Edna's Pearson Vue Practice Test

Card Set Information

Author:
happyedi253
ID:
8018
Filename:
Edna's Pearson Vue Practice Test
Updated:
2010-02-25 20:34:18
Tags:
Pearson Vue Real Estate Practice Test
Folders:

Description:
Real Estate practice test
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user happyedi253 on FreezingBlue Flashcards. What would you like to do?


  1. Broker Smithson, although believing the seller was demanding too high an asking price, took an exclusive right to sell listing on a home. Several months later, Smith met with the seller and urged her to reduce the listing price, but to no avail. Now, just as the listing is about to expire, Smithson advertises the property at a price below that shown on the listing and immediately receives an offer which the seller accepts. Broker Smithson's actions:

    A. Prove the listing price was too high all along
    B. Are acceptable practice
    C. Would be acceptable, since the seller signed and accepted the offer
    D. Constitute a breach of the agency agreement
    D. Constitute a breach of the agency agreement

    Agents may only advertise the agreed-upon price.
    (this multiple choice question has been scrambled)
  2. What document serves as excrow intructions?

    A. Listing agreement
    B. HUD-1 statement
    C. Purchase agreement
    D. Good faith estimate
    C. Purchase agreement

    the document executed between the buyer and the seller includes intructions for the escrow agent to follow.
    (this multiple choice question has been scrambled)
  3. For a conventional loan, how much of borrower's income can be debt?

    A. 36%
    B. 33%
    C. 29%
    D. 28%
    A. 36%

    The qualifying standard (set by teh secondary market) states that 36% of the borrower's income can go to servicing debt.
    (this multiple choice question has been scrambled)
  4. An agent is showing a house to a customer. The agent tells the buyer that the seller is desprerate for an offer. Which duty has the agent breached?

    A. Obedience
    B. Disclosure
    C. Loyalty
    D. Accountability
    C. Loyalty

    An agent must have the client's permission to reveal such a motivation to a customer.
    (this multiple choice question has been scrambled)
  5. For VA loans, how much of the borrower's income can be debt?

    A. 36%
    B. 41%
    C. 33%
    D. 29%
    B. 41%

    VA loans allow 41% of the borrower's income to be debt.
    (this multiple choice question has been scrambled)
  6. Which of the following could a real estate agent lawfully complete?

    A. Lease with option
    B. Land contract
    C. General warranty deed
    D. Standard real estate purchase contract
    D. Standard real estate purchase contract

    A real estate agent amy only "complete" (i.e. fill in the blanks) a pre-printed real estate purchase contract.
    (this multiple choice question has been scrambled)
  7. When the appraiser looks at the home Sandy has just purchased, he notices it has a fireplace and the comparable homes do not. He makes a $3,000 upward adjustment on his sales comparison approach worksheet. The $3,000 adjustment is based on what appraisal principle?

    A. Competition
    B. Anticipation
    C. Contribution
    D. Conformity
    C. Contribution

    This is the amount the fireplace "contributes" to the value. It is not necessarily the cost to install the individual item
    (this multiple choice question has been scrambled)
  8. When a contract is terminated without undoing anything that has been done so far, the action is called:

    A. Fruition
    B. Recission
    C. Cancellation
    D. Repudiation
    C. Cancellation

    Cancellation most often occurs when a purchase agreement is terminated.
    (this multiple choice question has been scrambled)
  9. In title states, what clauseis unique to the mortgage?

    A. Alienation
    B. Accelaration
    C. Defeasance
    D. Pre-payment penalty clause
    C. Defeasance

    In title theory states, there must be language that cancels the mortgagee's right to the title to land on the payment on the debt.
    (this multiple choice question has been scrambled)
  10. John has an open listing on his home with Company X. Paul has an exclusive right to sell listing with the same company. Their contracts have a 30-day protection period. Both listings expire on March 31. On April 15, Paul and John view each other's properties for the first time, and decide to swap homes. How much commission is Company X due?

    A. None
    B. Commission from just John
    C. Commission from just Paul
    D. Commission from Paul & John
    A. None

    No commission is due Company X. Protection periods will only protect an agency in regards to purchasers who have viewed the property during listing period.
    (this multiple choice question has been scrambled)
  11. What is the limit of the amount of punitive damages that can be awarded based on the Civil Rights Act of 1866?

    A. $20,000
    B. $100,000
    C. $50,000
    D. No limit
    D. No limit

    There is no limit for the amount of punitive damages that can be awarded.
    (this multiple choice question has been scrambled)
  12. Building codes are primary enforced by:

    A. The granting of licenses
    B. The issuance of permits
    C. Letters of approval
    D. Zoning laws
    B. The issuance of permits

    Building codes set contruction standards; building plans must comply with the code for a permit to be issued failure to comply with the permit may result in a stop order, fines and/or injunctions. Zoning laws set forth permitted uses. Licenses allow certain activities.
    (this multiple choice question has been scrambled)
  13. A salesperson is told by his client not to disclose the fact that, during heavy rains, the basement takes on water. The agent:

    A. Must not disclose the defect, due to the duty of obedience
    B. Must disclose the defect to any interested buyers.
    C. Must only show the property on sunny days
    D. Must give up the listing
    B. Must disclose the defect to any interested buyers

    An agent's duty of obedience only applies to lawful instructions. Latent defects must be disclosed.
    (this multiple choice question has been scrambled)
  14. While determining the net operating income of an investment property, an appraiser will take into account all of the following except:

    A. Property management fees
    B. Interest expense
    C. Income from vending machines
    D. Utility costs
    B . Interest expense

    Although tax deductible, the amount of interest an owner pays is not used to calculate the net operating income.
  15. When a broker received an unexpected bill, he deposited a client's earnest money check into his personal account to cover the expense. This best describes:

    A. A ligitimate loan
    B. Cooperating
    C. Promissory note
    D. Commingling
    D. Commingling

    Most states consider this behavior a violation of license law.
    (this multiple choice question has been scrambled)
  16. What is an appraisal?

    A. An opinion of value good for six monts
    B. An opinion of value for the day the appraisal only
    C. A guarantee of property value given to the bank
    D. An estimate of what the property should get on the market
    B. An opinion of value for the day the appraisal only

    Because market conditions can change (as can the property itself) the appraisals is only an opinion of value as of the day of appraisal.
    (this multiple choice question has been scrambled)
  17. If it is the policy of the broker to prohibit non-management level licensee dual agency, which of the following can not happen?

    A. Two agents can represent the interests of their separate clients
    B. The broker can be a dual agent
    C. A listing agent can sell his own listing to a customer
    D. A buyer's agent can also represent the seller in the same transaction.
    D. A buyer's agent can also represent the seller in the same transaction.

    When the broker does not allow an agent to represent both parties in the same transaction, the only option to the agent is for one side of the transaction to be a customer, or the broker can designate an agent to represent the interests of the separate clients. In that instance, the broker must be a dual agent.
    (this multiple choice question has been scrambled)
  18. For the income approach to appraisal, value is a reference to what?

    A. The income the investment produces
    B. The expenses related to the investment
    C. The worth of the investment
    D. The rate of return used by investors
    C. The worth of the investment

    Net income divided by the rate will yield the value, the worth of the investment.
    (this multiple choice question has been scrambled)
  19. The subject property is next to a sewage treatment plant. What could this situation be causing?

    A. A foul odor
    B. Economic obsolescence
    C. Functional obsolescence
    D. A curable defect
    B. Economic obsolescence

    Economic obsolescence refers to a situation outside of the subject property that may affect the value of the subject property.
    (this multiple choice question has been scrambled)
  20. What properties are affected by the Lead Based Paint Hazard Reduction Act?

    A. Any residential property
    B. Only commercial properties
    C. Residential properties built before 1978
    D. Public buildings
    C. Residential properties built before 1978
    (this multiple choice question has been scrambled)
  21. The purpose of RESPA is to

    A. Give lenders and title companies freedom to charge as much as they want
    B. Make sure brokers get the money they are entitled to
    C. Keep consumers confused
    D. Regulate settlement and closing procedures
    D. Regulate settlement and closisg procedures

    The purpose of RESPA is to regulate procedures, so that consumers can make informed decisions.
    (this multiple choice question has been scrambled)
  22. Which of the following describes the equitable remedy, when a contract is breached, that allows a cout to order someone to perform as agreed instead of paying damages?

    A. Mandatory perfomance
    B. Specific performance
    C. Exemplary damages
    D. Anticipatory repudiation
    B. Specific performance

    The injunction awarded by the court to force someone to perforn as agreed is specific performance.
    (this multiple choice question has been scrambled)
  23. A real estate investment business organized as a trust best describes a/an:

    A. Limited liability company
    B. REIT
    C. General partnership
    D. Corporation
    B. REIT

    Corporations, partnerships, and LLC ownership interest are not required to have a specified number of individuals. The REIT must have at least 100 investors.
    (this multiple choice question has been scrambled)
  24. The act of the government taking private property for public use is

    A. Taxation
    B. Eminint domain
    C. Escheat
    D. Condemnation
    D. Condemnation

    The act is condemnation, the power is eminent domain
    (this multiple choice question has been scrambled)
  25. When one party lets the other party know, before the time limit of performance, that they are not going to perform as agreed, the action is called:

    A. Anticipatory repudiation
    B. Anticipatory obligation
    C. Anticipatory performance
    D. Breach of intention
    A. Anticipatory repudiation

    When a party repudiates a contract, the other party can then sue for performance or damages.
    (this multiple choice question has been scrambled)
  26. "Effective gross income" best describes:

    A. Income minus debt services
    B. Gross income in an ideal situation, with no vacancy or collection losses
    C. Net income
    D. Gross income minus a figure for vacancy and collection losses
    D. Gross income minus a figure for vacancy and collection losses

    Effective gross income is generated by a property, plus miscellaneous income, minus a figure for vacancy and collection losses.
    (this multiple choice question has been scrambled)
  27. A buyer and a seller were separted in negotions by only five hundred dollars. The listing and sales agent agree to reduce the commission by that amount to make the deal. Each agent gives their clients two hundred and fifty dollars after closing. What unethical practice exist here?

    A. Seff dealing
    B. No violation has occured
    C. Undisclosed inducement and dividing commissions with non licensees
    D. Breach of tort
    C. Undisclosed inducement and dividing commissions with non licensees

    This behavior constitutes a violation of licese law.
    (this multiple choice question has been scrambled)
  28. In which situation is there no fiduciary relationship?

    A. Property manager and the owner
    B. Seller and the buyer
    C. Principal and the agent
    D. Seller and the listing broker
    B. Seller and the buyer

    The seller and buyer have no fiduciary relationship.
    (this multiple choice question has been scrambled)
  29. Developer George purchased 5 acres of residential land on the edge of town with frontage on the main highway. When the zoning board and city council refused to rezone the property to accommodate a commercial development, George sued for the value that he would have received had the land been rezoned to a higher classification. This type of legal challege is known as:

    A. Spot zoning
    B. Inverse condemnation
    C. Eminent domain
    D. Frivolous
    B. Inverse condemnation

    Inverse condemnation occurs when a property owner sues the government, asking the court to order the government either to pay compensation or loosesn land use restrictions. It may or may not be frivolous to do this. Eminent domain is the power of goverment to take private land for public use. Spot zoning is changing the zoning classification of a specific parcel of land.
    (this multiple choice question has been scrambled)
  30. In real estate terms, an estate for years also may be called:

    A. Fee simple conditional
    B. A leasehold
    C. A fee
    D. A joint tenancy
    B. A leasehold

    An estate for years is a lease that begins and ends on a specific date. A fee is the ownership of real property, and joint tenancy is co-ownership of the same property by two or more people at the same time.
    (this multiple choice question has been scrambled)
  31. The rule that says a buyer will not pay more for a property than a comparable substitute best describes:

    A. The rule of contribution
    B. The rule of supply and demand
    C. The rule of substitution
    D. The rule of conformity
    C. The rule of substitution

    Buyers ultimately determine the value of a property. A buyer not pay more for a property than for a comparable substitute, which is why comparing is the most accurate determining factor of value.
    (this multiple choice question has been scrambled)
  32. Of the following, which is not an example of a freehold estate?

    A. Periodic tenancy
    B. Life estate
    C. Fee simple
    D. Defeasible fee
    A. Periodic tenancy

    A periodic tenancy is a leasehold estate
    (this multiple choice question has been scrambled)
  33. Upon arrival, the listing agent dealing with an elderly lady realizes that she would be happy receiving an offer for much less than market value. The agent decides to make a cash offer for the list price that the seller chose. The agent then sells the property for maket value. What duty has the agent breached?

    A. Disclosure
    B. Obedience
    C. No breach has occured
    D. Confidentiality
    A. Disclosure

    An agent has a duty to disclose the property's true value. The agent's behavior is regarded as self dealing.
    (this multiple choice question has been scrambled)
  34. Transferring one's right or obligations under a contract to another and being relieved of liability best describes

    A. Declaration
    B. Assignment
    C. Novation
    D. Consideration
    C. Novation

    An assignment does not relieve the withdrawing party of liability. A novation does.
    (this multiple choice question has been scrambled)
  35. How long does a claimant have to file a complaint based on Title VIII with the HUD Office of Equal Oppurtunity?

    A. 3 years
    B. 2 years
    C. 1 year
    D. 180 days
    C. 1 year

    Filing a lawsuit based on the Federal Fair Housing Act must be done within 2 years. A complaint would be filed with the HUD Office of Equal Oppurtunity within 1 year.
    (this multiple choice question has been scrambled)
  36. "Gross income" best describes:

    A. Income after expenses
    B. Income before expenses
    C. Income plus debt service
    D. Income minus debt service
    B. Income before expenses

    The total of all income generated from an investment property is its gross income.
    (this multiple choice question has been scrambled)
  37. What is market price?

    A. The replacement cost of the property
    B. The price the property is likely to bring in an "arm's length" transaction
    C. How much the lender is risking
    D. The price the property actually sold for
    D. The price the property actually sold for

    Market value is what the property is likely to sell for. Insurance value deals with the cost of replacement.
    (this multiple choice question has been scrambled)
  38. Which of the following is not true of the Federal Housing Administrator

    A. Administered by the Department of Housing and Urban Development
    B. Helps buyers with low down payments
    C. Guarantees mortgage loans
    D. Enacted by governmental legislation
    C. Guarantees mortgage loans

    The only entity that guarantees mortgages is the VA; FHA insures loans.
    (this multiple choice question has been scrambled)
  39. Which of the following does not derive from a city's police power?

    A. Developer's restrictive covenants
    B. Urban planning
    C. Building codes
    D. Zoning ordinances
    A. Developer's restrictive covenants

    All are governmental restrictions on land use except C, which is enacted by a private citizen.
    (this multiple choice question has been scrambled)
  40. A court order instructing an official (i.e. a sheriff) to sell property in order to pay a judgment is called:

    A. Foreclosure
    B. Deficiency judgment
    C. Writ of execution
    D. Attachement
    C. Writ of execution

    Foreclosure is the preceeding which declare a mortgage void and forces the sale of property to satisfy the debt. The court order directing an official to seize and/or sell the property is called the writ of execution.
    (this multiple choice question has been scrambled)
  41. Two non-management level licensees (both working for the same broker) are representing opposing sides of a transaction. This best describes:

    A. Exclusive agency
    B. Split agency
    C. Disclosed dual agency
    D. Subagency
    B. Split agency

    Split agency occurs when one salesperson represents the buyer and another salesperson from the same firm represents the seller. In this split agency, the broker alone is a dual agent.
    (this multiple choice question has been scrambled)
  42. What is the body of law that governs negotiable instruments?

    A. Uniform Commercial Code
    B. Doctrine of emblements
    C. Statue of frauds
    D. Rule of conformity
    A. Uniform of Commercial Code

    The UCC sets out certain requirements for negotiable instruments.
    (this multiple choice question has been scrambled)
  43. Mortgages are recorder in order to:

    A. Assure amortization payments
    B. Comply with Truth-in-Lending reglutaions
    C. Transfer title to the mortgagee
    D. Create a valid lien
    D. Create a valid lien

    While the promissory note creates a debt, the mortgage is given to secure repayment of the debt; it becomes a lien against the property only when it is recorded.
    (this multiple choice question has been scrambled)
  44. If not given with the application, when must a lender give the required RESPA information to a buyer?

    A. Within 5 days
    B. Within 3 days
    C. Within 7 days
    D. Within 1 day
    B. Within 3 days

    A lender must give the buyer a good-faith estimate of settlement charges within 72 hours of the loan application.
    (this multiple choice question has been scrambled)
  45. The three most important aspects of a house are:

    A. Cost, value, and marketability
    B. Marketability, uniqueness, and scarcity
    C. Size, style, and function
    D. Location, location, location
    D. Location, location, location

    Where the property is located alone can contribute value to the property regardless of size, style, or function.
    (this multiple choice question has been scrambled)
  46. A closing conducted by a disinterested third party best describes a/an:

    A. Lender closing
    B. Roundtable closing
    C. Escrow closing
    D. Broker closing
    C. Escrow closing

    A closing conducted by a disinterested third party is an escrow closing. The roundtable closing involves all of the parties to the transaction signing documents at the same place at the same time.
    (this multiple choice question has been scrambled)
  47. In the state where bob lives, someone who receives a loan from a lender must transfer his/her property to the bank's holding company while the loan is outstanding. The document used to accomplish this is a/an

    A. Title insurance
    B. Deed of trust
    C. Encroachment
    D. Mortgage
    B. Deed of trust

    A mortgage does not transfer title to a lender; rather, it allows a lien to be posted against the property by a lender. With deed of trust, the homeowner actually transfers his property "interest" to a third party trustee, who holds title to the property while the loan is outstanding.
    (this multiple choice question has been scrambled)
  48. A buyer buys interest in a condominium in Mexico; she has one week's use of the property each year. Such an ownership is best describe as

    A. Fee simple absolute
    B. Time share
    C. Life estate
    D. Fee simple conditional
    B. Time share

    This person receives the right to use the property for one week only, she is thus "sharing time" of possession with 51 other owners.
    (this multiple choice question has been scrambled)
  49. The "subject property" best describes:

    A. The property compared to the base
    B. The property for which the value is sought
    C. The property currently on the market
    D. The property surrounding the base
    B. The property for which the value is sought

    The appraiser does not consider properties on the market. The subject is the property for which an opinion of value is sought, also called the base.
    (this multiple choice question has been scrambled)
  50. Which of the following could a real estate agent lawfully prepare?

    A. A lease contract for a landlord
    B. An independent contractor's agreement with a broker
    C. A real estate sales contract for buyer
    D. A land contract for a vendor
    B. An independent contractor's agreement with a broker

    The real estate agent could prepare the independent contractor's agreement, as he is a party to that agreement with the broker. The other contracts involve drafting agreements for third parties, an action that requires a license to practice law.
    (this multiple choice question has been scrambled)
  51. All of the following are examples of real property except:

    A. Drapes
    B. Shed
    C. Bathtub
    D. Sump pump
    A. Drapes

    Drapes are usually not considered real property. In some instances (i.e. drapes custom made to fit an unusual window), they can be considered real property
    (this multiple choice question has been scrambled)
  52. The agreement whereby a broker is entitled to be paid a commission by a buyer is a/an:

    A. Listing agreement
    B. Purchase agreement
    C. Option
    D. Buyer broker contract
    D. Buyer broker contract
    (this multiple choice question has been scrambled)
  53. What type of legal description is based on baseline and principal meridian?

    A. Square foot average
    B. Lot and block
    C. Metes and bounds
    D. Rectangular survey system
    D. Rectangular survey system

    The rectangular survey system divides an area into townships and ranges.
    (this multiple choice question has been scrambled)
  54. When a landlord raises the rent after a tenant complaints about code violations, what has occured?

    A. Retaliation
    B. Unlawful detainer
    C. Constructive evictions
    D. Self-help eviction
    A. Retaliation

    Raising the rent or filing for an eviction after a tenant has complained could be grounds for an unlawful eviction lawsuit.
    (this multiple choice question has been scrambled)
  55. The subject property has five bedrooms but only one bathroom. What could this situation be causing?

    A. Economic obsolescence
    B. Functional obsolescence
    C. A curable defect
    D. An ideal situation
    B. Functional obsolescence

    When something inherent in the subject property causes the lose of value, the property suffers from functional obsolescence
    (this multiple choice question has been scrambled)
  56. Which of the following is not party of the secondary market?

    A. Government National Mortgage Association
    B. Federal Home Loan Mortgage Corporation
    C. Federal Universal Mortgage Association
    D. Federal National Mortgage Association
    C. Federal Universal Mortgage Association

    The Federal Universal Mortgage Association is not a real association
    (this multiple choice question has been scrambled)
  57. What law is being violated when agents from different firms discuss and agree upon commission rates?

    A. Sherman Antitrust Act
    B. Truth-in-Lending Act
    C. Statue of Frauds
    D. RESPA
    A. Sherman Antitrust Act

    Discussing commission rates with other licensees is regarded as price fixing under the Sherman Antitrust Law.
    (this multiple choice question has been scrambled)
  58. After listing a property that the agent believes is overpriced, the agent returns to the office and vents his frustration to a fellow licensee at the brokerage. Which duty has the agent breached?

    A. Disclosure
    B. Accountability
    C. Reasonable skill and care
    D. Loyalty
    D. Loyalty

    If an agent decides to take the listing at the price indicated by the seller, the agent must be loyal to the seller and not imply that the list price is unreasonable.
    (this multiple choice question has been scrambled)
  59. A residential tenant with a month-to-month lease enjoys which leasehold estate?

    A. Periodic tenancy
    B. Joint tenancy
    C. Tenancy at will
    D. Estate for years
    A. Periodic tenancy

    Periodic tenancy is a lease that automatically renews itself from period to period
    (this multiple choice question has been scrambled)
  60. As an agent is showing a house to a customer, the agent notices a large vertical crack in the basement wall. What is the agent's duty?

    A. Notify the listing agent
    B. Nothing
    C. Tell the broker
    D. Immediately disclose the situation to the buyer
    B. Nothing

    The crack on the wall is obvious and falls into the category of patent defects. The agent has no duty to disclose patent defects.
    (this multiple choice question has been scrambled)
  61. A brief summary of a property's history, listing all recorded documents that may affect the title is a/an:

    A. Abstract of title
    B. Certificate of title
    C. Title insurance
    D. Title report
    A. Abstract of title

    An abstract of title is evidence of marketable title. It is prepared by an atorney acting as a neutral party in the closing.
    (this multiple choice question has been scrambled)
  62. According to the Lead Based Paint Hazard Reduction Act, what can happen to a licensee if he or she fails to give a buyer the lead-based paint pamphlet and disclosures?

    A. One year in jail
    B. A $10,000 fine
    C. Be ordered to pay three times the compensatory damages in a lawsuit
    D. All of the above
    D. All of the above

    The EPA has the power to apply all of these santions.
  63. The mortgagor is:

    A. The broker
    B. The seller
    C. The lender
    D. The borrower
    D. The borrower

    The borrower is giving the mortgage to the lender; thus, the borrower is the mortgagor.
    (this multiple choice question has been scrambled)
  64. The leasehold estate that can be terminated by either party and can not be assigned is:

    A. Joint tenancy
    B. Periodic tenancy
    C. Tenancy at will
    D. Tenancy at sufferance
    C. Tenancy at will

    Tenancy at will can not be assigned; it is based on the wishes of the parties.
    (this multiple choice question has been scrambled)
  65. When showing a downtown condominium, a licensee brags, "This unit propbably has the best view of Lake Michigan in the whole city!" Would this statement have legal consequences?

    A. No-only written statements can be construed as negligent misrepresentations
    B. No-this is "puffing" and is the agent's opinion.
    C. Yes-the licensee is stating a fact and could be held liable
    D. Yes-assuming the condo does not have the best view of the lake.
    B. No-this is "puffing" and is the agent's opinion.

    Bragging about a property is allowable, but an agent must use care. Saying "the basement never leaks," for example, might be a cause for legal action if the basement does leak.
    (this multiple choice question has been scrambled)
  66. What expenses would not be found on a good faith estimate?

    A. Moving costs
    B. Items payable with loan & other charges
    C. Pre-paid items
    D. Estimated monthly payment
    A. Moving costs

    The good faith estimate provides the buyer with the costs they will incur to take title to the land.
    (this multiple choice question has been scrambled)
  67. The rule that says a buyer is expected to reasonably inspect the property, instead of relying on what he or she was told. This best desribes:

    A. The doctrine of caveat emptor
    B. The doctrine of emblements
    C. The doctrine of estoppel
    D. The doctrine of stare decisis
    A. The doctrine of caveat emptor

    Caveat Emptor literally translates as, "let the buyer beware"
    (this multiple choice question has been scrambled)
  68. Executor Fred calls agent Tom to list a vacant tract of land, instructing him to list the land for $700,000. Several weeks later, agent Tom becomes aware of a developer who would pay as much as $1,000,000 for the property. Tom thereupon submits a full-price offer to the owner and purchases the property. Tom then resells the property to the developer and pockets a $300,000 profit. Which one of the following statements is correct?

    A. Tom violated the law by failing to waive the commission on property purchased for his/her own use.
    B. Tom was in compliance with the law, since Fred had established the listing price and received the full amount
    C. Tom violated the law by not providing notice of information that would affect Fred.
    D. Tom did not violate the law - it is not illegal for licensees to purchase listed property
    C. Tom violated the law by not providing notice of information that would affect Fred.

    Tom had a duty to inform Fred of the information, regardless of the listing price.
    (this multiple choice question has been scrambled)
  69. What is it called when personal property is transformed into real property?

    A. Constructive annexation
    B. Fixture
    C. Trade fixture
    D. Actual annexation
    D. Actual annexation

    Constructive annexation occurs when property is so closely related to real property that the law treats it as a real property, even though it is not physically attached. The fixture is the item that was transformed.
    (this multiple choice question has been scrambled)
  70. Which of the following is an involuntary specific lien?

    A. Mortgage
    B. Easement
    C. Mechanic's lien
    D. IRS Taxes
    C. Mechanic's lien

    The IRS is a general involuntary lien against all items owned by an individual (including, but not limited to , real estate). The mechanic's lien is an involuntary specific lien against property worked on by a contractor. The mortgage is a voluntary specific lien which is given freely by the landowner to the buyer. The easement is not a lien, although it is an encumbrance on the property.
    (this multiple choice question has been scrambled)
  71. What document is evidence of the relationship between property owner and property manager?

    A. Buyer broker contract
    B. Lease
    C. Property management agreement
    D. Listing agreement
    C. Property management agreement

    A listing agreement is between seller and broker. A buyer broker contract is between buyer and broker. A lease is between landlord and tenant.
    (this multiple choice question has been scrambled)
  72. What law requires lenders to limit the amount of funds that can be held in reserves?

    A. RESPA
    B. Regulation Z
    C. The Truth-in-Lending Act
    D. Title VIII
    A. RESPA

    Although lenders are touched and concerned with A, B, And D, RESPA sets limits concerning reserves.
    (this multiple choice question has been scrambled)
  73. Which approach to value would be most appropriate when appraising a vacant factory?

    A. Income approach
    B. Cost approach
    C. Market approach
    D. Summation approach
    B. Cost approach

    Unusual structures, where comparable properties are not readily available, are best appraised using the cost approach to value.
    (this multiple choice question has been scrambled)
  74. What refers to the interest in real property created by the execution of a valid sales contract?

    A. Equitable title
    B. Title
    C. Future title
    D. Inequitable title
    A. Equitable title

    A buyer's interest (at the time the offer is accepted) is only a future interest until the transaction comes to fruition.
    (this multiple choice question has been scrambled)
  75. "Plants and trees cultivated for harvest" best describes:

    A. Fructus naturales
    B. Fructus industrales
    C. Trade fixture
    D. Emblements
    B. Fructus industrales

    Fructus industrales would be crops, forests or other plants intended to benefit farmers of such plants. Tenant farmers' crops, grown for the benefit of thelandowner, would be trade fixture.
    (this multiple choice question has been scrambled)
  76. When rented property is sold by the owner, the outstanding leases:

    A. Must be renegotiated
    B. Are automatically terminated
    C. Remain binding upon the new owner
    D. Expire
    C. Remain binding upon the new owner

    A lease goes with the land. A new owner would be subject to any existing leases.
    (this multiple choice question has been scrambled)
  77. What pledges property as security for a loan?

    A. Habendum clause
    B. Hypothencation clause
    C. Collateral clause
    D. Defeasence clause
    B. Hypothencation clause

    The hypothencation clause in a mortgage literaly states that the real property is being pledged as security for repayment of a promissory note/loan. The habendum clause literally transfers real estate in a deed, not a mortgage; it is often referred to as the "to have and to hold" clause. The defeasence clause in a mortgage says that once the promissory note is paid, the mortgage is void. There is no such clause as the collateral clause.
    (this multiple choice question has been scrambled)
  78. The Real Estate Settlement Procedures Act was enacted to

    A. Provide avenues of additional compensation for eal estate sales agents
    B. To protect consumers from abusive lending practices.
    C. To settlement costs for escrow
    D. To provide detailed information concerning cost of interest and interest paid over the life of a loan.
    B. To protect consumers from abusive lending practices.

    RESPA ensures that consumers are provided with important, accurate, and timely information about the actual costs of selling or closing a transaction, not about the cost of obtaining a loan and interest. The cost of obtaining loans and interest are provided under Regulation Z of the Truth-in-Lending Act.
    (this multiple choice question has been scrambled)
  79. What type of land use doesn't comply with the zoning restriction for where it is located, but is permitted because it benefits the public?

    A. Conditional use
    B. Non-conforming use
    C. Spot zone
    D. Inverse condemnation
    A. Conditional use

    Conditional use (hospitals, schools etc) usually do not comply with zoning limitations.
    (this multiple choice question has been scrambled)
  80. In what type of installment agreement does the buyer make payments for the right to possession, but does not receive the title until most or all of the terms have been met?

    A. Proprietary lease
    B. Land contract
    C. Lease
    D. Purchase agreement
    B. Land contract

    In a land contract, the seller retains title until the contract has been satisfied.
    (this multiple choice question has been scrambled)
  81. Transferring one's rights or obligations under a contract to another with secondary liablility is called:

    A. Declaration
    B. Assignment
    C. Consideration
    D. Novation
    B. Assignment

    Novation relieves the withdrawing party of liability. Assignment does not.
    (this multiple choice question has been scrambled)
  82. When must a buyer be allowed to inspect the HUD-1 settlement?

    A. The day after closing
    B. One business day before closing
    C. Upon creating escrow instructions
    D. Two weeks before title transfer
    B. One business day before closing

    The buyer has a right to inspect the HUD-1 settlement statement one day prior to closing. If discrepancies are discovered, the transaction cannot close until they are corrected.
    (this multiple choice question has been scrambled)
  83. A broker, acting as a property manager, may refuse to rent to individuals because:

    A. They represent a racial group not already present in the facility.
    B. They practice an unusual religion
    C. There is no male head of household
    D. They are poor credit risks
    D. They are poor credit risks

    Not renting to someone because of religion, gender, or race is a violation of the Federal Fair Housing Act.
    (this multiple choice question has been scrambled)
  84. The leasehold estate that has a specified termination date best describes a/an:

    A. Periodic tenancy
    B. Joint tenancy
    C. Tenancy at will
    D. Estate for years
    D. Estate for years

    An estate for years has a specified termination date. If landlord and tenant agree to continue the tenancy affter termination, it converts to tenancy at will.
    (this multiple choice question has been scrambled)
  85. Mom & Dad's Cafe is located in an area that has recetly been rezoned "residential." Will they be allowed to continue operating as a restaurant?

    A. Yes, because the restaurant will be entitled to a variance
    B. No, because such use is not allowed in a residential zone
    C. Yes, because the restaurant will be " grandfathered" into the area
    D. No, because a non-conforming usage is illegal
    C. Yes, because the restaurant will be " grandfathered" into the area

    Most rezonings will allow for existing properties that do not conform to the new zoning to be "grandfather" in and continue to operate. The "grandfather" clause could be lost in the future for a variety of reasons.
    (this multiple choice question has been scrambled)
  86. The law that requires buyers and sellers be given an itemization of all costs and expenses of the buying and selling of a home is:

    A. Truth-in-Lending Act
    B. Fair Credit Reporting Act
    C. Equal Credit Opportunity Act
    D. RESPA
    D. RESPA

    The Real Estate Settlement Procedures Act requires that a thorough listing of the debits and credits due a buyer and seller be issued at the time of closing. Truth-in-Lending applied only to the borrower; it provides the borrower a disclores of the costs of getting a loan.
    (this multiple choice question has been scrambled)
  87. Fee simple absolute estates are all of the following except:

    A. Inheritable
    B. Transferable
    C. Perpetual
    D. Conditional
    D. Conditional

    If a condition exists in the deed, the estate is fee simple conditional. Fee simple absolute implies there are no conditions in the deed.
    (this multiple choice question has been scrambled)
  88. A closing with all parties presetn is a/an:

    A. Escrow closing
    B. Lender closing
    C. Broker closing
    D. Roundtable closing
    D. Roundtable closing

    In many states, all parties to the transaction sign documents and transfer title at the same place and time; this is referred to as a roundtable closing.
    (this multiple choice question has been scrambled)
  89. When an agent represents both parties in the same transaction, it is called:

    A. Disclosed dual agency
    B. Subagency
    C. Split agency
    D. Exlusive agency
    A. Disclosed dual agency

    Split agency refers to an in-company transaction. Exclusive agency implies the broker represents only one side. Dual agency can only occur when both parties consent to it.
    (this multiple choice question has been scrambled)
  90. Roberta wishes to build her garage 2 feet from her side lot line. City codes calls for all sides setbacks to be at least 5 feet. She will need to get what to be able to legally proceed and be assured that future owners will not have a problem?

    A. A waiver
    B. Spot zoning approval
    C. A variance
    D. Non-conforming use
    C. A variance

    A variance will provide permanent permission to deviate from setback rules.
    (this multiple choice question has been scrambled)
  91. The listing agent discriminates against a minority group buyer. If the seller were to be held responsible for the actions of the agent, it would be an example of:

    A. Fraud
    B. Vicarious liability
    C. Dual liability
    D. Intentional misrepresentation
    B. Vicarious liability

    Vicarious liability occurs when a client is held liable for the actions of his/her agent.
    (this multiple choice question has been scrambled)
  92. How often must a property manager report to the owner?

    A. Every month
    B. Every year
    C. Quarterly
    D. Weekly
    C. Quarterly

    Unless otherwise specified in the property management agreement, the amanger must report to the owner on a quarterly basis.
    (this multiple choice question has been scrambled)
  93. An unlicensed property manager can do all of the following except:

    A. Showing units
    B. Maintenance
    C. Negotiate lease terms
    D. Furnishing published information
    C. Negotiate lease terms

    Most states require anyone who lists, sells, leases, exchanges or otherwise negotiates in real estate of others must be licensed
    (this multiple choice question has been scrambled)
  94. When can a property manager use a self-help eviction?

    A. Never
    B. Always
    C. Only in non-residential tenancies
    D. Only in residential tenancies
    C. Only in non-residential tenancies

    A landlord may only use a utility shut-off or lockout against a non-residental tenancy
    (this multiple choice question has been scrambled)
  95. The act of the government taking private property for public use is

    A. Condemnation
    B. Escheat
    C. Eminent domain
    D. Taxation
    A. Condemnation

    The act is condemnation, the power is eminent domain.
    (this multiple choice question has been scrambled)
  96. Which of the following would terminate a listing agreement?

    A. Bankruptcy of the salesperson
    B. Failure of a buyer to secure financing
    C. Death of the principal
    D. Change in asking price of the property
    C. Death of the principal

    The death of one of the parties would terminate the agreement.
    (this multiple choice question has been scrambled)
  97. A lead-based paint disclosure form is required for all residential dwellings built before January 1, 1978. When applicable, who must sign the form?

    A. Seller only
    B. Buyer, seller and both agents
    C. Seller and listing agent
    D. Seller & Buyer
    B. Buyer, seller and both agents

    All parties must sign the disclosre form. Both agents are equally liable for compliance.
    (this multiple choice question has been scrambled)
  98. Eric and Sue purchase a new home and lot which is accessible only through a 12-foot-wide easement across Mr. Wilson's property. In this situation, the land owned by Eric and Sue is referred to as the:

    A. Dominant tenement
    B. Beneficiary
    C. Servient tenement
    D. Appurtenancy
    A. Dominant tenement

    The land benefited by an appurtenant easement is called the dominant tenement. The land burdened by the appurtenant easement is called the servient tenement. The appurtenancy is the right that the appurtenant easement provides the dominant tenement. The beneficiary is the owner of the dominant tenement.
    (this multiple choice question has been scrambled)
  99. A property management account:

    A. Must be non-interest bearing
    B. Can earn interest
    C. Can earn interest that gets paid to the broker
    D. Can earn interest that gets paid to the tenant
    B. Can earn interest

    A property management trust account can earn interest that gets paid to the property owner.
    (this multiple choice question has been scrambled)
  100. A real estate owner who lease the property is called

    A. The lessee
    B. Mortgagee
    C. Vendor
    D. The lessor
    D. The lessor

    The lessor and lessee are the parties to the lease. The lessor (the owner) is the giver of the leasehold estate, and the lessee (the tenant) is the receiving party in the lease.
    (this multiple choice question has been scrambled)

What would you like to do?

Home > Flashcards > Print Preview