Great Test Questions PDF

GREAT TEST QUESTIONS 1. The owner discovered their neighbor’s garage encroached four feet over his property line upon moving into the home they had just purchased. If a friendly settlement cannot be negotiated, the owner may sue whom of the following? Neighbor, since the enc...

GREAT TEST QUESTIONS 1. The owner discovered their neighbor’s garage encroached four feet over his property line upon moving into the home they had just purchased. If a friendly settlement cannot be negotiated, the owner may sue whom of the following? Neighbor, since the encroachment is a trespass. 2. Easements that restrict an owner’s ability to retain or construct improvements interfering with a neighbor’s solar energy system are called _________ easements. Solar. 3. Of the following, which one is an example of a freehold estate? A life estate. 4. There are _________ square feet in three acres of land. 130,680. 5. What is a roof on which all four sides slope to the eaves called? Hip roof. 6. What does the word “tenancy” in real property law most nearly mean? The method or mode of holding interest to real property by the lessee or owner. 7. Which of the following primarily leads to the vacancy rate of an apartment building under normal competitive conditions? Housing supply and demand in the area. 8. A dispute over ownership rights and interests held in real property may be settled by which of the following? A quiet title action. 9. What are ownership rights and interests in real estate called? Estates or fees. 10. Of the following options, which one is shown on a plot map? Location of the improvement on the lot and its relationship to surrounding features. 11. Of the following options, which one best describes an estate of indefinite duration? Estate of inheritance. 12. The land is the first component of real estate that comprises which of the following? All of these answers. 13. By which of the following does the Real Estate Commissioner rescind their approval of a subdivision? Issuing a desist and refrain order. 14. On a zoning map, what does "M" usually indicate? Manufacturing. 15. Under the Subdivided Lands Law, the Real Estate Commissioner is initially concerned with which of the following court? Small Claims. 16. Regarding zoning, which of the following statements is TRUE? Zoning is never retroactive. 17. How many acres does a lot containing 73,000 square yards equal? 15.1. 18. Which of the following clauses shows that the grantor is receiving something in exchange for the property? Consideration clause. 19. In a contract, what do the terms “adequate, valuable, good or sufficient” refer to? Consideration. 20. What is an intentional concealment of material facts by an agent? Fraud. 21. Brokers Phoebe and Saul both have an open listing on a property. Broker Phoebe showed the property to a prospective buyer, but the buyer decided not to buy. Two weeks later, Broker Saul contacted the same  buyer and arranged a sale of the property. The seller is obligated to pay a commission as which of the following? Respuesta: The full amount to Saul. 22. One party in a contract is coerced or placed under duress by the other party. At the discretion of the injured party, what is TRUE about the contract? Respuesta: It is voidable. 23. In order to avoid paying the broker his share, a buyer and seller agree to wait until the seller's listing is expired to make the sale. How can the broker get his commission? Respuesta: Prove in court he was the procuring cause of sale. 24. What is the difference between the listing period for a single-family home and a commercial property? Respuesta: A single-family home is typically listed for 60-120 days whereas a commercial property is typically listed for 6 months-1 year. 25. What are the terms “index,” “triple net” and “flat” used to describe? Respuesta: Leases. 26.  Of the following, which one is an acceptable termination date for an enforceable exclusive listing of residential real property? 180 days after the listing agreement is signed. 27.  The most crucial element of an enforceable listing contract is that it provides _________. A written contract documenting the broker’s employment. 28.  Who holds the right of possession and equitable title? Vendee. 29.  What does a valid and enforceable contract require? Competent parties; legal purpose; offer an acceptance, and compensation. 30.  Of the following contracts, which one needs to be in writing in accordance with the Statute of Frauds? A contract that is not to be performed for thirteen months. 31.  In a real estate purchase agreement, a buyer and seller initial the liquidated damages clause. The buyer later defaults. The amount recoverable is _________. Given to the seller after the default. 32.  Which term refers to the legal act of giving and receiving a deed? Passing title. 33.  What is a way of proving that the grantor signs the deed voluntarily? Acknowledgment. 34.  All of the following statements are correct EXCEPT _________. Under an exclusive agency listing, the seller may not liable for a commission if they sell the property themselves. 35.  What is the real estate loan that allows for interest rate fluctuations based on money market conditions? Adjustable interest rate loan. 36.  What financial instrument does a borrower give a lender as promise to repay a debt? A note. 37.  A typical reverse mortgage customer is _________. All of these. 38.  Under which circumstance will a lender generally not enforce the due-on sale clause in a promissory note? All of these. 39.  When the Federal Reserve (the Fed) increases the reserve requirements, which is known as tight money policy, it will _________. Decrease loan activity. 40.  When does Regulation Z (Reg Z) of the Federal Truth-in-Lending Act (TILA) give the borrower a 3 day right of rescission? The loan is a loan to refinance the borrower’s personal residence. 41.  In the context of mortgage finance, what is TRUE about a beneficiary statement? It is made by the lender to state the current balance required to pay off a real estate loan. 42.  A loan broker arranged a home equity loan for $9,600. What must the broker provide the borrower? Mortgage loan disclosure statement. 43.  What does the phrase “the secondary mortgage market” refer to? A resale marketplace for existing trust deed loans. 44.  What is a final payment on a note which is greater than twice the amount of any one of the six regularly scheduled preceding payments? Balloon payment. 45.  What is a foreclosure sale? An auction sale to the highest bidder. 46.  What is a lender that makes a loan to a borrower with a FICO score of 500 called? A subprime lender. 47.  What is the primary aim behind the creation of the Federal National Mortgage Association (FNMA)? To increase the money available to housing. 48.  All of the following entities buy loans in the secondary mortgage market EXCEPT _________. Federal Housing Administration (FHA). 49.  Bruce sold his home to Maria for $215,000 and carried back a $150,000 note with interest at 6% per annum, which was secured by a first trust deed. The home had a fair market value (FMV) of $200,000. Later, Bruce sold the trust deed and note at a discounted price of $135,000 to Syndi. On the back of the note, Bruce wrote, “I hereby assign the within note to Syndi without recourse.” If Maria defaults before making any principal payments, what should Syndi do? Foreclose to enforce payment of the $150,000. 50.  All of the following are one of the "three c's" of underwriting EXCEPT _________. Conformity. 51.  What is the minimum total foreclosure time under a trustee’s sale on a trust deed? Four months. 52.  All of the following are correct amounts for documentary transfer tax stamps EXCEPT _________. $111.00. 53.  In an escrow statement, what does the term “recurring costs” refer to? Impound account items. 54.  Which is NOT an impound requirement for a borrower? Mortgage interest. 55.  Which of the following is a common method of transferring real property that requires the involvement of a neutral third party? Escrow. 56.  Mike executed a grant deed to Trevor and recorded it. He later had a second thought and sought to set the conveyance aside, claiming there had been no delivery to Trevor. Why did Mike fail? Delivery and acceptance is presumed with recording. 57.  How to determine the annual property taxes that a homeowner needs to pay? Assessing the land and improvements separately, then multiplying the total by one tax rate. 58.  An offer based on a $300,000 loan assumption was made and accepted. During escrow, the loan turned out to be $290,000, not $300,000. What is the most likely result? The buyer can void the contract. 59.  Sara and Marshal are joint tenants. Marshal secures his interest in the property to obtain a loan from a lender. What happens when Marshal dies? Sara owns the property free and clear of the encumbrance. 60.  All of the following will cancel an escrow EXCEPT _________. The broker’s order to terminate escrow. 61.  Under federal income tax laws concerning an owner-occupied single-family dwelling, which of the following are NOT tax deductible? Landscaping expenses. 62.  On April 1, 2020, an escrow agent opened a preliminary title report order for the sale of a property. The seller purchased the home in 1998. He obtained a Federal Housing Administration (FHA) loan to finance it and FHA is currently making payments. Which of the following is TRUE about a preliminary title report dated April 5, 2020? It will show a deed of trust with the seller as trustor. 63.  All of the following are true of a tenancy in common EXCEPT _________. A tenant in common may not will their interest in the property to others on their death. 64.  Which of the following is a legal document used to transfer ownership of real property from one party to another? Quitclaim deed. 65.  Anna sold her primary residence, which she bought at $750,000 four years ago, for $950,000. During her ownership, she spent $300,000 on capital improvements. When filing her tax return, what can Anna write- off? None of these. 66.  What is a writ of execution issued for? Sheriff’s sale. 67.  Which of the following is a characteristic of a warranty deed? It guarantees the marketability of the property title. 68.  A real estate broker fires a salesperson for an illegal act. The firing should be informed to the Real Estate Commissioner _________. Immediately in writing. It is unconditionally required. 69. A broker represents only the buyer in a real estate sale. What is it known as? Single agency. 70. Concerning the creation of an agency relationship, what is NOT essential? Agreement to pay consideration. 71. To whom is a salesperson representing a buyer, in selling properties listed with another broker, directly responsible? The selling broker. 72. Which of the following is a practice which is NOT openly discriminatory, but leads to discriminatory effects? Implicit discrimination. 73.  A broker wants to solicit for an advance fee. Which government entity must he submit the advance fee paperwork to for approval at least 10 days before use? Department of Real Estate (DRE). 74.  A seller’s broker receives a full price offer on their listing. As they were leaving the office to present the offer, a broker of a second buyer hands them a separate cash offer for $10,000 less than the listed price. Which is a good practice for the seller’s broker? Present both offers at the same time. 75.  What is TRUE about a listing broker? A listing broker may not be the sole agent of the buyer. 76.  All racial discrimination in the sale or rental of property is prohibited according to the U.S. Supreme Court in 1968. What should a person discriminated against do? File a civil action in federal court. 77.  A seller’s agent listed a ranch for sale under an exclusive right to sell listing. A buyer’s agent, working through the local numerous listing service (MLS), made an offer accepted by the seller. During escrow, the seller’s agent noticed the buyer had recently bought a variety of similar ranches in the area at a far higher cost per acre than that offered in this transaction. What is the best practice that the seller’s agent should  perform? Disclose all information to the seller and let the seller decide what to do. 78.  Under which of the following circumstances can a deed be rewritten when it contains the racial identity of the parties? By court order. 79.  What is the Real Estate Commissioner authorized to do? Promulgate rules and regulations to enforce real estate laws. 80.  A property owner tells the broker that the house is connected to the sewer. The broker relays this information to the buyer, who later finds that the house has a septic system that needs repairing. Who would the buyer sue? The broker and the owner. 81.  Which of the following would establish an agency relationship? Any of these. 82.  A seller listed their home for sale with their broker for $400,000. The seller told their broker that the property must be sold quickly. The seller’s broker showed the property to a buyer and told them the seller was bankrupt and would accept $380,000. The buyer submits a $380,000 offer which the seller accepts based on the broker’s statement. Which of the following is TRUE regarding the broker’s actions? The seller’s broker violated their fiduciary obligation to the seller since they acted in excess of their authority. 83.  An agent discloses to their principal the race, creed, or color of a potential buyer or tenant. Is the agent's act discriminatory? Yes, since the race, creed or color of the prospect does not matter. 84.  A potential purchaser intends to buy a vacant lot in a rural subdivision. The buyer wants to know about sewer assessments, liens, utilities to the lot, blanket encumbrances and street maintenance. What is the source that provides all of this information? Real Estate Commissioner. 85.  Who does the Uniform Commercial Code, which pertains to a bulk sale transfer, protect? Creditors. 86.  When a natural hazard exists, a Natural Hazard Disclosure Statement (NHD) needs to be given to a buyer. All of the following trigger the delivery of an NHD EXCEPT _________. A property that contains lead-based paint. 87.  What is TRUE about prohibiting the display of “For Sale” signs in a residential neighborhood? It violates the First Amendment. 88.  What is an example of a red flag? A floor that is not level. 89.  What is the act of restricting a person from seeking to buy a residential property in a community and redirecting them to other housing? Steering. 90.  Which of the following state agencies empowered to prevent acts of discrimination against race, color, sex, national origin or ancestry in housing accommodations? The Department of Fair Employment and Housing. 91.  Lori has agreed to transact real estate business on behalf of Alex with Alex’s authority. Who is Lori in this case? An agent. 92.  What needs to be involved in a real estate broker’s advertisements? The name of the broker and license number. 93.  All of the following is disclosed in the seller’s Transfer Disclosure Statement (TDS) EXCEPT _________. Criminal activity in the surrounding neighborhood. 94.  What is an agent's positive efforts to satisfy the objectives of their customer under their employment agreement? Due diligence. 95.  When is a verbal agreement to sell real estate enforceable? The buyer makes a down payment, takes possession and improves the property. 96.  To induce panic selling, a licensee suggests that the racial makeup of a neighborhood is changing. What is this an instance of? Blockbusting. 97.  A seller sold a property to a buyer through a broker. When the rain season began four months later, the buyer discovered that the roof was significantly leaked. The buyer sued both the seller and the broker for the cost of repairs. The seller sued the broker since the seller had informed the broker multiple times of the roof leaks. The broker’s testimony in court revealed the broker had not disclosed the leaky roof to the buyer since the buyer had not mentioned it. What is the probable result of the court action? The buyer may recover from both the seller and the broker. Further, the seller would recover in the suit against the broker. 98.  What is the purpose of the Real Estate Law? Protect the public. 99.  What aims to grant the right to use property owned by another person like an easement and a lease? License. 100.  A residence has a 20-year physical age, but the appraiser notes the building has a 10-year-old appearance. What is the appraiser referring to? Effective age. 101.  Under the cost approach, an appraiser values a property by adding the value of the site to the depreciated cost new of improvements. What is the property worth if the value of a site is $150,000, the cost to build a new house is $300,000, the cost to build a new garage is $75,000, the value of site improvements including landscaping and the driveway are $75,000, and the physical depreciation factor is 20%? $525,000. 102.  When does demand have effect on value? There is purchasing power which enables the ability to buy the thing in demand. 103. What can the term “highest and best use” best be defined as? The use that creates the greatest net return. 104. Return on investment (ROI) comes in the form of profit. What does return of investment come in the form of? Depreciation. 105. What primarily leads to the vacancy rate of an apartment building under normal competitive conditions? Housing supply and demand in the area. 106. All of the following are forces that influence value EXCEPT _________. Demand. 107. What is the most common approach an appraiser uses in the appraisal of a single-family residence (SFR)? Market comparison. 108. What does an appraiser NOT consider when conducting an appraisal? The assessed value of a property. 109. A cost associated with home ownership is _________. Loss of interest on owner’s equity. 110. For real estate to depreciate, it must be ________? Improved. 111. John is considering an extensive modernization program for his old apartment building. Which of the following factors should his decision concentrate on? Effect on the net income. 112. Which of the following CANNOT be deducted to determine the net income in the capitalization process? Debt service. 113. All of the following are shown as expenses by a property owner EXCEPT _________. Depreciation. 114. What is NOT an essential element of value? Anticipation. 115. What is the first step in the appraisal process? Define the problem. 116. Who borrows money secured by a note and trust deed from a lender? Mortgagor. 117. As a matter of practice, what should Martha do with the deposit held in escrow? Deposit the funds with the court. 118. How much was the transfer tax? $426.80. 119. Harold is a mortgage banker. Jennifer is a mortgage broker. What is the difference between their duties and functions? Jennifer finds the loan. Harold funds it. 120. What is TRUE about the note rate on the mortgage in this case? The note rate will decrease and the principal amount will remain the same. 121. What is the value of a duplex if the monthly rent for each unit is $1,200 and the gross rent multiplier (GRM) is 12.5? $360,000. 122. What would the appraiser recommend first? A toxic waste report from the environmental protection agency (EPA). 123. Riley is employed to appraise a property. Analyzing the location of the property, Riley observes the property is situated behind other lots and is connected to the public street by a long and narrow driveway. What is this kind of lot referred to? What is this kind of lot referred to? Flag lot. 124. What is the best choice for Lupe? The Real Estate Recovery Fund. 125. Who lends mortgage money to a borrower? Mortgagee. 126.  What property style does this house have? Colonial. 127. Harvey has been employed to carry out a survey of raw land without public utilities situated outside of the city center. How many acres is the land if it is a quarter of a section? How many acres is the land if it is a quarter of a section? 160. 128. The first half of the current year’s tax bill is _________. $2,310. 129. What is this an example of? Valid purchase and resale of a property. 130. What is the person holding an option to buy property called? Optionee. 131. Which appraisal approach is used in this example? Market comparison approach. 132. What is the owner of a rental property called? Lessor. 133. Who is the holder of a note secured by a trust deed and entitled to the performance of the provisions in the trust deed? Beneficiary. 134. Which item is subject to the payment of sales and use tax? Furniture and fixtures of the business. 135. What is the minimum duration that brokers must retain copies of purchase agreements? 5 years. 136. Which of the following statements regarding a listing broker and a broker working as a property manager in CA is INCORRECT? Both brokers typically have a limited authority to bind their principals. 137. According to the California Real Estate Law, which of the following statements is CORRECT? You may pay a commission to a broker of another state. 138. Which of the following accurately describes the equipment William installed for the restaurant? William can remove this equipment from the property prior to the termination of the lease. 139. What is the maximum amount that can be paid out per judgment from the California Consumer Recovery Account? 50,000 for each transaction; and 250,000 for any one licensee. 140. Which kind of agency was established with the potential buyer? Implied agency. 141.  In California, which type of appraisal report is typically relied upon by a lender when financing the acquisition of a single-family residence? Summary Report. 142.  What is the mandatory number of Continuing Education hours that California Brokers are required to complete? 45 143.   What is the current status of the listing agreements at James's brokerage firm? James' mental incapacity terminates the listing agreements. 144. Under which act are the actions of two brokers who conspire to set uniform commissions and feesas well as allocate speci_c counties for their respective brokerage _rms' services, considered illegal in California? The federal Sherman Antitrust Act. 145.  Which of the subsequent claims is TRUE regarding Nancy's property improvements? None of the statements are correct. 146. Which state agency is authorized to address and prevent housing discriminationbased on race, color,sex, national origin, or ancestry in California? The Department of Fair Employment and Housing. 147. Which responsibility due only to the principal compels the listing broker to inform Steven of the unpaid child support? Disclosure 148. In California, it is necessary to disclose earthquake fault zones to potential buyers of specic properties. On average, how wide are earthquake fault zones in California? 0.25 miles wide. 149. Which laws hold the most significant influence over the housing and construction sectors in California? State Housing Law, Local building codes and Contractors License Law. 150. Which of the following entities serves as the regulatory body for licensees in California? DRE. Select all that apply: If a deed is valid it must be: Signed, Identify the property and parties involved, Witnessed Of the many expenses involved with owning a house, which of the following are tax-deductible? Real estate taxes, Mortgage interest The presence of lead paint in a home must only be disclosed if the home is being purchased using an FHA loan. False A transaction broker is known as a/an Intermediary, Nonagent, Facilitator Tenancy by the entirety is Ownership that's available only to married couples, tenancy by the entirety means that property may not be sold without the agreement of both parties. Which of the following types of discrimination are prohibited by the Fair Housing Act of 1968? Number of Children, Religion, National Origin As an agent you received $1,312.50 as commission for a referral fee. The listing agent paid 25% of her commission for the referral. The total commission paid was 6%, which was split equally between the listing and selling brokerage firms. If the listing agent was paid 50% of her firm's commission, what was the sale price of the property? $350,000 A person died testate. After an extensive search, no additional heirs were found. The person's real property would transfer by Devise. How much time must the parties to a real estate closing be given to review the HUD statement? 24 hours You referred a client to a lender. In return they sent you a thank you note with a $50 gift card to a local restaurant. Which law makes this kickback illegal? RESPA