Test #1

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Test #1
2013-09-03 15:57:26
Real Estate

Test 1 Reals Estate Answers
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  1. Recorded  title to a parcel of real property was vested in Johan  Wilson, a single woman.  After her marriage to William Roberts,  she executeda deed to the property only in the name of Johan  Roberts,  a married woman.The discrepancy  in the grantor’s name is:
    A defect which may cause a cloud on the title
  2. Which contract would be most difficult for a buyer to obtain financing on?
    A land Contract
  3. When a broker runs an ad. The broker must disclose:
    Name of the broker
  4. Logan sold a home to Hughes,If hughes backs out:
    Logan can sue for a specific performance
  5. The Federal  Housing Administration (FHA) was created  primarily to provide:
    Insurance for home loans made by approved  lenders
  6. Which of the following loans on a home would probably be made without requiring adown payment from the borrower?
    VA loan
  7. A Cal-Vet who wishes to purchase a home using the Cal-Vet program would send his application to:
    Department of Veterans Affairs
  8. The item that would appear on the debit side of a buyer’s closing statement would be?
    Purchase price
  9. When dealing with the public, a broker may not:
    Remain silent concerning  material  facts about a property known only to himself
  10. Which of the following is the reason that a real estate agent must keep his principal informed  of material  facts concerning  a pending real estate transaction?
    The agent is a fiduciary
  11. A buyer relied upon the fraudulent statement of the seller’s agent and was damaged.  The seller was unaware of the agent’s false statement, and he tried to enforce the agreement. The buyer:
    • -May sue the seller for fraud
    • -May sue the seller’s agent for fraud
    • -Has sufficient grounds  for rescission
  12. Lenders know that the lower the loan-to-value  ratio, the higher the:
  13. An offer to purchase real estate could be terminated in all of the following ways, except:
    Failure  to communicate  notice of revocation  before the other party  has communicated his acceptance.
  14. In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time?
    An option
  15. For Federal  Income Tax purposes,  capital expenditures for improvements are:
    Added to the cost basis of the property, and depreciated
  16. A property sold for $150,000 in a county which had established  a documentary transfer tax rate of $.55 for each $500. Of the purchase price only  $125,000 was subject to the tax. Which of the following is nearest to the tax that would have to be paid?
  17. Leland uses an 8% capitalization rate for a 40-unit apartment building that generates $174,000 net income. Which of the following is the most appropriate value of this property?
  18. A broker is negotiating a 25-year commercial lease at a straight  annual rental  of $30,000. The broker is to receive compensation  for negotiating this lease as follows: 7% of the annual  rent for the first year, 5% of the annual  rental  for the next four years, 3% of the annual  rental  for each of the next fifteen years; and 1% of the annual  rental  for every year thereafter during  the term of the lease. By the end of the 19th year,  the broker will have received a total  commission of most nearly:
    • $20,700          30000 $900 x 14=               $12,600
    • TOTAL           $20,700
  19. A salesman was to receive a 45% share of a 6% gross commission. He received $8,100. The property sold for:
  20. Two brokers  agreed to split a 4 ½% commission on a 50-50 basis on the sale of a property for $162,500. The listing salesperson agreed to a 50-50 split with his employing broker:
  21. Buyer Barker paid $4.40 per square  foot to purchase a20,000 square  foot lot. If the parcel is rectangular in shape and200 feet deep, the approximate cost per front foot would be?
  22. A deed:
    Does not have to be recorded to transfer title
  23. Of the following types of deeds, which one would contain no warranties, expressed or implied?
    Quitclaim deed
  24. An easement could be created  for what length of time?
    • -Perpetual
    • -For years
    • -Lifetime
  25. Land that is subject to an easement is said to be:
  26. provisions of the Subdivision Map Act are enforced by the:
  27. Walker hired a construction company to install a swimming pool on their residential premises. In the event the construction company was unpaid and it was necessary for them to file a lien for payment of the contract, the encumbrance created  would be?
    A specific lien A
  28. If no notice of non completion is recorded on an improvement project anyone can record  a mechanics lien within:
    90 days
  29. When comparing  condominiums  and rented apartments, which of the following is true?
    The person who occupies each unit would have an estate in real property
  30. In order  to operate a competitive, yet profitable business, a real estate broker needs to be concerned with “desk cost.” Which of the following most nearly represents the correct way to calculate desk cost?
    the total operating expenses of the firm, including salaries, rent, insurance,  etc., by the number of salespersons.
  31. Local government  laws for the regulation and control of land use includes which of the following?
    • -Building codes Zoning
    • -ordinances Subdivision
    • -ordinances All of the
  32. Broker Hudson has had a house listed for sale for nine months without selling it.  He knows that the building needs major  structural repairs, and he has listed it at 10% above its fair market value.  He runs an advertisement in a newspaper  that says, "Three bedroom,  Victorian. You won’t believe the price! Move right in.  Hudson – XXX-XXXX." This advertisement is bad because?
    Since Hudson knows that the property needs major  repairs, it is deceptive and misleading.
  33. A high price high quality home surrounded by lower price lower quality properties will suffer loss in value do to:
  34. Which of the following is an acceptable  response to  sellers who have indicated  that their home is not to be shown to prospects  who are members  of the ethnic minority group.  The appropriate response would be?
    I cannot accept the listing on your property because it is prohibited from discrimination.
  35. Which of the following statements  is most nearly true concerning  the activities of mortgage  companies?
    They prefer  negotiating loans which are salable in the secondary market
  36. The mortgage  insurance on a FHA loan:
    Protects  the lender in the event of default
  37. A real estate salesman went into a neighborhood to obtain listingsof residential  properties. He made representations that because of the entry into the neighborhood of minority groups, property values would be reduced  and  a decline in the quality of schools and an increase the crime rate, which of the following is true?
    Sufficient grounds  for disciplinary  action against the licensee
  38. The purpose  of the Truth-in-Lending Act is to:
    Assure a meaningful disclosure of credit terms
  39. Half a mile by half a mile represents how many acres:
    160 acres
  40. George Carson  is selling time-shares inhis Wildacre  subdivision. He mailedadvertisements to 10,000 people,offering them the chance to win a prize, but did not reveal that in order  to be eligible,the person must visit Wildacre  and listen to a sales presentation. All of the prize winners had become ownersin Wildacre.  Is there anything wrongwith this situation:
    Yes; anyone offering prizes or gifts must reveal any required attendance at a sales presentation when offering the prize or gift.
  41. The appraisal of an income-producing property is made as of a “given date” to indicate:
    The Market conditions influencing the value of the property at that point in time.
  42. Morrison  receives a net income of $675 per month at an annual return rate of 7 ½%.  Morrison’s investment  amounted to:
  43. Which of the following is least correct about in-house sales:
    Brokers  cannot sell their own in-house listings
  44. The hardest and yet the most important part of the market data method of appraising is:
    Adjusting for the differences between the comparable properties and the subject property.
  45. Harrison and David, both single people, owned a parcel of real property as joint tenants. Harris encumbered his interest  for $10,000,borrowing  the amount to pay medical bills without the knowledge or consent of David. Shortly thereafter, Harrison died, with the debt still unpaid. Which of the following would be true:
    David would own all of the property free and clear of the encumbrance
  46. When a governmental body takes private real property for necessary public use, certain legal processes must be followed. Such a taking is an exercise of the right of:
    Eminent domain
  47. A title company could make a title search by searching  the records  of the:
    • -County clerk’s office
    • -County recorder’s office
    • -Federal  land office
  48. When making a loan, amortization tables are used in order to determine the:
    Monthly payment
  49. Broker Smith took a listing on commercial acreage and also received the right  to purchase the property within 30 days. On the 28th day of the listing, the broker decided to buy the property. Before buying the property, he must:
    • -Disclose any outstanding offers
    • -Give the owner any material  information
    • -Obtain  written
    •  consent from the owner which acknowledges any profit or anticipated profit.
  50. A real estate broker presented an offer to a seller which met the terms of the listing. The offer was from a financially-qualified black person. Later,  his salesperson presented the seller an offer at a lower price from white prospects. The seller did not accept either offer, but instead, sold the property to a neighbor through the same salesperson. The neighbor wanted to buy the property so as to prevent  a minority person moving into the neighborhood. Which of the following parties  has not violated the Civil Rights Act of 1968:
    White prospects  or non-minority
  51. Which of the following state agencies is empowered to prevent acts of discrimination In housing accommodations in California because of race, color, sex, national  origin, or ancestry:
    Department of Fair Employment and Housing Act
  52. Broker Long had a listing to sell Seller Sharp's house. Broker Long received an offer on the house and presented it to Seller Sharp  who hesitated in accepting the offer. The Broker promised  Sharp  to find him another  suitable residence before escrow closed. On the basis of that, the seller accepted the offer. If Broker Long failed to perform during the time period, which of the following is most nearly correct:
    Broker Long will be liable if seller Sharp  decides to initiate a civil suit and the broker would be responsible for damages.
  53. Broker Knott's advertised  in the newspaper  that anyone who bought a property listed with the broker would receive a free microwave oven valued at $500. Such action is:
    Legal, if full disclosure is made to all interested parties
  54. If a broker is an agent of a seller, he owes the buyer:
    A duty of fair and honest dealing
  55. If two parties want to create an enforceable broker-principal relationship concerning  a right, title, or interest  in real property, the most essential element  would be:
    A written  employment  contract
  56. Which of the following rights of ownership in real property do individuals normally  not have:
    Eminent Domain rights
  57. If a Real Estate Licensee misrepresents a property to a buyer while he is acting as an agent, he may subject himself to:
    • -Disciplinary action by the licensing authority
    • -Civil action
    • -Criminal action
  58. Broker Hays took a 90-day Exclusive Agency Listing to sell a property that was owned by Wilson.  After 30 days, Hays had not sold the property, so Wilson sent him a certified letter in the mail canceling the Listing. One week later Wilson listed the property with several brokers  using an open listing. Two weeks later, one of the brokers  who had an open listing on the property, and completed a sale to new owners.  In this situation Wilson most likely:
    Is liable for payment of commission to Hays as well as to the selling broker
  59. A broker obtained a 6% listing on a selling price of $108,000. The seller incurred additional closing costs of $1,450. Based on the preceding information, the seller’s total cost of sale would amount to:
  60. When depreciation is taken on real property:
    The basis is reduced
  61. Under the Subdivision Map Act, subdivision reports must be filed with the:
    City or county where the land is located
  62. A voidable contract remains  binding upon the parties  until the contract is:
  63. Which of the following is the legal method that a city can use to implement
    its general plan:
  64. A roof with four slopes is known as:
    Hip roof
  65. An appraiser’s narrative appraisal report of a single-family residence probably would contain no reference to:
    Type of financing available
  66. Which of the following notices could be important to the filing of a mechanic’s lien:
    • -Notice of non-responsibility
    • -Notice of cessation
    • -Notice of completion
  67. If a real estate licensee was trying to persuade people to list or to sell their property by telling them that members  of another ethnic group were moving into their neighborhood, and it would be to their advantage to sell, it would be an example of all of the following, except:
    Legitimate conduct
  68. Which of the following is the most difficult for the mortgage  lender to evaluate:
    The degree of risk
  69. Interest rates on trust deed loans are primarily determined by which of the following?
    Demand and supply of money
  70. The words “time is of the essence” can be found in which of the following contracts?
    Real estate purchase contract and receipt for deposit
  71. When an air conditioning  unit has a higher energy efficiency ratio (EER), it means that:
    The unit is more efficient
  72. Carter bought 10 acres of vacant land for $20,000 per acre, making a cash down payment of $20,000, and executing a straight  note and a blanket deed of trust  for the balance.   As a part  of the note, the lender agreed that when Carter made an additional payment of $20,000 on the principal,
    the trustee  would issue a partial reconveyance for one acre. Carter has paid a total of $40,000 on the note and now owns two acres free and clear. The percentage of his equity in the encumbered property:
    Has increased
  73. A contractor was building a new home. Before completion, he received several offers to rent the property. Just before completion, the city announced that it was taking 10 feet off the front of the property to widen the street to facilitate traffic. There after, offers to rent were for approximately 10% less. This would be an example of which of the following types of depreciation:
    Economic obsolescence
  74. Which of the following is considered  real property:
    • -Land and buildings
    • -Artificial items which are immovable by law
    • -Easements  that convey rights of-way over adjoining  land
  75. A mortgage  loan may be insured  by:
    FHA or private mortgage  insurer
  76. The right granted  by an owner of real property to a telephone company for the purpose  of erecting poles to support  telephone wires over the property creates:
    An encumbrance
  77. Which of the following is not a lien:
    An encroachment
  78. A broker receives an offer from a buyer for a specific property. The deposit was in the form of a personal promissory note for $2,000 payable to the seller in60 days plus 10% interest.  Which of the following is true:
    The broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before the seller accepts the offer.
  79. Jose is an unlicensed employee of a licensed real estate broker. The broker pays him to distribute door hanger  fliers to homes in the immediate neighborhood and to make telephone solicitations for potential buyers and sellers. This activity by Jose is:
    Unlawful for the broker but not Jose.
  80. A real estate broker sent all of his title business to a Title Co. In appreciation of the business, the title company paid the broker $10 for each transaction. According to the Real Estate Settlement  Procedures Act, “RESPA,” this practice  is:
  81. Who is more likely to earn a sales commission, the broker who:
    Communicated acceptance  of the offer  by the seller to the buyer.
  82. A broker was able to make a sale to an interested buyer based on false information that the seller had provided to the broker. The broker had acted in good faith and in a reasonable  manner  in relying on the false information. Thereafter, the buyer rescinded  the contract because of the fraud. Given these circumstances, the broker is entitled to:
    A full commission and indemnity for any loss caused by any related legal action by the defrauded buyer against the broker
  83. When financing a home with a long-term loan, if equal payments are made, the amount  of the principal will:
    Increase while the interest payment decreases
  84. An agency relationship may be terminated by:
    Termination by completion
  85. When title is transferred, the grantee  in the deed may have the title insured  by:
    A title insurance policy
  86. Which is the best way to create an agency relationship:
    By written  agreement
  87. When the seller refuses to pay the broker an earned  commission, the broker may properly seek relief by:
    Court  action
  88. The maximum commission a broker may charge for the sale of residential property is:
    Determined  by the broker’s  contract with his principal
  89. Brokers  Andrews and Benson both have an open listing on a property. Broker Andrews showed the property to a prospective buyer and carried on negotiations,  but the buyer decided not to buy. Two weeks later, Broker Benson contacted  the same buyer and arranged a sale of the property. The seller would be obligated to pay a commission as follows:
    Full amount  to Benson only
  90. Under which of the following listings must an owner pay a commission, even though it was sold entirely through the owner's own efforts.
    Exclusive right to sell listing
  91. A broker’s  ad in a local newspaper  says that if a buyer or seller brings this ad to his office and either list or buy a property through him, that he will give that person $50. Which of the following is true:
    The broker can give $50 to the buyer or seller
  92. The basis of the market data approach to appraising is found in:
    The principle of substitution
  93. A joint tenant can dispose of an interest  held in real property by all of the following ways, except:
    Will it Sell
  94. Each owner in a tenancy in common:
    Has the right to possession of all of the property
  95. A trust  deed can have a provision that allows future  loans on the property to have priority: This would be called:
    A subordination clause
  96. Of the following, which is the best definition of a balloon payment:
    The required payment of the entire balance due
  97. A Chicano prospect purchaser asks to be shown homes but does not specifies that he wants to see homes located in a neighborhood where there are no Chicanos.  How should a licensee decide which properties to show him:
    The licensee may select homes for showing as he would for any other prospect
  98. The decline of Mortgage Interest  Rates would occur:
    When the mortgage  money supply increases
  99. If the owner of a property thinks that his property has been over-assessed by the County Assessor, he would contact:
    The Assessment Appeals Board
  100. The Lee's made an offer to purchase the Wilsons’s property. As part  of the offer, the Lee’s agreed to take title “subject  to” an existing VA loan which the Wilson's obtained when they purchased the property in the approximate amount  of $39,000. If the Wilson's sell to the Lee's under  these conditions, which of the following is true concerning  liability for a loss suffered by the Government after a foreclosure on the VA loan:
    Wilson will be primary liable
  101. A broker used the following clause in his Exclusive Listing Contract, “In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser.” This clause:
    • Is important for the creation  of a bilateral
    •  contract
  102. When a lender makes a loan regulated by the Real Estate Settlement Procedures Act, the loan applicant  must be provided with which of the following:
    A good faith estimate
  103. Broker Walter entered  into an oral listing agreement  with the seller of real property, without a subsequent written verification. The payment of a commission to Broker Walter under  these circumstances would be:
    Permissible if the seller agrees to it
  104. Mr. Smith bought a property for $72,000with a $20,000 cash down payment and a $52,000 loan. The loan did not require interest  and did not require any payments  for one year.  One year later, he sold the property for double its purchase price.  Each dollar of his original cash investment is now equal to:
  105. If a 32-unit apartment building shows an annual  net income of $117,800., and the appropriate capitalization rate is 8%, what is the approximate value of the property:
  106. 106 Which of the following does not directly affect the mortgage  interest  rates:
    Rate of unemployment
  107. To an appraiser, a definition of value is:
    • -A relationship between desirous persons and things desired
    • -The ability of one commodity to command other commodities in exchange
    • -The present  worth of future  benefits arising out of ownership of a property
  108. Concerning the second installment of Real Property Taxes in California, the due date and delinquent date are respectively:
    February 1st and April 10th
  109. A lessee rents a building from May 1st., to July 1st., His tenancy is:
    Estate for years
  110. Which of the following can be appurtenant to land:
    • -Stock in a mutual water company
    • -Attachments
    • -Easement
  111. A trustor defaults on his loan and refuses to reinstate the deed of trust. The most expedient thing for the beneficiary to do is to institute  a:
    Trustee sale
  112. When an appraiser is appraising a property he usually considers all of the following except:
    The assessed value
  113. Listing a home at an inflated price requiring minority prospects  to pay that price, but accepting a lower price from other non-minorities prospects:
    Could cause the listing salesperson and broker to be liable for money Damages in a Fair Housing suit.
  114. Mr. Gonzalez took out a loan for improvements to his real property that was fully amortized.  If the loan provides that there are equal monthly payments, the amount credited to the principal will:
    Increase while the interest payment decreases
  115. Which of the following phrases  will best describe the nature of a payment, to keep the principal informed:
    Fiduciary obligation
  116. When a deed shows the racial identity of the clients, it can be re-written only by authorization from:
    A court order
  117. When gross income is changed into value in one operation, which of the following describes this occurrence:
    Rent multiplier
  118. During the winter time, an appraiser finds that the inside of an exterior wall of a building is about the same temperature as the other interior walls. The appraiser would come to the conclusion that:
    The wall insulation is adequate
  119. A sublease is considered  to be:
    A transfer of less than the entire leasehold
  120. Which of the following best describes the actions of an agent under single agency:
    A single-agency broker is client-oriented
  121. An owner of an apartment house deducted  $6,000from the gross income for depreciation on his Federal  Income Tax Return. The basis of the property is therefore:
    Reduced by $6,000
  122. A real estate licensee refers transactions to a specific escrow company, because the escrow company pays him a referral fee for each such referral. Regarding  this arrangement, which of the following is correct:
    This arrangement is prohibited under  Real Estate Law
  123. A broker receives rental  income from several apartment units which he owns. He plans soon to accept an offer, accompanied by a deposit, to sell one of the units. Under these circumstances, he should:
    As owner, place neither the rental  income nor the sale deposit in a trust account.
  124. A new real estate salesperson, made strong efforts to obtain listings in a non-integrated community.  He found success by insinuating to property owners that should minorities move into the area, the value of their homes would decrease.  Which of the following terms best describes the activities of the salesperson:
    • -Panic peddling
    • -Blockbusting
  125. A listing (authorization to sell) generally:
    Authorizes  the broker to find a buyer for the property
  126. When a salesperson takes a listing , the listing is the property of:
    The broker who employs the salesperson
  127. When the Environmental Review Board or the Department of Real Estate issues a “negative declaration,” it means that the subdivision:
    Will have an insignificant  effect upon the environment and the developer will not have to pay for a full  environmental report.
  128. When a legal description begins with the phrase,  “Beginning at a point on the northerly edge of "O" Street 100 feet east of the NE corner  of the intersection  of "O" and Seventh Street, ”Which of the following methods of land description is being used:
    Metes and Bounds
  129. When an agent is accused of “puffing,” the agent might have been guilty of which of the following:
    Exaggerating the features  of the property and/or  neighborhood when showing the property to prospective buyers.
  130. Of the following, which best characterizes the term “single agency”:
    The agent represents one client in dealing with a third  person
  131. Mr. Brown hired an agent to purchase a home. The offer has a contingency. The offer was contingent  upon the sale of Brown’s home. The offerer made a counter  offer, accepting the Brown's offer, with the right to continue marketing the home for better  offers, and granting  to Brown a right offirst refusal to remove his contingency if a better  offer came in.The Brown's accepted the offer and immediately  listed their home for sale. Shortly thereafter the seller notified Brown that a better  offer has been presented without any contingencies.  What should the agent advise Brown to do:
    Advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home.
  132. Under the Business and Professions Code the broker is required to keep a copy of a deposit receipt for a minimum of three years from:
    The date of closing of the transaction
  133. A real estate broker was charging 1/8 percentage interest  rate higher to borrowers that English wasn’t their first language.  This action by the broker is:
    A violation of the Housing Finance Discrimination Act of 1977
  134. If a tenant enters into a 2 year lease, if the lease contains no clause of assignment of subleasing, the tenant:
    May sublease to another  tenant
  135. A tenant  of an apartment complex was working on heating ducts.  The tenant sees that the ducts contain asbestos insulation.   Does the tenant  have a legal obligation to warn anyone he should:
    The tenant  has no legal obligation to warn people
  136. All of the following statements  about covenants and conditions are false, except:
    A violation of a condition can result in the loss of title
  137. Which of the following is true regarding the depreciation of land under Federal  Income Tax Law:
    Land cannot be depreciated
  138. The term estopple best describes:
    Tenants  rights and landlord  responsibilities
  139. An appraiser using the replacement cost method may use the unit cost per square foot or cost per cubic foot in the computations. On a unit cost comparison basis:
    A small house would cost more per unit than a large house
  140. Two buildings are leased on a long term basis, one for a post office and the other for a hardware store. Using the capitalization approach to appraise  the properties, the post office would demand:
    A lower capitalization rate
  141. The Alquist-Priolo  Earthquake Special Studies Act is applicable to:
    All counties in California
  142. A loan secured by real property usually consist of:
    A promissory note and a trust  deed
  143. Mortgage loan correspondents may obtain a license by:
    The Department of Corporations & The Department of Real Estate
  144. A real estate broker who owned a large real estate firm operating under ABC Realty Co, listed a property for a total of $40,000. The broker and many of his salespersons were all principals in an investment  company operating under  the name of Realty Investment Company.  The investment company decided to purchase the property so the broker presented an all cash offer.  But did not disclose the buyers relationship under  this circumstances:
    The broker’s  action was improper because he did not reveal the true identity of the purchaser.
  145. Someone who has power of attorney  may do all of the following except:
    Deed the property to himself
  146. Purchasing a home with a lower down payment and longer repayment terms will generally:
    Increase  the total financing cost
  147. A lender under a trust  deed is known as:
    The beneficiary
  148. When a lender in a trust  deed takes a deed in lieu of foreclosure who is liable for the second financing:
  149. When a residential neighborhood is composed mostly of owner occupied residential  properties it tends to:
    Stabilize value
  150. In which of the following programs will the borrower pay no down payment:
    VA loans