Rockwell Exam Real Estate Classes WA Final Exam 1 – Flashcards
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A buyer purchases a rental home that is fully furnished. The document used to transfer title to the furniture is: a. quitclaim deed b. bill of sale c. special warranty deed d. general warranty deed
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b. bill of sale Deeds transfer title to real estate, a bill of sale is generally needed to transfer title to personal property.
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Ben receives a life estate in a property, with his nephew Will designated as the remainderman. When Ben dies, what kind of interest does Will receive? A. Fee Simple Estate B. Life Estate C. Remainder Interest D. Reversionary Interest
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A. Fee Simple Estate The interest that passes to a designated person upon the death of a life tenant (or other measuring life) is a fee simple estate. Will has a remainder interest only up until the moment Ben dies. Once Ben is dead, Will's interest immediately becomes a fee simple interest.
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A buyer accepts a general warranty deed from a seller, believing that the seller is the sole owner of the property. The buyer later finds out that the seller is only a co-owner. Has a covenant in the general warranty deed been violated? A. No, the only covenant in a general warranty deed promises that the previous owner didn't encumber the property B. No, the principle of caveat emptor controls matters concerning a deed C. Yes, there is a covenant providing equitable title D. Yes, there is a covenant providing marketable title
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D. Yes, there is a covenant providing marketable title The general warranty deed contains a covenant of the right to convey, meaning that the grantor either has title to the interest or is an agent of the owner with the authority to transfer the interest.
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A plaintiff files a lawsuit involving a property and also files a separate document intended to provide notice of the lawsuit. This recorded notice of a pending legal action is called a/ an: A. Abstract of judgement B. Petition for alienation C. Writ of execution D. Lis Pendens
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D. Lis Pendens A Lis Pendens is a recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate and that could bind the purchaser of the property.
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A movie theater was built ten years ago. If the neighborhood is now zoned entirely residential, the movie theater: A. will have to be torn down B. must be remodeled to better conform to the neighborhood's intended use C. will be allowed to continue if the owner obtains a conditional use permit D. will be allowed to continue since it was built before the new zoning law went into effect
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D. Will be allowed to continue since it was built before the new zoning law went into effect The movie theater is an example of a nonconforming use, which predated a zoning change. Nonconforming uses are generally allowed to continue, although they may not be enlarged, or resumed if they are stopped.
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In a bilateral contract: A. a duty wil be performed by only one party B. one party can restrict the performance of another party C. two parties have exchanged promises, and both parties are obligated to perform D. all parties have fully performed their duties
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C. two parties have exchanged promises, and both parties are obligated to perform In a bilateral contract, two parties have exchanged promises and both parties are obligated to perform. (Bi=two way)
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Gerald engages a licensee to list his property and find a buyer for it. In this context, the licensee is acting as a: A. General agent B. power of attorney C. property manager D. special agent
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D. Special Agent When a licensee represents a seller in a single transaction, and is authorized to perform typical duties associated with listing a property, she acts as a special agent.
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A licensee located what seems like a ready, willing, and able buyer. However, the deal falls through at closing because the buyer cant obtain necessary financing. At the same time, though, a seller turns out to be unable to provide marketable title. Does the seller still owe a commission to the listing agent in this case? A. No, because the sale didn't close B. No, because there was no ready, willing, and able buyer C. Yes, because the licensee saw the transaction through the closing date D. Yes, because the seller has an absolute duty to provide marketable title at closing
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B. No, because there was no ready, willing, and able buyer The most important rule of determining whether a seller is obligated to pay a commission is whether a ready, willing, and able buyer was found during the listing period. This would take precedence over the seller's failure to provide marketable title. A buyer who does not have financial ability to complete the purchase does not qualify as "able."
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Legally, how much earnest money must be submitted with a valid purchase and sale agreement? A. 1% of the purchase price B. 3% of the purchase price C. 5% of the purchase price, but the amount over 3% cannot be retained as liquidated damages D. No earnest money is required
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D. No earnest money is required While almost all buyers will include an earnest money deposit along with the purchase and sale agreement, that is because of tradition. There is no contractual or legal requirement of a particular amount, or any earnest money at all.
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A mortgage often includes a clause requiring the lender's consent before another borrower may assume the mortgage. This clause is called a/ an: A. power of sale clause B. subordination clause C. defeasance clause D. alienation clause (due-on-sale clause)
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D. Alienation clause (due-on-sale clause) an Alienation clause prevents assumption without the lender's consent by stipulating that the loan balance is due and payable in full if the property is sold.
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A buyer is unfamiliar with the concept of discount points and asks a licensee to explain. The licensee responds " Discount points are used to replace funds that are being held by the Federal Reserve, so that more funds are available to lend." Is that description correct? A. No, discount points are used to increase yield for lenders who will sell the loans on the secondary market B. No, discount points are used to pay brokers' commissions C. Yes, banks hold discount points in escrow until sufficient funds have been accumulated to make more loans D. Yes, discount points lower interest rates, which make loans more affordable for everyone
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A. No, discount points are used to increase the yield for lenders who will sell the loans on the secondary market. Discount points are paid to a lender in order to increase the lender's upfront yield on a loan. Typically, the lender will compensate for this by charging a below-market interest rate.
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A small house is situated n a larger lot in a mixed-use neighborhood. The city decides that the area will, in the future, be zoned commercial. What will most likely happen to the property's value? A. It will increase, because of the fears of new businesses built nearby B. It will increase in anticipation of the changing uses C. No effect, since the house is a nonconforming use D. No effect, until the change actually occurs
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B. It will increase, in anticipation of the changing uses. Under the principle of anticipation, a property's value is based on expectations of what will happen to the property in the future. Generally commercial land is worth more than residential land. A small house on a large lot would be viewed as a tear down.
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The Real Estate Settlement Procedure Act ( RESPA) applies to: A. contracts for deed B. seller-financed transactions C. commercial and residential mortgages D. residential first mortgages
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D. residential first mortgages RESPA applies to mortgages secured by a dwelling with up to four units. It does not apply to commercial transactions or seller financing. (A contract for deed, which is the same thing as a land contract, can only be used in a seller-financed transaction.)
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A homeowner bought his home for $150,000. Ten years later, he refinanced his mortgage and borrowed $100,000. Which of the following is true for this type of property? A. Interest on the difference between the original loan amount and the refinanced amount is not deductible B. Interest on only half of the difference between the original amount and refinanced amount is deductible C. Interest on loans such as this one for the purchase or refinance of a principal residence is deductible D. Interest deductibility will depend on the borrower's tax bracket
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C. Interest on loans such as this one for the purchase or refinance of a principal residence is deductible For a principal residence, interest on a purchase or refinance loan is fully deductible. Interest on a home equity loan of up to $100,000 is also deductible, regardless of the size of the purchase loan, and regardless of the taxpayer's income.
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Under Title VIII of the Civil RIghts act of 1968, certain transactions are exempt. Which one of the situations below would be exempted and not a violation of the act?] A. A church-owned apartment complex where the language in the lease restrict tenancy to memers of a specific national orgin B. Members of a certain ethnic group are denied lodging in facilities operated by a private club for commercial purposes C. An unlisted home that is for sale by owner, where the only advertising is a sign in front of the property that simply reads " For Sale" and the owner owns only one other home D. An Absentee owner who rents units in a four-plex without the help of a real estate agent
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C. An unlisted hoe that is for sale by woenr, where the only advertising is a sign in front of the property that simply reads "For Sale" and the owner owns only one other home The Federal Fair Housing Act ( Title VIII of the Civil Rights Act of 1968) does not apply to the sale or rental of a single-family home by its owner, provided that the owner doesn't own more than three such homes, no real estate agent is used, and no discriminatory advertising is used.
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As a property manager, you may: A. advertise that units are available, even when their not B. use diferent application forms for minority applicants C. require credit checks for some applicants, but not others D. offer inducements to prospective tenants
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D. offer inducements to prospective tenants Property managers may offer inducements to attract tenants; waiving the first month's rent. A property manager should perform credit checks on all prospective tenants.
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Price fixing is prohibited by the: A. state usuary act B. federal Regulation Z C. Sherman Antitrust Act and state antitrust laws D. federal Real Estate Settlement Procedures Act
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C. Sherman Antitrust Act and state antitrust laws The Sherman Antitrust Act and state antitrust laws prohibits price fixing, group boycotts, market allocation, and tie-in arrangements.
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A metes and bounds description reads as follows: "started at the intersection of Route 120 and Wells Lane. Proceed due south 1,815 feet, then due east 1,200 feet. Proceed due north 1,815 feet, then return west to point of beginning." How many acres is this property? A. 5 B. 20 C. 50 D. 100
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C. 50 Sketch as described. Area = Length x Width. Multiple 1,815 x 1,200 = 2,178,000 sq. ft. convert to acreage by dividing by 43,560, which equals 50. (43,560 equals square feet in one acre.)
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A survey has been completed, and stakes have been placed marking off the property. The survey can be used to: A. construct fences and driveways B. measure soil stability C. determine freehold interests D. verify known liens
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A. construct fences and driveways survery is used to determine where exactly a property's boundary lines fall.
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Erin entered into a lease that begins February 1, and is to end on January 31 three years later. This leasehold is a/an: A. estate for years B. tenancy at sufferance C. periodic tenancy D. estate from year to year
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A. estate for years An estate for years begins on a certain date an ends ona certain date.
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Which of the following is true about survey's? A. they determine placement of improvements on a property B. They identify setback lines from property boundaries C. The protect against easements by prescription D. They reveal encroachments not of public record
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D. They reveal encroachments not of public record A survey may reveal matters that are not part of the public record that would only be discovered through a personal inspection, such as encroachments. Why they are performed as part of obtaining extended coverage title insurance policy.
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Allen begins providing construction services on May 2 and records a construction lien on May 5. Bart begins providing services on May 3 and records a construction lien on May 4. On May 10, a judgment lien against the property is recorded. The property's owner also receives on May 10 that he is in arrears on his property tax payments. Which lien has lien priority? A. Allen's Lien B. Bart's Lien C. Judgement Lien D. Tax Lien
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D. Tax Lien Property tax liens take priority over other liens, including construction liens. Allen's lien still takes priority over Bart's. As a construction lien takes priority based on the date of the start of construction, but the tax lien takes priority over both.
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Which of the following is true about building designated a historical landmark? A. All lead paint must be removed immediately B. It ay not be willfully destroyed without a permit C. It may only be sold to family members D. It must comply with all local ordinances
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B. It may not be willfully destroyed without a permit, Historical preservation ordinances may protect exsiting buildings of historical value, and cannot be destroyed or modified without approval from an appropriate local authority.
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W, age 17, enters into an installment contract to purchase a five-year-old-car fro S, an adult. From a legal point of view, the contract is: A. void B. voidable by W only C. voidable by S only D. voidable by either S or W
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B. voidable by W only The contract is voidabole by minor, but not by other party.
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A real estate agent shows a listing to two different buyers. One buyer decided in the early morning to make an offer on the property for less than the listed price. The agent writes up an offer and plans to meet with the seller later in the day. The other buyer the contacts the agent and says she would like to make a full price offer. What should the agent do? A. Meet with the seller a but present the first offer, and then present the second offer only if the first offer is rejected B. Present both offers to the seller at the same time C. Tell the second buyer that her offer is invalid because there is already an offer on the property D. Tell the second buyer that he can only present the first offer to the seller, then he'll present her offer if the first one is rejected
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B. Present both offers to the seller at the same time A real estate agent has the duty to present all written communications to and from all parties in a timely manner. Failing to inform a party of any offer would be a breach of this duty. This is the law no matter who the agent is representing.
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To be valid, a listing agreement may be signed by: A. an attorney in fact B. the buyer C. the designated broker only, with the owner's authorization via telephone D. the licensee only
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A. the attorney in fact a listing agreement needs to be signed both by the listing agent, on the listing firm's behalf, and by the seller. An attorney in fact, someone the seller has appointed in a power of attonrney and granted the authority to convey the property may sign the listing agreement on the seller's behalf.
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An apartment building was built in 1960. An apartment is being rented to a couple ith no children. Which of the following is true? A. The rules on lead-based paint don't apply unless the tenant have children B. The rules on lead-based paint don't apply to tenants, only purchasers C. The tenants must receive a ten-day window in order to test for lead-based paint D. The tenant should sign the lead-based paint disclosure and receive a pamphlet on lead-based paint
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D. The tenant should sign the lead-based paint disclosure and receive a pamphlet on lead-based paint A landlord must disclose the location of any known lead-based paint, provide a copy of any report concerning lead-based paint if the property has been inspected, and give tenants a copy of the lead-based paint pamphlet. Tenants do not receive ten-day period in which to have the home tested for lead-based paint that buyers do.
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Once a contract for deed is signed by the parties, buyer immediately receives: A. a life estate B. legal title C. equitable title D. the right to lease the property
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C. equitable title A buyer recives equitable title to the property once th eland contracy has been signed. The seller retains legal title. The seller transfers legal title once the buyer finishes paying off the contract/purchase price.
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A buyer's agent has reportedly seen sales collapse at the last minute because the buyers weren't able to obtain financing. How could he best limit this in the future? A. Qualify all prospects himself B. Refer buyers to a specific lender C.Require prospects to be apprioved first D. Show lower-priced properties
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C. Require prospects to be approved first Getting preapproved for a loan before beginning the house hunting process is now standard procedure.
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An agent is performing a competitive market analysis for a potential client, working with four comparables. Which of the following comparables would require an upward adjustment in its sales price? A. Comparable W: is on a larger lot size than the subject property B. Comparable X: lacks a garage which subject property has C. Comparable YL has a swimming pool which subject property lacks D. Comparable Z: is in a superior neighborhood compared to subject property
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B. Comparabl X: lacks a garage, whih the subject property has WHile performing a CMA, you adjust a comparable's sales price upward if it does not have a feature that the subject property has.
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A federal law requires lenders to give a booklet "Shopping for your Home Loan" to all prospective borrowers within three business days of loan application. WHat law is this? A. Regulation Z B. Home Loan Disclosure Statement Act C. RESPA D. Truth in lending Act
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C. RESPA RESPA requires that all lenders give prospective borrowers a copy of the booklet about settlement procedures.
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A property manager of a ten-unit building shows an apartment to a woman who uses a wheelchair. The woman says that she would need to make some modifications, such as adding a grab bar in the shower and removing some carpeting in the bedroom. The landlord: A. can refuse to rent to the tenant because of the tenant's proposals B. must allow the tenant to make the modifications at her own expense, but can require her to restore the property at the end of the lease C. must allow the tenant to make the modifications at her own expense, and cannot require the tenant to restore the property at the end of the lease D. must make the modifiations and pay for the expenses himself
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B. must allow the tenant to make the modifications at her own expense, but can require her to restore the property at the end of the lease The Fair Housing Act says that a disabled tenant may make reasonable modifications to a leased property at her own expense. The tenant can be required to restore the premises at the end of the tenancy.
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To avoid tenant problems, a landlord is best off using a standardized lease form that includes: A. a copy of the Uniform Landlord Tenant Act B. a warranty of quiet enjoyment C. a tenancy at will provision D. specific rules and regulations
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D. specific rules and regulations including rules that govern the tenancy in the lease itself helps disputes between landlord and tenant.
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A warehouse is listed at 60 feet long anf 90 feet wide with 15 foot ceilings. The building rents for five cents per cubic foot per month. What is the amount of the monthly rental payment? A. $270 B. $2,700 C. $4,050 D. $405,000
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C. $4,050 First calculate the building's volume ( 60 x 90x 15= 81000 cubic feet) Multiply that by monthly rate (81000 x .05= 4050)
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Chin, a home seller, is talking to his real estate agent. He mentions that he rents the backup generator; it doesn't belong to him. The generator would be considered: A. a fixture B. a natural attachment C. a trade fixture D. personal property
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D. personal property The generator is he personal property of the company that owns it. While it might remain on the property after possession of the property changes, it still belongs to the rental company and they could reclaim it according to the terms of their contract.
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Which of the following would characterize a tenancy in common? A. only available to married persons B. Requirments of equal interests C. Right to survivorship D. Tenants can will a partial interest in the property
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D. Tenants can will a partial interest in th eproperty Unlike joint tenancy, a tenant in common can deed or will her share of the property to someone else. There is no right of survivorship, and no requirements of equal interests, in a tenancy in common.
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Carl is housebound and never goes outside. Neighbor Salvador plants a veggie garden on a corner of Carl's property that is not visible from the main house. After the required period of time, Salvador claims a prescriptive easement over this portion of Carl's land. This easement is A. not valid, because Salvador had a duty to inform Carl of his intended use B. not valid, because Carl didn't know of the use and had no chance to formally object C. valid, Salvadors' veggie garden is a productive use of land D. valid, the use was open and Carl's knowledge of the use isn't considered
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D. valid, the use was open and Carl's knowledge of the use isn't considered prescriptive easement requires a use that is open and notorious, rule only requires actions that would be enough to put the typical owner on notice that his property interest is threatened.
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A licensee is helping her buyer purchase some property. The buyer would like to make an offer on a corner lot that may have once been used as a storage site for a heating oil company. The Licensee should advise her uyer to: A. consult with an environmental expert b. request a spot zone C. seek tentative approval from the Environmental Proptection Agency D. use a condemnation clause in the offer
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A. consult with an environmental expert expert could conduct tests whether the soil has been contaminated and determine any abandoned undergournd storage tanks. Buyer does not need EPA approval before buying a site that may have been contaminated.
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To be enforceable, a contract for the sale of real estate msut be in writing and signing by the parties. This is tru because of which law? A. Real Estate License Law B. Uniform Commercial Code C. Real Estate Settlement Procedures Act D. Statute of Frauds
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D. Statute of Frauds requires certain contracts, including cirtually all real estate contracts, to be in writing.
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Seller complains that the seller's agent is showing other properties to buyers that compete with the seller's property. Which of the following is true? A. Seller's agent is breaching the duty of loyalty to her seller B. Seller's agent is not breaching the duty of loyalty C. Seller's agent has created a conflict of interest D. Seller's agent may do so, but only with the seller's express permission
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B. Seller's agent is not creaching the duty of loyaly A seller's agent has the duty to the seller. However, a real estate licensee will most likely have other clients as well, so even if a dual agency doesn't exist, the duty of loyalty to one client must still be balanced against the need to work for the best interests of other clients as well.
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Buyer bob and seller sam decided to wait until sam's listing agreement with XYZ real estate agency has expired, to avoid paying a commission. Does the firm have any legal resources? A. Yes, the listing agent can pursue criminal charges B. Yes, the listing agent can sue Bob under the listing agreement C. Yes, the lsiting agent can sue Sam under the lsiting agreement D. No, the listing agent has no further resources
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D. No, the listing agent has no further resources If a listing agreement does not include an extender clause, no resources.
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A mortgage that uses both real and personal property to secure the borrower's debt is a: A. reverse equity mortgage B. budget mortgage C. package mortgage D. deed of trust
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C. Package mortgage uses both real and personal property as collateral
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When a borrower maks payments on a fully amoritized loan, her debt service payments will cover: A. only principal on the loan B.only interest on the loan C.both principal and interest on the loan D. principal, interest, taxes, and insurance
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C. principal and interest on a loan A fully amortized loan is repaid through regular paymets that include both apportion of the principal and interest. Final payment will pay off the principal balance, leaving no need for a balloon payment.
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An appraiser is trying to estimate depreciatation when valuing an older residential rental property, but is finding it difficult because no comparables have sold recently. However, the appraiser can find sufficient data on rental rates in the same market, and a capitalization rate can be supported. Which approach to value should the appraiser use? A. Cost B. Income C. Market Data D. Sales comparison
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B. Income If comparables sales aren't avaibale anf the accrued depreciation is difficult the estimate, but the data necessary to use the income approach are availablr, then it's appropriate to use the income approach.
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The term "familial status" in the Fair Housing Act refers to the presence of: A. adult children of tenants living on the property B. children under the age of 18 living on the property C. disabled persons living on the property D. unmarried persons living on the property
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B. children under the age of 18 living on the property Discrimination based on familial status refers to discrimination against someone because a child (a person under 18 years old) is or will be living on the property. In addition to parents, this rule protects legal guardians, pregnant women, and people in the process of obtaining custody of a child.
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A type of lease that allows the lessor to share in the increasing sales generated by a retail property is a/an: A. percentage lease B. graduated lease C. index lease D. net lease
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A. Percentage lease Percentage leases are frequently used in shopping centers and with other retail properties. They enable the landlord to share in the tenant's profits as part of the rent.
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An apartment building has eight units; each units rents for $800 per month. The property can also be expected to earn $4,000 per year from laundry and vending machines. An appraiser estimates that the property typically operates with a 5% vacancy factor. What is the property's estimated annual effective gross income?
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D. $76,960 Multiply the eight units in the building by the monthly income (8 x $800 = $6, 400) Multiply that by 12 months per year, to find the annual income (12 x $6,400 = $76,800). Calculate what is 5% of that amount ($76,800 x .05 = $3,840). and subtract that amount from the annual income ($76,800 - $3,840 = $72,960). Add the $4,000 in additional revenue (which is not subject to the vacancy factor) to find the effective gross income ($72,960 + $4,000 = $76,960).
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Meridians and base lines relate to the: A. lot and block method B. metes and bounds method C. recorded map method D. rectangular survey method
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D. rectangular survey method The rectangular survey system, also known as the government survey system, divides the land into a series of grids, identified by meridians and base lines.
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An investor would like to invest in real estate, but without being involved in management or subjecting himself to any personal liability. He should invest in a: A. general partnership B. joint venture C. limited partnership D. Sole partnership
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C. limited partnership In a limited partnership, the limited partners are not personally liable for the partnership's debts and obligations. Limited partners are commonly passive investors who aren't directly involved in managing the business.
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Special assessments levied against a property for local improvements, such as streetlights and sidewalks, are computed on the basis of: A. the market value of the property B. the benefit the property receives from the improvements C. a recent appraisal of the property D. the square footage of the land
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B. the benefit the property receives from the improvements As a rule, special assessments are allocated according to the benefits each property receives, instead of the market value of the property. Thus a special assessment is not an ad valorem tax. Sometimes the allocation is based on the front footage of the lot, if the assessment is levied to pay for the storm drains, curbs, and gutters.
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A legal action brought in court to compel a party to fulfill the terms of a contract because the land is unique and money damages would not adequately compensate the party victimized by a breach is called a/an: A. partition action B. suit for specific performance C. quiet title action D. injunction
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B. suit for specific performance The legal premise that no two properties are alike is the basis for a suit for specific performance, which asks the court to order someone who has breached to actually perform the contract as agreed (deliver the deed to the buyer), rather than simply pay money damages.
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Under which of the following circumstances would a listing be terminated? A. Real estate agent who took the listing dies B. Seller dies C. Property is rezoned after listing is signed D. Listing agent goes to work for another firm
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B. Seller Dies According to agency law, if either the principal (in this case the seller) or the agent dies, the agency is terminated. However, the "agent" in an agency relationship is the real estate firm, not the individual who took the listing, so the listing is still in effect even if the individual real estate agent dies or moves to another firm.
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At closing, a sale doesn't go through because the seller's anticipated transfer to another city gets suddenly postpones, and the seller no longer wants to sell. Does the seller owe the listing agent a commission in this situation? A. No, because the sale didn't close B. No, because this was a circumstance outside the seller's control C. Yes, because the seller won't provide marketable title, which is considered default. D. Yes, unless the buyer and seller agreed to mutually cancel the transaction
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C. Yes, because the seller won't provide marketable title, which is considered a default. The misting agent has earned a commission if, after a suitable buyer agrees to buy, the sale fails to close and the seller is at fault. The seller's main responsibility regarding closing is to deposit into escrow a deed with marketable title. The seller failed to do that here.
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Which of the following persons could be eligible to receive a VA loan? A. A veteran or a deceased veteran's child B. A veteran or a deceased veteran's child or a un-remarried spouse C. A veteran or deceased veteran's un-remarried surviving spouse D. Only a veteran him or herself
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C. A veteran or deceased veteran's un-remarried surviving spouse A veteran's surviving spouse may be eligible for a VA loan if he or she has not remarried, and the veteran was killed in action or died of service-related injuries.
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A prospective tenant asks a licensee to show him only properties that do not allow children. How should the licensee respond? A. Say that only bona fide retirement communities may exclude children B. Say that the law requires that all available properties must be shown. C. Say that to do so would be steering, and therefore illegal D. Show properties that are billed as "adult only"
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A. Say that only a bona fide retirement communities may exclude children The Fair Housing Act forbids "adult only" apartment complexes. There is, however, an exemption for properties that qualify as "housing for older persons," such as those intended and solely intended by persons 62 or over.
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A property's net operating income is $12,000 per year. If an investor wants a 12% rate or return, how much is the property worth to him? A. $1,440 B. $100,000 C. $144,000 D. $1,000,000
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B. $100,000 Use the capitalization formula (Income / Capitalization Rate = Value) to find a property's value : $12,000 net income / .12 rate of return = $100,000 value.
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The best description of the boundary lines for a property found in a subdivision would be found on: A. a plat map B. the deed C. the mortgage D. the purchase and sale agreement
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A. plat map Subdivided property is usually described in deeds and purchase and sale agreements by reference to a map of the subdivision and particular lot. The map, known as a plat map, describes the boundaries of the lot and is prepared by a surveyor.
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A homeowner has an unpaid hospital bill for $20,000. The hospital files suit and wins a judgment for the full amount. Is the homeowner's home (which he owns free and clear) at risk? A. No, because the debt must by $25,000 to force a sale B. No, because the debt must exceed the value of the homestead C. Yes, but he may be partly or fully protected by homestead laws D. Yes, a court may always force a sale to fulfill a judgement
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C. Yes, but he may be partly or fully protected by homestead laws Homestead laws are state-level laws that give limited protection against foreclosure over judgement liens. Generally, foreclosure is not allowed unless the net value of the property exceeds the homestead exemption amount.
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Which of the following best describes the difference between building codes and zoning regulations? A. Building codes control the use of real property; zoning regulations affect improvements on the property B. Building codes affect improvements on the property; zoning regulations control the use of the real property C. Building codes are enforced by municipalities; zoning regulations are enforced by the state. D. Building codes are enforced by the state; zoning regulations are enforced by municipalities
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B. Building codes affect improvements on the property; zoning regulations control the use of real property Building codes protect the public from unsafe or unworkmanlike conditions, through the building permit system. Zoning regulations, by contrast, regulate the use of properties, dividing communities into zones for specific types of uses. Both are enforced at the city or county level.
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In an option: A. no consideration is required B. the seller is the optionee and the buyer is the optionor C. the seller must apply the option money to the purchase price if the optionee exercises her option D. the option agreement must clearly state all the terms and conditions of the sale
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D. the option agreement must clearly state all the terms and conditions of the sale The option agreement also serves as the sale contract once the option is exercised, so all terms and conditions of the sale need to be included in the option agreement.
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An independent contractor relationship between a real estate brokerage firm and a license requires that the: A. brokerage and licensee must enter into a written agreement B. brokerage must consider the licensee an employee for tax purposes C. brokerage must set the licensee's daily work schedule D. licensee must be paid primarily based on number of hours worked rather than commission
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A. brokerage and licensee must enter into a written agreement The Internal Revenue Service will consider a real estate licensee an independent contractor only if the brokerage firm and the licensee have a written contract saying that the licensee will not be treated as an employee for federal tax purposes. In addition, substantially all of the licensee's compensation must be based commission rather than hours worked.
question
An advertisement for a house includes only the following phrase about financing: "Assume the owner's original loan with only a $1,000 downpayment" What is wrong with this advertisement? A. it doesn't include the loan's annual percentage rate and other financial terms B. it doesn't also include the loan's original balance C. it doesn't give the brokerage firm's name as advertised D. Nothing. so long as it is the real estate's licensee's own property
answer
A. it doesn't include the loan's annual percentage rate and other financial terms Under the truth in lending act. if an advertisement contains a triggering term, such as the amount of a downpayment, then it must disclose all of the other information concerning the loan. This includes the loan's annual percentage rate.
question
Which of the following is true concerning federal fair housing laws? A. Enforcement may be brought about by filing a complaint with the Dept. of Housing and Urban Development B. Parts of these laws were overturned by the Supreme Court in the case of Jones v. Alfred H. Mayer Co. C. They only apply to racial discrimination D. They prevent state-level antidiscrimination laws
answer
A. Enforcement may be brought about by filing a complaint with the Dept. of Housing and Urban Development The Fair Housing Act enforced through the Department of Housing and Urban Development's Office of Fair Housing and Equal Opportunity. Jones vs. Mayer upheld the application of the Civil Rights Act of 1866 in sale or rental of real property. State laws are not preempted by federal antidiscrimination laws; in some cases, they may be more strict than federal law.
question
Bob's property has a fair market value of $190,000. It is in a county where properties are assessed at 50% of value, and the tax rate is $55 per $1,000 of assessed value. What's Bob's annual property tax? A. $2,612.50 B. $5,225.00 C. $7,837.50 D. $10,450.00
answer
B. $5,225.00 The first step in calculating a tax problem is to find the property's assessed value ($190,000 x .5 = $95,000). Divide the assessed value by $1,000 to find the number of increments ($95,000 / $1,000 = 95) and then multiply by the tax rate to find the annual tax bill (95 x $55 = $5,225).
question
Jesse, Kim, and Diane own a home together as joint tenants. If Jesse dies, her property interest: A. will be inherited by her children according to the provisions of her will B. must be bequeathed to Kim and Diane in her will C. will be automatically devised to her heirs D. will be automatically transferred (conveyed) to Kim and Diane
answer
D. will be automatically transferred (conveyed) to Kim and Diane Joint tenancy includes the right of survivorship, which means that upon the death of one joint tenant, title passes immediately to the remaining joint tenant(s). The property interest is not subject to probate; the transfer of title is automatic.
question
A contract signed by a person who was intoxicated at the time of the signature would be: A. valid B. void C. voidable by the intoxicated party D. voidable by the other non-intoxicated party
answer
C. voidable by the intoxicated party A contract signed by a person who is temporarily incompetent (through intoxication, for instance) may be voidable, if the person takes action to rescind the contract within a reasonable time after regaining competency.
question
A seller's agent knows that the seller intentionally failed to disclose on the property description statement that the basement leaks during heavy rains. The seller's agent must: A. complete a new property disclosure statement himself B. inform the local housing authority C. inform the Department of Licensing D. inform the prospective buyer that there is misrepresented information on the disclosure form
answer
D. inform the prospective buyer that there is misrepresented information on the disclosure form A real estate agent has the duty to disclose known material facts to the parties in a transaction, even when the agent's principal would prefer not to have the information disclosed. A leaking basement is a latent defect and certainly qualifies as a material fact.
question
Which of the following loans would be subject to the Truth in Lending Act? A. A loan to a first-time home buyer B. A loan to a homeowners association C. A loan to a residential subdivision developer D. A loan to buy a 20-unit apartment complex
answer
A. A loan to a first-time home buyer The truth in lending act applies to consumer loans. It doesn't cover loans for business, commercial, or agricultural purposes, or loans to corporations or other organizations.
question
Art sold his house, which was not encumbered with a mortgage. Closing expenses were $5, 264, and paid a commission of 7% of selling price. He received a check at closing for $372,316. What did the house sell for? A. $398,000 B. $404,260 C. $406,000 D. $411,100
answer
C. $406,000 The house sold for $372,316, plus whatever was subtracted from the sales proceeds at closing (that is, the seller's selling expenses). Thus, to get the sales prices (so we can determine the commission), you first add the selling costs to the sales proceeds. $5,264 / $372,316 =$377,580. Then use the seller's net formula. That is, divide the sales price by the commission rate subtracted from 100 (100% -7% =93%). $377,580 / .93 = $406,000.
question
Frank gives Stella an option to buy his house. Stella, as the optionee, is obligated to: A. exercise the option at the end of the option period B. apply for a zoning change, if one is necessary in order to use the property in the way Stella wants C. pay consideration for the option right D. record the option
answer
C. pay consideration for the option right Some consideration must pass from optionee to optionor . A mere statement of consideration is not adequate. Recording the option is advisable, but not required.
question
Sally lists her property for sale with Broker Al. Al learns that the property is about to be rezoned to a higher use. He tells Sally he would like to purchase the property himself. She agrees, and the sale closes. Six months later, Al resells the property for a significant profit. This is legal: A. as long as before Sally agreed to the sale, Al informed her of the upcoming zoning change and what it would mean for the property's value. B. as long as he disclosed to Sally the profit made off of the resale, after his sale closed C. only if Al shares his profits with Sally D. under no circumstance
answer
A. as long as before Sally agreed to the sale, Al informed her of the upcoming zoning change and what it would mean for the property's value When Al decided to buy the property for himself, his duty to disclose conflicts of interest and material facts to his principal required him to let Sally know all of the circumstances. If he failed to do so, it was self-dealing and a breach of fiduciary duties.
question
A corn field with a depth of 900 feet and a frontage of 484 feet is bisected by an access road, leaving two triangular lots. If the land sells for $2,000 per acre, how much is each lot worth? A. $2,000 B. $10,000 C. $20,000 D. $100,000
answer
B. $10,000 Each lot is worth $10,000. One way to solve this problem is to find the area of one of the triangular lots. Use the triangle area formula, Area = 1/2 base x height (900 feet x 484 feet = 217,800 square feet). Convert this to acreage (217,800 square feet / 43,560 square feet per acre = 5 acres), and then multiply by the cost per acre (5 acres x $2,000 = $10,000). Alternatively, you can use the rectangular area formula (Area = Length x Width) to find the area of the entire corn field (900 feet x 484 feet = 435,600 square feet), divide to convert the square footage to acreage ( 435,600 square feet / 43,560 square feet per acre = 10 acres), multiply by the cost (10 acres x $2,000 = $20,000), and divide by 2 to find the cost of one of the lots ($20,000 / 2 = $10,000).
question
Martha gave Hannah the right to purchase her vacant lot for $65,000. Hannah paid Martha $1,200 for this right. Hannah is the : A. mortgagor B. Mortgagee C. Optionor D. Optionee
answer
D. Optionee Martha gave the option to Hannah, so Martha is the optionor and Hannah is the Optionee
question
Which is a list of duties owed to a principal by an agent? A. Loyalty, compensation, reasonable care, accounting B. Loyalty, confidentiality, reasonable care, accounting C. Performance, compensation, reasonable care, indemnification D. Performance, confidentiality, loyalty, indemnification
answer
B. Loyalty, confidentiality, reasonable care, accounting Duties that an agent owes to all parties (including the principal) are reasonable skill and care, honesty and good faith, presenting written communications, disclosure of material facts, accounting, providing agency law pamphlet, and making an agency disclosure. In addition, an agent owes the principal the duties of loyalty, disclosure of conflicts of interest, confidentiality, advising the principal to obtain expert advice, and good faith and continuous effort. Compensation, indemnification, and performance are not duties an agent owes the principal.
question
Brian purchases two parcels of land, one measuring one square mile and the other containing five acres. If he paid $2,000 an acre, what was his total purchase price? A. $1,208,000 B. $1,209,000 C. $1,280,000 D. $1,290,000
answer
D. $1,290,000 One square mile equal 640 acres. Add those to find the total acreage (640 acres / 5 acres = 645 acres). Multiply the acreage by the price per acre to find the total price (645 x $2,000 = $ 1,290,000)
question
A licensee can reveal confidential information about his principal: A. under court order or subpoena B. under no circumstance C. when another party asks directly if a certain fact is true D. when acting as a dual agent
answer
A. under court order or subpoena While a licensee ordinarily has a duty to not disclose confidential information about the principal, it may be disclosed when the licensee is faced with a court order or a subpoena.
question
Ajax Reality lists a property for a seller at a commission rate of 8%. The multiple listing service provides that a listing brokerage will split commissions at a 50-50 rate. Baron Realty, a cooperating brokerage, finds a buyer for the property, at a price of $300,000. How much will the seller owe Ajax Reality at closing? A. $0 B. $12,000 C. $18,000 D. $24,000
answer
D. $24,000 Under the terms of listing agreement, the seller will pay the listing firm (Ajax) 8% of the sales price ($300,000 x .08 = $24,000). The seller is not a party to the MLS commission split agreement. It's up to Ajax to share half of the money with Baron Reality in fulfillment of the commission split agreement, the seller owes Ajax the full commission
question
A home inspection revealed that black mold is present in a home. What should the buyer's agent tell the buyer? A. That black mold is toxic, and that the buyer should not buy this home B. That mold is commonplace, and can be cleaned up with bleach C. To require the seller to remedy the problem D. To seek expert advice
answer
D. To seek expert advice A buyer's agent typically does not have expertise in environmental hazards. The proper step, for matters in a transaction outside the agent's expertise, is to advise the principal to seek expert advise. In this case, that would be a mold remediation specialist.
question
A buyer enters into a buyer agency agreement with a real estate licensee to negotiate the purchase of a particular FSBO property. The buyer then enters into purchase and sale agreement, but the property he agreed to buy is subsequently condemned. Which of the following is true? A. The agency is terminated B. They can immediately look for another property C. The agent may sue the buyer for damages, if any were incurred D. This creates a dual agency
answer
A. The agency is terminated An agency is terminated by operation of law based on the extinction of the subject matter, such as the condemnation of the subject property. The buyer and agent can look for another property, but would need to form another agency relationship first. Practically speaking, that's not very difficult (especially in states where an agency relationship can be formed simply by beginning to provide brokerage services to someone).
question
A right held by one or more persons to us and possess property to the exclusion of others is a/an: A. warranty B. easement C. fee simple estate D. right of equity
answer
C. fee simple estate An easement allows the use of property, but is not a possessory right. An estate, in contrast, is an interest in land that is or may become possessory. (A fee simple estate is the most common form of estate).
question
A new subdivision requires payment of homeowners association dues. If unpaid, what type of lien do they create? A. General lien applying to all property owned by the homeowner B. Involuntary lien that does not pass to the next buyer of the property C. Personal debt that is not secured by real property D. Specific lien that encumbers the property
answer
D. Specific lien that encumbers the property Unpaid homeowners association dues create a specific lien, meaning that the lien attaches only to a particular piece of property. A lien is an encumbrance, so it is not terminated by the sale of the property and would affect the next buyer's title.
question
A homeowner in a recently built subdivision plans to build an extra bedroom extending from the back of the house. Nobody in the subdivision has added on to their houses in a similar manner yet. What would the homeowner need to obtain before he could begin work on this project? A. Building permit B. Certificate of occupancy C. Conforming use permit D. Variance
answer
A. Building Permit A property owner must obtain a building permit from the city or county before making significant altercations to an existing building.
question
Barker is declared incompetent by a court, and his daughter, Marge, is appointed to handle his affairs. After several years, Marge asks her sister Beth to take over her duties. Beth then list's Barker's property for sale. Would a sale of Barker's property be valid under these circumstances? A. No, any contract concerning real estate and an incompetent person is automatically void B. No, Beth hasn't been designated by a court to handle Barker's affairs C. Yes, but only if Beth gets Barker's written permission D. Yes, Marge has delegated her responsibilities properly
answer
B. No, Beth hasn't been designated by a court to handle Barker's affairs An incompetent person's property may be sold, but the deed must be signed by a court-appointed guardian or a duty appointed attorney in fact. Beth doesn't meet either of these criteria.
question
Peter plans to sell a number of different properties. He enters into an agreement with Agent Carla, in which she agrees to act as Peter's special agent. Under this agreement, how many properties can Carla list for Peter? A. A special agent has no fiduciary obligations, so Carla can only list one property at a time B. A special agent may perform whatever legal acts have been authorized by the principal, so Carla can list as many properties as stated in the agreement C. A special agent acts as a dual agent, so Carla can only list two properties at a time D. None, because a special agent is in the business of appraising properties, not listing them.
answer
B. A special agent may perform whatever legal acts have been authorized by the principal, so Carla can list as many properties as are stated in the agreement A special agent may perform whatever legal acts the principal has authorized the agent to perform. There is no limit on the number of listed properties that one agency agreement can cover.
question
Gail gives ABC reality a listing that stipulated it I the only real estate firm authorized to list her home. At the same time she insists on including provisions that would allow her to sell the home herself without paying a commission to ABC. Which of the following describes this king of listing she has created? A. Non-exclusive listing B. Exclusive right to sell listing C. Exclusive open listing D. Exclusive agency listing
answer
D. Exclusive agency listing An exclusive agency listing agreement entitles the brokerage to a commission if anyone other than the seller finds a buyer for the property during the listing's term.
question
A buyer and a seller enter into a purchase and sale agreement. The agreement provides that closing must take place by September 30. A clause states that a party's failure to be ready by a date specified in the contract will constitute a breach of the contract. What is the name of this clause? A. A habendum clause B. A contingency clause C. A time of the essence clause D. A closing clause
answer
C. A time is of the essence clause A contract clause that makes failure to meet a stated deadline a material breach of the contract is called a "time is of the essence" clause. A time is of the essence clause does not have to be a stand-alone provision; it may be part of another provision.
question
Interest on a loan for a home purchase is which type of interest? A. Annually paid B. Compound C. Complex D. Simple
answer
D. Simple The interest paid on real estate loans is simple interest
question
Which of the following is a primary market lender? A. Federal Housing Administration B. Mortgage banking company C. Mortgage broker D. Veterans Administration
answer
B. Mortgage banking company A mortgage banker is a primary market lender, meaning that it originates loans directly to property buyers. Under the traditional distinction between a mortgage banker and a mortgage broker, a mortgage broker negotiates loans, bringing borrowers and lenders together for a fee, but (unlike a mortgage banker) is not a lender.
question
A buyer who is concerned with whether a property's soil is suitable for construction of a septic system would, as part of the inspection process, order a/an: A. absorption test B. geological inspection C. percolation test D. toxic waste report
answer
C. percolation test A percolation test, which measures the soil's capacity to absorb water, is usually performed to determine whether a property is suitable for a septic system that will meet applicable health standards.
question
A $4,500 earnest money check bounces because of insufficient funds. The first thing the broker should do is: A. notify escrow to charge this amount, plus the bounced check fee, to the buyer B. notify the borrower C. notify the principals D. write a personal check for $4,500 to cover the shortage
answer
C. notify the principals Both principals (the buyer and the seller) are parties to the escrow instructions. The broker should notify both of them so they can decide how they want to proceed.
question
Adjusted basis is initial basis: A. less capital expenditures, plus depreciation B. less repair expenses, plus capital expenditures C. plus capital expenditures, plus repair expenses D. plus capital expenditures, less depreciation
answer
D. plus capital expenditures, less depreciation A taxpayer's adjusted basis in a property is the initial basis, plus capital expenditures, less allowable depreciation
question
Which of the following rental transactions would be covered by (not exempt from) the Fair Housing Act even if no real estate agent were involved? A. Owner-occupant rents a unit in a four-unit dwelling, using a nondiscriminatory ad B. Owner-occupant of a duplex rents to a neighbor's son without advertising the unit C. Rental of a unit in a triplex, using no discriminatory advertising D. Owner rents out one room in her residence, without using any advertising
answer
C. Rental of a unit in a triplex, using no discriminatory advertising A residential rental transaction can be exempt from the Fair Housing Act only if the property is a single- family home and the owner has no more than three such homes, or if the properly has no more than four units and the owner is residing on the property. Option C does not indicate that the owner is occupying one of the units in the triplex, so the Fair Housing Act would apply to the transaction.
question
What is the most important consideration for a property manager who is deciding on appropriate rental rates? A. How many units are in the property B. Proximity of the property to places of employment C. The number of units available in the city D. The rental rates for similar properties in the same market
answer
D. The rental rates for similar properties in the same market In a market analysis, the manager examines competing rental properties to help him to set appropriate rental rates
question
A living room needs to be re-carpeted. It measures 18 feet long by 15 feet wide. How many square yards of carpet will need to be purchased? A. 10 B. 30 C. 90 D. 270
answer
B. 30 First, multiply the length and width to find the square footage (18 ft. x 15 ft. = 270 sq. ft). Then, because there are 9 square feet in a square feet in a square yard, divide by 9 to convert to square yards (270 / 9 = 30 square yards).
question
A deed that is not signed by the seller is still considered valid as long as it: A. is executed by a competent relative of the seller B. is delivered to the buyer C. contains is covenant of seisin D. is signed by an authorized attorney in fact
answer
D. is signed by an authorized attorney in fact The document used to assign legal rights to another person - for example, authorizing someone to sign a contract and/or deed on one's behalf - is a power of attorney. The person who is appointed to act is known as an attorney in fact.
question
A writ of attachment, an easement in gross, and a special assessment all have what in common? A. They're court actions B. They're encumbrances C. They're restrictions D. They're taxes
answer
B. They're encumbrances Writs of attachments and special assessments are financial encumbrances (liens), while an easement is a nonfinancial encumbrance (one that affects the use of the property), but all three are encumbrances.
question
A potential buyer gives a seller an offer that doesn't meet the seller's demands in the listing. What has the buyer given? A. Contract of sale B. Counteroffer C. Offer to purchase D. Option
answer
C. Offer to purchase An offer simply must express a willingness to contract, and be certain in its terms. It does not need to match the seller's terms.
question
Ed knows that his basement leaks, but doesn't disclose this is Sally, the buyer. Ed also instructed his agent to keep the information confidential. After the sale closes, Sally finds out that the basement leaks, and she sues for fraud and misrepresentation. Sally can sue: A. the listing agent only B. the seller only C. both the listing agent and the seller D. no one, under the doctrine of caveat emptor
answer
C. both the listing agent and the seller In this example, both the seller and the listing agent acted to conceal a latent defect from a buyer, and they both may be liable to the buyer for damages.
question
An exclusive listing agreement is an example of a/an: A. express contract B. illusory contract C. implied contract D. unilateral contract
answer
A. express contract A listing agreement is an express contract (an express contract is one that is stated in words - written or spoken - rather than implied by actions, and a listing agreement is stated in words: its a written agreement). Unlike an open listing, an exclusive listing agreement is a bilateral contract, not unilateral.
question
A buyer would be protected from risk of loss due to a failed heating system through: A. an agency disclosure statement B. a home protection plan C. mortgage insurance D. title insurance
answer
B. a home protection plan A home protection plan is a short-term warranty that a home buyer may purchase at closing. The buyer will be reimbursed to expenses related to the failure of covered systems or appliances, usually only during the first few years of ownership.
question
Which of the following clauses relates to a mortgage loan default and requires immediate payment of the debt? A. Subordinate clause B. Acceleration clause C. Wilt clause D. Safety clause
answer
B. Acceleration clause An acceleration clause allows the lender to accelerate the loan (demanding immediate payment of the entire amount owed) if the borrower fails to pay as agreed or defaults on any other aspect of the loan agreement.
question
B purchases a small commercial property, and he finances it with a 65% loan. The lender charges 9.25% annual interest and three discount points. The discount points: A. increase the mortgage payments B. decrease the annual percentage rate C. increase the fender's upfront yield D. increase the nominal interest rate
answer
C. increase the fender's upfront yield Discount points are a percentage of the principal amount of a loan, collected by the lender at the same time the loan is originated, to give the lender an immediate yield over and above the interest. While other discount points decrease the nominal (promissory note) interest rate, they don't decrease the annual percentage rate; the APR takes the discount points into consideration.
question
A real estate licensee is performing a competitive market analysis. He locates a comparable property that is slightly older than the subject property. The age of the comparable makes it worth $2,000 less. The comparable has a small porch worth $1,000 than the subject property lacks. If the comparable sold for $269,500 recently, what is the estimated value of the subject property? A. $266,500 B. $268,500 C. $270,500 D. $272,500
answer
C. $270,500 To estimate the value of the subject property, adjust the comparable's sales price to reflect what it would sell for if it were identical to the subject property. Add $2,000 to the comparable's sales price (to make it more like the subject property, which is newer), and then subtract $1,000 from the comparable's sales price (again, to make it more like the subject property, which lacks a porch). The results is $270,500.
question
Which of the following statements regarding the Real Estate Settlement Procedures Act (REPSPA) is true? A. It applies to residential and commercial transactions B. The borrower in entitled residential transactions, including seller financing C. It covers all financed residential transactions, including seller financing D. It sets the maximum interest rate that the lender can charge
answer
B. The borrower is entitled to a good faith estimate of the settlement costs within three days of submitting an application. Under RESPA, a lender is required to give a prospective borrower a good faith estimate of the settlement costs (closing costs) within three days after a written loan application is submitted (unless the loan is turned down within that period). Neither commercial transactions nor seller-financed transactions are covered by RESPA, and RESPA does not limit the interest rate lenders can charge.
question
A developer lists 20 different properties in a subdivision, with four different licensees. Each licensee gets her own model unit to work from. Which of the following is true? A. Each licensee must mention the other licensees offerings to all visitors B. Each model must display the Fair Housing logo C. Each model must display the licensee's license D. Each visitor must receive a copy of the condominium Buyer's Handbook
answer
B. Each model must display the Fair Housing Logo HUD regulations require the display of a Fair Housing poster with the Equal Housing Opportunity logo in any place of business where the business involves the selling or renting of dwellings
question
A property manager manages two large apartment buildings. They're older but well-maintained properties with a 96% occupancy rate. Based on analysis of market rates, the property manager should: A. lower rental rates to get to 100% occupancy B. maintain the status quo C. raise rents, if competitive market analysis confirms this D. refurbish the properties to improve desirability
answer
C. raise rents, if competitive market analysis confirms this Certainly the manager should raise (or lower) the rents if a competitive market analysis confirms the move. Only answer C is definitely true in all cases -- the CMA determines what level to set rents. (While answer A has some appeal, it's not the best answer: there might be reasons not to lower rents even to achieve higher occupancy. For example, perhaps a major employer is expanding soon and it would be a mistake to lock these units in a cheap prices.)
question
An assigned parking space in a lot at a condominium development would be considered a/an: A. common element B. easement C. limited common element D. private restriction
answer
C. limited common element A feature outside of the airspace of a condominium unit, but that is reserved for the owner of a particular unit, is considered a limited common element
question
Deborah sells her property to Juan, but Juan fails to record the deed. Which of the following statements is true about unrecorded deeds? A. The conveyance is invalid B. The deed is still valid between Deborah and Juan C. The deed provides constructive notice that Juan is the owner D. The property with the unrecorded deed will escheat to the county where it is located when Juan dies
answer
B. The deed is still valid between Deborah and Juan A deed that is unrecorded is still valid between the grantor and the grantee. However, it does not provide constructive notice of the grantee's interest, exposing the grantee to the risk that he could lose the property to a subsequent good faith purchaser (if, for instance, after selling to Juan, Deborah then fraudulently sold the property to someone else who didn't know that it had already been sold to Juan.)
question
Moe has an appurtenant easement over Ray's land. Ray's land is called a/an: A. dominant estate B. servient estate C. encroachment D. license
answer
B. servient estate Moe is the dominant tenant and Moe's land is the dominant tenement (estate), benefited by the easement. Ray is the servient tenant and Ray's land is the servient tenement (estate), burdened by the easement.
question
Which of the following would a landlord need to discuss to prospective tenants? A. Busy freeway is nearby B. One of the other tenants is a chronic alcoholic C. Presence of asbestos D. Similar units are available for lower rent in a nearby, more diverse neighborhood
answer
C. presence of asbestos Landlords must disclose the presence of asbestos and other environmental hazards on the property
question
Which of the following is true regarding an oral agreement for the sale of real property? It is: A. unenforceable; it violates the statue of frauds B. void: it violates the statue of frauds C. voidable: it violates the statue of frauds D. valid: assuming both parties are above the age of majority
answer
A. unenforceable: it violates the statue of frauds An oral agreement for the sale of real property fails to fulfill the requirements of the statue of frauds. Such a contract is unenforcable
question
Late on a Friday afternoon, an agent receives an offer on a property that she has listed, for $10,000 less than the listed price. The sellers will be away all weekend. The agent should: A. discard the offer since it is not for the desired amount B. try to get the offer to them as soon as possible on Friday C. wait in the hope that a full-price offer will come in D. have an unlicensed assistant present the offer
answer
B. try to get the offer to them as soon as possible on Friday Offers and counteroffers should be presented to the parties in as timely a fashion as possible. All offers and counteroffers should be presented, regardless of whether their terms seem acceptable.
question
Which of the following would MOST LIKELY happen in a land contract? A. The vendor pays the property taxes, insurance, repairs, and upkeep on the property until the final payment is made B. The vendor finances the property and makes installment payments C. The vendor retains the title to the property until the final payment is made D. The vendee receives possession and the vendor retains equitable title
answer
C. The vendor retains the title to the property until the final payment is made The vendor (seller) retains legal (not equitable) title to the property until the final payment is made. The vendee (buyer) receives possession and equitable title while making installment payments. The vendee is also usually responsible for property taxes, insurance, repairs, and upkeep during contract term.
question
A seller lists a 1.1 acre vacant residential lot asking $10,000. His broker decides to offer the financing himself. The broker runs an ad saying, "A $3,000 downpayment will get you beautiful residential acreage." Is more credit information needed? A. No, because Regulation Z doesn't apply to vacant land B. No, because the value was under $25,000 C. Yes, because a real estate broker is offering financing D. Yes, because the downpayment amount was given
answer
D. Yes, because the downpayment amount was given Under the advertising requirements of the Truth in Lending Act and Regulation Z (which apply to consumer loans secured by real property, including vacant land). if an ad contains a specific triggering term such as the downpayment amount, then the annual percentage rate and the other terms of repayment must also be disclosed in the ad.
question
A licensee who is taking a listing on a property find a number of problems that need to be fixed, such as several faucets and faulty electrical outlets. This would be an example of: A. economic obsolescence B. external obsolescence C. functional obsolescence D. curable depreciation
answer
D. curable depreciation Physical deterioration is a loss in value caused by wear and tear or by damage. The depreciation mentioned In the question would probably be classified as curable physical deterioration (deferred maintenance). Since it's likely that the cost of correcting the problems could be recovered in the sales price when the property is sold.
question
Which of the following pieces of information may an apartment property manager gather about applicants? A. Age B. Employment history C. National origin D. Social affiliations
answer
B. Employment history A property manager gathers information about rental applicants' employment history to gauge their ability to pay rent. National origin is protected class under the Fair Housing Act, and asking about it violates the act. While age and social affiliations are not protected classes in the Fair Housing Act, questions about them may implicate familial status and religion, which are protected classes. It's okay to ask abut age if there is a specific issue, for instance, if the applicant looks like he could be a minor. This question is asking about blanket inquiries, however.
question
An owner sells a property, and the buyer is going to make a 20% downpayment. The lender requires the buyer to pay two discount points, which turns out to total $1,000. What was the purchase price? A. $50,000 B. $62,500 C. $75,000 D. $200,000
answer
B. $62,500 The purchase price was $62,500. This question is simply two separate percentage problems. First, find the loan amount. Two discount points is 2% of the loan amount, so divide the value of the discount points by 2% to determine that this was a $50,000 loan ($1,000 / .02 = $50,000). The 20% downpayment means that this is an 80% loan. Now you can use the loan amount and the loan-to-value ratio to find the purchase price. To calculate the purchase price, divide the loan amount by 80% ($50,000 / 80 = $62,500).
question
A person takes control of an abandoned farmhouse, and begins to modernize it. She notifies the property's owner of her intention to do so and hears nothing back. Eventually she would be able to take title to this property through: A. accession B. adverse possession C. escheat D. partition
answer
B. adverse possession If a non-owner takes exclusive possession of a property without the owner's permission (the "hostile" requirement). In an open and notorious manner, and holds it for the required period of time, she can take title through adverse possession. Giving notice here helps satisfy the open and notorious element.
question
Alex owns 35 acres of vacant land that he would like to deed to a local wildlife conservancy. However, a title search reveals that timber rights and an easement to use the property were sold to Giant Lumber Company in 1963. Since this lumber company went out of business in 1987, Alex should: A. cancel the transaction, because the lumber company went bankrupt B. seek advice from an attorney, since the easement may still be valid C. claim a prescriptive easement, since the requisite number of years has passed D. cancel the transaction, because the easement will still be vaild
answer
B. seek advice from an attorney, since the easement may still be valid Even though the original easement holder no longer exists, a commercial easement in gross can be assigned. So the easement rights may have been transferred to another company, and it would be prudent to ask an attorney to investigate.
question
Jean offered to buy some vacant land for $500,000. There were no contingencies in his offer, and it was accepted by the seller. Jerry was planning on building a shopping center on the property, but didn't mention this to the seller or his real estate agent. A few days before closing, Jerry learned that his financing for the shopping center has fallen through. The contract is: A. void B. voidable C. unenforceable D. valid
answer
D. Valid The contract is still valid. Since it was not made contingent on financing for the shopping center. Jerry is liable for performance; if he cant find some way to buy the property, at the very least he is likely to lose his earnest money deposit.
question
An agent performing brokerage services owes all of the following duties, except: A. perform independent visual inspection of the property in question B. give parties a copy of the agency law pamphlet C. transmit all offers promptly D. disclose all material facts
answer
A. perform independent visual inspection of the property in question In Washington, a licensee is under no obligation to perform an inspection of the property or investigate any other matters that she has not specifically agree to investigate.
question
A loan is set up so that the borrower's payments are the same size each month. Each payment is partly interest and partly principal, and the loan's balance at the end of the loan term will be zero. Which type of loan is this? A. Fully amortized B. Partially amortized C. Reverse annually D. Straight note
answer
A. Fully amortized The regular payments on a fully amortized loan include both principal and interest and will pay off the entire amount owed by the end of the loan term, so no balloon payment will be necessary.
question
When determining the value of a vacant lot, an appraiser will typically use the: A. cost approach B. income approach C. Sales comparison approach D. summation approach
answer
C. sales comparison approach An appraiser will estimate the value of vacant land using the sales comparison approach, referring to the sales prices of similar lots that were recently sold.
question
Which of the following actions by a real estate agent would be illegal? A. Asking a disabled client if there are special features he might need in a house B. Showing only houses located in mostly Latino neighborhoods to a Latino family C. Telling a client, during prequalification, that her bad credit score makes an affordable loan unlikely D. Truthfully answering questions form a buyer about the demographics of a neighborhood.
answer
B. Showing only houses located in mostly Latino neighborhoods to a Latino family If a real estate agent channels prospective buyers toward particular neighborhoods because of their national origin, that is steering, a violation of the federal Fair Housing Act.
question
Which of the following I a requirement of a valid lease? A. Lease expiration B. Pet exclusion policy C. Service agreement D. Witness
answer
A. Lease expiration A lease generally needs and expiration date, either the date an estate for years will end, or the date a periodic estate will renew unless proper notice of termination has been given.
question
When part of the land is moves, but generally the boundaries of a property stay the same, it is known as: A. accretion B. Adverse possession C. Avulsion D. partition
answer
C. Avulsion Avulsion is a form of accession, which is involuntary alienation of property due to natural causes. In the case of avulsion, an owner may lose title to land that has been torn away by flowing water and deposited elsewhere.
question
A subdivision has deed restrictions that create a community nature trail from the rear ten feet of every owner's property. One owner decided that he wanted to use that part of his yard to have a storage shed instead. If the owners want to keep him from doing that, they should: A. file an unlawful detainer action B. file for an injunction in the appropriate court C. not do anything, because they do not have the authority to stop the owner D. request a cease and desist order from state real estate licensing authorities
answer
B. file for an injunction in the appropriate court Homeowners who wish to enforce a deed restriction against another owner who plans to violate the restriction may do so by seeking an injunction, which is a legal order that prohibits a person from taking a particular action.
question
A homeowner with a mortgage sells his home to a purchaser who agrees to assume the mortgage. The purchaser applies for and obtains the lender's approval, and the seller is released from liability for the mortgage. This is an example of: A. assignment B. subrogation C. subordination D. novation
answer
D. novation This is a novation, because the lender has approved the purchaser and released the seller from liability. The purchaser has entered into a new loan agreement with the lender that replaces the original agreement between the seller and the lender.
question
Bartholomew leases several acres from Stan so he can grow strawberries. However, when Bartholomew arrives at the property to plant his strawberries, he realized that Stan is already farming the acreage. Bartholomew does not have to pay rent to Stan because of the: A. covenant of quiet enjoyment B. covenant of right to convey C. covenant of seisin D. warranty of habitability
answer
A. covenant of quiet enjoyment Every lease includes an implied covenant of quiet enjoyment. This is the promise that the tenant's possession will not be disturbed, either by the landlord or by a third party with a lawful claim to the property. A breach of the implied covenant may be considered constructive eviction, releasing the tenant from the duty to pay rent as agreed.
question
A buyer is planning to purchase a property where he can operate a small mechanic's shop out of his home. He eventually finds a property he likes, and tells the listing agent his plans. However, after closing he finds out that there are deed restrictions that prevent him from operating such a business from his home. Which of the following is true? A. Since the agent knew the buyer's intended use, the agent should have investigated whether it was feasible or informed the buyer that he or his agent should investigate it B. The agent represented the seller and did not have a duty of loyalty to the buyer C. The seller always has to disclose the zoning on the property D. The real estate agent was the one responsible for investigating deed restrictions
answer
A. Since the agent knew the buyer's intended use, the agent should have investgated whether it was feasible or informed the buyer that he or his agent should investigate it The seller's agent does not owe a duty of loyalty to the buyer, so he is not required to investigate anythingon the buyer's behalf. However, this duty of honesty and good faith would likely compel him to at least recommend to the buyer that he or his agent should investigate the matter further. The listing agent should know that zoning or deed restrictions would prevent most residential properties from being used for a mechanic's shop, the issue is a material fact and not advising the buyer to look into it could lead to a lawsuit.
question
Which of the following is the proper method for determining the gross income multiplier? A. Divide monthly income by sales price B. Divide annual income by sales price C. Divide sales price by gross income D. Divide assessed value by gross income
answer
C. Divide sales price by gross income The gross income multiplier method involves dividing a comparable's sales price by its gross income to determine the multiplier
question
TempWorks leased space from Consolidated Properties for an eight-year term. The lease did not include a provision regarding assignment of the lease. Two years later, SuperTemps bought out TempWorks. TempWorks can: A. return the property to Consolidated with any penalties B. ask a judge to terminate its lease, on the grounds of unforeseen circumstances C. assign its leasehold estate to SuperTemps D. try to find a subtenant, but may not assign the space to anyone
answer
C. assign its leasehold estates to SuperTemps Absent a provision in the lease to the contrary, a tenant may assign or sublease the leased space
question
Which of the following is a latent defect that would need to be disclosed? A. decaying steps to back porch B. Leaking faucet C. A crack in the basement wall that is covered by paneling D. Worn-out carpeting
answer
C. A crack in the basement wall that is covered by paneling A latent defect is a problem that would not be discovered by ordinary inspection. If a crack is obscured by paneling, it is not likely to be observed and therefore must be disclosed to prospective buyers. The other options are all plainly visible upon inspection and therefore are not latent defects.
question
A percolation test will examine the: A. likelihood of landslides or subsidence B. presence of toxic contamination in soil C. roofing material's ability to report rain D. soil's ability to absorb and retain water
answer
D. soil's ability to absorb and retain water A percolation test measures the soil's ability to absorb and retain water. The test is usually performed to determine whether a property is suitable for a septic system that will meet applicable health standards
question
A landlord occasionally uses his master key to enter rental houses that he owns while residents are away. He avoids giving notice because hes looking for undisclosed pets, any damage or physical problems, and the like. This would be: A. allowed because of his duty to supervise tenants' use of the property B. not allowed under the Fair Housing Act C. not allowed under the implied covenant of quiet enjoyment D. not allowed under the tenants' freehold estate rights
answer
C. not allowed under the implied covenant of quiet enjoyment A landlord may enter the leased premises only with advance notice or the tenant's permission. Entry without notice or permission is a breach of the implied covenant of quiet enjoyment, the landlord's promise that the tenant's exclusive possession of the property will not be disturbed.
question
The following are all goals of Washington Center for Real Estate Research, except: A. recommending changes to state statues regarding licensing B. promoting growth and development in Washington C. determining low-income vacancy rates D. writing real estate exam questions
answer
D. writing real estate exam questions The Center for Real Estate Research does not write real estate exam questions; this is the job of the Real Estate Commission.
question
J passes the license exam on March 20. How uch time does J have to apply for his license, before being required to retake the license examination? A. six months B. 12 months C. 18 months D. Two years
answer
B. 12 months J has 12 months, if the license fee is not paid and the license placed on an active or inactive status within that time the applicant will have to retake the exam and meet any additional licensing requirements that have been adopted in the interim.
question
A property manager handling a vacant building fails, for several months, to keep out vagrants who damage the property. Who is liable? A. The management firm's designated broker alone B. The property manager alone C. The property manager as well as the designated broker (for failing to properly supervise the licensee) D. no one is liable
answer
C. The property manager as well as the designated broker (for failing to properly supervise the license) The property manager is liable for failing to exercise reasonable care in carrying out the duties she took on her client. The property manager's designated broker may also be liable for failing to supervise the property manager adequately. (note: a full-service property manager must have a real estate license and work for a brokerage).
question
Which of the following would not be considered a nominal earnest money deposit, subject to the pooled interest-bearing account requirement? A. $5,000 in the form of personal check B. $7,500 in the form of cash C. $10,000 in the form of certified checks D. $11,000 in the form of a cashiers check
answer
D. $11,000 in the form of a cashier's check Nominal earnest money deposits are $10,000 or less.
question
A licensee hires an unlicensed assistant. While the licensee is on a two-week vacation, the assistant helps negotiate contract addenda. The licensee could be disciplined under the Uniform Regulation of Business and Professions Act for: A. unlicensed practice B. aiding and abetting unlicensed practice C. failing to act in accordance with agency status D. misrepresentation
answer
B. aiding and abetting unlicensed practice A licensee may be disciplined under the license law for aiding or abetting an unlicensed person to perform real estate activities that require a license.
question
The Real Estate Commission does all of the following except: A. prepare licensing exam questions B. set real estate transaction fees C. advice the Director regarding new regulations D. hold educational conferences for the benefit of the real estate industry
answer
B. set real estate transaction fees The commission does not set transaction fees. Fees are set by agreement between the agent and principal in each transaction.
question
L's broker license is issued on October 16. L's license will expire at the end of: A. this year, on December 31 B. next year, on December 31 C. one year, on October 16 D. two years, on October 16
answer
D. two years, on October 16 L's license will expire two years after its issuance on October 16
question
A licensee is about to change her business location. Which of the following should she do? A. Move her license to the new location until the renewal date B. Notify the director of the Dept. of Licensing by phone C. Notify the Real Estate Program Manager in writing D. Surrender her license, and apply for an updated license with the correct location
answer
D. Surrender her license, and apply for an updated license with the correct location It's a licensee plans to change her place of employment, the firm's designated broker or the licensee surrenders the license. The Director of the Department of Licensing will then issue a new license for the new location.
question
Addenda to a purchase and sale agreement must be: A. kept in the broker's home office B. kept in the brokerage's transaction file C. kept in the firm's trust account D. signed by the broker
answer
B. kept in the brokerage's transaction file A transaction file should include all modifications or addenda to any agreement. The transaction file should be kept where the firm is licensed to have an office, not in a broker's home office. The addenda will be signed by the buyer and seller, not the broker.
question
When a broker attempts to renew his license, he intentionally lists a 3-hour course twice in order to reach 30 hours. The Director can: A. grant a 45-day interim license until the course is completed B. suspend the license and charge him with misrepresentation in obtaining or reinstating a license C. audit the school administrator D. refer the case to the Attorney General for prosecution
answer
B. suspend the license and charge him with misrepresentation in obtaining or reinstating a license It is a violation of the license law, and grounds for a disciplinary action, for a licensee to engage in misrepresentation or concealment of a material fact when obtaining or reinstating a license.
question
A real estate agent form Oregon is involved in a commercial property transaction in Washington. The agent from Oregon must do all of the following EXCEPT: A. associate with a Washington brokerage B. provide a copy of the out-of-state real estate license to the Washington firm C. deposit all records in the transaction with the firm in Washington D. register with the Department of Licensing at least 20 days before engaging in brokerage activities
answer
D. register with the Department of Licensing at least 20 days before engaging in brokerage activities An out-of-state licensee may handle commercial real estate transactions in Washington without a Washington license if she works in a cooperation with a brokerage in Washington. The Washington fir must have custody of the out-of-state broker's records concerning the in-state transaction. it must be given a copy of the out-of-state broker's license Out-of-state licensees aren't required to register with the Department of Licensing.
question
A Washington real estate licensee's license has expired because he did not pay his license fee as required. His license can be reinstated if he: A. completes an additional 30 hours of continuing education electives B. obtains special permission from the Director of the Department of Licensing C. pays back the renewal fees, plus penalties D. retakes the real estate exam
answer
C. pays back renewal fees, plus penalties A license that hasn't been properly renewed will expire. It can be reinstated within one year of the expiration, if the licensee pays a penalty and any back fees
question
Real Estate transaction records should be kept for a minimum of: A. one year B. two years C. three years D. four years
answer
C. three years Transaction records should be kept for at least three years after the transaction closes
question
The Director may impose all of the following penalties on a licensee for violating the license law. EXCEPT: A. additional remedial education B. license revocation C. license suspension D. requiring licensee to pay for costs of formal hearing
answer
D. requiring licensee to pay for costs of formal hearing A licensee may have her license revoked or suspended, or be required to complete additional education. However, a licensee is never required to pay or the costs of a disciplinary hearing (other than the costs of preparing a transcript, if she wishes to appeal the findings).
question
A licensee hires another licensee, who works for the same firm, to be an assistant for negotiating and selling properties. The supervising licensee, in this relationship, must: A. be a managing broker B. be a member of the team C. have a controlling interest in the firm D. take a 30 clock-hour course on supervision
answer
A. be a managing broker A managing broker's license authorizes a licensee to manage other licensees. This applies even in the "team" context, not jut to the management of branch offices.
question
Who needs to submit continuing education credits with each license renewal? A. Active brokers only B. Active managing brokers only C. All active licensees D. All active and inactive licensees
answer
C. All active licensees Both brokers and managing brokers must take continuing education courses, so long as they are actively licensed. Inactive licensees do not need to comply with the continuing education requirement, although a 30-hour class is required in order to reactivate a license that has been inactive for more than 3 years.
question
A Washington Real Estate broker takes a listing for a waterfront bungalow while working for Firm A. However, before a purchase agreement is signed she terminates her affiliation and beings working for Firm B. Which of the following statements is true? A. the listing belongs to Firm A, but Firm A will still owe a commission to the original broker B. The listing belongs to the firm, and will remain with Firm A C. The listing belongs to the licensee, and will go with her to Firm B D. The listing is canceled automatically, and the seller must re-list with the broker
answer
B. The listing belongs to the firm, and will stay with Firm A Listing agreements are the property of a firm, not a licensee. If a licensee leaves a firm mid-transaction, the listing will belong to the firm and will not follow the licensee to a new firm. Here, the agent left before a ready willing and able buyer was found. (Generally, whether the firm owes a commission to the licensee is a matter of the licensee's employment agreement with the firm, not of law).
question
The cost of an appeal from a final decision made by the director of the department of licensing in an adjudicative proceeding is paid by the: A. appellant B. appellant's real estate brokerage C. Real Estate Commission D. state Attorney General
answer
A. appellant A licensee appealing the outcome of a disciplinary hearing must post a $1,000 appeal bond to cover court costs. In case the superior court judge decides against the licensee. Even if the licensee wins the appeal, the licensee will still be responsible for the cost of a transcript of the hearing.
question
Who is ultimately responsible for the delivery of the earnest money? A. Purchaser B. Designated Broker C. Listing licensee D. Licensee who receives the funds
answer
B. Designated broker While the licensee who receives the funds has initial responsibility for handling the deposit in compliance with the license law, as with all brokerage activities, the designated broker has ultimate responsibility.
question
A licensee is criminally charged for stealing prescription drugs on July 2. He tells his designated broker about the charges on July 5. Who must notify the Real Estate Program Manager? A. The licensee must provide notice within 20 days of conviction B. The licensee must provide notice by July 22 C. The licensee must provide notice by July 25 D. the designated broker must provide notice by July 25
answer
B. the licensee must provide notice by July 22 A licensee must notify the Real Estate Program Manager within 20 days of learning of any criminal complaint or indictment in which the licensee is named as a defendant. (A conviction has yet to occur in this situation so answer A doesn't apply. if the licensee is eventually convicted, he will also have to notify the DOL of conviction within 20 days.)
question
Unless the purchase agreement or other contract states differently, an earnest money check given to a real estate licensee shall be made out to the: A. licensee's firm, as licensed B. closing or escrow agent C. seller D. appropriate multiple listing association
answer
A. licensee's firm, as licensed The question and answer correctly stat the law, however it is common practice for the buyer to name an escrow agent in the offer and make out the check to that person.
question
If a real estate agent is sending out emails offering his services, the federal CAN-SPAM Act requires the agent to: A. avoid mailing persons on the "do not call list" B. include the brokerage firm's name as licensed C. make sure that the licensee, not an unlicensed person, was responsible for the content D. tell recipients how to opt out of receiving future emails
answer
D. tell recipients how to opt out of receiving future emails The CAN-SPAM Act is a federal law that places limits on unsolicited emails. One requirement is that an email must give information on how recipients can avoid receiving further emails.
question
To be entitled to sue for a commission, a person must be able to prove that at the time the real estate activities were performed, she: A. was licensed B. had passed the real estate exam C. had at least a verbal promise of comparison D. was under the supervision of a mentor
answer
A. was licensed A person must have been validly licensed at the time she engaged in the real estate activities for which a commission is claimed
question
It is not necessary to complete 30 hours of continuing education in order to renew a/an: A. active license B. broker's license C. inactive license D. managing broker's license
answer
C. inactive license The renewal fee must be paid every two years, but as long as the license remains inactive, there is no education requirement. However, after three years of inactive status, reactivating the license -as opposed to renewing it- does require a 30 hour course.
question
If a designated broker wishes to terminate an affiliated licensee, or an affiliated licensee wants to terminate employment with a brokerage, which of the following statements is true? A. Either party ay act unilaterally to end the relationship B. An affiliated licensee may terminate only after she pays all debts uncured to the brokerage C. A designated broker may terminate an affiliated licensee only if there is good cause for termination D. Only the affiliated licensee can terminate employment
answer
A. Either party may act unilaterally to end the relationship Either a designated broker or an affiliated licensee may act unilaterally in order to terminate their employment relationship
question
A licensee with permission from his designated broker, sets up his own subsection S corporation, which he calls M reality. He then rents a billboard and advertises a listing on it, using only M realty name, is this legal? A. No, because ads must give the name of the firm B. No, because the firm must be the one that rents the billboard C. Yes, because he had the designated brokers consent D. Yes, because he used the exact corporation that was registered with the Secretary of State
answer
A. No, because ads must give the name of the firm Under Washington's real estate license law, every advertisement placed by a licensee on behalf of others must contain the name of the real estate firm as licensed. This is true even if a licensee conducts his own operations under a separately named business entity.
question
In Washington, a person licensed to act on behalf of real estate brokerage is called a/an: A. independent licensee B. affiliated licensee C. associated licensee D. designated licensee
answer
B. affiliated licensee A person licensed to act on behalf of a real estate brokerage is called an affiliated licensee
question
When a licensee is terminated, the date of termination is the: A. postmark date or the date the license is hand delivered to the Department of Licensing B. moment the termination is understood and agreed upon by both the designated broker an d the affiliate C. date the termination notice is tendered by either the designated broker or the agent D. date the terminated license is received by the Department of Licensing
answer
A. postmark date or the date the license is hand delivered to the Department of Licensing The termination date is the postmark date or the date the license is hand delivered to the Department of Licensing
question
J is selling real estate without a license. J is guilty of a : A. misdemeanor B. gross misdemeanor C. second degree felony D. first degree felony
answer
B. gross misdemeanor Selling real estate without a license is a gross misdemeanor, which in terms of seriousness is somewhere between a misdemeanor and a felony
question
A real estate agent sold a home for $275,000. Prior to closing, the agent's license was revoked on grounds of moral turpitude. With respect to his eligibility for the commission, which of the following statements is true? A. He is eligible for the commission because he was duly licensed when the sale was made B. He is eligible for the commission because he is technically licensed until all appeals have been exhausted C. He is not eligible for a commission because he was not licensed at the time the commission was paid D. He is not eligible for a commission because a license revocation automatically nullifies any right to commission that are yet unpaid
answer
A. He is eligible for the commission because he was duly licensed when the sale was made. The commission is earned when the sale is made, not when it is paid (at closing). The agent's license was revoked after the sale was made, so the agent was eligible for a commission when the services were provided and is still entitled to collect it.
question
S's license is temporarily suspended by the Director for a violation of the license law. S is also fined $500. The money collected as a result of the fine is: A. placed in the state's general fund B. used to support existing auditing and investigation services C. deposited in the real estate education account, to be used solely for education for the benefit of licensees D. used to compensate victims of real estate fraud
answer
C. deposited in the real estate education account, to be used solely for education for the benefit of licensees Fines are deposited in the education account and used for the education of licensees
question
An affiliated licensee owns a wholly owned S corporation, A Reality. He instructs an escrow agent to issue a commission check directly to A Reality. How has he violated the real estate license law? A. A third party can't give instructions to an escrow agent B. Commissions can be paid to licensees only via their firm C. The licensee didn't first inform the principals D. The licensee may charge for escrow services only if he is also a licensed escrow agent
answer
B. Commissions can be paid to licensees only via their firm A licensee may be paid a commission only by the real estate firm he is affiliated with. Affiliated licensees are not designated brokers, they work for a firm. "A Realty" cannot be a brokerage because no designated broker has a controlling interest in the entity. An affiliated licensee cannot receive compensation directly from a client or customer, or from another licensee, another real estate firm, or another business entity
question
In a disciplinary action, the Director of Licensing can do any of the following, EXCEPT: A. award damages to individuals defrauded by the real estate licensees B. revoke a license C. deny a license D. refer criminal violations to the prospective attorney in the county where the offense was committed
answer
A. award damages to individuals defrauded by real estate licensees The Director cannot award damages to victims of real estate fraud. Many states have what is called a "recovery fund" from which victims of real estate fraud can recover at least part of their losses. Washington doesn't have such a remedy for the consumer, however.
question
The selling agent must NOT accept a promissory note as an earnest money deposit: A. unless the agent knows that the buyer has an excellent credit history B. unless the purchase and sale agreement discloses that the deposit is a note C. unless the seller agreed during negotiations discussion to accept a promissory note D. under any circumstance
answer
B. unless the purchase and sale agreement discloses that the deposit is a note When preparing the buyer's offer to purchase, the selling agent must disclose on the purchase and sale agreement form that the deposit is in the form of a promissory note (or any other form that is not the equivalent of cash). The seller can then take this into account in deciding whether or not to accept the buyer's offer
question
Q falls behind on his child support payments. The matter is forwarded to the Director of Licensing. What action is available to the Director? She can: A. suspend Q's license B. revoke Q's license C. find Q up to $5,000 D. issue a cease and desist order
answer
A. suspend Q's license The Director can suspend Q's license until satisfactory arrangements are made to correct the delinquency.
question
A licensee is a defendant in a civil suit stemming from real estate activities. When must the licensee notify the Real Estate Program Manager? A. immediately B. Within 20 days of a verdict or judgment against her C. Within 20 days of service of process D. Within 90 days of the lawsuit being filed
answer
B. Within 20 days of a verdict or judgement against her A licensee must notify the department of Licensing's Real Estate Program Manager within 20 days of learning of any civil court order, verdict, or judgement entered against the licensee, if it involves real estate or business activities
question
Pamela would like to get a Washington broker's license. Which requirement must she meet? A. Four-year college degree B. Be a Washington resident C. Be at least 21 years of age D. Complete a course in Fundamentals
answer
D. Complete a course in Fundamentals One requirement for a broker's license in Washington is completion of a course in Fundamentals. No college is required, Washington residency is not required, and the applicant must be at least 18 ( not 21).
question
Washington state's real estate agency law does not address which of the following? A. Definition of dual agency B. Creation and termination of agency relationships C. vicarious liability of principal and licensee D. Penalties for not disclosing agency status
answer
D. Penalties for not disclosing agency status Washington's real estate agency law is found in the Real Estate Brokerage Relationships Act (RWC chapter 18:86). It addresses the topics listed in answers A-C (definition of dual agency, creation and termination of agency, and vicarious liability), but there is no reference in the law to penalties for not disclosing agency status. Penalties are found in the license law (RCW chapter 18:85).
question
An affiliated licensee rarely works in the firm's main office. The records for the licensee's transactions must be kept in: A. the licensee's personal files B. the firm's office C. both the licensee's personal files and the firm's office D. in the licensee's personal files until closing, then at the firm's office
answer
B. the firm's office A firm must keep all records at its main office or branch office. While I may be advantageous for a licensee who is rarely in the office to keep copies of the records for personal reference, the law makes the firm ultimately responsible for the custody and accuracy of all required records.
question
A licensee would not be disciplined for: A. accepting compensation from both parties in a transaction without a written disclosure B. failing to adequately supervise an employee who misrepresents a property to a prospect C. failing to include the firm's name, as licensed, in an advertisement D. offering to advertise a property, for a fee, for a "For Sale by Owner" seller
answer
D. offering to advertise a property, for a fee, for a "For Sale by Owner" seller It's legal for a real estate licensee to solicit business from a "For Sale by Owner" seller. If the FSBO seller agrees that the licensee will help sell the property by advertising it on the MLS and elsewhere, in exchange for a fee, then the seller and licensee would simply enter into a listing agreement. (in addition, the other three options can be discarded via process of elimination. Undisclosed dual agencies, failure to supervise employees, and blind ads are all illegal.)
question
A real estate license is needed for all these individuals, except: A. home inspector B. timeshare resale agent C. commercial leasing agent D. agent selling recreational real estate
answer
A. home inspector A home inspector is not directly involved in representing others in the process of buying, selling, leasing, or advertising real property, so an inspector does not need a real estate license.
question
Which of the following is not requirement for a broker's license in the state of Washington? A. College diploma B. Age 18 or older C. Pass a state license examination D. Complete 90 hours of pre-license education
answer
A. College Diploma A college diploma is not a requirement for a broker's license
question
If licensee D works out of a home office, for how long is she required to maintain records of closed transactions? A. 1 year B. 3 years C. 7 years D. Affiliated licensees are not required to maintain records of closed transactions
answer
D. Affiliated licensees are not required to maintain records of closed transactions Real Estate firms ( as opposed to its individual affiliated licensees) must maintain records of closed transactions for at least three years. The firm is responsible for the custody and accuracy of the required records, and they should be kept at a main office or branch office.
question
Under the Uniform Regulation of Business and Professions Act ( URBPA), which of the following actions by a licensee would constitute unprofessional conduct? A. Allowing an unlicensed assistant to submit property information to the MLS B. Being convicted of a gross misdemeanor related to a motor vehicle accident C. Failure to include in an advertisement the designated broker's name and telephone number of the brokerage D. Failure to provide a buyer with a property disclosure form
answer
D. Failure to provide a buyer with a property disclosure form Depending on the circumstances, failure to provide a property disclosure form in a transaction where one is required could be considered incompetence, negligence, malpractice, or misrepresentation. In any case, it violates the Uniform Regulation of Business and Professions Act. An advertisement must include the firm's name as licensed, not the name of the firm's designated broker or the telephone number.
question
Which one of the following people does NOT need a real estate license? A. A building contractor B. A person who sells business opportunities involving real estate C. A person who lists or offers to list real estate D. A person who hosts open houses
answer
A. A building contractor A building contractor is often involved in selling homes he has built and owns himself. As long as he is acting in this capacity, he does not have to have a real estate license. Note that while an unlicensed person may act as a greeter at an open house, she can't host or conduct tours or even answer questions except to reiterate basic facts about the property from a form prepared by an agent.
