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REAL ESTATE FINAL EXAM 1
QUESTIONS WITH CERTIFIED ANSWERS
"A handicapped person moved into an apartment and at his own expense lowered the light switches, lowered the kitchen cabinets, installed handrails, and widened the doorways. At the expiration of the lease, which of the following would the tenant LEAST LIKELY have to return to its original condition? a. Light switches b. Kitchen cabinets c. Handrails
d. Doorways - CORRECT ANSWER doorways"
"Which of the following must be disclosed when an agent is showing a house? a. Mortgage balance b. The asking price of other homes in the neighborhood c. That the property is in a flood plain zone
d. Original cost of the property - CORRECT ANSWER That the property is in a flood plain
zone" "Broker Alma had a listing agreement to sell Noah's house. Noah found a buyer for the house and Alma collected the brokerage fee. The type of listing agreement Alma had is a(n) a. exclusive-right -to-sell listing. b. exclusive agency listing c. open listing
d. net listing - CORRECT ANSWER exclusive-right -to-sell listing"
"The federal Truth-in-Lending Act a. requires a lender to estimate a borrower's loan closing charges on all mortgages. b. regulates advertising that contains information regarding mortgage terms c. prevents brokers from using phrases like"FHA-VA financing available" in classified ads d. dictates that all mortgage loan applications be
made on specially prepared government forms. - CORRECT ANSWER regulates advertising
that contains information regarding mortgage terms" "Recording a deed provides the greatest benefit for the
a. grantor b. public c. attorney
d. grantee - CORRECT ANSWER grantee"
"Which of the following is NOT an example of a subdivision rule and regulation? a. The agreement that the property cannot be sold and used as a waste disposal site b. The agreement that a tree house cannot be built on the property c. The agreement that walls and fences shall not exceed four feet in height d. The agreement that no structure of a temporary
character shall be constructed on any lot - CORRECT ANSWER The agreement that the
property cannot be sold and used as a waste disposal site" "A seller wants to net $65,000 on his house after paying the broker's fee of 6 percent. What will the gross selling price be? a. $69, b. $68, c. $67,
d. $66,091 - CORRECT ANSWER $69,149"
"The value of a piece of land a. is the present worth of future benefits. b. includes a measure of past expenditures. c. is what a buyer pays for the property.
d. is the same as the sales price. - CORRECT ANSWER is the present worth of future benefits."
"Wilma is buying a condominium in a new sub-division and obtaining financing from a local savings and loan association. Which of the following BEST describes Wilma? a. Vendor b. Mortgagee c. Grantor
d. Mortgagor - CORRECT ANSWER Mortgagor"
"All of the following terminate an offer EXCEPT a. revocation of the offer before acceptance. b. death of the offeror before acceptance. c. a counteroffer by the offeree.
d. an offer from a third party. - CORRECT ANSWER an offer from a third party."
"If a mortgage on a house is 80percent of the appraised value and the mortgage interest of 8 percent amounts to $460 per month, what is the appraised value of the house? a. $86, b. $71, c. $69,
d. $92,875 - CORRECT ANSWER $86,250"
"A building is 100 feet by 150 feet and sits on a lot valued at $25,000. If the replacement cost of the property is $25 per square feet and it has depreciated 5 percent, what is the value of the property? a. $375, b. $381, c. $481,
d. $318,250 - CORRECT ANSWER $381,250"
"A, B and C are co-owners of property. When C dies testate, A and B are the devises to her one-half interest in the property. How do they own the property? a. Joint tenancy b. Tenancy in common c. Severally
d. Partnership tenancy - CORRECT ANSWER Joint tenancy"
"Which of the following is an example of a free-hold inheritable estate? a. Life estate b. Dower estate c. Estate at will
d. Fee simple defeasible estate - CORRECT ANSWER Fee simple defeasible estate"
"Tom and Sally moved into a condominium that boasted of many common facilities, including tennis courts, club house, work out room, and a putting green. Under a typical condominium arrangement, these common elements are owned by a. an association of homeowners in the condominium b. a corporation in which Frances and the owners of the other units own stock. c. the couple and the owners of the other units in the form of an undivided interest.
d. the couple and the owners of the other units in the form of divided interests. - CORRECT
ANSWER the couple and the owners of the other units in the form of an undivided interest."
"In a graduated-payment loan a. mortgage payments decrease b. mortgage payments balloon in five years. c. mortgage payments increase for a period of time and then level out.
d. the interest rate on the loan adjusts annually - CORRECT ANSWER mortgage payments
increase for a period of time and then level out." "Jack feels that he has been the victim of an unfair discriminatory practice by a local broker. His complaint must be filed with HUD within a. 3 months of alleged discrimination b. 6 months of alleged discrimination c. 9 months of alleged discrimination
d. 12 months of alleged discrimination - CORRECT ANSWER 6 months of alleged
discrimination" "A mortgage using both real and personal property as security is a a. blanket mortgage b. package mortgage c. dual mortgage
d. chattel mortgage - CORRECT ANSWER package mortgage"
"Tammy home is appraised at $75,000, she obtains a mortgage for $50,000 with two points, how much will she be charged by the lender at closing for the points? a. $1, b. $ c. $1,
d. $150 - CORRECT ANSWER $1,000"
"A borrower obtained a second mortgage loan for $7,000. The loan called for payments of $50 per month, including 6 percent interest over a period of five years, with the final installment made as a balloon payment including the remaining outstanding principal. What type of loan is this? a. Fully amortized loan b. Straight loan c. Partially amortized loan
d. Accelerated loan - CORRECT ANSWER Partially amortized loan"
"Sandy bought property in a secluded area adjacent to the Pacific Ocean. Shortly thereafter, he noticed that people form town often walked along the shore in front of his property. He later learned that the locals had been walking along this beach for years. Sandyl went to court to try to stop people form walking along water's edge in front of his property. Sandy is likely to be a. unsuccessful, because the local citizens were walking there before he bought the property, and thus had an easement. b. unsuccessful, because under the doctrine of littoral rights, he owns the property only to the high-water mark, and the public can use the land beyond that mark. c. successful, because of the doctrine of riparian rights
b. Dudley does not have to continue with the contract because Mary does not have the right to force Dudley to lose money. c. Dudley can force Mary to renegotiate the contract because of Dudley's mistake, if the mistake was reasonable. d. Dudley is liable for breach of contract if he fails to perform, and the fact that the job is more
difficult than Dudley had expected is irrelevant. - CORRECT ANSWER Dudley is liable for
breach of contract if he fails to perform, and the fact that the job is more difficult than Dudley had expected is irrelevant." "Allen offers to sell Naomi certain undeveloped land in the country and represents to her that a new freeway will run right by the land, even though Allen knows that the plans for the new freeway have been dropped. Naomi, relying on the representation, purchases the land from Allen. Under these circumstances. a. Allen can be forced to proceed with the sale even though there was fraud. b. the contract is voidable at the option of Allen. c. the misrepresentation automatically voids the contract d. Naomi must purchase the property and cannot
sue Allen for fraud. - CORRECT ANSWER Allen can be forced to proceed with the sale even
though there was fraud." "If the market value of a house is $84,500, the assessment ratio is 35 percent, and the tax rate is 30 mills, what are the monthly taxes? a. $887. b. $942. c. $73.
d. $87.72 - CORRECT ANSWER $73.94"
"Richard seeks relief from zoning regulations on the ground of nonconforming use. Effective arguments to the zoning authorities would include all of the following EXCEPT that a. the nonconforming use existed prior to the passing of the zoning ordinance. b. he would earn more by using the property for the purposes that don not conform with the zoning ordinance c. the nonconforming use didn't harm the public health, safety, and welfare
d. conforming to the zoning ordinance would create an undue hardship - CORRECT ANSWER
he would earn more by using the property for the purposes that don not conform with the zoning ordinance" "Jimmy and his neighbor both own irregularly shaped lots. To create a bird sanctuary, Jimmy would like to purchase part of his neighbor's property. If Jimmy has the properties surveyed, all of the following terms would most likely be found in the survey EXCEPT a. datum.
b. monument. c. point of beginning.
d. linear distance. - CORRECT ANSWER linear distance."
"What is the legal procedure or action that may be brought by ether the buyer or the seller to enforce the terms of a contract? a. Injunction b. Suit for specific performance c. Lis pendens
d. Attachment - CORRECT ANSWER Suit for specific performance"
"Which of the following contracts would become void on the death of one of the principals in the contract? a. Listing contracts and offers b. Listing contracts and sales contracts c. Listing contracts and deeds
d. Listing contracts and mortgage - CORRECT ANSWER Listing contracts and offers"
"Which of the following parties to a long-term ground lease is the holder of the leased fee? a. Lessor b. Lessee c. Grantee
d. Grantor - CORRECT ANSWER Lessor"
"Seller's broker was working with a buyer on an exclusive-authorization-to-sell-listing, and presented an offer at less than the listed price. At the same time, the owner was dealing with another buyer who offered more money for the property and all in cash. The owner sold to the buyer at the higher price for all cash. The broker is entitled to: a. a reasonable commission based upon the lower offer. b. stop the sale of the property. c. void the sale.
d. a commission based upon the higher selling price. - CORRECT ANSWER a commission
based upon the higher selling price." "Buying real property "subject to the mortgage" is: a. a type of conditional loan. b. a mortgage bought by FNMA and sold to GNMA. c. the taking of title to property by grantee with no personal responsibility for paying the mortgage loan.
"Which of the following parties is in the weakest position against a claim of title by a stranger? a. A non occupant holder of a warranty deed b. A non occupant holder of an unrecorded quit-claim deed c. One who holds an unrecorded deed d. One who holds a recorded quitclaim deed to
the property. - CORRECT ANSWER A non occupant holder of an unrecorded quit-claim deed"
"An easement may be canceled by all of the following except: a. the dominant estate b. the servient estate
c. merging both estates into one d. prescription - CORRECT ANSWER prescription"
"Deed restrictions are examples of: a. Zoning ordinances b. Police power c. Private control of land
d. Leaseholds - CORRECT ANSWER Private control of land"
"In any valid lease, the lessor by law gives an implied covenant of: a. quiet enjoyment b. satisfaction c. reconveyance
d. undue influence - CORRECT ANSWER quiet enjoyment"
"If a written rental agreement is used a.the agreement need not be signed to be enforceable b.the agreement must be signed by the party to be charged c.the Uniform Residential Landlord and Tenant Act requires only the landlord sign the agreement. d.the Uniform Residential Landlord and Tenant Act requires only the tenant sign the agreement.
CORRECT ANSWER the agreement must be signed by the party to be charged"
"A valid enforceable sales agreement must a. contain the grantor and grantee' s signatures. b. be written and delivered. c. be accompanied by an earnest money deposit.
d. be written and mailed. - CORRECT ANSWER be written and delivered."
"a. contract would become void. b. contract would be voidable by the seller only. c. contract would be voidable by the buyer.
d. buyer must be allowed additional time to meet the condition. - CORRECT ANSWER
contract would be voidable by the buyer." "When a seller wishes to convey title by means of a statutory deed form, the salesperson a. can advise the seller which deed form to use. b. can advise the buyer which tenancy to use. c. can help the seller fill in the blanks.
d. can fill it out for the buyer. - CORRECT ANSWER can help the seller fill in the blanks."
"A mortgage instrument may include a clause that prevents the assumption of the mortgage by a new purchaser without the lender's consent. What is this clause called? a. Alienation clause b. Power of sale clause c. Defeasance clause
d. Escalation clause - CORRECT ANSWER Alienation clause"
"Under a deed of trust on real property, the trustee is a. the owner of the property covered by the deed of trust. b. empowered to foreclose upon default after advertising the sale. c. the equitable owner of the property.
d. the holder of the grant deed. - CORRECT ANSWER the owner of the property covered by
the deed of trust." "To be a valid lien against a parcel of real estate a deed of trust must be signed by: i. Trustee ii. Trustor iii. Beneficiary a. Only i. b. Only ii. i. and ii.
ii. and iii. - CORRECT ANSWER Only ii."
"A deed of trust loan must include a power of sale clause to be foreclosed by a. Advertising the sale b. Law suit c. Judicial procedure
d. the FHA - CORRECT ANSWER Advertising the sale"
"Money for tax and insurance payments that accompanies principal and interest could be placed in any of the following accounts EXCEPT a. suspense funds account
"A licensed real estate broker a. becomes an agent the vendee upon obtaining a valid listing. b. can disclose any truthful information received from the principal. c. becomes an agent of the vendor when a buyer is found.
d. must disclose all material facts to the principal. - CORRECT ANSWER must disclose all
material facts to the principal." "How many acres are in the S1/2 of the NW 1/4 of the SE 1/4 of a section? a. 10 b. 20 c. 40
d. 120 - CORRECT ANSWER 20"
"Sandy and Gary, who are not married, jointly own a parcel of real estate. Each owns an undivided interest. Sandy' s share is two-thirds and Gary' s share is one-third. This form of ownership is a. tenancy in common. b. joint tenancy. c. tenancy by the entirety.
d. community property ownership. - CORRECT ANSWER tenancy in common."
"Sam leases a property to Henry under an oral one-year lease. If Henry defaults, Sam may a. not bring court action because of parol evidence rule. b. not bring court action because of the statue of frauds. c. bring a court action because of one-year leases need not be in writing to be enforced.
d. bring a court action because the statue of limitations does not apply to oral leases. - CORRECT
ANSWER bring a court action because of one-year leases need not be in writing to be enforced."
"Acceleration is a term associated with which of the following? a. Listings b. Sales contracts c. Mortgages
d. Leases - CORRECT ANSWER Mortgages"
"The federal Fair Housing Act 1968 makes it illegal to discriminate because of a. age. b. marital status. c. public assistance.
d. religion. - CORRECT ANSWER religion"
"Broker Allen enters into a listing agreement with seller Bennett wherein Bennett will receive $12,000 from the sale of a vacant lot and Allen will receive any sale proceeds over and above that amount. The type of listing agreement into which Allen and Bennett entered is a. called a gross listing. b. a highly popular method of listing property in most states. c. called an exclusive agency
d. called a net listing - CORRECT ANSWER called a net listing"
"If the annual net income form certain commercial property is $22,000 and the capitalization rate is 8 percent, what is the value of the property using the income approach? a. $275, b. $176, c. $200,
d. $183,000 - CORRECT ANSWER $275,000"
"A real estate sales contract becomes valid or in effect when it has been signed by which of the following? a. Buyer b. Buyer and seller c. Seller
d. Broker and seller - CORRECT ANSWER Buyer"
"All of the following situations are in violation of the federal Fair Housing Act of 1968 EXCEPT the a. refusal of property manager Joe Kelley to rent an apartment to a Catholic couple who are otherwise qualified. b. general policy of the Locust Loan Company, which avoids granting home improvement loans to individuals "changing" neighborhoods. c. intentional neglect of a broker Harvey Hall to show a black family any property listings of homes in all-white neighborhoods.
d. insistence of Agnes Taylor, a widow, on renting her spare bedroom only to another women. -
CORRECT ANSWER insistence of Agnes Taylor, a widow, on renting her spare bedroom only
to another women." "A licensed salesperson is authorized by law to a. sign a closing statement b. collect a commission directly from a principal for performing assigned duties. c. advertise listed property under his or her own name.
d. It belongs to L ' s heirs until the death of M. - CORRECT ANSWER It belongs to L ' s heirs
until the death of M." "A subdivision has a deed restriction that does not allow tree houses. An architect moves into the subdivision and builds a tree house in the back yard. How many neighbors will it take to enforce the deed restriction and what action should be taken? a. 75 percent of the neighbors must sign a petition that will be given to the local zoning board for enforcement. b. Only one neighbor needs to take action through the local zoning board. c. Only one neighbor needs to take action through the court system.
d. 75 percent of the neighbors must take action through private court action. - CORRECT
ANSWER Only one neighbor needs to take action through the court system."
"A developer discovers that a proposed swimming pool in a condominium community meets all local zoning requirements except for the side yard line on one side of the clubhouse. What should the developer do? a. Because its only on one side of the clubhouse, no action is necessary on the part of the developer. b. The developer should file for a variance with the local zoning board. c. The developer should file for a nonconforming use with the local zoning board. d. The developer should continue with the construction and later file for an adverse possession
claim to the property. - CORRECT ANSWER The developer should file for a variance with the
local zoning board." "Which of the following situations would terminate a listing agreement without legal liability? a. Death of the agent b. Destruction of the broker' s office c. Death of the seller
d. Bankruptcy of the agent - CORRECT ANSWER Death of the seller"
"Which of the following statements in NOT true? a. A land contract is also known as an installment contract. b. If a time for performance is not stated in a contract, the duties are expected to be performed within a reasonable time. c. An equitable title is transferred when the deed is signed by the grantor at the closing table. d. Liquidated damages are agreed to in advance by the buyer and seller to compensate one party if
the other does not live up to the contract. - CORRECT ANSWER An equitable title is
transferred when the deed is signed by the grantor at the closing table." "Because the cost of clean-up and removal of hazardous waste can be greater than the value of the property, an agent is expected to have a. technical expertise in possible hazardous substances.
b. technical expertise in the area of asbestos, which is present in so many buildings. c. taken a class on how to identify asbestos,because it is present in so many buildings. d. a basic knowledge of hazardous substances and be aware of environmental issues in a real
estate transaction - CORRECT ANSWER a basic knowledge of hazardous substances and be
aware of environmental issues in a real estate transaction" "The primary objectives of a property manager are to a. generate the highest net operating income of the property while maintaining preserving the owner's investment. b. secure tenants by offering the lowest possible rents that the budget allows. c. negotiate contracts with service providers that give the manager the most advantageous kickbacks.
d. cut expenses in any way necessary to generate a profit for the owner. - CORRECT ANSWER
generate the highest net operating income of the property while maintaining preserving the owner's investment." "A lease with a definite beginning, a definite ending, and no notice is required to terminate the lease is a (n) a. estate for years. b. periodic tenancy. c. estate at will
d. estate at sufferance - CORRECT ANSWER estate at will"
"A tenant entered into a three-year lease that was an estate for years agreement. On the termination of the lease agreement, the tenant remained in possession of the property. Which of the following is true? a. I the landlord accepted payment for another month, the original lease automatically renewed for another term. b. The landlord could evict the tenant or treat the holdover tenant as a periodic tenancy. c. The tenant had the right to remain in the property because the landlord did not give proper notice. d. The tenant had the right to remain in property because the landlord does not have it rented to
anyone anyway. - CORRECT ANSWER The landlord could evict the tenant or treat the
holdover tenant as a periodic tenancy." "Which of the following is NOT a requirement for a valid lease? a. Offer and acceptance b. Description of the leased premises c. Capacity to contract
d. An option agreement - CORRECT ANSWER An option agreement"
"What is the MAJOR DIFFERENCE between constructive notice and actual notice? a. Constructive notice is a direct knowledge, while actual notice is legal notice. b. Constructive notice is documented at an attorney's office, while actual notice is documented through the newspapers. c. Constructive notice provides protection because it is recorded by an attorney, while actual notice can be recorded by an agent. d. Constructive notice is notice that the law presumes we have, while actual notice is what a party
actually knows. - CORRECT ANSWER Constructive notice is notice that the law presumes we
have, while actual notice is what a party actually knows." "Which of the following is NOT true regarding RESPA? a. RESP A requirements apply when a residential purchase is financed by a federally related mortgage loan. b. RESPA was enacted to eliminate kickbacks and other referral fees that increase the cost of settlement. c. RESPA requires that a good-faith estimate of settlement costs be provided to the buyer within two days of loan application. d. The settlement statement must be made available for inspection by the borrower at or before
settlement. - CORRECT ANSWER RESPA requires that a good-faith estimate of settlement
costs be provided to the buyer within two days of loan application." "Robert and Dorothy, no longer needing their large house, decide to sell the house and move into a cooperative apartment building. Under the cooperative form of ownership, Robert and Dorothy will a. become stockholders in a corporation. b. never lose their apartment if they pay their share of the cooperatives's taxes. c. take out a new mortgage on their unit.
d. receive a 20-year lease for their unit. - CORRECT ANSWER become stockholders in a
corporation." "Which of the following is NOT an example of a legal description? a. Geodetic survey b. Lot and block c. Metes and bounds
d. Torrens system - CORRECT ANSWER Torrens system"
"Carrie is buying a single-family home for investment purposes. The appraiser will MOST LIKELY use which method to appraise the property? a. Income b. GIM
c. Cost
d. Market data - CORRECT ANSWER Income"
"In appraising a residential property, the appraiser would make a a. positive adjustment to the subject property if the subject property had an amenity the comparable did not. b. negative adjustment to the subject property if the subject property had an amenity the comparable did not. c. positive adjustment to the comparable property if the subject property had an amenity the comparable did not. d. negative adjustment to the comparable property if the comparable property did not have an
amenity the subject property had. - CORRECT ANSWER positive adjustment to the subject
property if the subject property had an amenity the comparable did not." "Which of the following terms is associated with real estate property taxes? a. Caveat emptor b. Caveat venditor c. Annuit coeptis
d. Ad valorem - CORRECT ANSWER Ad valorem"
"A lender charged $4,000 in discount points on a $100,000 loan. How many discount points were charged? a. 1 b. 10 c. 4
d. 40 - CORRECT ANSWER 4"
"A borrower negotiated a 90 percent loan and the lender is charging two points. If his offer of $190,000 is accepted, what is the minimum cash he will need to close? a. $22, b. $19, c. $25,
d. $22,240 - CORRECT ANSWER $22,420"
"Buyer and seller agree to the purchase of a house for $200,000 in which the buyer will make a $30,000 down payment and the seller will take back a ten-year purchase money mortgage for the balance. There is nothing in the contract to indicate that time is of the essence. The sales contract will be valid for which of the following? a. Closing date b. Interest rate c. Signatures on the contract
d. Term of loan - CORRECT ANSWER Interest rate"
