Principles: End Of Course Lessons From Test

Front 1

In July, Easton bought Rothchild’s home through the listing
broker, McGrew. After a hard rain in November, the roof
developed a severe leak. Easton sued Rothchild and McGrew
for the cost of a new roof. Testimony in court revealed that
Rothchild mentioned the need for a new roof to Broker McGrew. McGrew did not tell Easton about the need for a new roof. What would most likely occur?

Buyer would collect from Seller; Seller would then seek recourse from __.

Back 1

Realtor

Front 2

On October 1, 2008, Garcia agreed to purchase Chan’s home. Both parties agreed that escrow would close on December 1, 2008, and that property taxes would be
prorated as of date of possession. On November 1, 2008, Chan paid the property taxes for the year 2008–2009. According to the escrow closing statement, Garcia paid Chan __ months worth of taxes.

Back 2

8 (yes, property tax proration starts on the day of acceptance, not the close of escrow)

Front 3

A __ relationship is not essential to form an agency.

Back 3

fiduciary

fiduciary is a result of agency, but not needed to form an agency

Front 4

A real estate agent must disclose all material facts to a seller
principal. Which of the following is considered a material
fact?
a. the buyer’s racial background
b. the agent’s knowledge of a pending better offer
c. the lender’s requirement that a buyer pay a loan fee
d. that the buyer has a medical problem

Back 4

b. the agent’s knowledge of a pending better offer

Front 5

In appraising improved property, the least important factor is
a. sales price.
b. highest and best use.
c. prices of comparables.
d. assessed value.

Back 5

d. assessed value.

Front 6

Studs are attached to rest upon the:
a. mud sill.
b. subfloor.
c. header.
d. sole plate.

Back 6

sole plate.

Front 7

Which of the following is an operating expense to be
subtracted from gross income when appraising a property
using the income approach?
a. interest payments
b. principal payments
c. property taxes
d. all of the above

Back 7

c. property taxes

ANYTHING but principal and interest payments can be subtracted

Front 8

26. A salesperson working for a broker had been wrongfully
selling information to a loan company. When the broker,
who had been using reasonable supervision, discovered this,
the salesperson was fired. Based upon the information given,
a. the broker is probably not liable if he or she had no
knowledge of the wrongdoing.
b. both the salesperson and the broker are liable.
c. there is no liability.
d. a salesperson is licensed

Back 8

b. both the salesperson and the broker are liable.

Front 9

(Fannie Mae) Federal National Mortgage __

(Ginnie Mae) Government National Mortgage __

(FHA) Federal Housing __

(DVA) Department of Veterans __

Back 9

Association
Association
Administration
Affairs

Front 10

Title insurance does not protect a buyer against
a. forgery in the chain of title.
b. lack of capacity of the grantor.
c. recorded easements.
d. zoning restrictions.

Back 10

d. zoning restrictions.

Front 11

30. If state housing codes conflict with local codes, usually:
a. state codes prevail.
b. local codes prevail.
c. the stricter of the two prevails.
d. the more lenient of the two prevails.

Back 11

c. the stricter of the two prevails.

Front 12

36. A real estate agent is asked to hold the buyer’s deposit
uncashed until acceptance of the offer by the seller. Upon the
seller’s acceptance, the agent must put the deposit in escrow
or in a trust fund or give the deposit to the seller within how
many business days?
a. 5
b. 3
c. 2
d. 1

Back 12

b. 3

Front 13

To claim depreciation, you must use the property in an __-producing activity (as a rental).

Back 13

income

Front 14

52. Covenants and conditions are frequently placed in deeds. If a
covenant or condition is breached, the enforcement is
a. more severe for a condition.
b. more severe for a covenant.
c. equal for both a condition and a covenant.
d. under current law neither can be enforced.

Back 14

a. more severe for a condition.

Front 15

53. Which of the following is not a fiduciary relationship?
a. broker to seller
b. trustor to beneficiary
c. attorney to client
d. attorney-in-fact to principal

Back 15

b. trustor (borrower) to beneficiary (bank)

Front 16

55. An owner plans to divide a parcel of land into nine parcels,
with the intention of selling three parcels per year for each
of the next three years. The owner:
a. must satisfy the Subdivision Map Act.
b. must report to the Real Estate Commissioner, but need
not conform to the Subdivision Map Act
c. must comply with the Subdivision Map Act and the
Subdivided Lands Act.
d. need not comply with any special law, as fewer than five
lots are being sold in any one year.

Back 16

c. must comply with the Subdivision Map Act and the Subdivided Lands Act.

TIP: transactions in CA must always comply with state laws; for those outside California, no.

Front 17

59. A corporation built a large tract of homes and hired a
handyperson to take care of the maintenance. The handyperson
was given extra compensation for showing the homes
on weekends to prospective buyers.
a. The corporation is not in violation of real estate
regulations.
b. The handyperson could be fined for showing homes
without a license.
c. As an employee, the handyperson does not need a license
to show homes.
d. All corporate employees and officers selling the homes
must be licensed.

Back 17

b. The handyperson could be fined for showing homes

Front 18

60. After a trustee’s sale, any money remaining after paying
lienholders and costs is remitted to the:
a. trustor.
b. trustee.
c. beneficiary.
d. mortgagor.

Back 18

a. trustor.

Front 19

63. As required by law and regulations, a real estate broker must
have a:
a. trust fund account.
b. trust fund logbook.
c. credit card for business use only.
d. both (a) and (b) are correct.

Back 19

b. trust fund logbook.

Front 20

64. Shay gives a quitclaim deed to Wilson for a parcel of real
estate. Wilson does not record the deed. Which of the following
is true?
a. Deed is invalid as between Shay and Wilson.
b. Deed is invalid as between Shay and Wilson, but valid to
subsequent recorded interest.
c. Deed is valid as between Shay and Wilson, but invalid as
to subsequent recorded interest without notice.
d. Deed is valid as between Shay and Wilson and valid as to
subsequent recorded interest without notice.

Back 20

c. Deed is valid as between Shay and Wilson, but invalid as
to subsequent recorded interest without notice.

Front 21

After a mortgage is executed and recorded, title:
a. remains with the mortgagor.
b. transfers to the mortgagee.
c. is given to the trustee.
d. remains with the trustor.

Back 21

a. remains with the mortgagor.

Front 22

67. A real estate contract by a married couple under the age of 18 is
a. void.
b. voidable.
c. unenforceable.
d. valid.

Back 22

d. valid.

Front 23

69. A buyer in a land project can rescind the purchase for any
reason and obtain a refund within
a. 3 days.
b. 5 days.
c. 10 days.
d. 14 days.

Back 23

d. 14 days.

Front 24

71. All of the following are contracts, except
a. escrow instructions.
b. a listing agreement.
c. a deed.
d. a deposit receipt.

Back 24

c. a deed.

Front 25

78. RESPA (Real Estate Settlement Procedures Act) requires
that certain lenders and/or closers must deliver a Uniform
Settlement Statement to the borrower and seller within
a. 10 days after the loan commitment.
b. 3 days prior to closing.
c. 5 days after closing.
d. on or before the date of closing.

Back 25

d. on or before the date of closing.

Front 26

80. An abstract of judgment can be recorded
a. in any county.
b. only in the county where the judgment is to be placed.
c. only in the county where the debtor has real property.
d. only in the county where the creditor resides.

Back 26

a. in any county.

Front 27

In a Deed of Trust there are three parties involved: the borrower, the lender, and a trustee. In a mortgage document there are only two parties involved, the borrower and the lender. In a Deed of Trust, the borrower conveys title to a __ who will hold title to the property for the benefit of the lender. The title remains in trust until the loan is paid.

Back 27

trustee

Front 28

86. If a borrower fails to make a loan payment, which financing
instrument would be to the borrower’s advantage?
a. deed of trust
b. mortgage
c. contract of sale
d. lease

Back 28

b. mortgage

Front 29

97. If a dispute arises during escrow and the buyer and seller
cannot agree, the escrow holder may legally:
a. file an interpleader action.
b. return all funds to the respective parties.
c. cancel the escrow.
d. do all of the above.

Back 29

a. file an interpleader action.

Front 30

Kevin, DO NOT select "all of the above" unless you can surely identify at least 2 correct choices.

Back 30

Do it

Front 31

__ acres = one square mile

Back 31

640

Front 32

100. An owner hired a broker to act as property manager and
collect rent from tenants. Rents are due on the first of the
month. On June 1, the broker collected rents from all but
one of the tenants. The next day, the owner died. On
June 2, the broker asked the remaining tenant for the rent.
The tenant refused to give the rent money to the broker. The
tenant:
a. must give the rent to the broker.
b. should not give the rent to anyone but the heirs or the court.
c. is in default by not giving the rent to the broker.
d. need not pay the rent.

Back 32

b. should not give the rent to anyone but the heirs or the court.

Front 33

101. Which of the following employment situations is primarily
concerned with the results, not the direction, of work?
a. employer–employee
b. jobber
c. independent contractor
d. agent

Back 33

c. independent contractor

Front 34

103. Which of the following is not issued by the Department
of Real Estate?
a. Real estate broker license
b. Prepaid rental listing license
c. Real estate sales license
d. Escrow license

Back 34

d. Escrow license

Front 35

106. An out-of-state developer wishes to sell lots to Californians.
All of the following apply, except that
a. sales agreements must carry a disclaimer approved by the
California Real Estate Commissioner.
b. advertising must carry a disclaimer approved by the
California Real Estate Commissioner.
c. the Subdivision Map Act will be enforced.
d. all of the above apply.

Back 35

c. the Subdivision Map Act will be enforced.

Front 36

115. Which of the following would violate the advertising
provisions of the Truth-in-Lending Law? Ads that state
a. no money down.
b. $100,000 all-cash sale.
c. $200,000 price, easy terms.
d. qualification for FHA financing.

Back 36

a. no money down.

Truth-in-Lending = Regulation Z = APR. Also, if one
financial term (such as interest rate or no money down) is mentioned, all financing terms (interest rate, monthly payments, length of loan, and so on) must be stated in the ad.

Front 37

122. A cloud on the title could be created by
a. a recorded homestead.
b. a deed of trust paid, but never reconveyed.
c. an easement for utility poles.
d. recorded covenants and conditions.

Back 37

b. a deed of trust paid, but never reconveyed.

Examples of clouds on title include:
- property's address being misspelled in the grant deed
- a mortgage lien whose repayment hasn't been officially recorded,
- a deed which hasn't been properly recorded,
- an easement that has not been properly recorded,
- unpaid property taxes,
- a failure to transfer property rights (such as mineral rights) to a former owner of the property
- a pending lawsuit over ownership to the property.

A cloud on title is generally considered synonymous with a title defect.

Front 38

126. The most important factor in estimating the value of residential homes is
a. square footage.
b. demand by ready, willing, and able buyers.
c. floor plan.
d. rent.

Back 38

b. demand by ready, willing, and able buyers.

Front 39

128. Once an abstract of judgment is recorded, it remains in
force for
a. 1 year.
b. 3 years.
c. 5 years.
d. 10 years.

Back 39

d. 10 years.

Front 40

131. The unauthorized use of the term REALTOR® is
a. a criminal offense.
b. a violation of California Real Estate Law.
c. not a problem if the person is a licensed broker.
d. not punishable in California.

Back 40

b. a violation of California Real Estate Law.

Front 41

141. In qualifying married buyers for a loan, the least important is
a. regular income.
b. spouse’s income.
c. monthly debts.
d. overtime pay.

Back 41

d. overtime pay.