Nv Re Practice Exam 1

Front 1

A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have?

Back 1

Correct answer - Tenancy at will.

Front 2

In every real estate transaction, a legal description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions?

Back 2

Correct answer - The same one used in prior transfers of the parcel, verified by a surveyor.

Front 3

Which is true of BOTH special assessments and ad valorem taxes?

Back 3

Correct answer - Delinquent payment is grounds for sale of the property.

Front 4

At the time of harvest, crops that require annual planting are generally considered to be

Back 4

Correct answer- personal property.

Front 5

An easement can be terminated by

Back 5

Correct answer- merger of titles.

Front 6

Timeshare ownership programs MOST often use which of the following ownership forms?

Back 6

Correct answer- Tenancy in common.

Front 7

Two lots of the same size are sold on a street. The lot on the corner sells for $20,000 more than the lot in the middle of the street. Which of the following characteristics MOST likely explains the price difference?

Back 7

Correct answer- Situs.

Front 8

Topic Area- Land Use Controls And Regulatons Total Topic Score- 7.0
A lawsuit for inverse condemnation may be brought by

Back 8

Correct answer- a homeowner.

Front 9

The terms "littoral," "riparian," and "appropriative" refer to

Back 9

Correct answer- water rights.

Front 10

If conditions for purchase are included in a deed and these conditions are violated, what is the penalty?

Back 10

Correct answer- Return of the property to the original owner.

Front 11

When a sewer line is installed down a rural road, the cost will probably be shared by

Back 11

Correct answer- all current owners of real estate fronting on that road.

Front 12

An Environmental Impact Statement (EIS)

Back 12

Correct answer- projects the impact on the environment of a proposed project.

Front 13

Which of the following BEST illustrates the concept and intent of a buffer zone?

Back 13

Correct answer- Garden apartments located between a single-family residential neighborhood and a shopping center.

Front 14

A deed restriction is applicable to the activities of

Back 14

Correct answer- all owners, present and future.

Front 15

Topic Area- Valuation And Market Analysis Total Topic Score- 7.0
If all other factors are equal, in which location is a parking lot likely to bring the highest sales price?

Back 15

Correct answer- Business district zoned for a six-story office building.

Front 16

When preparing a market data estimate of value, which of the following categories of adjustment is NOT essential?

Back 16

Correct answer- The original cost of the building.

Front 17

A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest

Back 17

Correct answer- a competitive market analysis to determine the property's value.

Front 18

All of the following are methods to calculate the reproduction or replacement cost of a building EXCEPT the

Back 18

Correct answer- straight-line method.

Front 19

The gross rent multiplier for a single-family home is calculated by dividing the sales price of the property by

Back 19

Correct answer- its gross monthly rent.

Front 20

An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than

Back 20

Correct answer- $250,000.

Front 21

Which of the following is NOT a consideration in the definition of market value?

Back 21

Correct answer- Buyer and seller must agree to appraised value.

Front 22

Topic Area- Financing Total Topic Score- 8.0
Which of the following statements about discount points is FALSE?

Back 22

Correct answer- They are computed as a percentage of the selling price.

Front 23

The FHA functions MOST like

Back 23

Correct answer- an insurance company.

Front 24

Regulation Z requires that the borrower be fully informed of all of the following EXCEPT

Back 24

Correct answer- the total interest.

Front 25

When the sellers are lending part of the purchase price, they may secure the debt either with a deed of trust or a mortgage. For the seller, one benefit of the deed of trust is that

Back 25

Correct answer- foreclosure is usually simpler and faster.

Front 26

A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to

Back 26

Correct answer- demand immediate payment of the entire note.

Front 27

When is flood insurance REQUIRED in order to obtain a loan?

Back 27

Correct answer- When the property is located in a Flood Hazard Zone.

Front 28

A loan which requires the borrower to pay interest only until the maturity date (or due date), and then to pay the entire principal on the maturity date, is called a

Back 28

Correct answer- term loan.

Front 29

The purpose of usury laws is to regulate

Back 29

Correct answer- interest rates charged by lenders.

Front 30

Topic Area- Laws Of Agency Total Topic Score- 10.0
Another term for the owner of a property listed with your firm is the

Back 30

Correct answer- client.

Front 31

A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when

Back 31

Correct answer- the seller accepts the offer.

Front 32

Which of the following events would AUTOMATICALLY cancel a listing agreement?

Back 32

Correct answer- Property owner's death.

Front 33

The amount of commission to be paid is

Back 33

Correct answer- agreed upon by the seller and agent on the contract.

Front 34

Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells it, a commission will be due. What kind of listing contract do the owners have?

Back 34

Correct answer- Exclusive agency listing.

Front 35

A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with

Back 35

Correct answer- the builder.

Front 36

The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that

Back 36

Correct answer- he is no longer the listing agent.

Front 37

A broker lists a property, with a listing contract allowing subagency and dual agency. One of the broker's salespersons shows the property. The salesperson would be classified as

Back 37

Correct answer- a subagent of the seller.

Front 38

A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship?

Back 38

Correct answer- Agency coupled with an interest.

Front 39

A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should

Back 39

Correct answer- tell the seller that the buyer will pay more.

Front 40

Topic Area- Mandated Disclosures Total Topic Score - 6.0
The real estate broker who is listing a house for sale should personally verify

Back 40

Correct answer- the number of square feet in the building.

Front 41

At the time of listing, the seller tells the listing agent they are moving because the neighbor has loud parties every weekend. The agent should

Back 41

Correct answer- tell potential buyers about the parties.

Front 42

Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of

Back 42

Correct answer- misrepresentation.

Front 43

A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should

Back 43

Correct answer- tell the seller to disclose the termite treatment on the property disclosure.

Front 44

The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA,

Back 44

Correct answer- require the buyer to acknowledge disclosure of the presence of any known lead paint.

Front 45

Which of the following is the first action to take when mold problems are found?

Back 45

Correct answer- Identify and remedy the cause of the problems.

Front 46

Topic Area- Contracts Total Topic Score- 10.0
A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called

Back 46

Correct answer- a contract.

Front 47

A couple signed a lease on an apartment for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term?

Back 47

Correct answer- No notice is required.

Front 48

A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if

Back 48

Correct answer- the owner withdraws the counteroffer before it is accepted.

Front 49

Two parties orally promise one thing, but write and sign something else. Which contract will prevail?

Back 49

Correct answer- The written contract.

Front 50

A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called

Back 50

Correct answer- an option contract.

Front 51

The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of

Back 51

Correct answer- impossibility of performance.

Front 52

Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE?

Back 52

Correct answer- Both contracts are valid.

Front 53

A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have?

Back 53

Correct answer- The buyer may sue the seller for specific performance.

Front 54

An agreement to purchase that has NOT yet closed is

Back 54

Correct answer- an executory contract.

Front 55

The purpose of requiring an earnest money deposit in a real estate sales contract is to

Back 55

Correct answer- provide evidence of the buyer's intention to carry out the contract.

Front 56

Topic Area- Transfer Of Property Total Topic Score - 7.0
The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing?

Back 56

Correct answer- Credit buyer $110,000 debit seller $110,000.

Front 58

At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing?

Back 58

Correct answer- Debit seller $300 credit buyer $300.

Front 60

A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given

Back 60

Correct answer- constructive notice.

Front 61

Which of the following is NOT usually prorated at closing?

Back 61

Correct answer- Special tax assessments.

Front 62

For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income?

Back 62

Correct answer- Mortgage loan interest, local property taxes, mortgage loan origination fees.

Front 63

In MOST states, foreclosed property is sold through

Back 63

Correct answer- public auction.

Front 64

MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and

Back 64

Correct answer- the sale price.

Front 65

Topic Area- Practice Of Real Estate Total Topic Score- 10.0
Antitrust laws prohibit competing brokers from all of the following EXCEPT

Back 65

Correct answer- receiving compensation from both the buyer and the seller.

Front 66

Earnest money should be deposited into a trust account

Back 66

Correct answer- in a timely manner, according to state laws.

Front 67

An agent shows a home to a couple and mentions that it has a lovely fireplace in the living room. After buying the home, the buyers and agent discover that the brick fireplace is just a decorative fireplace and is not "wood burning." Which of the following would BEST protect the agent from financial loss?

Back 67

Correct answer- E & O coverage.

Front 68

A landlord may legally refuse to rent to a prospective tenant if the tenant

Back 68

Correct answer- has ever been convicted of selling illegal drugs.

Front 69

The buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyer's agent who is drawing up the contract should

Back 69

Correct answer- suggest the buyer ask a lawyer to furnish the wording.

Front 70

The statement "this property has the most beautiful views in the neighborhood" is an example of

Back 70

Correct answer- puffing.

Front 71

A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not?

Back 71

Correct answer- No, because it is appropriate to show any property for which the buyer is qualified.

Front 72

According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the

Back 72

Correct answer- prepayment penalties and rebates.

Front 73

A managing broker can be held responsible for

Back 73

Correct answer- all real estate activities of salespersons.

Front 74

An equal housing opportunity notice MUST be

Back 74

Correct answer- displayed in the brokerage office.

Front 75

Topic Area- Real Estate Calculations Total Topic Score- 5.0
An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?

Back 75

Correct answer- None of the above.

Front 76

A buyer wants to purchase a home for $60,000 with a 15% down payment. The lender charges 2 points. How much money does the buyer need up front to make the purchase?

Back 76

Correct answer- $10,020.

Front 77

The sale of a home closed on October 16. Homeowners association fees of $500 for the current calendar year had already been paid. How much does the buyer owe the seller for these fees if the buyer pays for the day of closing? Use a 30-day month and a 360-day year, and round to the nearest cent.

Back 77

Correct answer- $104.17.

Front 78

Two buyers bought a house with a $178,000 mortgage. The interest rate is 6 1/2% per annum payable for 30 years. To the nearest dollar, what is their monthly principal and interest payment? (BE SURE TO USE THE AMORTIZATION TABLE.)

Back 78

Correct answer- $1,125

Front 79

A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent.

Back 79

Correct answer- $225.00

Front 80

Topic Area- Specialty Areas Total Topic Score - 3.0
A major reason for buying and owning a condominium rather than a detached single-family home is that

Back 80

Correct answer- a condominium tends to be more affordable.

Front 81

Too much leverage may result in

Back 81

Correct answer- negative cash flow.

Front 82

Ownership of common stock in a corporation gives

Back 82

Correct answer- an interest that is classified as personal property.