property taxes; (B) Mortgage relief; (C) Interest income; (D) Income taxes
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(D) Tax shelters refer to income tax savings.
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The sale of real property generally is governed by the laws of: (A) The state where the real property is located; (B) The state where the owner of real property resides; (C) Any of the United States; (D) The federal government
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(A) Statement of fact.
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An interest in a joint tenancy holding of real property could be terminated or transferred in all of the following ways except by a: (A) Lease of the property; (B) Sale of the interest; (C) Devise of the interest; (D) Gift of a part interest
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(C) Devise is a gift of real property left in a will. A joint tenancy cannot be willed.
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Darlene Adams is selling time shares in her Wildacre subdivision. She mailed advertisements to 10,000 people, offering them the chance to win a prize, but did not reveal that in order to be eligible, the person must visit Wildacre and listen to a sales presentation. All of the prize winners had become owners in Wildacre. Is there anything wrong with this situation: (A) Yes; property owners must be excluded from the list of eligible participants; (B) Yes; anyone offering prizes or gifts must reveal any required attendance at a sales presentation when offering the prize or gift; No; prizes may be offered as part of any undisclosed presentation; (D) No; as long as all of the winners are also owners of property in the subdivision
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(B) An attendance requirement must be revealed when a gift is offered.
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A broker who most likely has earned a commission is the one who has: (A) Communicated acceptance to offerer; (B) Communicated acceptance to seller; (C) Secured acceptance of an offer; (D) Secured a substantial deposit
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(A) A contract is first established when the offeror (buyer) receives a copy of the seller's signed acceptance. Without a contract, there will be no commission.
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A trust deed foreclosed under the power of sale by a trustee's sale: (A)Is similar to a court foreclosure; (B)Bars any possibility of a deficiency judgment; (C)Gives the trustor redemption rights; (D) Provides for no reinstatement period
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(B) No deficiency judgments are permitted in a trustee's sale.
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To an appraiser, a definition of value is: (A)A relationship between desirous persons and things desired; (B)The ability of one commodity to command other commodities in exchange; (C)The present worth of future benefits arising out of ownership of a property; (D) Any of the above
answer
(D) All of these are definitions of value.
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A real estate licensee has a practice that when he is approached by members of minority groups who want to be shown property, he avoids showing them property in integrated areas. This would be an example of: (A) Redlining; (B) Blockbusting; (C)Steering; (D)Proper conduct
answer
(C) Statement of fact.
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Bill owns a home which rents for $600 per month. The home across the street rents for $690 per month and recently sold for $78,000. If Bill applies the same gross rent multiplier to his home as was used on the heme across the street, what is the approximate value of Bill's home? (A) $50,000; (B) $67,826; (C)$69,565; (D) $70,909
answer
(B) Gross Rent Multiplier = Sales Price I Gross Monthly Rent $78,000 I 690 = 113.04 (Gross Rent Multiplier) Sales Price = Gross Monthly Rent x Gross Rent Multiplier 113.04 x 600 = $$67,826.08 Value
question
Ms. Andrews constructed a $500,000 income producing building on a lot for which he paid $100,000. Ms. Andrews financed the construction of the building by paying $100,000 cash and obtaining an 8% per annum interest rate loan for $400,000 secured by a first trust deed lien against the property. Under these conditions, Ms. Andrews can depreciate on future income tax returns: (A) $600,000; (B) $500,000; (C)$400,000; (D) $100,000
answer
(B) The cost of the improvement is its basis. The improvement may be depreciated, not the land.
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Which of the following parties would hold a less-than-freehold estate? (A) A lessee; (B)A dominant tenement; (C)A beneficiary; (D) A mortgagee
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(A) Less-than-Freehold Estate is a name for a lease. Lessee holds the leasehold estate.
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Which of the following is authorized to manage property for the general public: (A) A licensed real estate broker; (B) One holding the Certified Property Manager designation; (C) Any affiliate member of the California Association of Realtors; (D) Any of the above
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(A) Statement of fact. Although a CPM (Certified Property Manager) can manage property this designation is not required. Affiliate members of the Association of Real Realtors are not usually licensed. They are in related fields, i.e., lenders, title companies.
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An agreement to sell community real property signed by one spouse: (A) Valid; (B) Enforceable; (C) Unenforceable; (D) Illegal
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(A) A contract signed by one spouse is voidable for one year. It becomes valid if the spouse whose signature is not obtained does not void it within the year. A voidable contract is valid until void. This is the best choice.
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A "balloon payment" would most nearly be identified with a: (A) Fully amortized loan; (B) Partially amortized loan; (C)Liquidated loan; (D) A swing loan
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(B) A partially amortized note results in a balloon payment.
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Which of the following types of financing generally does not require any down payment? (A) Cal-Vet; (B)Conventional; (C) FHA; (D) VA
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(D) VA does not require a down payment.
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In order for demand to be effective, it must be accompanied by: (A) Objectivity; (B) Inflation; (C) Purchasing power; (D) Transferability
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(C) Desire is not demand. Demand requires the ability to compete in the market place. This takes purchasing power.
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If a person buys property in a California land project and then changes his mind, he can obtain a refund of his money without a specific reason within how long: (A) 2 calendar days; (B) 5 calendar days; (C) 10 calendar days; (D) 14 calendar days
answer
(D) Statement of fact.
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Under federal income tax regulations, an individual may not deduct a loss on the sale of residential property unless: (A) The loss exceeds 20% of the individual's adjusted gross income; (B) The property was also used for business purposes and showed profit for the 3 year period immediately preceding the sale; (C) The individual shows an additional capital gain which would be offset by the sale; (D) The property was bought as an investment property and was rented or leased as such
answer
(D) Losses can only be deducted on income producing properties.
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An ad offering " secured loans for sale" would be regarded as misleading unless: (A) The. ad was placed by a licensed loan broker; (B) Each purchaser was offered a standard title insurance policy covering the encumbered properties; (C) The broker secured the borrower's signature on the loan broker statement; (D) The ad fully explained how and to what extent the funds would be secured
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(D) Any ad offering a "secured" loan must disclose how and to what extent the loan is secured
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If on the grant deed the manner of taking title is not indicated following the grantees' names, the courts would rule: (A) Joint tenancy; (B) Community property; (C) Tenancy in common; (D) Severalty
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(C) The courts abhor (hate) a forfeiture. The courts view the loss of the right to will as a forfeiture, therefore a joint tenancy must be stated. It is never presumed.
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According to the regulations of the real estate commissioner, the broker with each of his salespersons must have a signed employment agreement. This must be kept by both parties for: (A) One year from date of termination; (B) Two years from date of termination; (C) Three years from date of termination; (D) Five years from date of termination
answer
(C) Statement of fact.
question
According to the terms and conditions contained in a purchase contract, the buyer is to take the property "subject to" the existing loan. The term "subject to" most nearly means: (A) Both the buyer and seller will be liable on the loan; (B) The seller has no liability for the loan; (C) Only the buyer will be liable for the loan; (D) The buyer will not be personally liable for the loan
answer
(D) Buyer is not personally liable for the loan when taken "subject to". The seller remains primarily liable.
question
Broker Forrest received a signed offer from Mr. Humble to purchase Mr. and Mrs. Shine's property together with a $1,000 deposit. Broker Forrest presented the offer to the Shines and within the time set forth in the offer, the Shines gave their unqualified acceptance. Before Broker Forrest could deliver the signed acceptance to Mr. Humble, Mr. Humble died of a heart attack. Under these circumstances: (A) The offer is voidable due to the fact that the deed could never be delivered to Humble; (B) The death of Humble revokes the offer; (C) The administrator or executor of Humble's estate could bind the estate of Humble to purchase the property; (D) The signatures of both parties constitutes a valid and binding contract since there was an offer and acceptance of the contract terms
answer
(B) There is no contract until the acceptance is delivered back to the buyer. The death of a buyer before the contract is valid, revokes the offer.
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If an investor purchases a mountain ski cabin for $120,000 cash and monthly net rental income is $600, what is the rate of return on the investment? (A) 11%; (B) 15%; (C) 6%; (D) 4.5%
answer
(C) ALWAYS WORK WITH ANNUAL FIGURES. Annual net income is $600 x 12 = 7,200 Made I Paid= Rate 7,200/120,000 = 6%
question
Title to real property being purchased under the California Veteran's Farm and Home Purchase plan is held by the: (A) Vendee; (B) Trustee; (C) Veteran's Administration; (D) Department of Veterans Affairs
answer
(D) The Cal-Vet program uses a land contract. Title is held by Department of Veterans Affairs.
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When an appraiser relies on the principle of substitution, he assumes that one property may be substituted for another in terms of: (A) Income; (B) Use; (C) Structural design; (D) Any of the above
answer
(D) Property must be substitutable as are all of these categories.
question
Escrow has just closed on a sale which was extremely complicated and very time consuming for the salesperson. In addition to his normal commission from the broker, the salesperson could accept a bonus directly from: (A) The seller; (B) The buyer; (C) The broker; (D) The escrow
answer
(C) A salesperson may receive money only from the employing broker.
question
A real estate broker who specializes in selling residential property in a given area may refuse to accept a listing on a property in that area for which of the following reasons: (A) Because of the minority status of any of the residents; (B) Because of the minority status of the owner of the residence; (C) Because the owner's required price is substantially above the market price in the area of the residences; (D) For any of the above
answer
(C) A broker would refuse any listing which is overpriced. This is not discrimination.
question
Each owner in a tenancy in common: (A) Has the right to possession of all the property; (B) Cannot institute a partition action to have the court divide the property; (C) Cannot convey their interest without the consent of the others; (D) Can exclude the other owners from possessing any of the property
answer
(A) Possession is the one unity in a tenancy in common. Each has right of possession.
question
When a licensee is the buyer's agent, the licensee will tell others: (A) As soon as possible; (B) After the offer has been presented and accepted; (C) When the loan is funded; (D) After the licensee receives his commission
answer
(A) Statement of fact.
question
A real estate broker is liable to the buyer if he: (A) Executes a contract in the name of the seller; (B) Acts in excess of the authority given him by the seller; (C) Turns the buyer's deposit over to the seller and thereafter the contract fails due to no fault of the broker; (D) Innocently makes a misrepresentation based upon information received from seller
answer
(B) When a broker acts in excess of authority conferred by principal, broker is directly liable to third party (buyer).
question
When comparing a straight note with an installment note, the straight note: (A) Will have equal annual principal reduction payments; (B) Will have no principal payments during the term of the loan except on the last payment; (C) Will have a total effective interest rate greater than if the loan were an installment loan; (D) None of the above
answer
(B) Straight notes are interest only and will have no principal payments until the last payment.
question
Value levels in a residential neighborhood are influenced more by social characteristics of its present and prospective occupants than by any other factor. What would maintain high values in a given neighborhood? (A) Everybody purchasing with comparable down payments; (B) Everybody having approximately the same income levels; (C) Both A and B; (D) None of the above
answer
(C) Values are best maintained when there is conformity within a neighborhood - Principle of Conformity.
question
When a trust deed is sold, the parties often use an escrow in order to: (A) Obey the civil code; (B) Be a witness for the transaction; (C) Make sure that the conditions and terms are met prior to the closing of the transaction; (D) Provide a legal recourse against the escrow company for the two parties involved
answer
(C) This is the purpose of any escrow
question
Most likely, the United States Attorney General would act to enforce the Federal Open Housing Law whenever: (A) State statutes are not enforced by the state officials; (B) A conspiracy •exists to practice resistance to the Federal Open Housing Law; (C) A complaint is filed with the Secretary of Housing and Urban Development; (D) Subject matter of a complaint filed by an aggrieved party indicates a violation by an owner of more than four units
answer
(B) Attorney General is highest member of justice system and would only act if conspiracy exists.
question
All of the following methods of computing depreciation is considered an accelerated method except: (A) Sum-of-the-years digits; (B) 150% declining balance method; (C) Doubledeclining balance method; (D) Straight-line method
answer
(D) Statement of fact.
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Ownership rights and interests in real property are called: (A) Liens or encumbrances; (B) Absolute land sales agreement; (C) Estates or fees; (D) All of the above
answer
(C) Statement of fact.
question
Which one of the following actions, when advertising the sale of real property, is considered as prima facie evidence by the Real Estate Commissioner in California as being misleading or deceptive advertising? (A) Advertising with but disclosing purchase price; (B) Showing a misleading map directing prospective buyers to the site of the property for sale; (C) Implying a specific yield on a note which is different from the actual interest rate specified on the note; (D) The inadvertent misspelling of the broker's name in the ad
answer
(B) The misleading map is proof of deceptive advertising.
question
Assume the buyers are married and only the husband signed the "Offer to Purchase": (A) The contract is voidable; (B) The contract is void; (C) The contract is unenforceable; (D) The contract is valid
answer
(D) Either party may buy for the community alone. Both signatures required to sell.
question
A home owner purchased a small home and borrowed 60% of the price using an interest only loan. The loan has an interest rate of 10% and the total interest paid the first year is scheduled to be $5,400. What was the purchase price? (A) $70,500; (B) $62,000; (C) $90,000; (D) $54,000
answer
(C) Made I Rate= Paid 5,400 I 10% = 54,000 Loan Amount 54,000 I 60% = $90,000 Purchase Price
question
A method of borrowing additional funds •on a mortgage, without negotiating a new mortgage: (A) Conventional; (B) Second mortgage; (C) Open end mortgage; (D) Any of the above
answer
(C) Open-end mortgages allow borrower to borrow additional money on the same mortgage.
question
When processing a real estate loan application, a lender would correlate characteristics of borrower, loan, and property to make: (A) A property appraisal; (B) A loan commitment; (C) A credit rating; (D) A liability statement
answer
(B) Statement of fact.
question
The value of a parcel of real property is best measured by which of the following groups of characteristics: (A) Utility, scarcity, depreciation, and demand; (B) Cost, demand, utility, and transferability; (C) Scarcity, utility, feasibility, and cost; (D) Demand, scarcity, transferability, and utility
answer
(D) Four elements of value - Utility, Scarcity, Demand and Transferability - Remember the word DUST or STUD
question
According to generally accepted practices, an escrow agent is authorized to: (A) Give the buyers advice about the best financing which is available; (B) Change the escrow instructions when asked by the listing broker; (C) Call for funding of the buyer's loan; (D) Authorize a pest control company to make corrective work
answer
(C) Remember: Escrow is agent of both buyer and seller and must remain neutral. Escrow can call for funding of the buyer's loan.
question
How long does a victim have to file a complaint about discrimination with the Department of Housing and Urban Development? (A) 3 months; (B) 6 months; (C) 9 months; (D) 1 year
answer
(D) Statement of fact.
question
Benson owns a single family residence in which he resides. He trades with Carson for another residence which Carson is renting to a tenant. Both parties intend to use their newly acquired properties for rental income. Which of the following is true? (A) Benson can negotiate a tax free exchange; (B) Carson can negotiate a tax free exchange; (C) Both parties can negotiate a tax free exchange; (D) Neither party can negotiate a tax free exchange
answer
(B) "Tax free" exchange requires properties to be of like kind. Only Carson is trading an income property for an income property. Therefore, only Carson has tax free exchange.
question
A deed: (A) When recorded, gives actual notice of its contents; (B) If recorded, will not give the grantee the usual protection of the recording laws if it is a quitclaim deed; (C) Can only be recorded in one county; (D) Does not have to recorded to transfer title
answer
(D) Deeds do not need to be recorded to transfer title and be valid.
question
If two or more parties own property as tenants in common: (A) The last surviving owner holds title to the property in severalty; (B) Each party owns an equal interest; (C) None of the parties may transfer their interest by will or intestate succession; (D) Each party may transfer their interest separately
answer
(D) One of the characteristics of Tenancy in Common is the right to transfer title separately.
question
Broker Allen had a listing to sell Seller White's house. Broker Allen received an offer on the house and presented it to Seller White who hesitated in accepting the offer. The broker promised White verbally to find White another suitable residence before escrow closed. On the basis of that, the seller accepted the offer. If Broker Allen failed to perform during the time period, which of the following is most nearly correct? (A) Seller White could initiate a civil suit and the broker would be responsible for damages; (B) Since the promise was verbal, the broker has no liability; (C) If White files a complaint, Broker Allen may be liable for criminal negligence; (D) Seller White may withdraw his acceptance of the offer without liability
answer
(A) This is seller's remedy.
question
A broker licensee can legally claim a commission in the following: (A) For a loan that he or she did not negotiate; (B) For the sale of a property on which he or she had an exclusive authorization to sell with a definite termination date; (C) For the sale by another of a property on which he or she had an open listing with a termination date; (D) For the sale by another on which he or she had a net listing with a termination date
answer
(B) Broker can claim commission regardless of who sells property if he has an Exclusive Right to Sell listing with a definite termination date.
question
Which of the following types of lenders would have the greatest percentage of, and most funds invested in, real estate mortgages: (A) Savings and loan associations; (B) Commercial banks; (C) Life insurance companies; (D) Mutual savings banks
answer
(A) Savings and Loans provide most real estate loans
question
Following a court foreclosure proceeding against a truster, the latter could retain possession of the property: (A) 5 years; (B) 1 year; (C) 120 days; (D) 90 days
answer
(B) In a court foreclosure, trustor has one year "Equity of Redemption."
question
When a neighborhood is composed mostly of owner occupied residences, it tends to: (A) Deteriorate more rapidly than a neighborhood of rental properties; (B) Stabilize values; (C) Attract major department stores to the area; (D) Inversely affect values
answer
(B) Owner occupants maintain the property and so stabilize values.
question
Whenever there is a real estate sales transaction, it must be reported to the IRS by the: (A) Lender; (B) Broker; (C) Escrow; (D) City
answer
(C) Statement of fact.
question
Of the following, which is considered a violation of fair housing laws in regards to periodic tenancy: (A) A landlord requiring that each and every tenant have a good credit rating and the assurance of a steady source of income; (B) The requirement of a landlord that all tenants furnish references from their previous landlord; (C) The requirement of a landlord of a co-signer exclusively for tenants who are single; (D) A landlord that requires all tenants to pay first, second, and last month's rent in advance
answer
(C) Single tenants must be treated the same as married tenants.
question
Unpaid real property taxes constitute a lien: (A) Prior to a mortgage lien; (B) Concurrent with a mortgage lien; (C) After a mortgage lien; (D) None of the above
answer
(A) Real property taxes have priority over trust deeds regardless of when they are filed.
question
When taking a listing on a residence of the owners, the listing broker noted that the vesting clause in the owner's deed read, "Jack Murphy and Rita Murphy, husband and wife." From this information the broker would know that the title is being held as: (A) Joint tenants; (B). Tenancy in common; (C) Tenants in partnership; (D) Community property
answer
(D) Community property preserves the right to will. Courts would never presume a Joint Tenancy, because the married couple would lose the right to will.
question
If an owner enters into an exclusive agency listing and thereafter sells the property through his own efforts: (A) No commission is owed; (B) Broker is entitled to 50 percent of his commission; (C) Broker is entitled to a full commission; (D) None of the above
answer
(A) In an Exclusive Agency Listing the owner reserves the right to sell and not pay a commission.
question
The agency of a real estate broker is usually established by: (A) Employing contract; (B) Estoppel or arbitration; (C) Express contract; (D) Ratification
answer
(A) An agency is usually established by a listing, which is an employment agreement.
question
A $100,000 note is sold to an investor, through a mortgage broker, at a 25% discount. The broker earned a 7.5% commission. What was the dollar amount of the commission? (A) $7,500; (B) $5,625; (C) $3,475; (D) $1,875
answer
(B) Paid x Rate = Made or Lost 100,000 x 25% = 25,000 100,00 - 25,000 = 75,000 paid 75,000 x 7.5% = $5,625 Commission
question
An alienation clause differs from an acceleration clause in that the alienation clause is based upon: (A) Any forfeiture; (B) Any breach; (C) Resale; (D) Delinquency on payment
answer
(C) An alienation clause is a "Due on Sale" clause and allows the lender to call the loan, making it all due and payable, when title transfers.
question
The basic protection of a lender on a purchase-money second trust deed would be: (A) Equity of the borrower; (B) Credit rating of the borrower; (C) Amount of the second trust deed; (D) The borrower's ability to repay
answer
(A) Equity of the borrower lowers the lenders loan to value ratio and the lender has more protection.
question
In your opinion, the relationship between the thing desired and the potential purchaser is best defined as: (A) The relationship between utility and value; (B) The relationship between demand and value; (C) Value; (D) The present worth of future income
answer
(C) This is one of the definitions of value.
question
Part of the California Civil Code requires that a disclosure statement be delivered by which of the following when transferring title to certain real property: (A) The probate court, as a part of a probate sale; (B) A trustee, when conducting a trustee's sale; (C) The transferor; (D) A husband, to his wife as part of a divorce property settlement
answer
(C) This is the Seller's Transfer Disclosure Statement. Seller is transferor and must deliver the disclosure statement to the buyer (transferee).
question
Under current law, the seller of real property does not have to disclose that a prior occupant of the property died of AIDS. However, it must be disclosed: (A) Only if the lender asks; (B) Only if the loan is an FHA loan; (C) Only if an inquiry is made about this subject; (D) Never
answer
(C) The fact that a former occupant died of AIDS is not a material fact. However, since this is a sensitive issue, agent must disclose it if asked by buyer.
question
According to income tax laws, which of the following is true about depreciation of land? (A) Land has a residual value but improvements do not; (B) The ACRS method of depreciation can be used when depreciating land; (C) Land is considered to be 25% of the total value and is depreciated; (D) Land is not depreciated •
answer
(D) Statement of Fact
question
Which of the following is not characteristic of a fee simple title? (A) It is free of encumbrances; (B) It is of indefinite duration; (C) It is transferable with or without consideration; (D) It is transferable by will or intestacy
answer
(A) Fee estates are usually encumbered by at least a trust deed or property taxes.
question
Two people purchased a home for $360,000. They added a $30,000 pool and patio complex. Five years later they sold the home for $500,000. What was their annual average rate of appreciation above their cost? (A) 5.6%; (B) 14.4%; (C) 7.2%; (D) 4.4%
answer
(A) $360,000 + 30,000 = $390,000 Paid 500,000 - 390,000 = $110,000 Gross Profit Made I Paid = Rate 110,000 I 390,000 = 28.21 Gross Profit for 5 years 28.21 I 5 = 5.6% Average Profit Per Year
question
Commercial banks consider liquidity and marketability of loans to be of paramount importance when they make mortgage investments secured by real property. Such banks are referring to the: (A) Activities of secondary mortgage markets; (B) Superiority of short-term loans over long-term loans; (C) Resale of homes; (D) Effects of the security offered by the Federal Deposit Insurance Corporation
answer
(B) Short term loans are the favorite of commercial lenders.
question
Mr. Love tells Broker Tom, "While l will not sign a listing on my home, if you can find a buyer who will pay at least $250,000 for it, I will pay you a 6% commission." Three weeks later, Broker Tom found a buyer who gave him a $1,000 deposit on the purchase price of $265,000, along with a signed offer to purchase the property. When the offer was presented to Mr. Love, he accepted it and then demanded that the deposit be given to him. Which of the following is true? (A) Once the offer is accepted, the deposit belongs to the seller without the buyer's written consent; (B) Broker Tom may not give the buyer's deposit to the seller without the buyer's written consent; (C) Because the listing was not in writing, Broker Tom is not obligated to follow the seller's orders; (D) Broker Tom should deposit the money into escrow and let the escrow officer worry about it
answer
(A) The deposit belongs to the seller and broker must give it to him. The fact that the listing was oral is not an issue.
question
An owner of an 80 acre horse ranch entered into an exclusive authorization and right to sell contract with a licensed real estate broker. Included in the listing contract was an agreement by the broker to advertise the property in a special catalog that the broker published on a quarterly basis. The owner gave the broker $100 at the time of the listing to pay for the cost of advertising in the catalog. According to the Real Estate Law and Regulations, this $100: (A) Must be deposited in the broker's trust account and can only be withdrawn to pay for actual expenses incurred in advertising the property; (B) May be used by the broker for any purpose provided the proper entries are made in the broker's account records; (C) Must be deposited in the broker's trust account but may be withdrawn and kept as liquidated damages in the event the owner cancels the listing contract; (D) Need not be deposited in the broker's trust account, but the broker must be prepared to return the money if not spent on advertising the property
answer
(A) Advanced fees for advertising may only be used for the purpose they were collected.
question
A trustor defaults on his loan and refuses to reinstate the deed of trust. The most expedient thing for the beneficiary to do is to institute a: (A) Sheriffs sale; (B) Lien sale; (C) Trustee's sale; (D) Judicial foreclosure
answer
(C) Trustee's Sale takes approximately 4 months. Judicial foreclosure takes one year.
question
If there is no provision for a termination date in the escrow instructions, the parties have: (A) 30 days; (B) 60 days; (C) A reasonable time period; (D) As long as either party wishes
answer
(C) When there is no provision for a termination date in an escrow; all parties have a reasonable time to perform.
question
"When identical or highly similar properties are offered for sale, the property offered at the lower price attracts the greatest demand." That statement is an illustration of which of the following principles of appraising? (A) Substitution; (B) Highest and best use; (C) Productivity; (D) Inflation
answer
(A) This is principle of substitution. The lowest price is always preferred by buyer.
question
If a real estate broker undertakes to canvas a neighborhood area that is very near to a section into which minorities have recently moved telling people to whom he talks that they should sell now as their property might suffer a loss in the future, that broker would be guilty of: (A) Steering; (B) Panic peddling; (C) Blockbusting; (D) Both (B) and (C)
answer
(D) This is definition of Panic peddling and Blockbusting.
question
The inability of a corporation to qualify as a joint tenant in the ownership of property is due to the fact that: (A) It is controlled by a board of directors; (B) It can be domestic or foreign; (C) It has perpetual existence; (D) Only community property can be held in joint tenancy
answer
(C) Statement of fact. Corporation would always survive a human being.
question
Mr. Hagan, who was not a real estate licensee, negotiated the purchase of a vacant parcel of land for a total price of $5,000. Hagan, at the time of the purchase, had .a prospective buyer for the property for a total price of $20,000. If Hagan purchased and resold the property at these terms: (A) The prospective buyer could recover the difference in price from Hagan in a court action; (B) The original owner could recover the difference from Hagan in a court action; (C) Both parties would be successful in seeking damages from Hagan in a court action; (D) Neither party would be successful in seeking damages from Hagan since this was a. legal transaction
answer
(D) Hagan is not licensed and does not have to disclose anything to the seller.
question
The extent of a real estate agent's authority to act on behalf of his principal is: (A) The authority that third party principals interpret the agent as possessing; (B) That which the principal confers upon the agent, whether actual or otherwise; (C) Any authority the agent chooses to accept, regardless of restrictions placed upon his authority; (D) The authority to sell and convey real property and modify or cancel purchase agreements .after they have been made
answer
(B) The agent's authority is conferred in the listing agreement.
question
When making a loan, amortization tables are used in order to determine the: (A) Interest rate; (B) Monthly payment; (C) Term of the loan; (D) Annual percentage rate
answer
(B) Amortization tables are used to determine monthly payments.
question
''Market value" of real property most nearly means the: (A) Valuation that has been determined by a well-qualified fee appraiser or experienced real estate broker; (B) Estimated value which was determined by considering the exact current prices of materials and labor that would be needed to build the improvements at the present time; (C) Expected price if a reasonable amount of time is allowed to find a buyer and if both the prospective buyer and s ller are. substantially familiar with market conditions; (D) Present value of the net revenue that is expected to be received during the remainder of the property's productive life
answer
(C) This is the definition of market value.
question
Life insurance companies, not willing to deal directly with mortgagors/trustors, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: (A) FHA or VA; (B) Savings and loan associations; (C) Mortgage companies; (D) Any of the above
answer
(C) Life insurance companies buy loans from mortgage companies, who continue to service the loan.
question
Which of the following would least likely appear as a debit on a buyer's closing statement: (A) Proration of taxes; (B) Interest on an assumed loan; (C) Discount points for a new FHA loan; (D) Prorations of insurance premiums
answer
(B) Interest is paid in arrears. It is unlikely the seller would have prepaid any interest.
question
Broker Ken listed a home for sale for $400,000. The seller told him he would take anything over $350,000. Broker Ken then found a buyer willing to pay $380,000, but instead of presenting the buyer's offer, he wrote up his own offer for $350,000, which the seller accepted. He then sold the home to the buyer for $380,000 without informing the seller. Such action would probably be classified as: (A) Secret profit; (B) Commingling; (C) Misappropriation; (D) Good business practice
answer
(A) This is a secret profit and a violation of law.
question
An improvement assessment of $4,000 has been levied against residential property, which has been valued at $50,000. The status of the appraised value is now: (A) $48,000; (B) $54,000; (C) Reduced by $4,000; (D) $50,000
answer
(D) Assessments are capital improvements and are added to basis; they do not effect the appraised value.
question
Assume a brother and sister own title in a parcel of real estate as joint tenants. The sister marries and deeds half her interest to her husband. Under these circumstances the brother now holds title to the property as: (A) A joint tenant; (B) Community property; (C) Sole owner; (D) A tenant in common
answer
(D) The joint tenancy was broken by the deed to sister and husband. Brother is now tenant in common. He owns 50%; sister and husband each have 25%.
question
If a salesperson misinforms a buyer as to deed restrictions: (A) There is no liability if the restrictions are a matter of record; (B) The salesperson and broker may both be liable for damages; (C) Only the salesperson is liable; (D) Only the principal is liable
answer
(B) Broker is responsible for supervising salesperson. Both could be disciplined for misrepresentation.
question
A trust deed note taken by a state savings and loan association on a single family, owner occupied residence could be repaid without a penalty: (A) If the loan is more than 7 years old; (B) If the lender exercises the due on sale provision in the note and signs a waiver of right to prepay; (C) If the loan is assumed by a buyer of the house; (D) Any time whether there is a written prepayment or not
answer
(A) Prepayment penalties on single family home loans are not enforceable after 5 years.
question
A note secured by a second trust deed with a remaining balance of $5,000 was sold for $3,500. This transaction is an example of: (A) Leverage; (B) Foreclosure; (C) Discounting; (D) Devaluating
answer
(C) Statement of fact.
question
Which of the following is not one of the four important elements of value: (A) Scarcity; (B) Cost; (C) Utility; (D) Transferability
answer
(B) Four elements of value: Utility, Scarcity, Demand and Transferability.
question
When an escrow closed on the purchase of a home, the closing statements usually reveal that the seller has paid certain items in arrears or in advance as they relate to ownership of that home. These items are usually prorated or adjusted. All of the following would be included in these proration items except: (A) Interest and fire insurance; (B) Property taxes and assessments; (C) Interest and impounds; (D) Delinquent interest and principal applying to an unsecured home improvement loan
answer
(D) If the property is not used as security for the loan it would not be a concern to escrow.
question
Community apartment projects and condominiums come within the subdivision provisions of the California Real Estate Law when they contain how many units; (A) One or more; (B) Five or more; (C) Three or more; (D) Two or more
answer
(B) Five or more make a subdivision
question
Richard has purchased an 20 unit apartment building. If he reports his income on a cash basis, he can deduct all of the following on his next income tax return, except: (A) Loss of rental because of vacancies suffered by two units; (B) The cost of redecorating two vacant units; (C) • Interest payments on the second trust deed; (D) Depreciation when the value of the property has increased
answer
(A) For tax purposes, an owner adds up the income he receives and subtracts expenses.
question
The phrase that best describes the nature of a broker's duty to keep a principal fully informed is: (A) Ethical conduct; (B) Continuing responsibility; (C) Fiduciary obligation; (D) Trustworthy business principles
answer
(C) Fiduciary obligations require utmost binding faith, trust and loyalty. Keeping a principal informed falls into this category.
question
Which of the following statements regarding deed restrictions is true? (A) A covenant is generally more severe than a condition; (B) To be legally enforced, a private restriction must promote public health, safety, and welfare; (C) The term "covenant'' is an all-inclusive word embracing both "restrictions" and "conditions"; (D) A violation of a condition might result in the loss of title
answer
(D) Statement of fact.
question
A contract for the sale of community real property signed by the wife only is: (A) Valid; (B) Voidable; (C) Illegal; (D) Void
answer
(B) Voidable for one year, than it becomes valid.
question
A mortgage loan is best defined as: (A) An unsecured loan; (B) Any loan collateralized by real property; (C) A real estate loan secured by a personal residence; (D) Any loan secured by real or personal property
answer
(B) This is the definition of a mortgage loan.
question
You purchase a negotiable note and have no knowledge of any defects. You are known as: (A) The new trustor; (B) The new mortgagor; (C) The holder in due course; (D) The holder in blank
answer
(C) This is a good description of a holder in due course.
question
Some forms of depreciation are curable, some are not. Which of the following forms is the most difficult to cure: (A) Physical depreciation; (B) Physical wear and tear; (C) Economic obsolescence; (D) Functional obsolescence
answer
(C) Economic obsolescence occurs outside the property line and the owner has no control. It is the hardest to cure.
question
Which of the following costs would be classified as a recurring cost: (A) Recording fees; (B) Title insurance fees; (C) Escrow fees; (D) Impound account items
answer
(D) Impounds are paid during escrow and continue after escrow until the trust deed is paid off.
question
Condominium ownership can be a: (A) Residence; (B) Commercial office space; (C) Industrial property; (D) All of the above
answer
(D) Statement of fact
question
A man sold his personal residence after living in it for the past 18 years. The gross selling price was $121,000 and the expense of sale was $12,000. If the cost of the home was only $60,000 and he did not purchase another home, his capital gain for income tax purposes could be as little as: (A) $19,600; (B) $61,000; (C) $49,000; (D) Nothing
answer
(D) The man has a capital gain which is less than $250,000, so there would be no tax on the capital gains.
question
The main purpose of a deed is to: (A) Provide evidence of the terms of a real property transaction; (B) Evidence the change in title or transfer of an interest in real property; (C) Identify the parties involved in a real property transfer; (D) Provide a written instrument that can be recorded
answer
(B) A deed is written evidence of a title transfer.
question
The one uriity in a joint tenancy holding that is also present in a tenancy in common holding is: (A)Equal right of possession; (B) Right of survivorship; (C) Equal interests of all owners; (D) Tenant in possession can be charged rent for the use of the land
answer
(A) Joint tenancy has four unities: Time, Title, Interest and Possession. Tenancy in common only has one unity: Possession.
question
The major part of the California Laws relating to real property are created by: (A) The state constitution; (B) Legislative acts; (C) The Real Estate Commissioner; (D) The Business and Professions Code
answer
(B) The State Legislature makes law in the State of California .. Real Estate Commissioner issues regulations which interpret that law for real estate licensees.
question
Salesperson Green who was employed by broker Brown, was able to secure an acceptance of an offer from a buyer on a property that was listed by broker Snells. Broker Snells had agreed to cooperate with broker Brown. After escrow opened Green was in need of $100 and asked broker Snells to advance him $100 from the eventual commission. If broker Snells wants to advance Green the $100: (A) It would be acceptable provided it is released through the escrow holder; (B) It would be a violation of the real estate law; (C) It would be perfectly legal as it doesn't matter from whom Green receives money; (D) , It would be legal as long as it does not come out of the escrowed money.
answer
(B) Salespersons may only receive money from their own broker. Snells is not Green's broker and cannot pay or "lend" him money.
question
A home is sold for $180,000, making a 20% profit over cost. What was the cost? (A) $136,000; (B) $144,000; (C) $148,000; (D) $150,000
answer
(D) Made I Rate = Paid $180,000/1.20% = $150,000
question
A property is encumbered by a first trust deed and also a purchase money second deed of trust. The truster fails to make payments on the first note but continued to make payments on the second. The trustee under the first files a notice of default. The beneficiary of the second would most likely: (A) Refinance the first and foreclose on the second; (B) Reinstate the first but take no action on the second; (C) Reinstate the first and start proceedings to foreclose on the second; (D) File notice of default on the second but do nothing about the first
answer
(C) To protect himself, the beneficiary on the second would reinstate the first and foreclose on the second trust deed.
question
Which of the following statements is most nearly true concerning the activities of mortgage companies: (A) They are organized under federal laws and thus are not subject to state regulations; (B) They never service the loans they create; (C) They prefer negotiating loans which are salable on the secondary mortgage market; (D) They are not active in the field of government insured loans
answer
(C) Mortgage companies sell almost all their loans on the secondary market.
question
Under the cost approach in the appraisal of property, the land and the improvements are valued: (A) jointly in one approach; (B) singly using more than one approach; (C) singly using one approach; (D) None of the above
answer
(B) Land is valued by the comparison approach and improvements by the cost approach. The values are then combined.
question
During a sales escrow, the escrow officer receives two structural pest control reports. The escrow officer should: (A) Contact the inspection companies to determine which one is most recent and use that one; (B) Send the report that requires the most work to the buyer and obtain his approval; (C) Notify the broker and obtain written instructions from the buyer and seller concerning the reports; (D) Request the broker to find out from the seller which report to use
answer
(C) Escrow must always have written instructions from buyer and seller. The escrow cannot decide which report to use.
question
When imposing restrictions on a new large subdivision, the procedure normally used is: (A) To publish them in a newspaper of general circulation at least 30 days prior to the first sale; (B) To include them in the final public report issued by the Real Estate Commissioner; (C) To include as a covenant in the deed to each individual parcel; (D) To record them with the county recorder, with adequate reference made thereto in the deed to each parcel
answer
(D) Usually there are several pages of covenants and restrictions. They are recorded once and referred to in each deed.
question
In which of the following situations would an IRS Section 1031 exchange not be allowed: (A) The properties are not of a like kind; (B) The exchanged properties are both vacant land; (C) One of the properties is a leasehold over 30 years; (D) One property is in California and the other is in Arizona
answer
(A) In a 1031 exchange both properties must be "like for like", income property for income property, or the exchange would be disallowed by IRS.
question
Adams sold his home to Brooks, who did not record his deed but took up residency there. Adams then sold the same property to Carr, who examined the county recorder's files but did not look at the property. Carr received a deed from Adams and recorded it Concerning title to that property, which of the following is true: (A) Title vests with Carr; (B) The priority of recordation prevails; (C) Carr has recourse against Brooks for failure to record; (D) Brooks remains the owner
answer
(D) Possession is an exception to the recording statute. Person in possession will have title.
question
The one characteristic that is always present in both a joint tenancy holding and a community property holding is: (A) Each party's interest is equal; (B) Each party has the right of survivorship; (C) All parties must execute the deed when conveying any part of the interest; (D) A party's interest may not be willed
answer
(A) Both community property and joint tenancy require equal interest.
question
In an agency transfer relationship, according to the Civil Code, you must apply it to: (A) "For sale" by owner; (B) 12 unit apartment complex; (C) Husband and wife who are divorced and are transferring property; (D) All of the above
answer
(C) Refers to the Agency Disclosure Law: It applies to real estate licensees, so (A) cannot be right. It applies to owner occupied, 1 to 4 units, so (B) is incorrect. (D) cannot be right, because (A) and (B) are wrong. By elimination, the correct choice is (C).
question
Should a dispute regarding a commission arise between two sales licensees who are members of the National Association of Realtors®, by the provisions of that organization's Code of Ethics, they will settle the matter by: (A) Litigation; (B) Estoppel; (C) Arbitration; (D) Mandamus
answer
(C) Realtors agree to arbitrate disputes.
question
If a person was discussing a "warehouse operation" in reference to real property financing, that person would most probably be referring to: (A) Security which is held under Division 7 of the Uniform Commercial Code; (B) The underwriting of stock issues with loans against industrial property; (C) The holding of a long term debenture secured by real property; (D) A mortgage broker collecting loans prior to sale.
answer
(D) This is a good description of a "warehouse operation."
question
Under Federal guidelines, the interest rate on a renegotiable rate mortgage may increase or decrease over the life of the loan by a maximum of: (A) 5%; (B) 10%; (C) 12%; (D) 15%
answer
(A) Statement of fact.
question
The fee that the appraiser charges for his appraisal is established by the: (A) Agreement between the appraiser and the client; (B) Department of Veterans Affairs; (C) Real Estate Commissioner; (D) American Institute of Real Estate Appraisers
answer
(A) This is how appraisal fees are set; not by law, etc.
question
Sally James wants to open up her own escrow services company. She must be licensed by the: (A) Real Estate Commissioner; (B) Corporations Commissioner; (C) Insurance Commissioner; (D) None of the above
answer
(B) Escrow companies must be incorporated and are under the Corporation Commissioner.
question
The legal purpose of zoning restrictions is to: (A) Keep all types of commercial property out of residential neighborhoods; (B) Keep the land in every area as similar as possible; (C) Preserve or protect public health, safety, morals, or general welfare; (D) None of the above
answer
(C) This is the definition of police power. Zoning is a police power.
