Cal-Real Exam 1.pdf

California Real Estate Salesperson Practice Exam 1 Total Questions: 150 1. Which of the following is considered real property? land 2. Agent rates of commission on sales of real property are negotiable between the principal and agent. 3....

California Real Estate Salesperson Practice Exam 1 Total Questions: 150 1. Which of the following is considered real property? land 2. Agent rates of commission on sales of real property are negotiable between the principal and agent. 3. Which is the usual method for commercial property valuation? capitalization rate 4. Which of the following does NOT warrant that the seller owns the property? quitclaim deed 5. The 1968 Fair Housing Act as amended EXEMPTS which of the following? rooms in owner-occupied residential units 6. Real property is NOT characterized by which of the following? that which is movable by law 7. There are several methods to legally describe land in California for purposes of sale, lease, or financing. Which of the following methods is NOT legal? county assessor’s parcel number 8. The U.S. Government Survey method uses which descriptors to identify property? tiers, ranges, and townships 9. Public controls of real estate and its uses is a police power of the state derived from which source? the U.S. Constitution 10. The exercise of littoral rights pertains to the use of lake water. 11. The next section number located just south of Section 33 in T4N, R3E Humboldt Base Line and Meridian is 4. 12. A monetary encumbrance on land is known as a lien. 13. A deed of trust filed at the county recorder’s office is an example of which of the following? a lien 14. The ownership “bundle of rights” includes All of the above. (possession, enjoyment, exclusion) 15. Mineral rights in the land pertain to all of the following EXCEPT Oil. is considered a “fungible” (meaning moving) 16. Ownership of personal property is transferred with which of the following? the sales receipt 17. A custom-made bookcase in a bookstore is an example of personal property when it is a trade fixture. 18. Covenants, conditions, and restrictions (CC&Rs) are private. 19. Which of the following is an example of personal property (as opposed to real property)? garden bench 20. A single individual who has never been married would most commonly hold title in real estate in which of the following? Severalty 21. The California Coastal Commission regulates California property boundaries located along the Pacific Ocean. Property boundaries are set by which of the following? The mean high tide line 22. The presence of lead-based paint in homes or condominiums built before 1978 is:  Required for both owner-occupied purchases and rental properties 23. The government reserves the right of eminent domain according to the 5th Amendment of the U.S. Constitution to take private land for public use. An example of the taking of property for public use would include which of the following? A highway bypass 24. A property owner has a lake existing completely within the property boundaries. The property owner has what rights to the water in the lake? Littoral rights 25. One acre of land is a common measurement in rural areas. An acre of land equals which of the following? 43,560 square feet 26. Is a 50-gallon solar water heater, costing $2,000 and requiring hours for installation, considered a fixture and therefore real estate? It depends on many factors, including the method of attachment. 27. Administration of the Subdivided Lands Act is the responsibility of which of the following? The California Department of Real Estate 28. A couple purchases a home together one week before their marriage. They may not hold title to the property in which of the following? Community property 29. A seller executes a grant deed to a buyer but does not record the document at the county recorder’s office. This real estate sale and property transfer is: Legal. 30. A life estate interest in real property is in effect for the remainder of the: C. life of a designated person 31. Which of the following is not a basic type of promissory note used to evidence a debt? A deed of trust 32. Which of the following financial terms is never expressed as a percentage? The principal 33. Examples of negotiable instruments include all except which of the following? United States savings bonds 34. A married man, James, buys a $300,000 condominium in Palm Springs. He secures a $250,000 fully amortized, 30-year loan from a mortgage broker. He pays the broker 1 point to reduce the interest rate to 2.654%. How much does James pay the broker? $2,500 35. Margaret Byer (vendee) has no down payment and is unable to secure a loan to purchase a house and barn on five acres. Carol Rivera (vendor) agrees to finance Margaret’s purchase using a land contract with a 20-year term. When will Margaret acquire title to the property? At such time as all the principal and interest are paid in full 36. The Truth in Lending Act (TILA) is a federal law as administered by the Federal Reserve (Regulation Z). It requires its lenders make certain disclosures to which of the following type(s) of borrowers? Consumers only 37. CalVet home loans and private sales contracts (land contracts) have one thing in common. What is it? Title transfers to the buyer once the entire loan principal and interest are paid. 38. There are three main types of lenders that finance real estate transactions. What kind of lender is fictional Donald Duck’s rich uncle, Scrooge McDuck? A non-institutional lender 39. A deed of trust is: A surety device 40. All licensed and registered mortgage loan originators (MLOs) in California may set their commissions: In accordance with the California Business and Professions Code. 41. In California, mortgage loan brokers can be licensed by which of the following? D. all of the above (the Department of Business Oversight (DBO), the Department of Real Estate (DRE), the California Finance Lenders (CFL) 42. Which of the following is used in California that makes real property collateral for a promissory note? A deed of trust 43. The greatest level of title insurance coverage is associated with which type of policy? An American Land Title Association (ALTA) policy 44. California Proposition 13: Allows for tax reassessment of real property for third-party sales. 45. The four unities of time, title, interest, and possession must be concurrent for parties to hold which of the following types of titles? Joint tenancy 46. Who can act as an agent when the buying and selling parties have agreed to an escrow for handling the paperwork and funds in a real estate transaction? A neutral third party 47. It is common for an escrow agent to prorate rents or property taxes as part of the escrow process. How many days is the basis of proration of monies? 30 days in the month regardless of the number of calendar days 48. “RESPA” is an abbreviation for an important law relating to the sale of one to four unit residential dwellings. “RESPA” stands for: The Real Estate Settlement Procedures Act. 49. Which of the following is NOT a method of transferring real estate title? A handshake 50. Individual California taxpayers can expect to pay income taxes on monies received from: Rental property. 51. Real estate commission for a property that is in probate is set by: Superior Court of California order. 52. Which of the following requires probate taxes and court costs including attorney’s fees? A holographic will 53. “Escheat” is the term that most closely relates to what process? The state taking assets if there is no will and no heirs 54. The underlying premise for all real estate property valuation is: Location. 55. The cost approach, also known as the replacement cost method, is most often used to value property for what purpose? Property insurance replacement 56. Real Estate Appraisers are licensed by the: California Bureau of Real Estate Appraisers (BREA). 57. The comparison approach (market data approach) is commonly used to value which of the following? A residential tract home for sale in order to secure a home loan 58. When do licensed real estate agents perform appraisals for home sellers? Never 59. In order for an appraisal report to comply with BREA guidelines, it must contain all of the following EXCEPT: The compensation paid for the appraisal. 60. Commercial property is valued by:  The gross rents it generates. 61. The proverb “A bird in the hand is worth two in the bush” is most closely associated with which financial concept? The time value of money 62. Simple interest as expressed in dollars earned on an investment can be calculated using which of the following formulas? P*R=I 63. The Truth in Lending Act requires all consumer, home loan, and refinance loan interest rates be published as: Annual percentage rate (APR). 64. California’s usury statute restricts the amount of interest that can be levied on any loan by a non-exempt lender to what annual interest rate? Ten percent rate 65. A financial analysis of the future cash flows from an investment property can be found on: A pro forma cash flow report. 66. What does “simple” mean in the term “simple interest?” It does not take the time value of money into the equation. 67. An individual invests $1 million in a $4 million dollar bottling plant and secures a 10-year, triple-net lease from a beverage company. Annual gross rents are $500,000 per year. Using the payback method, how long will it take for the individual to get the invested money back? Two years 68. A “seller’s market” occurs when prices for real estate rise due to: An increasing demand for real estate purchase or rent. 69. Conventional lenders look carefully at loan to value (LTV) ratios when considering the security for a new owner-occupied home loan. Other matters being equal, which of the following ratios would make a loan on an owner-occupied residential dwelling most attractive? 0.8:1 70. Jessica has a $250,000 30-year fully amortized loan at 4.25% secured by deed of trust. The loan was acquired to purchase her personal residence, where she has lived for 15 years. Jessica notices that interest rates on refinance loans have dropped to 2.85%. What should she do? Consider refinancing the remaining principal balance with a 15-year fully amortized loan to reduce her monthly payments 71. The “4 C’s” of qualifying for a real estate loan include all of the following EXCEPT: Character 72. Of the following institutional lenders, which has the greatest money available to lend for real estate–secured loans? Life insurance companies 73. Government-backed loans such as the Federal Housing Administration (FHA), U.S. Department of Housing and Urban Affairs (HUD), and U.S. Veterans Affairs (VA): Insure and guarantee loans.  74. A “4-3-2-1 depth table” would indicate what percentage of the value of the property is located in the front part of the parcel. This would apply to which of the following? Lake-front property in Lake Tahoe 75. The mudsill is what part of conventional construction? C. the treated lumber or plate through which the building is bolted to the foundation 76. An option agreement requires a minimum of how much value (money) to bind the contract? A nickel 77. Transfer of real property between parties must legally describe the property and the parties to the transfer of title in which of the following ways? On paper 78. Can a married person who has acquired sole and separate real property transfer the title without their partner’s consent? No 79. Licensed California real estate brokers may buy and sell promissory notes: With a special Department of Real Estate license endorsement. 80. The real estate listing agreement is: The personal property of the broker. 81. Dual agency agreements are Legal if disclosed, elected, and confirmed by both parties. 82. Elements of a real estate contract include all of the following EXCEPT Legal residence or citizenship in the United States. 83. May a non-emancipated minor own and enter into a contract to sell real estate? No; a non-emancipated minor may own real estate but cannot sell it. 84. Liquidated damages are limited to which of the following? 3% of the sale’s residential property contract price 85. Buyer and broker agreements include all of the following EXCEPT a(n) Gross listing. 86. What is the duration of a Residential Listing Agreement (Exclusive Authorization and Right to Sell)? Negotiable 87. May an agent request an advance fee? No, an agent can never request an advance on commission for any reason or purpose. 88. Those listings not published through the multiple listing service are known as “pocket listings” and are Unethical 89. The California Residential Purchase Agreement and Joint Escrow Instructions are also known as the Deposit receipt. 90. The listing agent is engaged by the seller to Procure a ready, willing, and able buyer. 91. When may an agent pay a finder’s fee to a licensed individual? for an introduction that is not a procuring reason for the sale 92. Commissions earned by the procuring real estate listing agent for residential 1- to 4-unit dwellings are negotiable. 93. The Transfer Disclosure Statement (TDS) for 1- to 4-unit owner-occupied residential dwellings is  Completed by both the property owner and agents. 94. The three steps of the agency disclosure law are all of the following EXCEPT Collect. 95. A fiduciary relationship exists between all of the following EXCEPT The agency staff. 96. The statute of frauds is a legal concept that states that all of the following must be in writing EXCEPT month-to-month rental agreements. 97. The California Law of Agency is entered into by an agent and principal By all of the above plus implied authority. express or written authority, by estoppels, by ratifi cation. 98. The California Megan’s Law disclosure is required for all residential real estate sales and property management contracts. 99. When an agent is in doubt of a probable material fact, it is always prudent to disclose in accordance with ethical professional conduct. 100. Month-to-month lease agreements need not be in writing. 101. An agent may terminate the agency agreement When asked to participate in discriminatory actions. 102. Commingling an agent’s personal funds with a client’s funds Could lead to civil prosecution. 103. A non-licensed agent acting as a principal’s attorney-in-fact may Sell the principal’s estate. 104. Easton v. Strassburger is a landmark 1984 California Court of Appeals decision that Greatly expands a real-estate broker’s liability for material fact disclosure. 105. A secret profit made by a licensed agent or a member of the agent’s family Is unethical and a breach of the fiduciary relationship. 106. If the seller in a real estate agreement unexpectedly dies, the listing agreement Is terminated. 107. A licensed California real estate agent wishing to do business in Lake Tahoe may Represent sellers and buyers only on the California side of the lake. 108. Errors and omissions insurance will cover which of the following errors in a real estate transaction? Minor or non-material errors in the sales document such as punctuation and spelling 109. What type of media may be used by a licensed real estate agent to place a blind advertisement? None 110. Newly licensed sales agents may begin their new profession Once the broker has notified the Department of Real Estate in writing of their affiliation. 111. When does title transfer to the new property owner? upon delivery and acceptance of the deed or constructive receipt of the deed 112. Misrepresentation of a material fact on the Transfer Disclosure Statement by the seller’s broker Exposes the broker to civil liabilities. 113. Agents must disclose their license number and broker affiliation on all of the following EXCEPT Personal correspondence. 114. A licensed real estate agent’s disclosure of agency relationship(s) may include any or all of the following EXCEPT The agent. 115. Fiduciary duties of a real estate agent acting on behalf of a seller include all of the following except the duty  To explain the impact of the seller’s disclosures to the buyer. 116. The Wire Fraud and Electronic Funds Transfer Advisory (WFA) is Now a mandatory disclosure. 117. The Department of Real Estate audit checks to see that the Exclusive Authorization and Right to Sell Agreement (RLA) includes a Specific end date. 118. The Sellers Advisory (SA) form includes a recommendation that the seller Obtain a professional inspection before the sale. 119. The California Association of REALTORS® (CAR®) multiple listing service (MLS) is California’s largest database and is key to Reaching the greatest number of potential buyers. 120. Disclosure or discussion of affliction with AIDS or of an AIDS-related death in the property May constitute prohibited discriminatory conduct. 121. Impound accounts for property insurance and property taxes are often found in which real estate professional’s accounting books of record? Lender’s accounts 122. Broker trust accounts Must not hold more than $200 of the broker’s personal funds. 123. The obligation to prepare the mandated and necessary disclosures is the responsibility of The seller and the seller’s agent. 124. The licensed broker of record has a legal duty to supervise The business activities of their licensed agents. 125. The real estate broker examination Has more questions than the salesperson exam. 126. The real estate broker and salesperson licenses require how many hours of continuing education for license renewal? 45 hours of approved continuing education every four years 127. Unlicensed sales associates are permitted to do which of the following at an open house? Greet visitors 128. Natural hazard disclosures regarding the property may include which of the following? Situation in a flood zone 129. Property managers for non-residential, transient, or resort properties are Exempt from California real estate licensing requirements. 130. Are real estate agents who manage their personal, owner-occupied 1- to 4-unit residential property exempt from the 1968 Fair Housing Act as amended? No 131. Which of the following statements about California residential property managers is true? A California real estate license is never required. 132. Who must visually inspect a residential property before purchase? The potential buyer may elect not to, but the seller and the buyers’ agents are required to visually inspect 133. The “parol evidence” rule states that The terms and conditions made in writing are the complete and final intention of the contracting parties. 134. Real estate agents may engage in the business specialty of dealing in real property securities such as promissory notes and sales contracts upon Securing a Real Property Securities Dealer (RPSD) endorsement to their broker’s license. 135. Novation is the process whereby A new contract is substituted for an old one. 136. Owner sales representation of a business opportunity including the sale of an existing liquor license (personal property) Is an allowed activity of a licensed real estate broker. 137. A member of the National Association of Real Estate Brokers (NAREB) is referred to as A REALTIST®. 138. Digital real estate forms and contracts are A common and standard method of contract and disclosure creation and delivery. 139. Do commercial and industrial properties have the same consumer protection disclosure requirements as residential, owner-occupied 1- to 4-unit dwellings? No, they do not. 140. Electronic signatures using computer software tools such as DocuSign® are Valid except when a notarized signature by a licensed notary public is required. 141. “Puffing” is when a real estate agent describes a All of the above. (Very small, cramped house as “cozy.”, Two-year-old roof as “new.”, Mediocre school system as “desirable.”) 142. The Unruh Civil Rights Act prohibits All the above. (Steering" in real estate practices, Blockbusting" in real estate practices, Any business establishment from discriminating on any arbitrary basis) 143. The real estate recovery fund is Limited to $50,000 per occurrence. 144. Licensed real estate brokers must retain all their agency records for a minimum of Three years. 145. The California Department of Real Estate Has the jurisdiction to revoke the license of an agent 146. The Department of Real Estate audits focus primarily on which sector? Property management 147. A pre-paid rental listing service (PRLS) as licensed by the Department of Real Estate provides A list of real estate property available for tenancy for a fee. 148. The public report issued by the Department of Real Estate is a Formal disclosure report of important facts about a new subdivision. 149. Is it adequate for a licensed real estate agent to conduct business in accordance with California state law? No 150. Residential lofts (zero-bedroom dwelling) are always considered Exempt from a consumer protection transfer disclosure statement and rental lead disclosure statement.