Colorado Real Estate Test 10 – Flashcards
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Regarding a dispute over Earnest Money - if no lawsuit is filed, the broker may:
A. surrender the money to the state Real Estate Commission
B. surrender the money to the court in an interpleader action
C. surrender the money to the party with the best lawyer
D. surrender the money to the court by way of "Notice of Appearance".
answer
B. surrender the money to the court in an interpleader action
question
Loan fraud can have the following results to a real estate licensee except:
A. criminal action filed in criminal court
B. disbarred by HUD from all federal programs
C. end of a career in real estate
D. no action taken
answer
D. no action taken
question
The maximum amount of days that can be specified in the Holdover Period in the Listing Contract is:
A. 30 days
B. 60 days
C. 90 days
D. negotiable by Seller and Broker
answer
D. negotiable by Seller and Broker
question
On a new loan closing, the settlement worksheet entry for a tax reserve indicates that the new lender is
A. Withholding this amount from loan proceeds to start the escrow account for the next tax payment
B. Collecting this tax amount from the seller
C. Contributing this amount toward the buyer's taxes for this year
D. There is no such thing as a Tax Reserve
answer
A. Withholding this amount from loan proceeds to start the escrow account for the next tax paymen
question
Which of the following is true when an employing broker changes the primary business address?
A. the broker must notify the commission in a manner acceptable to the commission or the license will become inactive
B. each employed licensee must notify the commission of the change
C. the change may be noted at the next license renewal cycle
D. all licenses of employees must be sent to the commission for reissue
answer
A. the broker must notify the commission in a manner acceptable to the commission or the license will become inactive
question
An Environmental Impact Statement (EIS)
A. summarizes the environmental impact of an existing project
B. is used primarily for state and Federally funded projects
C. must be approved by all affected water districts
D. projects the impact on the environment of a proposed project
answer
D. projects the impact on the environment of a proposed project
question
The real estate contract for a specific property for use as an unlicensed petroleum sales operation was forced to terminate. The termination was the result of:
A. impossibility of performance
B. novation
C. breach of contract
D. operation of law
answer
A. impossibility of performance
question
In order for the appraiser to obtain access to the property, he or she must first obtain permission from the:
A. listing agent
B. Title Company
C. buyer
D. selling agent
answer
A. listing agent
question
The IRS requires which of the following documents to be completed by the seller at the time of closing?
A. W-9
B. 1099-S
C. W-4
D. 1031-E
answer
B. 1099-S
question
A seller providing financing may be exempt from attaining a lender's license if they have completed:
A. a seller providing financing always needs a mortgage license
B. less than 3 transactions in the past 12 months
C. less than 5 transactions in the past 12 months
D. less than 5 transactions is the past 15 months.
answer
B. less than 3 transactions in the past 12 months
question
In Colorado, which of the following must be investigated by the real estate commission?
A. any verified written complaint
B. at least five percent of all brokers annually
C. disputes between brokers regarding commission
D. any licensee accused of a crime
answer
A. any verified written complaint
question
Broker A is a sole proprietor. He quits business and goes to work under Broker B. Whose responsibility is it to keep Broker A's previous records?
A. Broker A
B. Broker B
C. Real Estate Commission
D. None of the above
answer
A. Broker A
question
A house is closed on May 15. HOA dues are $108 per month and are due and payable on the first day of each month. The HOA dues will appear on the closing statement as a:
A. $49 debit to the seller
B. $59 debit to the seller
C. $59 credit to the seller
D. $49 credit to seller
answer
$59 credit to the seller
question
When must an employing broker keep a ledger?
A. When paying salaries to brokers
B. When putting money in an account to maintain it
C. When accepting money belonging to others
D. When receiving an earned commission
answer
C. When accepting money belonging to others
question
If the Specific Performance box is not checked, and the buyer defaults:
A. the buyer cannot default without mediation
B. the seller keeps the earnest money, but cannot sue
C. the buyer is entitled to receive the earnest money
D. buyer and seller split the earnest money
answer
B. the seller keeps the earnest money, but cannot sue
question
A Colorado broker with residence out of state accepts an earnest money deposit on a property located in Colorado. He needs to:
A. open an escrow account in a Colorado bank
B. have a Colorado office open to the public
C. open an escrow account in his state of residence
D. have an active license in his home state
answer
A. open an escrow account in a Colorado bank
question
The Colorado Legislature passed a bill on April 22, 1996, establishing single licensing. The primary effect of this law, is that Colorado:
A. you now can be single or married to receive a state real estate license.
B. you can only hold one state license at a time
C. will no longer issue a real estate salesperson license
D. you can only have a real estate license from one state
answer
C. will no longer issue a real estate salesperson license
question
To become an employing broker, one must:
A. have three years active experience
B, pass the uniform portion of the broker exam
C. take 48 hours Brokerage Administration
D. take 24 hours Brokerage Administration
answer
D. take 24 hours Brokerage Administration
question
What is the purpose of the real estate commission in Colorado?
A. to provide mediation in disputes between brokers and Colorado residents
B. to protect the public
C. to assure that licensees collect commissions in accordance with the law
D. to provide legal assistance to the public regarding real estate transactions
answer
to protect the public
question
If the contract calls for a closing on or before December 30 and the purchaser wishes to close on December 22, the following must happen:
A. the purchaser and seller must agree to the new date
B. there does not need to be agreement
C. the Title Company can decide if it can close
D. it is decided by the person responsible for setting the time and place of closing
answer
A. the purchaser and seller must agree to the new date
question
Under the Real Estate Commission rules, when a listing broker receives an earnest money deposit on a residential sales contract, he must deposit the earnest money in his trust account:
A. no later than the third business day after he is notified of the acceptance of the contract
B. no later than the first working day after receipt of the deposit
C. no later than 48 hours after the receipt of the deposit
D. when he is instructed to do so by the seller
answer
A. no later than the third business day after he is notified of the acceptance of the contract
question
A woman listed her house that had prize roses bushes in the backyard. She told her agent that she would be removing the roses from the garden and preparing the soil for the new owner to plant their own flowers. Upon the walk-through, the buyers saw that the roses were removed and were angry. That is one of the reasons they were buying the house. What would be the best scenario in this situation?"
A. If the roses bushes were not listed as an exclusion the Buyers have the right to cancel the agreement
B. The Buyers would still be bound to purchase the home if the Sellers plant new rose bushes
C. The Sellers intent rules, the Buyers must complete the transaction
D. The Sellers have no recourse, they must replant the rose bushes they removed.
answer
A. If the roses bushes were not listed as an exclusion the Buyers have the right to cancel the agreement
question
The Real Estate Commission will NOT issue a temporary hardship employing broker license to:
Corporation
Partnership
Individual Proprietor
LLC
answer
Individual Proprietor
question
If a broker is asked for additional information on working relationships, the broker must provide:
A. the written office policy
B. definitions of relationships
C. Commission-approved form "Definitions of Real Estate Working Relationships"
D. the telephone number for the Real Estate Commission
answer
C. Commission-approved form "Definitions of Real Estate Working Relationships"
question
An licensee shows a home and mentions that it has a lovely fireplace in the living room. After buying the home, the buyers and agent discover that the brick fireplace is just a decorative fireplace and is not "wood burning." Which of the following would BEST protect the licensee from financial loss?
Homeowner warranty insurance
The state recovery fund
Errors and Omissions coverage
the agent's homeowners insurance policy
answer
Errors and Omissions coverage
question
Single party listings:
A. no holdover provision
B. no disclosure is necessary
C. no contract to perform is necessary
D. not applicable to the Statute of Frauds
answer
no holdover provision
question
A final walk-through provides all of the following except:
A. buyer the opportunity to verify that the property is in the same condition as when originally viewed
B. buyer the opportunity to verify any repairs that needed to be done, have been completed
C. the opportunity to re-inspect the property
D. the final time to terminate the contract if not satisfied with the condition of the property
answer
D. the final time to terminate the contract if not satisfied with the condition of the property
Explanation
The final walk-through is the buyer's opportunity to verify work that was to have been completed and make sure that the property is in the same condition as when viewed.
question
When an employing broker A sells his company to broker B:
A. broker A is responsible for retention of all records prior to sale
B. broker B is responsible for retention of all records before and after sale
C. broker A is only responsible for records of transactions not completed
C. broker A is only responsible for their personal transactions
answer
A. broker A is responsible for retention of all records prior to sale
question
On the Commission-approved purchase and sale agreement involving remedies in the event of a buyer default; if no box is checked what is the default:
A. neither liquidated damages nor specific performance is in effect - a judge will have to decide
B. the liquidated damages clause is automatically in effect
C. the buyer cannot sue for specific performance
D. the seller can sue for specific performance
answer
B. the liquidated damages clause is automatically in effect
question
Tenant may remove trade fixtures before the lease expires provided:
A. tenant restores the premises to previous condition
B. the lease gives the tenant the right to install trade fixtures
C. trade fixtures are removed 30 days after expiration of lease.
D. fixtures are removed three days after expiration of license
answer
A. tenant restores the premises to previous condition
question
According to the buy and sell contract; a copy of covenants governing a condominium must be delivered to the purchaser:
A. Upon closing
B. Upon making a loan application
C. On or before Association Documents Deadline
D. Upon delivery of possession
answer
C. On or before Association Documents Deadline
question
If an owner refuses to pay a broker an earned commission, the broker may properly seek relief by:
A. filing a mechanics lien
B. bringing a formal complaint with the division of real estate
C. bringing a court action
D. bringing a quiet title action against the seller
answer
C. bringing a court action
question
The lender may require the following items from the purchaser except:
bank statements
divorce decree
pay-stubs
there current property taxes
answer
there current property taxes
question
A broker acting as an agent must:
A. act as an advocate for the buyer or seller
B. exercising reasonable skill and care, as well as act as an advocate for buyer or seller
C. not act as an advocate for either the buyer or the seller
D. not inform the buyer or seller that they could be legally responsible for the agent
answer
exercising reasonable skill and care, as well as act as an advocate for buyer or seller
question
If the _____________ box is checked on the purchase and sale contract, this is the seller's sole and only remedy if the buyer fails to perform the obligations of the contract
cost and expenses
specific performance
liquidated damages
seller's default
answer
specific performance
question
At or before the signing of a contract for sale, every condominium unit buyer must be provided by the seller with:
A. A copy of the by-laws of the unit owner's corporation
B. An agreement to amendment and extend
C. A copy of the amendments to the condominium association by-laws
D. A buyer/agency agreement
answer
A copy of the amendments to the condominium association by-laws
question
The contract to purchase addresses the following issues:
A. the buyer will furnish an owner's title insurance policy
B. pre-owned home warranty programs are available
C. the selling agent's rights to be paid a commission and how much he is being paid
D. the broker's rights if the contract is not executed
answer
B. pre-owned home warranty programs are available
question
A house is closed on April 15. The property taxes are $960 for the year. They have not been paid. How much does the buyer receive from the seller at closing?
360
274
280
680
answer
274
question
How much personal funds can you keep in the escrow account?
none
$100
$500
Only enough to maintain the account
answer
Only enough to maintain the account
question
The lender computed the interest for the previous month on a $120,000 mortgage loan balance at $825. What is the rate of interest?
0.07500000000000001
0.07750000000000001
0.0825
0.085
answer
0.0825
Explanation
$825 X 12 = $9900 (Annual Interest) / $120,000 = .0825 or 8 1/4 %
question
Tina Dooley, a salesperson, ordered this listing in the real estate section of the local phone directory: Tina Dooley, Real Estate Salesperson, Residential Property My Specialty." What additional information must be included?
her street address
her license number
the expiration date of her license
the name of her employing broker
answer
the name of her employing broker
question
The fee to notarize a Warranty Deed is charged on the settlement statement to:
the buyer
the listing broker
the seller
the buyer and seller
answer
the seller
question
Requirements of a real estate applicant:
A. must be at least 21 or older
B. meet the state requirements for licensing
C. must have a high school diploma or GED
D. must be a US citizen
answer
meet the state requirements for licensing
question
Which statement is NOT true?
A. Depositing earnest money must be within three business days after acceptance of contract
B. Withdrawing earnest money must be within the last business day before closing
C. The beneficiary's transaction ledger should be zeroed out after closing and dispersing of funds
D. A copy of the earnest money check with a copy of the validated deposit slip should be placed in the transaction file
answer
B. Withdrawing earnest money must be within the last business day before closing
question
What if anything must an associate broker include in his/her Web site advertising?
A. Name of the brokerage firm that holds the associate broker's license
B. Names of all licensees in the broker's office which the associate broker works
C. The brokerage firms home office that holds the associate's license
D. There is no need for additional disclosures
answer
A. Name of the brokerage firm that holds the associate broker's license
question
In addition to taking the required 168 hours of course instruction to become an associate broker, one must also:
A. pass the state side of the broker's exam
B. hang their license under an employing broker or set up your own office
C. work as an assistant broker for three months
D. hang their license under an employing broker
answer
D. hang their license under an employing broker
question
In Colorado a broker must retain records of real estate transactions for a minimum of how many years?
A. 2
B. 3
C. 4
D. 8
answer
4
question
If a licensee negotiates a sale of real estate on behalf of a seller while her license is inactive, she may receive a commission from:
A. her employing broker
B. the seller
C. her principal
D. none of the above
answer
none of the above
question
A broker has an Exclusive Right-to-Buy contract with a principal. Who is to be their customer?
A. Buyer
B. Broker
C. Seller
D. Client
answer
Seller
question
As to the preparation of legal documents at closing:
A. the licensee bears the cost for the preparation of all legal documents including those prepared by the Sellers or Buyers attorney
B. the licensee may charge the Seller or Buyer for the cost of preparation
C. the licensee bears the cost for the preparation of legal documents except those prepared by the Seller''s or Buyer''s attorney
D. the licensee does not pay for the preparation of legal documents
answer
C. the licensee bears the cost for the preparation of legal documents except those prepared by the Seller''s or Buyer''s attorney
question
In Colorado, when must real estate licenses be renewed?
A. every three years with expiration on December 31 of the third year
B. every three years on the anniversary date of first being licensed, or any date mandated by the CREC.
C. each year at the anniversary of licensing
D. every three years if the licensee passes the state examination
Explanation
All license renewals shall be for a full three-year period called the "anniversary date renewal period
answer
B. every three years on the anniversary date of first being licensed, or any date mandated by the CREC.
Explanation
All license renewals shall be for a full three-year period called the "anniversary date renewal period
question
During a showing on a property with a buyer, the broker is called away on a family emergency. In this situation the broker:
A. should allow the buyers to lock the house up when they are finished
B. should give the lock box information to the buyers so they can view the other properties, while the broker takes care of the family emergency
C. call his or her assistant to show the properties to the buyers
D. arrange another time to meet with the buyers and show them propertie
answer
D. arrange another time to meet with the buyers and show them propertie
question
When comparing/analyzing CMA, these are the factors that would be NOT be taken into consideration:
Similar size properties sold in the neighborhood
Date of sale
Age of the property
Accrued Depreciation
answer
Accrued Depreciation
question
When a contract is contingent upon the purchaser's ability to obtain special financing, (i.e. down payment or closing cost assistance), the:
A. selling broker should not disclose anything to the listing agent
B. listing broker should verify the ability of the purchaser to obtain such financing, the availability of the program, and disclose this information to his or her seller
C. seller needs to investigate
D. buyer should leave everything to his agent
answer
B. listing broker should verify the ability of the purchaser to obtain such financing, the availability of the program, and disclose this information to his or her seller
question
When the license of the sole proprietor is suspended for two years, what is the effect on the affiliated associate brokers?
A. Affiliates' licenses will also be suspended for a two-year period.
B. Affiliates' licenses will be revoked, subject to reinstatement after one year.
C. Suspension of the proprietor has no effect on the affiliates' licenses.
D. Affiliates licenses are inactive until they are hired by a new employing broker.
answer
D. Affiliates licenses are inactive until they are hired by a new employing broker.
question
When a contingency is tied to a date in the contract, it is the responsibility to follow up on that date.
A. the Title Company
B. lender's
C. listing or selling brokers
D. appraiser's
answer
C. listing or selling brokers
question
According to the Real Estate License Law, a transaction and trust account record must be kept for a minimum of how many years?
A. 1
B. 2
C. 3
D. 4
answer
D. 4
question
A broker must keep which of these funds in his trust account?
A. Rental monies received
B. Fire insurance premium monies not part of a real estate transaction
C. Commissions received
D. Relocation referral fees
answer
A. Rental monies received
question
A broker must offer:
A 100% commission
B 50/50% commission split
C 75/25% commission split
D. commission splits and office fees referenced in the broker's office policy manual
Explanation
Commission splits and office policies will be addressed in the broker's office policy manual.
answer
D. commission splits and office fees referenced in the broker's office policy manual
Explanation
Commission splits and office policies will be addressed in the broker's office policy manual.
question
A lender requires the use of a Name Affidavit to identify:
A the legal names of all borrowers
B all of the alias' used by the borrowers
C the beneficiary in the event of the death of the borrower
D the birth name of all female borrowers
answer
B all of the alias' used by the borrowers
question
Unclaimed funds held in escrow after five years:
A may be used by the broker for the annual office party
B must be reported and remitted to the state treasurer
C should be invested in real estate investment trusts
D should be kept indefinitely
answer
must be reported and remitted to the state treasurer
question
A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship?
A General agency
B Exclusive agency
C Specific agency
D Agency coupled with an interest
answer
D Agency coupled with an interest
question
Colorado Real Estate Commission Rule E-11 states that all agreements to provide services, for which a license is required, must have:
A a notary witness signatures
B a definite date for termination
C an automatic six-month termination
D a commission approval signature
answer
B a definite date for termination
question
How should you respond if a client asks you about sex offenders in the neighborhood in which they are planning to buy a property?
A Canvas the neighborhood asking about sex offenders
B Refer them to the local law enforcement agency that keeps the information
C Call the police station to get the information for them
D Tell them the information is protected under "fair housing" disability category
answer
B Refer them to the local law enforcement agency that keeps the information
question
The commissioners are selected in the following way:
A Popular vote
B Appointed by the real estate director
C Appointed by the governor
D They volunteer
answer
Appointed by the governor
question
If an offer is given that fulfills all the terms of a contact and the seller rejects that offer - what happens?
A The listing broker is entitled to a commission
B The listing broker receives no commission
C The listing broker can sue for specific performance
D The listing broker is entitled to a partial commission for services rendered
answer
A The listing broker is entitled to a commission
question
The seller agrees to all terms of the offer presented, except that they want 72 hours before possession, not 48 hours as in the offer. Since it is such a small change, they made the change by crossing out the 48 hours and writing in 72 hours and initialing the change. They then signed the contract as accepted. The buyer may, at their discretion:
A also initial the change, and the contract is deemed accepted by all parties
B not initial but they are still bound because of the seller's acceptance
C they must initial since the price and all other terms were acceptable
D proceed with the contract since the seller's signed it, but do not initial the change and consider the original 48 hours as the accepted terms
answer
A also initial the change, and the contract is deemed accepted by all parties
question
Being an independent contractor; your earned commissions:
A reflect tax deductions
B reflect no deductions
C are paid once a month
D are held for 30 days
Explanation
The commission reflects no deductions and is reported on a 1099 MISC.
answer
B reflect no deductions
Explanation
The commission reflects no deductions and is reported on a 1099 MISC.
question
The Colorado Contract to Buy & Sell states that "time is of essence hereof". This statement means that:
A All dates and deadlines must be performed within a reasonable margin of the stated time or date
B Everything not done by closing will be waived
C Everything in the contract must be complete within one year
D Dates and deadlines will be strictly interpreted
answer
D Dates and deadlines will be strictly interpreted
question
New home builders:
A must advertise their homes through the MLS
B must be members of the BRC
C might use non-commission approved sales contracts
D must use commissioned approved forms
answer
C might use non-commission approved sales contracts
Explanation
Each builder has his or her own type of purchase and sale contracts.
question
Which of the following is true for a person activating an inactive or expired Colorado real estate license?
A are not required to make up for the continuing education requirements they missed
B must satisfy the continuing education requirement before they apply to activate an inactive license or to reinstate an expired license to active status
answer
B must satisfy the continuing education requirement before they apply to activate an inactive license or to reinstate an expired license to active status
question
Seller is giving the buyer a contingency but doesn't want to be stopped from selling forever. The seller should consider:
A increasing the earnest money
B get proof of buyer financing
C refuse the contingency
D countering with an escape clause
answer
D countering with an escape clause
Explanation
Before we define "escape clause" lets define "contingency". When a seller agrees to accept a contingency from a buyer, they are agreeing to sell the property to the buyer contingent on the buyer selling their property. Sellers are more likely to accept a contingency offer in a tough real estate market when they are uncertain when and if their property will sell. In a strong market, seller are not as motivated to pull their property off the market.
It is very common when a seller does accept a contingency, for the seller to want to include an escape clause into the terms of the purchase agreement. There is no set format for an escape clause, it is simply a term used to describe any clause in a contract that would let the seller not perform the contract i.e. blow off the contingent buyer and accept another offer. It is not unusual for an escape clause to place a deadline on the contingent buyer, usually a day or two, to waive the contingency or lose the property.
question
What portion of the 24-hour continuing education requirement is to consist of the mandatory credits developed by the Real Estate Commission?
4 hours
8 hours
12 hours
All 24 hours are mandatory subjects
answer
12 hours
question
The Metrolist offers to its members:
A yard signs and open house materials
B the annual parade of homes
C Microsoft Word and Excel computer classes
D computer classes
answer
D computer classes
question
As a licensee you desire to sell your home yourself:
A this will be addressed in the office policy manual
B you may do so as long as you do not disclose you are a licensee
C you reserve the right to pay yourself a commission because you are licensed
D you may not advertise this property in the MLS
answer
A this will be addressed in the office policy manua
question
If an offer is given that fulfills all the terms of a contact and the seller rejects that offer - what happens?
A The listing broker is entitled to a commission
B The listing broker receives no commission
C The listing broker can sue for specific performance
D The listing broker is entitled to a partial commission for services rendered
answer
A The listing broker is entitled to a commission
question
Mediation is for and arbitration is for
A moral violations, ethical violations
B ethical violations, monetary disagreements
C angry clients, low income
D informal dispute settlement, formal settlement
answer
D informal dispute settlement, formal settlement
question
A house is closed on October 15. The annual insurance payment is $578 for the fiscal year of July 1 to June 30. The buyers will assume the seller's policy. Since the policy has been paid, how much does the buyer owe the seller at closing?
A 167.86
B 410.14
C. 408.56
D. 169.44
Explanation
$578 / 365 = $1.5836 per day. Seller paid for 259 days; he didn't own the policy (Oct. 15 through June 30) 259 x $1.5836 = $410.14
answer
B 410.14
Explanation
$578 / 365 = $1.5836 per day. Seller paid for 259 days; he didn't own the policy (Oct. 15 through June 30) 259 x $1.5836 = $410.14
question
A licensee selling his or her own home must do all of the following except:
A pay himself a commission
B disclose in the contract, or in a concurrent writing, that the licensee is a licensed real estate broker
C include the company name if the licensee is advertising a FSBO
D use state approved forms if you are listing through your broker
answer
A pay himself a commission
question
When a seller decides to counter an offer presented to him, which is true?
A Seller should sign the original offer as well as the counter offer
B Seller should not sign either the original offer or the counter offer
C Seller should sign only the counter offer
D Seller should sign the original offer only
answer
C Seller should sign only the counter offer
