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604 Cards in this Set

  • Front
  • Back
When demand decreases and supply remains the same
a. prices tend to rise.
b.  prices tend to fall.
c. prices are not affected.
d. the market becomes stagnant
b. prices tend to fall.
A licensed real estate professional acting as a point of contact between
two or more people in negotiating the sale, rental or purchase of a
property is known as a(n)
a. sales affiliate.
b. broker.
c. property manager.
d. appraiser.
b. broker
. Which of the following would NOT affect supply?
a. Population
b. Construction costs
c. Government controls
d. The labor force
A. population
Which of the following is NOT a category of the uses of real property?
a. Residential
b. Developmental
c. Agricultural
d. Industrial
b. developmental
Which of the following would NOT affect demand
a. Population
b. Demographics
c. Wage levels
d. Fiscal policy
d. Fiscal policy
Which of the following does NOT affect how quickly the forces of
supply and demand work?
a. Degree of standardization of the product
b. Mobility of the product
c. Degree of standardization of the product’s price
d. Mobility of the parties to the transaction
d. Mobility of the parties to the transaction
The point at which supply and demand are balanced is known as
a. highest and best use.
b. balance.
c. conformity.
d. equilibrium.
d. equilibrium.
When the supply of a commodity decreases
a. prices tend to rise.
b. prices tend to drop.
c. demand tends to rise.
d. demand tends to drop
a. prices tend to rise.
. A broker responsible for maintaining a client’s property while maximizing
income return is
a. a rental agent.
b. a building maintenance specialist.
c. a property manager.
d. an investment counselor
c. a property manager.
. The study and description of the people in a community is called
a. population.
b. demographics.
c. family lifestyles.
d. households.
b. demographics.
. The phrase “bundle of legal rights” is properly included in
a. the definition of real property.
b. a legal description.
c. real estate transactions.
d. leases for less than one year.
a. the definition of real property.
. Which of the following is NOT included in one’s right to control
their property?
a. The right to invite people on the property for a political fundraiser
b. The right to exclude the utilities’ meter reader
c. The right to erect “no trespassing” signs
d. The right to enjoy pride of ownership
b. The right to exclude the utilities’ meter reader
According to law, a trade fixture is
a. a fixture.
b. an easement.
c. personalty.
d. a license.
c. personalty.
K is interested in a house that fits most of her needs, but it is located
in a busy area where she is not sure where she wants to live.
Her concern about the property’s location is called
a. physical deterioration.
b. area preference.
c. permanence of investment.
d. immobility.
b. area preference.
Which of the following is considered to be personal property?
a. Wood-burning fireplace
b. Awnings
c. Bathtubs
d. Patio furniture
d. Patio furniture
Which of the following is NOT meant by the word “improvement”?
a. Streets
b. A sanitary sewer system
c. Trade fixtures
d. The foundation
c. Trade fixtures
Real property can become personal property by
a. severance.
b. purchase.
c. hypothecation.
d. attachment.
a. severance.
Which of the following is NOT a physical characteristics of land ?
a. Indestructibility
b. Uniqueness
c. Immobility
d. Scarcity
d. Scarcity
A broker showed an owner-occupied property that had window
screens, venetian blinds and a wall bed. The broker secured a
buyer whose offer was accepted by the owner, and the transaction
was placed in escrow. Before the close of escrow, the seller may remove
a. all of the identified items as they are trade fixtures.
b. only the venetian blinds as personal property.
c. only the wall bed because it is real property.
d. none of the identified items.
d. none of the identified items.
Land is considered to be
a. indestructible.
b. a wasting asset.
c. immune to the forces of supply and demand.
d. subordinate to real property rights
a. indestructible.
A rancher owns a parcel of land on which oil was discovered.
If the rancher has not previously conveyed the oil rights, who owns the oil?
a. The rancher
b. The tenant to whom the property has been leased
c. The state government
d. The federal government
a. The rancher
Certain items on the premises that are installed by the tenant and are
related to the tenant’s business are called
a. fixtures.
b. emblements.
c. trade fixtures.
d. easements.
c. trade fixtures.
Which of the following is NOT described as personal property ?
a. Chattels
b. Trade fixtures
c. Emblements
d. Fixtures
d. Fixtures
Fixtures are
a. real property.
b. chattels.
c. removable by a tenant before the expiration of the lease.
d. removable by a tenant after the expiration of the lease.
a. real property.
After the construction of a building over a railroad right-of-way,
the trains can
a. operate as usual.
b. no longer use the tracks under the building.
c. use the tracks under the building only if they cause no problem
for the building’s occupants.
d. use the tracks under the building as long as they first obtain the
building owner’s permission.
a. operate as usual.
Which of the following is NOT an economic characteristic of land ?
a. Scarcity
b. Permanence of investment
c. Uniqueness
d. Area preference
c. Uniqueness
Generally, personal property can be distinguished from real property by its
a. greater variety.
b. mobility.
c. price.
d. multiplicity of use.
b. mobility.
An important characteristic of land is that it may be modified or
improved at any given time. Depending on its type, an improvement
may increase the value of real estate greatly. Which one of the
following would NOT be considered to be an improvement ?
a. Sewers
b. Crops
c. Buildings
d. Roads
b. Crops
T leases store space to K for a restaurant, and K installs his ovens,
booths, counters and other equipment. When do these items become
real property?
a. When they are installed
b. When K defaults on his rental payments
c. When the lease takes effect
d. When the lease expires
d. When the lease expires
The geographic location of any parcel of land
a. can be changed as some substances are removable from the land.
b. can never be changed.
c. can be changed because the topography can be changed.
d. can be changed only under certain legal circumstances.
b. can never be changed.
Legally, the term improvements when referring to real estate would include
a. shrubbery.
b. trees.
c. sidewalks.
d. lawns.
c. sidewalks.
Which of the following is NOT a test of determining a fixture?
a. Intent of the parties
b. Size of the item
c. Method of attachment of the item
d. Adaptation of the item to the real estate
b. Size of the item
The owner of a house wants to fence the yard for her dog. When the
fence is erected, the fencing materials are converted to real estate by
a. severance.
b. annexation.
c. immobility.
d. indestructibility
b. annexation.
The physical characteristics of land include which of the following?
a. Uniqueness
b. Scarcity
c. Permanence of investment
d. Adaptation
a. Uniqueness
The rights of ownership of real property do NOT include the right of
a. disposition.
b. exclusivity.
c. control.
d. compatibility.
d. compatibility.
Which of the following is considered to have the greatest impact on the
value of a property?
a. Area preference
b. Permanence of investment
c. Scarcity
d. Uniqueness
a. Area preference
The foremost consideration in the purchase of a home is its affordability.
What is the second?
a. Construction specifications
b. The age of the improvements
c. The location of the property
d. The landscaping and exterior
c. The location of the property
The real cost of owning a home includes certain costs or expenses that
many people overlook. Which of the following is NOT such a cost/expense?
a. The income lost on cash invested in the home
b. The interest paid on borrowed capital
c. Maintenance and repair expenses
d. Personal property taxes
d. Personal property taxes
M listed her real estate for sale at $100,000. If her cost was 80 percent
of the listing price, what will her percentage of profit be if her real estate
is sold for the listing price?
a. 10 percent
b. 15 percent
c. 20 percent
d. 25 percent
d. 25 percent
Most homeowner’s insurance policies contain which of the following clauses?
a. A property improvement clause
b. A coinsurance clause
c. A co-ownership clause
d. A property devaluation clause
b. A coinsurance clause
The value that an owner has in the property that exceeds the amount
of the mortgage debt is called
a. equality.
b. escrow.
c. surplus.
d. equity.
d. equity.
One of the expenses the homeowner may NOT deduct when
preparing his annual income tax return is
a. real estate taxes.
b. mortgage interest on a first home.
c. mortgage interest on a second home.
d. mortgage interest on a third home
d. mortgage interest on a third home
In the event that a homeowner’s insurance policy provides
coverage for less than 80 percent of the full replacement cost
of the dwelling, then the loss of the residence will be settled for
a. the market value of the property less the land value.
b. the lowest repaid bid.
c. either the actual cash value or the prorated repair cost.
d. the total replacement cost.
c. either the actual cash value or the prorated repair cost.
The Ls sold their vacation home for $88,000. If they made a profit
of 10 percent, what was the original cost of the property?
a. $61,000
b. $79,000
c. $79,200
d. $80,000
d. $80,000
One factor that would NOT affect the desirability of the location of
a residence would be
a. retirement prospects.
b. employment opportunities.
c. social services.
d. cultural advantages.
a. retirement prospects.
The selling price of a property is $96,000. This can be financed if t
he buyer can put 10 percent down and pay a loan origination fee of
1.5 percent. How much cash must the buyer produce to complete
this transaction?
a. $10,080
b. $10,896
c. $11,040
d. $11,084
b. $10,896
Federal income tax law excludes gain realized on the sale of a primary
residence for singles and couples. The amount of the exclusion is (single/couple):
a. $100,000/$200,000
b. $125,000/$250,000
c. $250,000/$500,000
d. $300,000/$600,000
c. $250,000/$500,000
Which of the following is NOT covered in a basic homeowner’s policy?
Damage caused by
a. fire and lightening.
b. vandalism.
c. windstorm and hail.
d. flooding waters.
d. flooding waters.
Federal income tax regulations allow a homeowner to reduce his or her
taxable income by amounts paid for
a. repairs and maintenance.
b. hazard insurance premiums.
c. real estate taxes.
d. principal and interest
c. real estate taxes.
A longer mortgage loan term will
a. decrease the number of loans being made.
b. result in lower monthly mortgage payments.
c. prevent many individuals from owning homes.
d. cause interest rates to increase
b. result in lower monthly mortgage payments.
. The buyer of a $125,000 home has paid $2,000 as earnest
money and has a loan commitment for 70 percent of the purchase
price. The balance of the cash the buyer needs to complete the
transaction is
a. $3,500.
b. $35,500.
c. $37,000.
d. $37,500
b. $35,500.
A homeowner who wishes coverage greater than that provided
by a basic insurance policy may choose a broad-form policy for
coverage of which of the following additional perils?
a. Flood or earthquake
b. War of nuclear explosion
c. Falling objects
d. Volcanic eruption
c. Falling objects
Mr. and Mrs. H have been living in their condominium at the shore
for the past 4 years and leasing the house that they bought 25 years
ago to a tenant. When they sell their house, how much of the capital
gain will be taxable?
a. 0 percent
b. 40 percent
c. 50 percent
d. 100 percent if it is less than $500,000
d. 100 percent if it is less than $500,000
The federal tax provisions allowing for the exclusion of a certain level
of capital gain from taxation applies if the home is
a. single family.
b. condominium.
c. part of a pud.
d. any of the above.
d. any of the above.
The real estate broker’s responsibility to keep the principal informed
of all of the facts that could affect a transaction is the duty of
a. care.
b. disclosure.
c. obedience.
d. accounting.
b. disclosure.
Which of the following would be considered to be a dual agency?
a. The broker acting for both the buyer and the seller in the
same transaction
b. Brokers cooperating with each other
c. The broker representing different principals
d. The broker listing and selling the same property
a. The broker acting for both the buyer and the seller in the same transaction
The relationship of a broker to his or her client is that of a(n)
a. trustee.
b. subagent.
c. fiduciary.
d. attorney in fact.
c. fiduciary.
A real estate broker acting as the agent of the seller
a. is obligated to render faithful service to the principal.
b. can disclose the seller’s minimum price.
c. should present to the seller only the highest offer for the property.
d. can accept an offer on behalf of the seller.
a. is obligated to render faithful service to the principal.
Statements by a real estate licensee exaggerating the benefits of a
property are called
a. polishing.
b. puffing.
c. prospecting.
d. marketing.
b. puffing.
A broker is permitted to represent both the seller and the buyer in the
same transaction when
a. the principals are not aware of such action.
b. the broker is a subagent rather than the agent of the seller.
c. commissions are collected from both parties.
d. both parties have been informed and agree to the dual representation.
d. both parties have been informed and agree to the dual representation.
Which of the following would NOT be considered fraudulent practice?
a. Deceitful or dishonest practices.
b. Exaggerated statements about the property.
c. Omitted statements of material fact.
d. Misstatements about the property
b. Exaggerated statements about the property.
As an agent for the seller, a real estate broker can
a. guarantee a prospective buyer that the seller will accept an offer
at the listed price and terms.
b. solicit an offer to purchase the property from a prospective buyer.
c. advise a prospective buyer of the best manner of taking title
to the property.
d. change the terms of the listing contract on behalf of the seller.
b. solicit an offer to purchase the property from a prospective buyer.
A seller has listed her home with a broker for $90,000, and the broker
tells a prospective buyer to submit a low offer because the seller is desperate
to sell. The buyer offers $85,000 and the seller accepts it. In this situation,
a. the broker has violated his agency relationship with the seller.
b. the broker was unethical, but the seller did get to sell her property.
c. the broker acted properly to obtain a quick offer on the property.
d. any broker is authorized to encourage such bids for the property
a. the broker has violated his agency relationship with the seller.
When Broker H was told by his principal not to advertise
her property in the XYZ newspaper, which was out of the area,
Broker H complied because he
a. had never advertised in the XYZ newspaper anyway.
b. must obey the lawful instructions of his principal.
c. was NOT intending to advertise the property at all.
d. is allowed to advertise only in local newspapers.
b. must obey the lawful instructions of his principal.
. It is the duty of an agent to disclose to the principal every
step taken in the transaction of the principal’s business.
This is because the
a. commission can be adjusted up or down according to
the agent’s efforts.
b. agent has fiduciary obligations to the principal.
c. terms of the listing contract require the agent to do so.
d. terms of the purchase contract require the agent to do so.
b. agent has fiduciary obligations to the principal.
Upon discovering a latent defect in the property, the licensee
should discuss the problem with the seller and then
a. notify the seller that the defect must be repaired.
b. arrange for the repairs himself or herself.
c. inform any prospective buyers of the defect.
d. contact the city building inspector about the defect
c. inform any prospective buyers of the defect.
A landowner subdivides his acreage and offers the lots for sale.
Broker E tells the landowner that she can sell the lots. After Broker
E sells some of the lots, the landowner refuses to pay her a
commission. Broker E can
a. report the landowner to the real estate licensing authorities.
b. file a lien against the landowner’s remaining lots.
c. sue the landowner for breach of contract.
d. do nothing.
d. do nothing.
A salesperson who is employed by a broker told a prospective
buyer that the house she was looking at is “the best house in the
area.” Because of this statement
a. the salesperson was guilty of fraud.
b. the broker was guilty of fraud because the employing broker is
responsible for the actions of the salesperson.
c. the salesperson was guilty of puffing.
d. the salesperson would be guilty of fraud only if the buyer purchased
the house.
c. the salesperson was guilty of puffing.
Which of the following best defines the “law of agency?”
a. The selling of another’s property by an authorized agency
b. The rules of law that apply to the responsibilities of a person who
acts for another
c. The principles that govern one’s conduct in business
d. The rules and regulations of the state’s licensing agency
b. The rules of law that apply to the responsibilities of a person who acts for another
. A broker who is the agent of the buyer should do which of the following?
a. Disclose to the seller that the buyer is a minority person
b. Disclose to the seller the maximum price the buyer is willing to pay
c. Present to the seller only offers that are acceptable
d. Advise the buyer if the listing price of the seller’s house is unrealistic
d. Advise the buyer if the listing price of the seller’s house is unrealistic
A salesperson sells a buyer a property listed by another brokerage firm
in the MLS. The salesperson has been working with the buyer for many
months but does not have an agency contract with the buyer. This
salesperson has fiduciary obligations to
a. the seller.
b. the buyer.
c. no one.
d. the public.
a. the seller.
A buyer who is shown properties listed for rent by a broker is the broker’s
a. client.
b. principal.
c. customer.
d. fiduciary.
c. customer.
Mr. M’s house has been listed for sale for more than one year and he
is very anxious to move into a retirement condominium. A salesperson,
who is a subagent of the seller, tells a prospective buyer to make a low
offer because the salesperson is sure that the seller will accept it. Regarding
the salesperson’s conduct, which of the following would NOT be true?
a. the salesperson acted appropriately to get the seller’s property sold.
b. the salesperson violated the fiduciary to the seller.
c. the salesperson’s conduct could indicate that she is working for the buyer.
d. the salesperson should not assume that an anxious seller will accept a lower offer
a. the salesperson acted appropriately to get the seller’s property sold.
A salesperson who represents the seller is showing a house to a
prospective buyer. The salesperson knows that the house has a wet
basement. Which of the following is true?
a. Withholding the information protects the confidence of the seller.
b. Disclosing the information could create a fiduciary with the buyer.
c. Withholding the information prevents the buyer from making an
informed decision.
d. Disclosing the information violates the fiduciary to the seller.
c. Withholding the information prevents the buyer from making an informed decision.
Which of the following would NOT need to be licensed when acting
for another person in the sale or lease of real estate?
a. One who is personally representing a dealer in real-estate
b. Anyone acting under a power of attorney
c. A relative of the party
d. A next-door neighbor
b. Anyone acting under a power of attorney
A broker cannot legally collect commissions from both the seller
and the buyer without
a. notifying both parties of this fact verbally after the sale has closed.
b. notifying both parties of this fact in writing after the sale has closed.
c. having exclusive listing agreements signed by both the seller and the
buyer.
d. having the prior knowledge and written consent of both the seller and the buyer.
d. having the prior knowledge and written consent of both the seller and the buyer.
Broker W, in the course of selling a home to N, told her that the
foundation was “solid as a rock” when he knew for a fact that it
was slowly sinking into the landfill on which it was built. Which of
the following is he NOT likely to be subjected to?
a. Having his real estate license revoked
b. Being sued criminally for restitution
c. Being sued civilly for damages
d. Being sued criminally for fraud
d. Being sued criminally for fraud
The amount of commission due to a salesperson is determined by
a. state law.
b. the local real estate board.
c. mutual agreement.
d. court decree.
c. mutual agreement.
. Broker J was accused of violating antitrust laws. She was probably
accused of
a. not having an equal housing opportunity sign in her office window.
b. undisclosed dual agencies.
c. allocation of customers or price fixing.
d. dealing in unlicensed exchange services.
c. allocation of customers or price fixing.
A real estate broker was responsible for a chain of events that resulted
in the sale of one of his client’s properties. This is referred to as a
a. pro forma.
b. procuring cause.
c. private offering.
d. proffered offer.
b. procuring cause.
A salesperson may advertise a property for sale only if he or she
a. personally listed the property.
b. uses the employing broker’s name in the advertisement.
c. personally pays for the advertisement.
d. is a member of the local real estate board.
b. uses the employing broker’s name in the advertisement.
A parcel of vacant land 80 feet wide and 200 feet deep was sold for
$200 per front foot. How much money would a salesperson receive
for her 60 percent share in the 10 percent commission?
a. $640
b. $960
c. $1,600
d. $2,400
b. $960
A real estate salesperson who is an independent contractor receives
a. a monthly salary or hourly wage.
b. company-provided health insurance.
c. company-provided automobile.
d. negotiated commissions on transactions.
d. negotiated commissions on transactions.
In a typical agency relationship between the broker and the client, the
broker’s commission
is determined by
a. state law.
b. the local real estate board.
c. mutual agreement.
d. minimums based on the property type
c. mutual agreement.
Salesperson N finally concluded some extremely difficult negotiations
that resulted in the sale of a listed parcel of property. For all of her extra
efforts, she can legally demand a performance bonus from
a. the seller.
b. the buyer.
c. her broker.
d. no one.
d. no one.
W is a salesperson working for Broker V. W sells a $150,000 home.
The listed commission is 6.5 percent of the selling price. Out of this
amount, 5% is payable to the referral network that referred the buyer,
35 percent goes to the listing broker, and 60 percent belongs to the
cooperating broker. Broker V and W agreed that W would receive
55 percent of any commission that he generated for the office. For this
transaction, W is entitled to receive
a. $2,632.50
b. $3,217.50
c. $3,412.50
d. $5,850.00
b. $3,217.50
Which of the following is NOT required of a broker in order for that
broker to collect a commission on the sale of a property? That he or she
a. had a valid real estate broker’s license.
b. was a procuring cause.
c. was employed to perform certain activities.
d. belonged to a real estate board.
d. belonged to a real estate board.
A broker lists a property for sale at $100,000 with a 5 percent commission
and he later obtains a verbal offer to purchase the property from a prospective
buyer. The seller indicates to the broker that the offer would be acceptable
if it were submitted in writing. Before it can be put in writing, the buyer backs
out and revokes the verbal offer. In this situation, the broker would
be entitled to
a. a commission of $5,000.
b. only a partial commission.
c. no commission.
d. the normal rate of commission
c. no commission.
Which of the following is NOT prohibited under the antitrust laws?
a. Property management companies standardizing management fees
b. Brokers allocating markets based on the value of homes
c. Real estate companies agreeing NOT to cooperate with a broker
because of the fees that broker charges
d. A broker deciding whether to join a MLS
d. A broker deciding whether to join a MLS
A broker’s salesperson lists a unit for sale in a condominium building.
The salesperson in this transaction
a. has a direct contractual relationship with the owners of the unit.
b. acts on behalf of the broker.
c. acts on behalf of the condominium association.
d. must find a buyer for the unit to obtain a share of the commission
b. acts on behalf of the broker.
There is a spectacular house that a salesperson from Firm A has been
trying for several weeks to list for sale. The owners have been
interviewing salespeople from different firms. They tell A’s salesperson
that Firm B will charge 2% less commission for selling the house.
What should A’s salesperson say to the owner to get the listing?
a. Salespeople will not show Firm B’s listings because of their
commission fees.
b. Most brokers in the area charge a standard rate of commission,
including Firm A.
c. Firm B cannot provide good services because they charge less.
d. Firm A provides excellent services to market their sellers’ properties.
d. Firm A provides excellent services to market their sellers’ properties.
A licensed salesperson may receive compensation or commission from
a. only the employing broker.
b. from the principal.
c. from any broker.
d. from a landlord.
a. only the employing broker.
The listing and selling brokers agree to split a 7% commission
fifty-fifty on a $96,900 sale. The listing broker gives the listing
salesperson 30% of his commission and the selling broker gives
the selling salesperson 35% of his commission. How much does
the selling salesperson earn from the sale?
a. $1,139.78
b. $1,174.78
c. $971.95
d. $1,187.03
d. $1,187.03
Unless some other written agreement has been made, the broker will
usually receive the sales commission when
a. the purchaser takes possession of the property.
b. the seller lists the property with the broker.
c. the transaction is closed.
d. an offer is procured from a ready, willing and able buyer.
c. the transaction is closed.
Which of the following is NOT a reason a listing agreement may be terminated ?
a. Sale of the property
b. Death of the salesperson
c. Agreement of the parties
d. Destruction of the premises
b. Death of the salesperson
By executing a listing agreement with a seller, a real estate broker has become
a. a procuring cause.
b. obligated to open a special trust account.
c. an agent of the seller.
d. responsible for sharing commissions.
c. an agent of the seller.
The provision in a listing agreement that gives additional authority to the
broker and obligates the broker to distribute the listing to other brokers is a(n)
a. joint listing clause.
b. multiple listing clause.
c. net listing clause.
d. open listing clause.
b. multiple listing clause.
A building sold for $157,000. The broker charged a 6 percent commission
and divided it as follows: 10 percent to the salesperson who took the listing;
one-half of the balance to the salesperson who made the sale; and the
remainder to the broker. What was the listing salesperson’s commission?
a. $239
b. $942
c. $1,570
d. $4,239
b. $942
Broker W took a listing on a property and shortly thereafter discovered
that her client had been previously declared incompetent by the court.
The listing now is
a. binding as the broker was acting in good faith.
b. still valid.
c. the basis for commission if the broker produces a buyer.
d. void.
d. void.
The type of listing agreement that provides for the payment of a commission
to the broker even though the owner makes the sale without the aid of the
broker is called a(n)
a. exclusive-right-to-sell listing.
b. open listing.
c. exclusive-agency listing.
d. option listing.
a. exclusive-right-to-sell listing.
A property owner lists his property for sale with a broker. During the
negotiations, the owner told the broker that the owner wanted $138,000
for the property, and anything above that amount the broker could keep
as his commission. The listing with this type of provisions is known as the
a. gross listing.
b. net listing.
c. open listing.
d. non-exclusive listing.
b. net listing.
Under which of the following listing agreements can the owner of listed
property sell the property on his or her own without having to pay the
listing broker a commission?
a. Exclusive-right-to-sell listing
b. Exclusive-agency listing
c. Open listing
d. Both b and c
d. Both b and c
A property owner signed a 90-day listing agreement with a broker.
The owner was killed in an accident before the listing expired.
Now the listing is
a. binding on the owner’s spouse for the remainder of the 90 days.
b. still in effect as the owner’s intention was clearly defined.
c. binding only if the broker can produce offers to purchase the property.
d. terminated automatically upon the death of the principal.
d. terminated automatically upon the death of the principal.
A listing contract in which the broker’s commission is contingent on the
broker being able to produce a buyer before the property is sold by the
owner or another broker is called a(n)
a. open listing.
b. net listing.
c. exclusive-right-to-sell listing.
d. exclusive-agency listing.
a. open listing.
A broker who represents a seller under an exclusive listing receives two
offers for the property at the same time, one from one of his salespeople
and one from a salesperson of a cooperating broker. What should the
broker do?
a. Submit the offer from his salesperson first
b. Submit the offer from the other salesperson first
c. Submit the higher offer first
d. Submit both offers at the same time
d. Submit both offers at the same time
Which of the following is NOT a typical provision of a listing agreement?
a. The price the seller is asking for the property
b. The date the broker will schedule an open house
c. The commission rate to be paid to the listing broker
d. The responsibilities of the broker
b. The date the broker will schedule an open house
The type of listing agreement that provides the least protection for the listing
broker is the
a. exclusive-right-to-sell listing.
b. exclusive-agency listing.
c. open listing.
d. net listing.
c. open listing.
If a seller needs to net $50,000 after the sale, how much must the real estate
sell for if the selling costs include a 7% commission and $1,200 in other
expenses?
a. $54,700.00
b. $54,963.44
c. $55,053.76
d. $55,633.25
c. $55,053.76
A seller refused to pay a commission to the broker even though there was a
valid listing agreement and the broker procured a buyer for the property.
What can the broker do?
a. Sue the seller in court for the commission
b. File a lien on the seller’s property for the amount of the commission
c. Obtain an injunction to stop the transaction until the commission is paid
d. Collect the commission from the buyer
a. Sue the seller in court for the commission
Under an exclusive agency listing, the listing broker would NOT be
entitled to a commission if
a. the broker sells the property herself.
b. the property is sold through another broker.
c. the property is sold through the multiple-listing service.
d. the seller sells the property to a neighbor across the street who has her
property listed with another broker.
d. the seller sells the property to a neighbor across the street who has her property listed with another broker.
Which of the following is NOT a type of listing contract?
a. Open listing.
b. Exclusive agency.
c. Exclusive right-to-sell.
d. MLS contract.
d. MLS contract.
Which of the following is NOT a reason that a listing agreement
may be terminated ?
a. By mutual agreement
b. By operation of law
c. Because the seller can’t find another house to buy
d. Because of impossibility of performance
c. Because the seller can’t find another house to buy
The seller wants to net $65,000 on the sale of his house after paying
the broker a fee of 6%. How much must the gross selling price be?
a. $69,149
b. $68,093
c. $67,035
d. $66,091
a. $69,149
The broker enters into a listing agreement with a seller in which the
seller will receive $12,000 from the sale of a lot and the broker will
receive any sale proceeds over this amount. This type of listing is a(n)
a. gross listing.
b. legal and ethical way to ensure that the broker is compensated.
c. exclusive agency.
d. net listing.
d. net listing.
In some states the following type of listing is prohibited:
a. Exclusive-right-to-sell
b. Net listing
c. Buyer Agency Agreement
d. Open Listing
b. Net listing
An owner who is interested in selling his house is usually concerned
about how much money he can get when it sells. A competitive market
analysis may help the seller determine a realistic listing price. Which
of the following is true?
a. A competitive market analysis is the same as an appraisal.
b. A broker, not a salesperson, is permitted to prepare a
competitive market analysis.
c. A competitive market analysis is prepared by a certified real
estate appraiser.
d. A competitive market analysis contains a compilation of other similar
properties that have sold.
d. A competitive market analysis contains a compilation of other similar
properties that have sold.
Two different brokerage companies claimed they were entitled to a
commission from the sale of a property that was listed by one of the
firms under an open listing agreement. The broker who is entitled to
the commission is the one who
a. listed the property.
b. advertised the property.
c. obtained the first offer.
d. was the procuring cause of the sale.
d. was the procuring cause of the sale.
Broker P listed the Ks’ property for sale under an exclusive-right-to-sell
agreement. Today, one of P’s salespeople, T, obtained an offer to
purchase the property along with a certified check for 5 percent of the
purchase price as earnest money.What should T do with the earnest
money check?
a. Give it to the Ks.
b. Hold it until the closing.
c. Deposit the money in his trust account.
d. Give the money to P for deposit in his trust account.
d. Give the money to P for deposit in his trust account
An employment contract between a buyer and a broker would NOT be called
a. an exclusive buyer agency agreement.
b. an exclusive agency buyer agency agreement.
c. an open buyer agency agreement.
d. a net buyer agency agreement
d. a net buyer agency agreement
Before signing a buyer agency agreement a licensee would NOT
a. explain forms of agency available.
b. obtain financial information from the buyer.
c. inform the buyer of the charges or compensation for services.
d. describe specific services to be provided.
b. obtain financial information from the buyer.
An owner lists her property for sale with a broker. Another broker,
however, finds a buyer for the house. The listing broker did not receive
a commission from the sale. The type of listing contract between the
owner and the broker could have been a(n)
a. exclusive right-to-sell.
b. exclusive agency.
c. open listing.
d. multiple listing.
c. open listing
Under an exclusive (agency) buyer agency agreement the real estate broker
would NOT be entitled to a commission
a. if the broker sells the buyer a listing from another firm.
b. if the property is a FISBO.
c. if the buyer finds a suitable property without the broker.
d. if the buyer cancels the agreement of sale.
c. if the buyer finds a suitable property without the broker.
The salesperson received $2,800 commission on her 35% share of the total
commission on the sale of a property that sold for $160,000.
What was the commission rate?
a. 10%
b. 5%
c.7% d. 4.5%
b. 5%
A broker hires sales associates with an agreement to split the commission
between the broker - 45%, the listing salesperson - 30%, and the selling
salesperson. If the broker’s share is $2,430, the property sold for $90,000,
and the listing salesperson’s share was $1,620, what was the selling sales
associate’s share?
a. $2,700
b. $1,800
c. $1,350
d. $1,295
c. $1,350
A statutory right that a family has in its residence is called
a. entirety.
b. survivorship.
c. curtesy.
d. homestead.
d. homestead.
A person who has complete control over a parcel of real estate is said to
own a
a. leasehold estate.
b. fee simple estate.
c. life estate.
d. defeasible fee estate
b. fee simple estate.
A portion of W’s building was inadvertently built on G’s land.
This is called an
a. accretion.
b. avulsion.
c. encroachment.
d. easement.
c. encroachment.
Many states determine the order of water rights according to which users
of the water hold a recorded beneficial use permit. This allocation of
water rights is determined by
a. accretion.
b. riparian theory.
c. littoral theory.
d. the doctrine of prior appropriation.
d. the doctrine of prior appropriation
The purchase of a ticket for a professional sporting event gives the bearer
a. an easement right to park his car.
b. a license to enter and claim a seat for the duration of the game.
c. an easement in gross interest in the professional sporting team.
d. a license to sell goods and beverages at the sporting event.
b. a license to enter and claim a seat for the duration of the game.
Which of the following has an indefinite duration?
a. Freehold estate
b. Less-than-freehold estate
c. Estate for years
d. License
a. Freehold estate
If the owner of the dominant tenement becomes the owner of the servient
tenement and merges the two properties,
a. the easement becomes dormant.
b. the easement is unaffected.
c. the easement is terminated.
d. the properties retain their former status.
c. the easement is terminated.
A decedent left a will giving his neighbor the right to use a well on the
decedent’s land as long as the neighbor was alive. The neighbor’s interest
in the property is properly called a(n)
a. license.
b. easement in gross.
c. easement appurtenant.
d. life estate.
b. easement in gross.
Homeowner G acquired the ownership of land that was deposited by
a river running through her property by
a. reliction.
b. succession.
c. avulsion.
d. accretion.
d. accretion.
A life estate conveys to the life tenant
a. a leasehold for life.
b. a reversionary interest.
c. a legal life estate.
d. ownership for life.
d. ownership for life.
J owned the fee simple title to a vacant lot adjacent to a hospital
and was persuaded to make a gift of the lot. She had her attorney
prepare a deed that conveyed the ownership of the lot to the
hospital “So long as it is used for medical purposes.” After the
completion of the gift, the hospital will own a
a. life estate.
b. tenancy for years.
c. fee simple determinable.
d. periodic tenancy.
c. fee simple determinable
The rights of the owner of property located along the banks
of a river are called
a. littoral rights.
b. prior appropriation rights.
c. riparian rights.
d. hereditaments.
c. riparian rights.
The local utility company dug up F’s garden to install a natural gas line.
The company claimed it had a valid easement and proved it by the
county records. F claimed the easement was not valid because he did
not know about it. The easement
a. was valid even though the owner did not know about it.
b. was an appurtenant easement owned by the utility company.
c. was not valid because it had not been used during the entire time that F owned property.
d. was not valid because F was not informed of its existence when he purchased the property.
a. was valid even though the owner did not know about it.
Which of the following is NOT an ownership right to real estate?
a. Buildings located on the property.
b. Air space above the property.
c. Easements running with the land.
d. Navigable rivers running through the property.
d. Navigable rivers running through the property.
J and S are next-door neighbors. S tells J that he can store his camper
in her yard for a few weeks until she needs the space. S did not charge
J rent for the use of her yard. S has given J a(n)
a. easement appurtenant.
b. easement by necessity.
c. estate in land.
d. license.
d. license.
Your neighbors use your driveway to reach their garage on their property.
Your attorney explains that the ownership of the neighbors’ real estate includes an
easement appurtenant giving them the driveway right. Your property is the
a. leasehold interest.
b. dominant tenement.
c. servient tenement.
d. license property.
c. servient tenement.
Creditors suing a homeowner who has obtained a homestead exemption as
provided by state law
a. can have the court sell the residence and apply the full proceeds of the
sale to the outstanding debts.
b. have no right to sell the debtor’s residence.
c. may request a court-ordered sale and have the proceeds in excess
of the statutory exemption and exempted liens applied to the debts.
d. can force the debtor to sell the residence in order to pay the outstanding
debts in full.
c. may request a court-ordered sale and have the proceeds in excess of the statutory exemption and exempted liens applied to the debts.
Q owned two acres of land. He sold one acre to F and reserved for himself
an appurtenant easement over F’s land for ingress and egress. F’s land
a. is the dominant tenement.
b. is the servient tenement.
c. can be cleared of the easement when Q sells the withheld acre to
a third party.
d. is subject to an easement in gross.
b. is the servient tenement.
G owns 50 acres of land with 500 feet of frontage on a desirable
recreational lake. She wishes to subdivide the parcel into salable lots,
but she wants to retain control over the lake frontage while allowing
lot owners to have access to the lake. Which of the following types
of access rights would provide the greatest protection for a prospective
purchaser?
a. An easement in gross
b. An appurtenant easement
c. An easement by necessity
d. A license
b. An appurtenant easement
A homestead exemption protects against judgments
a. of unsecured creditors.
b. that result from unpaid taxes.
c. that result from foreclosure of a mortgage.
d. that result from the costs of improvements.
a. of unsecured creditors.
The major intent of zoning regulations is to
a. demonstrate the police power of the state.
b. ensure the health, safety and welfare of the community.
c. set limits on the amount and kinds of businesses in a given area.
d. protect residential neighborhoods from encroachment by business and industry.
b. ensure the health, safety and welfare of the community.
The owner of a secluded area adjacent to the Atlantic Ocean noticed
that people from town walked along the shore in front of this property.
The owner learned that the local citizens had been walking along this
beach for years. The owner went to court to try to stop people from
walking along the water’s edge in front of his property. The owner is
likely to be
a. unsuccessful because the local citizens have been doing this for
years and thus have an easement.
b. unsuccessful because the owner’s property extends only to the
high-water mark and the public can use the land beyond this point.
c. successful because the owner’s property extends to the middle of
the water bed.
d. successful because the owner can control access to his own property.
b. unsuccessful because the owner’s property extends only to the high-water mark and the public can use the land beyond this point.
A deed conveys ownership to the grantee so as long as the existing building
is not torn down. What type of estate did this deed create?
a. A life estate
b. A nondestructible estate
c. A fee simple estate
d. A determinable fee estate
d. A determinable fee estate
Which of the following best describes a legal life estate?
a. A homestead estate
b. An estate conveyed by one party to a second party for the life of
the second party
c. An estate created by a will
d. An estate conveyed to a second party subject to a condition
a. A homestead estate
For land to be taken by the government under its right of eminent domain,
which of the following must apply?
a. The taking must be for a public purpose.
b. There must be a statutory dedication.
c. This must be an adverse action.
d. There must be constructive notice.
a. The taking must be for a public purpose.
H conveys a life estate to her grandson and stipulates that upon her death the
estate will pass to her son-in-law. The son-in-law has a(n)
a. estate in reversion.
b. estate in remainder.
c. estate for years.
d. legal life estate.
b. estate in remainder.
L conveys the ownership of his house to his mother and stipulates that
upon her death he will recapture the ownership. The interest L has in
the ownership is a
a. remainder estate.
b. curtesy estate.
c. legal life estate.
d. reversion estate
d. reversion estate
The process by which the government can take ownership of a building
that has deteriorated, with bricks falling on a public sidewalk, is
a. escheat.
b. eminent domain.
c. condemnation.
d. doctrine of public protection.
c. condemnation.
Mrs. D conveys the ownership of her apartment building to a nursing home,
anticipating that the rental income will help pay for her father’s care there.
When her father dies, Mrs. D will recapture the ownership of the apartment
building. This is an example of a
a. remainder life estate.
b. legal life estate.
c. life estate pur autre vie.
d. leasehold estate.
c. life estate pur autre vie.
The developer grants to the gas company the right to install
transmission lines. This right is called a(n)
a. license.
b. easement in gross.
c. easement by prescription.
d. conditional use permit.
b. easement in gross.
A lot is encumbered by a sewer easement that runs where the
foundation of a building would be. How will this affect the owner
who wants to build a house?
a. It will have no effect because the sewer line is deeper than the foundation would be.
b. The house must be constructed to avoid the easement.
c. The municipality must move the sewer line prior to construction.
d. Any easement through the buildable part of the lot will prevent construction.
b. The house must be constructed to avoid the easement.
A person wants to ensure that the ownership of real property can be willed
to her children. Which of the following forms of ownership would the person
want?
a. A conventional life estate
b. A fee estate
c. A joint tenancy
d. A license
b. A fee estate
The owner divides a parcel into two lots, one of which is surrounded by
other lots and has no street access. Which of the following is true?
a. The municipality must construct a street to create access.
b. The owner must create an easement by condemnation to provide access.
c. An easement by prescription should be granted.
d. An easement by necessity should be created for the land-locked parcel.
d. An easement by necessity should be created for the land-locked parcel.
A person who acquired ownership that can be inherited, with the provision
that the land must always be used for recreational purposes, has which of
the following?
a. A fee simple estate
b. A conditional fee estate
c. A restricted estate
d. An estate that cannot be sold
b. A conditional fee estate
The power by which government can acquire ownership of private land
for public use is
a. escheat.
b. eminent domain.
c. condemnation.
d. doctrine of public acquisition.
b. eminent domain.
A father conveyed the family home to his daughter by will as a pur autre vie
estate for the life of her mother. If the daughter should die before the mother
who holds the property?
a. The mother
b. The remaindermen
c. The daughter’s estate
d. The father’s other children
c. The daughter’s estate
S and N bought a store building and took title as joint tenants. N died testate.
S now owns the store:
a. as a joint tenant with rights of survivorship.
b. in severalty.
c. as a tenant in common with N’s heirs.
d. in trust.
b. in severalty.
F has the legal right to occupy and use a certain residential structure.
Which of the following does NOT describe F’s interest ?
a. Fee simple
b. Remainder
c. Leasehold
d. Life estate
b. Remainder
Which of the following would be considered community property?
a. A gift of property to the wife during the marriage
b. Income earned by one spouse during the marriage
c. Property inherited by the husband during the marriage
d. Income earned by either party prior to the marriage
b. Income earned by one spouse during the marriage
A trust is a legal arrangement whereby the title to property is held for the
benefit of a third party by a(n)
a. beneficiary.
b. trustor.
c. trustee.
d. attorney in fact.
c. trustee.
E lives in an apartment building. The land and structures are owned by a
corporation, with one mortgage loan covering the entire property.
Like the other residents, E owns stock in the corporation and has a
lease to his apartment. This type of ownership is called a:
a. condominium.
b. planned unit development.
c. time-share.
d. cooperative.
d. cooperative.
V and N are co-owners of a fee simple interest in a small office building.
N dies intestate and leaves no estate to be distributed to his heirs. V is
neither related to N nor a creditor of N. Which of the following would
explain why V acquired the interest of N?
a. Adverse possession
b. Reversionary rights
c. Joint tenancy
d. Foreclosure
c. Joint tenancy
An ownership interest that is based on annual occupancy intervals is the
a. leasehold.
b. time-share.
c. condominium.
d. cooperative.
b. time-share.
J, M, and H are joint tenants owning a parcel of land. H conveys his
interest to his long-time friend W. After the conveyance, J and M
a. become tenants in common.
b. continue to be joint tenants with H.
c. become joint tenants with W.
d. remain joint tenants owning a two-thirds interest.
d. remain joint tenants owning a two-thirds interest.
K and U owned a combination apartment building with a small bar
and grill on the premises. They shared their profits and losses on
their venture equally, but they did not own the business under any
written partnership agreement. One day, U died of a heart attack.
If, after U’s death, K continued to own the same undivided interest
in the real estate as he did before U’s death and no more, then:
a. they were joint tenants.
b. they were tenants in common.
c. they were stockholders in their own corporation.
d. U died intestate.
b. they were tenants in common.
Which of the following does NOT have equal rights of possession?
a. Tenancy in common
b. Tenancy at will
c. Tenancy by the entirety
d. Joint tenancy
b. Tenancy at will
In a gift of a parcel of real estate, one of the two owners was given an
undivided 60 percent interest and the other received an undivided 40
percent interest. The two owners hold their interests as
a. cooperative owners.
b. joint tenants.
c. community property owners.
d. tenants in common.
d. tenants in common.
In a community property state, separate property is owned
a. solely by either spouse before the marriage or acquired by gift
or inheritance by either spouse during the marriage.
b. by one spouse before the marriage and jointly with the other
spouse during the marriage.
c. one-half by each living spouse during the marriage and then
passes entirely to the survivor.
d. jointly by one spouse and his or her deceased spouse’s descendants
a. solely by either spouse before the marriage or acquired by gift or inheritance by either spouse during the marriage.
Under the community laws of the state in which they live, which of the
following does NOT apply to the Ds ?
a. Each also owns separate property.
b. They may not convey community property without the other’s consent.
c. Each also owns community property with others.
d. They may not encumber community property without the other’s consent.
c. Each also owns community property with others.
To create a joint tenancy relationship in the ownership of real estate, there
must be unities of
a. grantees, ownership, claim of right, and possession.
b. title, interest, encumbrance, and survivorship.
c. possession, time, interest, and title.
d. ownership, possession, heirs, and title.
c. possession, time, interest, and title.
A person who owns one unit in a multi-unit structure together with a
specified undivided interest in the common elements would own a
a. cooperative.
b. share in a real estate investment trust.
c. condominium.
d. time-share interest.
c. condominium.
Separate property owned by a married person in a community
property state must be
a. incorporated into the community property.
b. kept totally separate from the community property.
c. designed so that it eventually becomes community property.
d. established prior to, not during, the marriage.
b. kept totally separate from the community property.
A joint tenancy with right of survivorship may be created
a. automatically if the property is distributed to the surviving children.
b. by presumption if another form of ownership is not described.
c. by deed or will.
d. when a deed is signed by both spouses.
c. by deed or will.
The owner of a condominium unit learns that a neighbor has failed to
pay his real estate taxes. If this neighbor does not pay the taxes
a. a lien can be filed against the condominium, including all of the units.
b. a lien can be filed against the neighbor’s unit and his percentage of the
common elements.
c. a lien can be filed only against the common areas of the condominium.
d. the taxing authority can order the condominium to be dissolved
b. a lien can be filed against the neighbor’s unit and his percentage of the
common elements.
A property held as tenancy by the entirety requires which of the following?
a. The cotenants must be husband and wife.
b. The property in question must be Torrens property.
c. Upon the death of a cotenant, the decedent’s interest passes to his or
her heirs.
d. In the event of a dispute the property must be partitioned.
a. The cotenants must be husband and wife.
In a community property state
a. the property that a person accumulated prior to marriage is called
separate property.
b. the property that a person received as a gift during marriage is
known as community property.
c. all property owned by a married person is called community property.
d. the property paid for by the earnings of one spouse during the marriage
is knows as separate property.
a. the property that a person accumulated prior to marriage is called
Which of the following is NOT an element of a joint tenancy with right
of survivorship ?
a. It is created only when four unities are present.
b. It cannot be created by operation of law.
c. Each joint tenant may pass on his or her interest to the heirs.
d. The land may be the subject of a suit to partition.
c. Each joint tenant may pass on his or her interest to the heirs.
Which of the following is a false statement about a condominium?
a. A declaration must be filed before any units may be sold.
b. Each unit owner has a fractional undivided interest in the common
elements.
c. Each owner receives a separate real estate tax statement.
d. Each owner has a proprietary lease with the association for his or
her own unit.
d. Each owner has a proprietary lease with the association for his or
her own unit.
Because Mr. and Mrs. J no longer need their large house, they
decide to sell the house and move into a cooperative apartment
building. In a cooperative they will
a. become stockholders in a corporation.
b. own their individual apartment.
c. own the common elements.
d. receive a 20 year lease to their apartment.
a. become stockholders in a corporation.
The severalty owner of a parcel of land sells it to a buyer.
The buyer insists that the owner’s wife join in signing the deed.
The purpose of obtaining the wife’s signature is to
a. terminate any rights the wife may have in the property.
b. defeat any curtsey rights.
c. provide evidence that the owner is married.
d. subordinate the wife’s interests to the buyer.
a. terminate any rights the wife may have in the property.
Under the condominium form of ownership, the owner’s
interest in the unit would normally be
a. a life estate.
b. a fee simple estate.
c. a reversionary estate.
d. a proprietary leasehold.
b. a fee simple estate.
A and B are joint tenants. B sells his interest to C. What is
the relationship of A and C?
a. They are joint tenants.
b. They are tenants in common.
c. There is no relationship because B cannot sell to C.
d. A owns a 2/3 interest and C owns a 1/3 interest.
b. They are tenants in common.
Tenancy with survivorship means
a. the tenancy interest may be inherited.
b. the tenancy interest may be held by the remaining
tenants upon death.
c. the tenant’s heirs are survivors.
d. this is not a legal tenancy.
b. the tenancy interest may be held by the remaining
tenants upon death.
Acquisition of real estate by a group that includes one or
more sponsors (promoters) and several investors is called a
a. subdivision.
b. time share.
c. syndication.
d. group investment.
c. syndication.
A person purchases a fee simple estate and has an undivided
interest in common elements. What does this person own?
a. A tenancy in common
b. A cooperative
c. A condominium
d. A tenancy by the entireties
c. A condominium
Which of the following is true about condominium ownership?
a. It cannot be mortgaged.
b. The corporation pays the real estate taxes.
c. The ownership cannot be willed.
d. The limited common elements cannot be sold separately.
d. The limited common elements cannot be sold separately.
The owner of a condominium is responsible for paying a monthly
maintenance fee. If the owner fails to make this payment, which
of the following is true?
a. The owner is evicted.
b. The debt is collected from other owners.
c. The debt is liened against the unit.
d. The debt is added to the mortgage payment.
c. The debt is liened against the unit.
How does a cooperative obtain the funds necessary to cover
on-going operating expenses and mortgage payments?
a. Charge rent.
b. Sell common elements.
c. Assess shareholders.
d. Charge special assessments
c. Assess shareholders.
A trust that is established after the death of the owner is called a
a. trust by will.
b. testamentary trust.
c. beneficial trust.
d. living trust.
b. testamentary trust.
In a land trust which of the following is NOT a correct statement?
a. The beneficial interest can be transferred by assignment.
b. The beneficiary is usually the trustor.
c. Public records list all the beneficiaries.
d. The property can be pledged as security for a loan without
recording a mortgage.
c. Public records list all the beneficiaries.
In a limited partnership
a. the number of investors is limited to 10.
b. all the partners participate in running the business.
c. the general partners run the business.
d. investors can participate with a small amount of capital
with a minimum risk.
c. the general partners run the business.
. In defining a corporation as a legal entity, which statement is NOT true?
a. Stockholders have a direct ownership interest in the real estate.
b. It is managed by the Board of directors.
c. It continues to exist until formally dissolved.
d. Profits are taxed on two levels: as corporation profit and as dividends
top stockholders.
a. Stockholders have a direct ownership interest in the real estate.
The difference between time-share use and a time-share estate is
a. the amount of time sold to the buyer.
b. one limits use to certain months, the other provides a rotation
system for use.
c. time-share use sells only right of occupancy, not a fee-simple estate.
d. no difference except in terminology.
c. time-share use sells only right of occupancy, not a fee-simple estate.
How many acres are in a lot that is ¼ of a mile wide by ¼ of a mile long?
a. 10
b. 120
c. 40
d. 80
c. 40
The numbering of sections in a township begins in the section in the
a. northeast corner and then runs easterly.
b. northwest corner and then runs easterly.
c. northeast corner and then runs westerly.
d. northwest corner and then runs westerly
a. northeast corner and then runs easterly.
The following legal description contains how many acres: the South ½ of
the SE ¼ of the NW ¼ of the NE ¼ of Section 7?
a. 2.5
b. 5
c. 10
d. 20
b. 5
A township contains
a. 6 square miles.
b. 640 acres.
c. 23,040 square feet.
d. 36 sections.
d. 36 sections.
Strips of land six miles wide that run north and south are called
a. tiers.
b. ranges.
c. latitudes.
d. longitudes.
b. ranges.
A metes and bounds legal description
a. can be made only in areas excluded from the rectangular survey system.
b. is not acceptable in court in most jurisdictions.
c. must commence and finish at the same identifiable point.
d. is used to complete areas omitted from recorded subdivision plats.
c. must commence and finish at the same identifiable point.
How many lots, each measuring 72.5 feet wide by 100 feet deep, could be
made from a two-acre parcel of land?
a. 6
b. 7
c. 12
d. 14
c. 12
A parcel of land described as “the NW ¼ of the SW ¼ of Section 6,
T4N, R8W of the Third Principal Meridian” was sold for $875 per acre.
The listing broker will receive a 5 percent commission on the total
sales price. How much will the broker receive?
a. $1,750
b. $5,040
c. $14,000
d. $15,040
a. $1,750
The section of land reserved for school purposes in the rectangular
survey system is section
a. 12.
b. 16.
c. 20.
d. 36.
b. 16.
The system of legal description that defines a parcel of land by its perimeter is the
a. geodetic survey.
b. rectangular survey.
c. lot and block system.
d. metes and bounds system.
d. metes and bounds system.
A metes and bounds legal description must
a. cover an area larger than 10 acres.
b. be used in areas not covered by the rectangular survey system.
c. commence and finish at the same identifiable point.
d. always use north as the basis for directions.
c. commence and finish at the same identifiable point.
The primary survey line running east and west in the rectangular survey system is the
a. township line.
b. base line.
c. range line.
d. principal meridian.
b. base line.
Which of the following parcels of land is the smallest?
a. Two sections
b. Five percent of a section
c. Two square miles
d. 1,280 acres
b. Five percent of a section
“Beginning at the SE corner of the NE ¼ of the section, then due west
5,280 feet more or less to the SW corner of the NW ¼, the north along
the west line of the section 2,640 feet more or less to the NW corner of
said NW ¼, then in a straight line to the point of beginning.” How many
acres does this parcel contain?
a. 80 acres
b. 160 acres
c. 240 acres
d. 320 acres
b. 160 acres
A section
a. is one mile square.
b. contains 460 acres.
c. has a perimeter of 5,280 square feet.
d. can be numbered from 1 through 50.
a. is one mile square.
A lot with a depth of 80 feet and an area of 4,800 square feet was sold
for $350 per front foot. What was the total sales price?
a. $21,000
b. $28,000
c. $31,800
d. $35,000
a. $21,000
The primary survey line running north and south in the rectangular survey
system is the
a. township line.
b. base line.
c. range line.
d. principal meridian.
d. principal meridian.
A recorded subdivision plat is used in the
a. geodetic survey system.
b. rectangular survey system.
c. lot and block system.
d. metes and bounds system.
c. lot and block system.
In parts of the country where there are many lakes and rivers, the
rectangular survey system designations will often include
a. hyphenated sections.
b. meander-line sections.
c. mean water-line sections.
d. fractional sections.
d. fractional sections.
The rectangular survey system section contains
a. 36 townships.
b. 160 government lots.
c. 160 acres.
d. 640 acres.
d. 640 acres.
The method of describing land by degrees, feet and monuments is
known as the
a. angular system.
b. metes and bounds system.
c. rectangular survey system.
d. lots and blocks system.
b. metes and bounds system.
How many acres are in a description reading, “The NW ¼ of the
SE ¼ and the S ½ of the SW ¼ of the NE ¼ of Section 4”?
a. 40 acres
b. 50 acres
c. 60 acres
d. 80 acres
c. 60 acres
Which of the following is the best way to ensure that there are no
encroachments and verify the boundaries of a parcel of land?
a. Write a legal description
b. Get a spot survey
c. Find the monuments
d. Verify the benchmarks
b. Get a spot survey
A farmer owned Section #17 and sold the south one half. He then
fenced in the northern one half. How many linear feet of fencing did
he use if he had two 6 foot wide gates?
a. 27,720
b. 15,828
c. 18,530
d. 14,250
b. 15,828
The owner has a large parcel of land surveyed into lots and streets
and files a subdivision plat. Each lot can be legally described by use
of which of the following?
a. Street address
b. Government survey
c. Metes and bounds
d. Lots and blocks
d. Lots and blocks
How many linear feet of fence are needed along 1.5 miles of roadway?
a. 7,920
b. 8,250
c. 13,430
e. 16,450
a. 7,920
1.5 x 5,280 = 7,920 Ft
When properly recorded in the county where the real estate of the
defendant is located, a judgment becomes a(n)
a. voluntary lien.
b. involuntary lien.
c. specific lien.
d. equitable lien.
b. involuntary lien.
When a company furnishes materials for the construction of a
house and is subsequently not paid, it may file a(n)
a. deficiency judgment.
b. lis pendens.
c. estoppel certificate.
d. mechanic’s lien.
d. mechanic’s lien.
Which of the following liens does NOT need to be recorded to be valid?
a. Mortgage lien
b. Real estate tax lien
c. Judgment lien
d. Mechanic’s lien
b. Real estate tax lien
When a lien against a parcel of real estate may result from a lawsuit
currently before the court, one examining the public records would look for
a. the chain of title.
b. a lis pendens.
c. a suit to quiet title.
d. a judgment lien.
b. a lis pendens.
A mechanic’s lien would be properly classified as a(n)
a. equitable lien.
b. voluntary lien.
c. general lien.
d. statutory lien.
d. statutory lien.
The current market value of a property is $35,000. For tax purposes,
it is assessed at 40 percent of market value. The tax rate of $4 per $100
of assessed value. What is the amount of the tax due?
a. $560
b. $625
c. $705
d. $740
a. $560
Under which of the following types of liens can both the real property
and the personal property of the debtor be sold to pay the debt?
a. Real estate tax lien
b. Mechanic’s lien
c. Judgment lien
d. Assessment lien
c. Judgment lien
Which of the following is a voluntary lien?
a. Mortgage lien
b. Estate tax lien
c. Real estate tax lien
d. Judgment lien
a. Mortgage lien
Mechanic’s liens are based on
a. federal law.
b. state law.
c. common law.
d. case law.
b. state law.
A court orders real estate to be sold to satisfy an unpaid lien in an
action known as a(n)
a. encumbrance.
b. attachment.
c. seizure.
d. foreclosure.
d. foreclosure.
A mechanic’s lien can be filed against an owner’s real estate by a(n)
a. real estate salesperson claiming part of the broker’s commission.
b. lumber company furnishing materials ordered by the property owner.
c. real estate broker claiming a commission under a rejected offer.
d. individual who obtained a judgment against the property owner.
b. lumber company furnishing materials ordered by the property owner.
The current market value of a property is $255,000 and it is assessed
at 35 percent of its current market value with an equalization factor of
1.25. What is the amount of real estate tax due if the tax rate is $3.50
per $100 of assessed value?
a. $2,756.25
b. $3,445.31
c. $3,904.69
d. $4,880.26
c. $3,904.69
Judgment liens are
a. specific liens.
b. voluntary liens.
c. statutory liens.
d. equitable liens.
d. equitable liens.
A property owner contracted to have a swimming pool installed on
her property. When the pool was completed, she refused to pay for
the improvement, and the contractor filed a lien for nonpayment.
This lien was most likely a
a. general lien.
b. special lien.
c. specific lien.
d. voluntary lien.
c. specific lien.
G has defaulted in the payment of several of his debts, and the court
has ordered his property sold to satisfy them. A title search revealed
several outstanding liens against the property. Which of the following
liens has first priority?
a. The outstanding first mortgage lien dated and recorded one year ago
b. The current year’s real estate tax lien
c. The judgment lien rendered and recorded last month
d. The mechanic’s lien for work started two months before the mortgage
was recorded
b. The current year’s real estate tax lien
After real estate has been sold by the state or county to satisfy a
delinquent tax lien, the defaulted owner usually has a right to
a. have the sale canceled by paying the back taxes and penalties.
b. pay his or her creditors directly and have their liens removed.
c. redeem the property within the time specified by law.
d. record a notice of non-responsibility for the unpaid taxes.
c. redeem the property within the time specified by law.
Normally, the priority of general liens is determined by
a. the order in which they are filed or recorded.
b. the order in which the cause of action arose.
c. the size of the claim.
d. the court.
a. the order in which they are filed or recorded.
Which of the following is NOT a specific lien?
a. Real estate taxes
b. Judgments
c. Mortgages
d. Mechanic’s liens
b. Judgments
Which of the following is a lien on real estate?
a. An easement
b. A recorded mortgage
c. An encroachment
d. A restrictive covenant
b. A recorded mortgage
When establishing priorities for liens
a. a mechanic’s lien is always first in priority.
b. the date on which the lien was recorded determines priority.
c. the date on which the debt was incurred determines priority.
d. a broker’s lien is automatically first in priority.
b. the date on which the lien was recorded determines priority.
The current value of a property is $40,000. The property is assessed
at 40% of its current value, with an equalization factor of 1.5 applied
to the assessed value. If the tax rate is $4 per $100 of assessed value,
what is the amount of tax due on the property?
a. $640
b. $960
c. $1,600
d. $2,400
b. $960
40,000 x 40% = $16,000
$16,000 x 1.5 = $24,000
$24,000 x 4% = $960
What is the difference between a general and a specific lien?
a. A general lien cannot be enforced in court, while a specific lien
can be enforced.
b. A specific lien is held by one person, while a general lien is held
by at least two persons.
c. A general lien covers all of the debtor’s property, while a specific
lien is covers only a certain piece of real property.
d. A specific lien covers real estate, while a general lien covers
personal property.
c. A general lien covers all of the debtor’s property, while a specific lien is covers only a certain piece of real property.
If the market value of a property is $84,500 and the assessment ratio
is 35%, what are the monthly taxes if the tax rate is 30 mills?
a. $887.25
b. $942.50
c. $73.94
d. $87.72
c. $73.94
$84,500 x 35% = $29,575
($29,575 x 0.030) / 12 = $73.94
Taxes levied on a property owner to pay to install sidewalks or sewers are
called
a. ad valorem taxes.
b. general property taxes.
c. special excise taxes.
d. special assessments.
d. special assessments.
Debts that are incurred by an individual and become liens against
the real property owned by that person are
a. general liens.
b. specific liens.
c. fiduciary encumbrances.
d. special assessments.
b. specific liens.
The real estate taxes are $1200 a year. If the assessment rate is 20%
and the tax rate is 120 mills, what is the current value of the property?
a. $120,000
b. $80,000
c. $250,000
d. $50,000
d. $50,000
($1,200 / 0.120) / 20% = $50,000
The monthly taxes on a property are $200. If the tax rate is $4 per $100
of assessed value, what is the assessed value?
a. $12,000
b. $90,000
c. $60,000
f. $240,000
c. $60,000
$200 x 12 = $2,400
$2,400 / 4% = $60,000
A void contract is one that is
a. not in writing.
b. not legally enforceable.
c. rescindable by agreement.
d. voidable by only one of the parties.
b. not legally enforceable.
The legal proceeding or legal action brought by either the buyer or
the seller under a purchase contract to enforce the terms of the
contract is known as
a. an injunction.
b. a lis pendens.
c. an attachment.
d. specific performance.
d. specific performance.
The essential elements of a contract include all of the following EXCEPT
a. offer and acceptance.
b. notarized signatures.
c. competent parties.
d. consideration.
b. notarized signatures.
If, upon the receipt of an offer to purchase his property under certain
conditions, the seller makes a counteroffer, the prospective buyer is
a. bound by his original offer.
b. bound to accept the counteroffer.
c. bound by whichever offer is lower.
d. relieved of his original offer
d. relieved of his original offer
The amount of earnest money deposit is determined by
a. the real estate licensing statutes.
b. an agreement between the parties.
c. the broker’s office policy on such matters.
d. the acceptable minimum of 5 percent of the purchase price.
b. an agreement between the parties.
If the buyer defaulted some time ago on a written contract to purchase
a seller’s real estate, the seller can still sue for damages if he is not
prohibited from doing so by the
a. statute of frauds.
b. law of agency.
c. statute of limitations.
d. broker-attorney accord.
c. statute of limitations.
A written real estate contract is assumed to be the complete agreement
of the parties because of the
a. statute of frauds.
b. parol evidence rule.
c. statute of limitations.
d. rule of contracts.
b. parol evidence rule.
Which of the following gives the best evidence of the buyer’s intention to
carry out the terms of the real estate purchase contract?
a. The “subject to” clause
b. The agreement to seek mortgage financing
c. The earnest money deposit
d. The provision that “time is of the essence”
c. The earnest money deposit
The term “rescind” means
a. change.
b. cancel.
c. substitute.
d. subordinate.
b. cancel.
Which one of the following is NOT essential to the formation of a contract?
a. Offer
b. Acceptance
c. Consideration
d. Performance
d. Performance
An option
a. requires the optionee to complete the purchase.
b. gives the optionee an easement on the property.
c. keeps the offer open for a specified time.
d. makes the seller liable for a commission.
c. keeps the offer open for a specified time
When a prospective buyer makes a written purchase offer that the
seller accepts, then the
a. buyer may take possession of the real estate.
b. seller grants the buyer ownership rights.
c. buyer receives legal title to the property.
d. buyer receives equitable title to the property.
d. buyer receives equitable title to the property.
H agrees to purchase V’s real estate for $230,000, and deposits $6,900
earnest money with Broker L. However, V is unable to clear the title to
the property, and H demands the return of his earnest money as provided
in the purchase contract. Broker L should
a. deduct his commission and return the balance to H.
b. deduct his commission and give the balance to V.
c. return the entire amount to H.
d. give the entire amount to V to dispose of as he decides.
c. return the entire amount to H.
Every real estate contract must have a(n)
a. grantor and a grantee.
b. offer and acceptance.
c. acknowledgment by a notary.
d. legal description.
b. offer and acceptance.
A bilateral contract is one in which
a. only one of the parties is obligated to act.
b. the promise of one party is given in exchange for the promise of the
other party.
c. something is to be done by one party only.
d. a restriction is placed in the contract by one party to limit the
performance by the other.
b. the promise of one party is given in exchange for the promise of the
other party.
A buyer makes an earnest money deposit of $1,500 on a $15,000
property and then withdraws her offer before the seller can accept it.
The broker is responsible for disposing of the earnest money by
a. turning it over to the seller.
b. deducting the commission and giving the balance to the seller.
c. returning it to the buyer.
d. depositing it in his or her trust account.
c. returning it to the buyer.
. Broker K arrives to present a purchase offer to D, an invalid, and
finds her son and his wife also present. In the presence of Broker K,
both individuals persistently urge D to accept the offer, even though it
is much lower than the price she has been asking for her home. If D
accepts the offer, she may later claim that
a. Broker K should not have brought her such a low offer for her property.
b. she was under undue duress from her son and daughter-in-law, and
therefore, the contract is voidable.
c. Broker K defrauded her by allowing her son and his wife to see the
purchase offer he brought to her.
d. her consumer protection rights have been usurped by her son and
daughter-in-law.
b. she was under undue duress from her son and daughter-in-law, and
therefore, the contract is voidable.
The law that requires real estate contracts to be in writing to be enforceable is the
a. law of descent and distribution.
b. statute of frauds.
c. parole evidence rule.
d. statute of limitations.
b. statute of frauds.
If an owner takes his property off the market for a definite period of time
in exchange for some consideration, but he grants the right to purchase the
property within that period for a stated price, this is called a(n)
a. option.
b. contract of sale.
c. right of first refusal.
d. installment agreement.
a. option.
Which of the following best describes earnest money?
a. The consideration for the sale of the property
b. The money put up by the buyer at the time the offer is made
c. The commission to be paid to the broker
d. The money to be used for paying for some of the closing costs
b. The money put up by the buyer at the time the offer is made
A breach of contract is a refusal or a failure to comply with the terms
of the contract. If the seller breaches the purchase contract, the buyer
may do all of the following EXCEPT
a. sue the seller for specific performance.
b. rescind the contract and recover the earnest money.
c. sue the seller for damages.
d. sue the broker for nonperformance
d. sue the broker for nonperformance
To assign a contract for the sale of real estate means to
a. record the contract with the county recorder’s office.
b. permit another broker to act as agent for the principal.
c. transfer ones rights under the contract.
d. allow the seller and the buyer to exchange positions
c. transfer ones rights under the contract.
When a valid purchase contract is signed by the seller and the buyer,
a. the seller retains reversionary rights.
b. the buyer receives equitable title.
c. the seller transfers legal title.
d. the buyer forfeits possessory rights.
b. the buyer receives equitable title.
If a broker deposits the buyer’s earnest money in a trust account, at
what time is the seller entitled to receive it?
a. When the offer is presented to the seller
b. At the time of settlement
c. After the settlement
d. When the seller accepts the offer made by the buyer
b. At the time of settlement
An offeree has the right to
a. reject an offer.
b. revoke an offer.
c. rescind an offer.
d. release an offer.
a. reject an offer.
Which of the following best describes a contract that is voidable?
a. The contract has no legal effect.
b. The contract is oral.
c. The contract may be valid.
d. The contract has not been signed.
c. The contract may be valid.
Two salespeople working for the same broker obtained offers on
a property listed with their firm. The first offer was obtained early
in the day. A second offer for a higher purchase price was obtained
later in the afternoon. The broker presented the first offer to the seller
that evening. The broker did not inform the seller about the second
offer so that the seller could make a decision about the first offer.
Which of the following is true?
a. The broker’s actions are permissible provided the commission is
split between the two salespeople.
b. After the first offer was received the broker should have told the
salespeople that no additional offers
would be accepted until the seller decided on the offer.
c. The broker has no authority to withhold any offers from the seller.
d. The broker was smart to protect the seller from getting into a
negotiating battle over two offers.
c. The broker has no authority to withhold any offers from the seller.
A broker has an exclusive right-to-sell listing on a building. The owner
is out of town when the broker gets an offer from a buyer to purchase
the building providing the seller agrees to take a purchase money
mortgage. The buyer must have a commitment from the seller before
the seller is scheduled to return to the city. Under these circumstances the
a. broker may enter into a binding agreement on behalf of the seller.
b. broker may collect a commission even if the transaction falls through
because of the seller’s absence from the city.
c. the buyer is obligated to keep the offer open until the seller returns.
d. the broker must obtain the signature of the seller to effect a contract.
d. the broker must obtain the signature of the seller to effect a contract.
A broker took a listing and later discovered that the client was previously
declared legally incompetent. The listing is now
a. binding because the broker was acting as the owner’s agent in good faith.
b. of no value to the broker because it is now void.
c. the basis for the recovery of a commission if the broker produces a buyer.
d. renegotiable.
b. of no value to the broker because it is now void.
On Monday the seller offers to sell his vacant lot to the buyer for $12,000.
On Tuesday, the buyer counter offers to buy for $10,500. On Friday the buyer
withdraws the counteroffer and accepts the original offer of $12,000. Under
these conditions
a. there is a valid agreement because the buyer accepted the seller’s offer
exactly as it was made.
b. there is not a valid agreement because the buyer’s counteroffer was a
rejection of the seller’s offer and, once it was rejected, it cannot be
accepted later.
c. there is a valid agreement because the buyer accepted before the
seller advised the buyer that the offer is withdrawn.
d. there is not a valid agreement because the seller’s offer was not
accepted within 72 hours.
b. there is not a valid agreement because the buyer’s counteroffer was a
rejection of the seller’s offer and, once it was rejected, it cannot be
accepted later.
In a option to purchase real estate, the optionee
a. must purchase the property, but may do so at any time within the option period.
b. has no obligation to purchase the property.
c. is limited to a refund of the option consideration if the option is exercised.
d. is the prospective seller of the property.
b. has no obligation to purchase the property.
The broker receives an earnest money deposit with a written offer to purchase
that includes a ten-day acceptance clause. On the fifth day, before the offer is
accepted, the buyer notifies the broker that she is withdrawing the offer and
demands the return of the earnest money deposit. In this situation
a. the buyer cannot withdraw the offer because it must be held open
for the full 10 days.
b. the buyer has the right to revoke the offer at any time until it is
accepted and recover the earnest money.
c. the seller and the broker have the right to each retain ½ of the deposit.
d. the broker declares the deposit forfeited and retains it for his services.
b. the buyer has the right to revoke the offer at any time until it is
At the time a buyer was negotiating the purchase of a lot on which to build a
new home, the seller represented that the soil is firm enough to support the
construction of a building when, in fact, the seller knew it is not.
This contract is
a. void.
b. voidable by the buyer because of fraud.
c. voidable by the seller because of the mistake.
d. voidable by neither party because no harm was done yet.
b. voidable by the buyer because of fraud.
. After the buyer and seller have signed a sales contract, the seller changes his
mind and defaults. The buyer sues the seller to force him to go through with
the contract. This is known as a suit for
a. specific performance.
b. damages.
c. rescission.
d. forfeiture.
a. specific performance.
The concept that requires that an injured party to bring an action within a
specific period of time after the injury is
a. a variance.
b. the statute of limitations.
c. the statute of fraud.
d. a waiver.
b. the statute of limitations.
. A person must accept an offer to enter into a contract before
a. the payment of any money.
b. the death of the offeror.
c. the close of the 10th business day following the offer.
d. a similar offer is made to a third party.
b. the death of the offeror.
A contract agreed to under duress is
a. voidable.
b. breached.
c. discharged.
d. void.
a. voidable.
A real estate sales contract becomes valid or in effect when it
has been signed by
a. only the buyer.
b. the buyer and seller.
c. only the seller.
d. the broker and the buyer.
b. the buyer and seller.
Which of the following would NOT terminate an offer?
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.
d. An offer from a third party.
The title to real estate passes when a valid deed is
a. signed and recorded.
b. delivered and accepted.
c. filed and microfilmed.
d. executed and mailed.
b. delivered and accepted.
The primary purpose of a deed is to
a. prove ownership.
b. transfer title rights.
c. give constructive notice.
d. prevent adverse possession
b. transfer title rights.
A special warranty deed differs from a general warranty deed in that the
grantor's covenant in the special warranty deed
a. applies only to a definite limited time.
b. covers the time back to the original title.
c. is implied and is not written in full.
d. protects all subsequent owners of the property.
a. applies only to a definite limited time.
The law that requires transfers of real property ownership to be in writing is the
a. parol evidence rule.
b. statute of limitations.
c. rule of civil procedure.
d. statute of frauds.
d. statute of frauds.
A third party holds title to property on behalf of someone else through the use of a
a. devise.
b. quitclaim deed.
c. bequest.
d. trust deed.
d. trust deed.
In a real estate transaction, any transfer taxes that are due are usually
the responsibility of the
a. buyer.
b. seller.
c. escrow agent.
d. licensee.
b. seller.
Title to real estate that is inherited from a person who died intestate is referred to as a
a. legacy.
b. bequest.
c. devise.
d. demise.
c. devise.
Which of the following documents is signed by the owner of the real estate?
a. A gift deed
b. A trustee's deed
c. A reconveyance deed
d. A tax deed
a. A gift deed
Which of the following deeds contains no expressed or implied warranties?
a. A bargain and sale deed
b. A quitclaim deed
c. A warranty deed
d. A grant deed
b. A quitclaim deed
Which of the following is NOT required for a deed to be valid?
a. Date
b. Legal description
c. Name of the grantee
d. Signature of the grantee
d. Signature of the grantee
The reversion of real estate to the state because of its lack of heirs or
other persons legally entitled to own the property is called
a. eminent domain.
b. escheat.
c. attachment.
d. estoppel.
b. escheat.
What is the purpose of the acknowledgment by a notary public on a deed?
a. To make the deed eligible for recording
b. To assure that the title is valid
c. To show the genuineness of the grantor's signature
d. To prove that the property has not been encumbered
c. To show the genuineness of the grantor's signature
P owns a one-quarter undivided interest in a parcel of land, and he wants
his interest transferred to his sister E. As a general rule, which of the following
actions will transfer P's undivided interest out of his name?
a. The redemption from a foreclosure sale
b. The making and the signing of a will
c. The delivery of the deed during the owner's lifetime
d. The acceptance by signature of an offer to purchase
c. The delivery of the deed during the owner's lifetime
A valid will devises the decedent's real estate after the payment of all debts, claims, inheritance taxes and expenses through the
a. administrator of the estate.
b. law of testate succession.
c. granting clause established in the will.
d. court action known as probate.
d. court action known as probate.
When the grantor does not wish to convey certain property rights, he or she
a. must note the exceptions in a separate document.
b. may not do so, as the deed conveys the entire premises.
c. may note the exceptions in the deed of conveyance.
d. must convey the entire premises and have the grantee reconvey the rights
to be retained by the grantor.
c. may note the exceptions in the deed of conveyance.
F bought acreage in a distant county, never went to see it, and did not use it,
although he regularly paid the real estate taxes on it. L moved his mobile home
onto F's property, drilled a well for water, and lived there for many years. L may
have become the owner of the acreage if he has complied with the state laws regarding
a. intestate succession.
b. adverse possession.
c. the statute of frauds.
d. the statute of limitations
b. adverse possession.
In which of the following situations would a quitclaim deed be the most
appropriate type of deed to use?
a. To convey a marketable title
b. To release a nominal real estate interest
c. To remove a cloud on title
d. To warrant that a title is valid
c. To remove a cloud on title
The condemnation of private property for public use is exercised
under the government right of
a. taxation.
b. escheat.
c. manifest destiny.
d. eminent domain.
d. eminent domain.
. A trespasser built a log cabin in a national park and occupied
the structure for over 15 years. That person will never be able to
claim the property under adverse possession statutes because
a. the possession was not "notorious."
b. the possession was not "hostile."
c. the property was not privately owned.
d. the property was not properly fenced
c. the property was not privately owned.
Grantee is to a deed as devisee is to a
a. trust.
b. will.
c. estate.
d. leasehold.
b. will.
Which of the following is NOT true about adverse possession?
a. The person taking possession of the property must do so without
its owner's consent.
b. Occupancy of the property must be continuous over a specified
period of time.
c. The person taking possession must compensate the owner at the
end of the possessory period.
d. The person taking possession may become the owner of the property.
c. The person taking possession must compensate the owner at the end of the possessory period.
Which of the following would NOT transfer property upon the owner’s death?
a. By devise
b. By dedication
c. By descent
d. By escheat
b. By dedication
A deed must be signed by the
a. grantor.
b. grantee.
c. grantor and grantee.
d. grantee and two witnesses.
a. grantor.
Normally a deed will be considered valid even if
a. it is signed by an attorney-in-fact rather than the seller.
b. the grantor is not a legal entity.
c. the grantor is a minor.
d. the grantor did not deliver the deed.
a. it is signed by an attorney-in-fact rather than the seller.
In order for a deed to be valid
a. the grantor must be legally competent.
b. the signature of the grantor must be witnessed.
c. the deed must be recorded.
d. the grantee must sign the deed.
a. the grantor must be legally competent.
The seller conveyed a quitclaim deed to the buyer. Upon receipt
of the deed, the buyer may be certain that
a. the seller owned the property.
b. there are no encumbrances against the property.
c. the buyer now owns the property subject to certain claims of the seller.
d. all of the seller's interests in the property belong to the buyer.
d. all of the seller's interests in the property belong to the buyer.
The type of deed in which the grantor defends the title back to its beginning is a
a. trustee's deed.
b. quitclaim deed.
c. special warranty deed.
d. general warranty deed.
d. general warranty deed.
Which of the following is true regarding a special warranty deed?
a. The grantor is making additional warranties beyond those given in a warranty deed.
b. The grantor retains an interest in the ownership.
c. The grantor is warranting that no encumbrances exist against the property.
d. The grantor's warranties are limited to the time the grantor owned the property.
d. The grantor's warranties are limited to the time the grantor
owned the property.
Two people own a building as joint tenants with right of survivorship. One of the tenants dies intestate. The other tenant now owns the building
a. as a joint tenant with right of survivorship.
b. in severalty.
c. in absolute ownership under the law of descent.
d. subject to the terms of the deceased's will.
b. in severalty.
A single person owned a parcel of land. Subsequent to the owner's death the
probate court determined the distribution of the land in accordance with the state's
statutes. This person
a. died testate.
b. died intestate.
c. was the devisee.
d. was the grantee.
b. died intestate.
Which of the following is an involuntary alienation of property?
a. Quitclaim
b. Inheritance
c. Eminent domain
d. Gift
c. Eminent domain
The type of deed in which the granting clause states "remise, release,
alienate and convey" is a
a. special warranty deed.
b. bargain and sale deed.
c. quitclaim deed.
d. sheriff's deed.
a. special warranty deed.
. A grantor does not wish to be responsible for defects in the title
that arise from previous owners but will guarantee the title for the
time the grantor has the ownership. What type of deed would the
grantor convey?
a. Bargain and sale deed
b. Quitclaim deed
c. Reconveyance deed
d. Special Warranty deed
d. Special Warranty deed
Which of the following is an example of involuntary alienation?
a. Selling a property to pay off debts
b. Giving a piece of land to the zoo
c. Having a piece of land sold for delinquent taxes
d. Letting another person plant crops on an unused portion of a
piece of land
c. Having a piece of land sold for delinquent taxes
The clause in the deed that conveys the rights and privileges of
ownership is called the
a. habendum clause.
b. appurtenance clause.
c. granting clause.
d. acknowledgment.
c. granting clause.
Which of the following deeds can be executed without subjecting
the grantor to legal warranties?
a. Quitclaim
b. Bargain and sale
c. Trust
d. Trustee's deed
a. Quitclaim
The deed that "grants and releases" and implies that the grantor
has title is a
a. special warranty deed.
b. bargain and sale deed.
c. quitclaim deed.
d. trust deed.
b. bargain and sale deed.
. The deed states that the grantor is conveying all rights and interests
of the grantor to have and to hold by the grantee. This is the
a. acknowledgment clause.
b. restriction clause.
c. covenant of seizen.
d. habendum clause.
d. habendum clause.
What will happen to the real estate if the deceased owner did not
write a will and has no heirs?
a. The ownership will pass by devise.
b. The ownership will escheat.
c. The courts will seize the ownership.
d. The ownership will revert to the previous owner.
b. The ownership will escheat.
Under the terms of a trust established by a will, the trustee is required to sell
the real estate the trust holds. The deed that will be delivered at settlement is a
a. deed of release.
b. warranty deed.
c. trustee's deed.
d. trustor's deed.
c. trustee's deed.
Which of the following is acceptable as the evidence of marketable title?
a. A trust deed
b. A warranty deed
c. A title insurance policy
d. An affidavit
c. A title insurance policy
When a claim is settled by a title insurance company, the company
acquires all rights and claims of the insured against any other person
who is responsible for the loss. This is known as
a. caveat emptor.
b. surety bonding.
c. subordination.
d. subrogation.
d. subrogation.
Which of the following would be used to clear a defect from the title records?
a. A lis pendens
b. An estoppel certificate
c. A suit to quiet title
d. A writ of attachment
c. A suit to quiet title
The part of the title insurance policy that sets forth all of the encumbrances
and defects that will NOT be insured against is called the
a. schedule of defects.
b. citation clause.
c. non-exclusionary clause.
d. schedule of exceptions.
d. schedule of exceptions.
An abstract of title does NOT provide evidence of title unless it is
accompanied by a
a. copy of the title insurance policy.
b. letter of insurance coverage.
c. letter of warranty.
d. legal opinion of title.
d. legal opinion of title.
A bill of sale is used to transfer the ownership of
a. real property.
b. fixtures.
c. personal property.
d. appurtenances.
c. personal property
When U purchased her home, the title insurance policy she received
did NOT include which of following ?
a. A list of outstanding mortgage loans against the property
b. A record of all of the previous owners of the property
c. A report of the existing tax liens against the property
b. A record of all of the previous owners of the property
A written summary of the history of all conveyances and legal proceedings
affecting a specific parcel of real estate is called a(n)
a. affidavit of title.
b. certificate of title.
c. abstract of title.
d. title insurance policy
c. abstract of title.
When the preliminary title report reveals the existence of an easement
on the property, it indicates that the easement is a(n)
a. lien.
b. encumbrance.
c. encroachment.
d. tenement.
b. encumbrance.
The recorded history of matters that affect the title to a specific parcel
of real property is called a
a. chain of title.
b. certificate of title.
c. title insurance policy.
d. abstract of title.
d. abstract of title.
. Generally, if some defect is found in the title to real property, the effect
on a sales contract is that
a. the contract is immediately void.
b. a new contract must be written.
c. the buyer has a reasonable time to find another property.
d. the seller has a reasonable time to correct the defect.
d. the seller has a reasonable time to correct the defect.
. Which of the following would NOT be considered evidence of
marketable title?
a. An abstract of title with a legal opinion
b. A title commitment or title insurance policy
c. A certificate of title by a real estate broker
d. A. certificate of title by a real estate attorney
c. A certificate of title by a real estate broker
The recordation of a warranty deed
a. guarantees ownership.
b. protects the interests of the grantee.
c. prevents claims of parties in possession.
d. provides defense against adverse possession
b. protects the interests of the grantee.
Documents affecting real estate are recorded or filed with the county in
which the property is located to
a. satisfy the legal requirements for recording.
b. give constructive notice of the real estate interest.
c. comply with the terms of the statute of frauds.
d. prove the execution of the document.
b. give constructive notice of the real estate interest.
Which one of the following would NOT be acceptable as evidence of
marketable title?
a. A Torrens certificate
b. A title insurance policy
c. An abstract and legal opinion
d. A property owner's warranty deed
d. A property owner's warranty deed
Under the Torrens system,
a. title passes when the registrar approves the grantor's deed for
registration.
b. the Torrens official performs exactly the same functions as the
recorder of deeds.
c. the original deed is mailed to the buyer after it has been registered.
d. the registration of a title can be canceled by the owner at any time.
a. title passes when the registrar approves the grantor's deed for
registration.
The best assurance of good title that a real estate purchaser can obtain is a
a. valid warranty deed signed by the seller.
b. valid quitclaim deed signed by the seller.
c. policy of title insurance.
d. certificate of title.
c. policy of title insurance.
A document that protects against hidden risks such as forgeries and loss
due to defects in the title, subject to specific exceptions, is call a(n)
a. chain of title.
b. abstract of title.
c. certificate of title.
d. title insurance policy.
d. title insurance policy.
The body of law that covers such topics as security agreements, financing
statements, and bulk transfers is the
a. American Land Title Association.
b. Uniform Commercial Code.
c. Parol Evidence Rule.
d. Statute of Limitations
b. Uniform Commercial Code.
The recording of a deed
a. is all that is required to transfer the title to real estate.
b. gives constructive notice of the ownership of real property.
c. insures the interest in a parcel of real estate.
d. warrants the title to real property.
b. gives constructive notice of the ownership of real property.
A buyer took delivery of the deed to his new house but forgot
to record the deed. Under these circumstances
a. the transfer of the property from the seller is ineffective.
b. the buyer's interest is not fully protected against third parties.
c. the deed is invalid after 90 days.
d. the deed in invalid after 6 months.
b. the buyer's interest is not fully protected against third parties.
The mortgagee purchases a title insurance policy on the property a
buyer is pledging as security for the mortgage loan. Which of the
following is true?
a. The policy is issued for the benefit of the buyer.
b. The policy guarantees that the buyer's equity will be protected.
c. The amount of coverage is commensurate with the loan amount.
d. The amount of coverage increases as the borrower's equity increases
c. The amount of coverage is commensurate with the loan amount.
Which of the following is an example of proof of ownership?
a. An abstract of title
b. A deed
c. Title insurance
d. A title search
c. Title insurance
A defect or a cloud on the title may be cured by
a. obtaining quitclaim deeds from all interested parties.
b. bringing an action to register title.
c. paying cash for the property at closing.
d. obtaining title insurance.
a. obtaining quitclaim deeds from all interested parties.
Which of the following is NOT true regarding public records?
a. They give notice of encumbrances.
b. They establish priority of liens.
c. They guarantee marketable title.
d. They provide constructive notice about interests in the property.
c. They guarantee marketable title.
The primary reason a buyer obtains title insurance is
a. because the mortgage lender requires it.
b. to ensure that the buyer has marketable title.
c. to ensure that the abstractor has prepared a complete summary
of title.
d. to pay future liens that may be filed.
b. to ensure that the buyer has marketable title.
A sales contract requires the seller to deliver marketable title.
Which of the following is true?
a. The delivery of a general warranty deed will provide this assurance.
b. A search of the public records will prove that the title is marketable.
c. The seller will pay all liens that are pending.
d. All encumbrances will be removed by the seller.
c. The seller will pay all liens that are pending.
. An outstanding claim or encumbrance which, if valid, would impair
an owner’s title is a
a. color of title.
b. cloud on the title.
c. quiet title.
d. subrogation.
b. cloud on the title.
Quieting a title refers to
a. a title insurance company's search of the title.
b. a mortgagor relinquishing title after foreclosure.
c. the deposit of a title with an escrow agent.
d. the removal of a cloud on the title by court action.
d. the removal of a cloud on the title by court action.
Under an installment contract, the title to the property is held by the
a. vendor.
b. vendee.
c. trustor.
d. trustee.
a. vendor.
Charging more interest than is legally allowed is known as
a. escheat.
b. usury.
c. a deficiency.
d. an estoppel.
b. usury.
A mortgagor is the one who
a. gives the mortgage.
b. holds the mortgage.
c. provides the mortgage funds.
d. forecloses on the mortgage.
a. gives the mortgage.
A promissory note
a. may not be executed in connection with a real estate loan.
b. is an agreement to perform or not to perform certain acts.
c. is the primary evidence of a debt.
d. is a guarantee by a government agency
c. is the primary evidence of a debt.
A land contract provides for the
a. sale of unimproved land only.
b. sale of real property under an option agreement.
c. conveyance of legal title at a future date.
d. immediate transfer of reversionary rights.
c. conveyance of legal title at a future date.
The finance fee charged by the lender to make the loan is a(n)
a. prepayment penalty.
b. advance interest payment.
c. loan origination fee.
d. prepayment of mortgage insurance.
c. loan origination fee.
If the amount realized at a sheriff's sale as part of a mortgage foreclosure
is more than the amount of the indebtedness and expenses, then the
excess belongs to
a. the mortgagor.
b. the mortgagee.
c. the sheriff's office.
d. the county.
a. the mortgagor.
. L has just made the final payment on her home mortgage to her lender.
There will still be a lien on her property until the lender records a(n)
a. satisfaction of mortgage.
b. reconveyance of mortgage.
c. alienation of mortgage.
d. reversion of mortgage.
a. satisfaction of mortgage.
. An existing mortgage loan can have its lien priority lowered through
the use of a
a. hypothecation agreement.
b. satisfaction of mortgage.
c. subordination agreement.
d. reconveyance of mortgage
a. hypothecation agreement.
The right a mortgagor has to regain the property by paying the debt
after a foreclosure sale is called
a. acceleration.
b. redemption.
c. reversion.
d. recapture
b. redemption.
The clause in a trust deed or mortgage that permits the lender to
declare the entire unpaid balance immediately due an payable
upon default is the
a. judgment clause.
b. escalator clause.
c. forfeiture clause.
d. acceleration clause
d. acceleration clause
A building was sold for $115,000. Earnest money in the amount of
$15,000 was deposit in escrow, and the buyer obtained a new loan for
the balance of the purchase price. The lender charged two discount
points on the loan. What was the total amount of cash used by the buyer
for this purchase?
a. $2,300
b. $15,000
c. $17,000
c. $17,000
($115,000 - $15,000) x 2% = $2,000
$15,000 + $2,000 = $17,000
When a mortgage loan has been paid in full, it is important for the
borrower to be sure that
a. the paid note is placed in a safe deposit box.
b. he or she obtains a deed of partial reconveyance.
c. the paid mortgage is returned to the lender.
d. a satisfaction of mortgage is recorded.
d. a satisfaction of mortgage is recorded.
. In what way does a deed of trust differs from a mortgage ? i
a. In the number of parties involved in the loan
b. In the obligation of the borrower to repay the funds
c. In the redemption rights allowed after foreclosure
d. In the time period permitted to cure a default
a. In the number of parties involved in the loan
. A person who assumes an existing mortgage loan is
a. not personally liable for the repayment of the debt.
b. not in danger of losing the property by default.
c. personally responsible for paying the principal balance.
d. generally released from liability, but not always.
c. personally responsible for paying the principal balance.
. The interest in a property held by the owner in excess
of any liens against it is called
a. hypothecation.
b. subordination.
c. leverage.
d. equity.
d. equity.
The mortgagee foreclosed on a property after the borrower
defaulted on the loan payments. At the foreclosure sale, however,
the house sold for only $29,000. The unpaid balance of the loan
at the time of the sale was $40,000. What must the lender do to
recover the $11,000 the borrower still owes?
a. Sue for damages
b. Sue for specific performance
c. Seek a judgment by default
d. Seek a deficiency judgment
d. Seek a deficiency judgment
The clause in a mortgage instrument that would prevent the
assumption of the mortgage by a new purchaser is a
a. due on sale clause.
b. power of sale clause.
c. defeasance clause.
d. certificate of sale clause
a. due on sale clause.
The defeasance clause in a mortgage requires the mortgagee
to execute a(n)
a. assignment of mortgage.
b. satisfaction of mortgage.
c. subordination agreement.
d. partial release agreement
b. satisfaction of mortgage.
. The seller agrees to sell the house to the buyer for $100,000.
The buyer was unable to qualify for a mortgage loan for this
amount so the seller and buyer enter into a contract for deed.
The interest the buyer has in the property under a contract
for deed is
a. legal title.
b. equitable title.
c. joint title.
d. mortgagee in possession.
b. equitable title.
. A "friendly foreclosure" enables a mortgagor to prevent the
mortgagee from taking the property by statutory means. This
can be accomplished by a(n)
a. deed in lieu of foreclosure.
b. reconveyance deed.
c. assumption.
d. escrow deed.
a. deed in lieu of foreclosure.
Mortgage lenders want assurance that future real estate taxes
will be paid. The most common way to do this is to require the
borrower to
a. obtain title insurance.
b. sign a note.
c. pay into an impound account.
d. submit paid tax receipts.
c. pay into an impound account.
The pledging of property as security for payment of a loan is
a. disintermediation.
b. equity.
c. hypothecation.
d. subordination.
c. hypothecation.
When real estate is sold under an installment land contract
and the buyer takes possession of the property, the legal title
a. is subject to a purchase money mortgage.
b. must be transferred to a land trust.
c. is kept by the seller until the purchase price is paid according
to the contract.
d. is transferred to the buyer
c. is kept by the seller until the purchase price is paid according
to the contract.
Which of the following is true about an installment contract
(land contract)?
a. The buyer is given possession.
b. The seller delivers a deed to the buyer.
c. The buyer obtains a mortgage loan.
d. The seller delivers legal title to the buyer
a. The buyer is given possession.
If a buyer obtains a $50,000 mortgage with 4 points, how
much will the lender charge at closing?
a. $6,000
b. $200
c. $2,000
d. $40,000
c. $2,000
$50,000 x 4% = $2,000
In absence of an agreement to the contrary, the mortgage
having priority will be the one
a. for the highest amount.
b. which was recorded first.
c. which was the first mortgage.
d. that is a construction loan.
b. which was recorded first.
The purpose of a mortgage is to
a. provide security for the loan.
b. convey title of the property to the lender.
c. restrict the borrower's use of the property.
d. create a lien on the property.
a. provide security for the loan.
If a property sold at a mortgage foreclosure does not sell
for an amount sufficient to satisfy the outstanding mortgage
debt, the mortgagor may be responsible for
a. a default judgment.
b. a deficiency judgment.
c. liquidated damages.
d. punitive damages.
b. a deficiency judgment.
. K has just purchased his first home with a fixed-rate loan.
The interest he will pay over the life of the loan is
a. simple interest.
b. compound interest.
c. prepaid interest.
d. discounted interest.
a. simple interest
The amount of a loan expressed as a percentage of the value
of the real estate offered as collateral is the
a. amortization ratio.
b. loan-to-value ratio.
c. debt-to-equity ratio.
d. capital-use ratio.
b. loan-to-value ratio.
The purpose of the Real Estate Settlement Procedures Act
(RESPA) is to
a. see that buyers do not borrow more money than they
can repay.
b. make real estate brokers more responsive to the needs
of buyers.
c. help sellers know how much money is required to purchase
the property.
d. see that buyers and sellers know all of their settlement costs.
d. see that buyers and sellers know all of their settlement costs.
If the quarterly interest at 10-1/2 percent is $3,150, the principal
amount of the loan is
a. $30,000.
b. $60,000.
c. $90,000.
d. $120,000.
d. $120,000.
Fannie Mae
a. makes FHA loans.
b. buys FHA loans.
c. services FHA loans.
d. insures FHA loans
b. buys FHA loans
The grantor becomes the lessee and the grantee becomes the lessor
under which of the following financing arrangements?
a. Partial sale
b. Wraparound mortgage
c. Sale and leaseback
d. Assumption of mortgage
c. Sale and leaseback
Which of the following pairs of terms is considered synonymous?
a. Interim financing and construction loan
b. Construction loan and pass-through loan
c. Pass-through loan and take-out loan
d. Take-out loan and construction loan
a. Interim financing and construction loan
The type of real estate loan that allows the lender to increase the
outstanding balance of a loan up to the original sum in the note while
advancing additional funds is the
a. wraparound mortgage.
b. open-end mortgage.
c. growing-equity mortgage.
d. graduated-payment mortgage.
b. open-end mortgage.
Which of the following statements is true?
a. The priority of a mortgage is determined by the date on which
it was executed.
b. A mortgage document contains no covenants or promises on
the part of the borrower.
c. A deed of trust is typically conveyed by the trustor to the
beneficiary.
d. A buyer does not have to be a veteran to assume a VA loan.
10. Which of the following loans to individuals is NOT affected by the
Truth in Lending Law implemented by Regulation Z, that sets forth
certain requirements regarding real estate loans?
a. Household use
b. Business use
c. Room additions
d. Swimming pools
11. An FHA-insured mortgage loan would be obtained from which
of the following?
a. The Federal Housing Administration
b. The Department of Housing and Urban Development
c. Any qualified lending institution
d. Any qualified insuring institution
12. Fannie Mae, Ginnie Mae, and Freddie Mac have in common
the purpose of
a. originating residential mortgage loans.
b. purchasing existing mortgage loans.
c. insuring residential mortgage loans.
d. guaranteeing existing mortgage loans.
13. A mortgage broker generally offers which of the following services?
a. Handling the escrow procedures
b. Bringing the borrower and the lender together
c. Providing credit qualification and evaluation reports
d. Granting real estate loans using investor funds
14. An eligible veteran made a purchase offer of $80,000 on a home he
wants to finance with a VA-guaranteed loan. Four weeks after the offer
was accepted, a certificate of reasonable value (CRV) for $77,000 was
issued for the property. In this situation, the veteran could NOT do which
of the following ?
a. Withdraw from the transaction without penalty.
b. Purchase the property with a $3,000 cash down payment.
c. Negotiate with the seller to reduce the price $3,000.
d. Borrow the $3,000 for the cash down payment.
15. A borrower obtained a $7,000 second mortgage loan for 5 years at 6
percent interest per annum. Monthly payments were $50. The final
payment included the remaining outstanding principal balance. What type
of loan is this?
a. A fully amortized loan
b. A straight loan
c. A partially amortized loan
d. An accelerated loan
c. A partially amortized loan
The discount points charged on a VA guaranteed mortgage loan could
NOT be paid by which of the following?
a. The buyer
b. The seller
c. The buyer and seller
d. The mortgage loan
d. The mortgage loan
The principal distinction between the primary mortgage market and the
secondary mortgage market is in the
a. insuring versus the guaranteeing of mortgage loans.
b. origination versus the purchase of mortgage loans.
c. use of mortgages versus the use of deeds of trust.
d. use of discount points versus the use of origination fees.
b. origination versus the purchase of mortgage loans.
A real estate loan payable in periodic installments that are sufficient
to pay the principal in full during the term of the loan is called a(n)
a. conventional loan.
b. straight loan.
c. participation loan.
d. amortized loan.
d. amortized loan.
. An extension of credit from a seller to the buyer to allow the buyer to
complete the transaction is called a
a. growing equity mortgage.
b. purchase money mortgage.
c. package mortgage.
d. blanket mortgage.
b. purchase money mortgage.
When compared with a 30-year payment period, taking out a loan
with a 20-year payment period would NOT result in
a. faster amortization.
b. higher monthly payments.
c. quicker equity buildup.
d. greater impound amounts.
d. greater impound amounts.
If the interest rate on an FHA-insured mortgage loan is 11-1/2
percent and the monthly payment is $1,412, the principal sum
would be
a. $12,278.
b. $147,339.
c. $162,383.
d. $194,561.
b. $147,339.
PMI is the acronym for Private Mortgage Insurance often used by
borrowers whose LTV (loan-to-value) ratio is less than 20%.
Lenders must cease charging PMI when the LTV is
a. 22 %.
b. 27%.
c. 29%.
d. 35%.
a. 22 %
From which of the following would a borrower most likely obtain
a residential real estate mortgage loan?
a. An insurance company
b. A pension fund
c. A commercial bank
d. A savings and loan association
d. A savings and loan association
Regulation Z applies to
a. business loans.
b. real estate sales agreements.
c. commercial loans under $10,000.
d. personal credit transactions under $25,000.
d. personal credit transactions under $25,000.
FNMA's activities do NOT include
a. buying and selling FHA and VA mortgages.
b. buying and selling conventional mortgages.
c. buying and selling mortgages at full face value.
d. buying and selling mortgages at discounted values.
c. buying and selling mortgages at full face value.
As an entity operating in the secondary mortgage market, the
Federal Home Loan Mortgage Corporation was established
to assist the
a. Federal Housing Administration.
b. Federal National Mortgage Association.
c. federal savings and loans.
d. federal banks.
c. federal savings and loans.
A graduated payment loan is one in which
a. mortgage payments decrease.
b. mortgage payments balloon in 5 years.
c. mortgage payments increase.
d. the interest rate on the loan adjusts annually.
c. mortgage payments increase.
. If the amount of a loan is $13,500 and the interest rate is 7 1/2%
what is the amount of the semiannual interest payment?
a. $596.55
b. $506.25
c. $602.62
d. $457.14
b. $506.25
The type of mortgage loan that uses both real and personal
property as security is a
a. blanket mortgage.
b. package mortgage.
c. purchase money mortgage.
d. wraparound mortgage.
b. package mortgage.
The supply of mortgage money for single-family homes is
regulated by the Federal Reserve System through which of
the following?
a. Reserve requirements and discount rates
b. Federal National Mortgage Association
c. Federal Housing Administration
d. Resolution Trust Corporation
a. Reserve requirements and discount rates
Which of the following normally purchases mortgages in the
secondary mortgage market?
a. Mortgage bankers
b. Ginnie Mae
c. Federal Housing Administration
d. Veterans Administration
b. Ginnie Mae
If a house sold for $80,000 and the buyer obtained a loan for
$72,000, how much money would the buyer pay if the lender
charged 3 points?
a. $2400
b. $2328
c. $2160
d. $240
c. $2160
A mortgage loan requires monthly payments of $175.75 for 20
years and a final payment of $5,095. This type of a mortgage
loan is a(n)
a. wraparound mortgage.
b. accelerated mortgage.
c. balloon mortgage.
d. variable mortgage.
c. balloon mortgage.
In a sale-and-leaseback arrangement the
a. seller retains legal title to the real estate.
b. buyer becomes the lessee.
c. broker will not earn a commission.
d. buyer becomes the lessor.
d. buyer becomes the lessor.
Last month's loan payment included $412.50 interest on a
$60,000 loan balance. What is the annual rate of interest?
a. 7 1/2 percent
b. 7 3/4 percent
c. 8 1/4 percent
d. 8 1/2 percent
c. 8 1/4 percent
Mrs. D has owned her house for over 50 years. It has
fallen into disrepair but, because she lives on a fixed income,
she does not have the money to make the needed repairs.
She has a considerable amount of equity in the house. What
type of loan best suits her needs?
a. A home equity loan
b. A reverse annuity mortgage
c. A blanket loan
d. An open-ended loan
b. A reverse annuity mortgage
The type of loan that will most likely have the lowest
loan-to-value ratio is a
a. VA loan.
b. FHA loan.
c. PMI loan.
d. conventional loan.
d. conventional loan.
A lender may protect its interest in a mortgage loan by
obtaining additional security from
a. private mortgage insurance.
b. title insurance.
c. the borrower's note.
d. impound accounts.
a. private mortgage insurance.
A lender will take certain factors into consideration when
deciding whether to grant a borrower a mortgage loan.
One of the following is NOT a legitimate factor.
a. The marital status of the borrower
b. The creditworthiness of the borrower
c. The amount of the borrower's income
d. The ability of the borrower to make the payments
a. The marital status of the borrower
One of the ways lenders increase their revenue is by servicing
loans. Which of the following is NOT an activity of servicing loans ?
a. Collecting payments
b. Paying real estate taxes from escrow accounts
c. Renegotiating interest rates
d. Sending overdue notices
c. Renegotiating interest rates
A developer had a mortgage loan on his entire housing development.
When he sold a lot to a buyer, he was able to deliver title to that lot
free of the mortgage lien by obtaining a partial release. What type of
loan did the developer have?
a. Blanket mortgage
b. Purchase money mortgage
c. Package mortgage
d. Open-end mortgage
a. Blanket mortgage
The T's apartment lease has expired, but their landlord has
indicated to them that they may remain on the premises until
a sale of the building is closed. The Ts will be charged their
normal monthly rental during this period. The tenancy held
by the Ts is called a(n)
a. year to year holdover.
b. estate for term.
c. estate at sufferance.
d. estate at will.
d. estate at will.
Generally, an oral lease for five years is
a. illegal.
b. unenforceable.
c. a short-term lease.
d. renewable only in writing.
b. unenforceable.
An office rents for $450 per month and measures 12 feet
by 20 feet. The advertised annual rent per square foot
would be
a. $1.875.
b. $4.50.
c. $18.75.
d. $22.50
d. $22.50

12 x 20 = 240 Sq Ft
($450 / 240) x 12 = $22.50
Rent would best be defined as
a. the contractual consideration to a third party.
b. the consideration for the use of real property.
c. all monies paid by the lessor to the lessee.
d. the total amount owed under the terms of a lease
b. the consideration for the use of real property.
Which of the following tenancies does NOT involve a
lessor-lessee?
a. Tenancy at will
b. Tenancy in common.
c. Tenancy from month to month.
d. Tenancy from year to year.
b. Tenancy in common.
The tenant leases a heated apartment, but the landlord
fails to provide heat because of a defective central heating
plant. The tenant vacates the premises and refuses to pay
any rent. This is an example of
a. abandonment.
b. actual eviction.
c. constructive eviction.
d. lessor negligence.
c. constructive eviction.
A lease would be terminated by which of the following?
a. The sale of the leased premises
b. The death of the tenant
c. The abandonment of the leased premises by the tenant
d. The expiration of the term of the lease
d. The expiration of the term of the lease
. For a written lease to be valid, it must contain
a. the signatures of both the lessor and the lessee.
b. a statement of the specific length of time.
c. a statement of the retention of the reversionary
interest by the lessor.
d. a complete legal description of the premises
a. the signatures of both the lessor and the lessee.
The authority to carry out the eviction of a delinquent
tenant from rented property is held by the
a. court.
b. landlord.
c. sheriff.
d. property owner.
c. sheriff.
Which of the following would NOT acquire title to
real property ?
a. The grantee
b. The devisee
c. The vendee
d. The lessee
d. The lessee
. A tenant's lease has expired, but the tenant has not
vacated the premises or negotiated a renewal lease,
and the landlord has declared that he does not want
the tenant to remain in the building. This type of
occupancy is referred to as an estate
a. for years.
b. from year to year.
c. at will.
d. at sufferance.
d. at sufferance.
. D leases a barber shop from K. The lease does not
specifically indicate who is responsible for making repairs
to the premises. The expense of making such repairs is
generally
a. paid by the lessor.
b. paid by the lessee.
c. shared by the lessor and the lessee.
d. paid by the lessee who will be reimbursed by the
lessor.
b. paid by the lessee.
When a tenant sublets all or any part of the premises
rented under a written lease,
a. the tenant assigns all right title, and interest in the
rented property to the new lessee.
b. the sublessee becomes primarily responsible to
the landlord for the payment of rent and
maintenance of the property.
c. the original lease is automatically canceled and the
sublessee takes possession of the property on a
month to month basis.
d. the original lease is unaffected unless it contains a provision that prohibits such subletting.
d. the original lease is unaffected unless it contains a provision that prohibits such subletting.
A lessee who pays some or all of the lessor's property
expenses has a
a. gross lease.
b. net lease.
c. percentage lease.
d. sublease.
b. net lease.
The principal difference between an estate for years and
an estate from year to year is that
a. an estate for years is a life estate.
b. an estate for years cannot be terminated.
c. an estate from year to year must be in writing.
d. an estate from year to year has no expiration date.
d. an estate from year to year has no expiration date.
. The covenant implied in a lease that ensures that the
tenant will not be evicted by someone claiming ownership
of the property prior to that of the lessor is the covenant
a. of seizin.
b. of quiet enjoyment.
c. of warranty forever.
b. of quiet enjoyment.
. A tenant has an estate for years. According to the written
one-year lease, the tenancy will expire on May 1st. For the
landlord to obtain possession as of that date, he must give
the tenant
a. 30 days' notice.
b. 60 day's notice.
c. no notice.
d. notice as of April 15th.
c. no notice.
The owner of real estate who leases it to another is called the
a. vendor.
b. lessor.
c. grantor.
d. trustor.
b. lessor.
A lease that will terminate within one year of its inception
a. is invalid.
b. violates the provisions of the
statute of frauds.
c. must be in writing.
d. can be verbal.
d. can be verbal.
When a tenant holds possession of a landlord's property
without a definite lease term but with the consent of the
landlord, this is called
a. tenancy in common.
b. tenancy at sufferance.
c. tenancy at will.
d. trespass.
c. tenancy at will.
Which of the following is the best definition of actual
eviction?
a. The right of a landlord to use the rental premises
b. The enforcement of a court order to remove a lessor
c. The landlord's reversionary right in the rental premises
d. The enforcement of a court order to remove a lessee
d. The enforcement of a court order to remove a lessee
. In the event that it is necessary for a landlord to remove
a tenant from the premises, he or she does it by
a. refunding any rents paid.
b. refunding any security or other deposits paid.
c. filing an eviction suit.
d. using the minimum amount of physical force necessary.
c. filing an eviction suit.
. If a leased building collapsed and the tenant was forced
to move out, this could be called
a. constructive eviction.
b. effective eviction.
c. actual eviction.
d. detainer.
a. constructive eviction.
Under a tenancy for years
a. the term of the lease must be for at least one year.
b. no notice is required to terminate the lease.
c. a 30-day notice is required to terminate the lease.
d. the lessee has a freehold estate.
b. no notice is required to terminate the lease.
Under a gross lease, the lessee may be requested
to pay
a. maintenance.
b. real estate taxes.
c. insurance.
d. a percent of sales.
d. a percent of sales.
. A lessee is in possession of property under a tenancy
at will. Which of the following is true?
a. The lessee has not received the consent of the
landlord to possess the property.
b. The tenancy will terminate if the lessee dies.
c. The tenancy was created by the death of the lessor.
d. The tenancy has a definite termination date.
b. The tenancy will terminate if the lessee dies.
. A tenant's lease does not terminate for five more years.
The premises, however, have become too small to
accommodate the tenant's growing business. Another
business owner is interested in leasing the premises from
the tenant for 3 years. Which of the following would the
parties use for the tenant to lease the space to the
business owner?
a. An assignment
b. A novation
c. A sublease
d. A tenancy at sufferance
c. A sublease
A young couple with a toddler and an infant want to
lease an apartment in a complex that is occupied primarily
by adults. The rental agent shows the couple apartments
only on the first floor. Which of the following is true?
a. The rental agent is protecting the other adults from the
disruption of the children.
b. The rental agent should charge a higher security
deposit for this family.
c. The rental agent should have suggested that the
couple look elsewhere.
d. The rental agent should have inquired about the
couple's preference for apartments.
d. The rental agent should have inquired about the
couple's preference for apartments.
The landlord's lease prohibits tenants from altering the
property in any way. A young woman who uses a wheelchair
cannot maneuver over the doorstep into the apartment by
herself. Nor can she use the bathroom facilities in her
wheelchair. Which of the following is true?
a. The landlord is responsible for making all apartments
accessible to people with disabilities.
b. The tenant cannot remedy these conditions because
of the terms of the lease.
c. The landlord should not have rented this apartment to
the tenant.
d. The tenant is entitled to make the necessary alterations.
d. The tenant is entitled to make the necessary alterations.
A tenant is leasing a house until he has saved enough money
for the down payment to perform on the sales contract. What
type of an arrangement is this?
a. Lease with an option
b. Lease purchase agreement
c. Periodic tenancy
d. Purchase money mortgage
b. Lease purchase agreement
A lease agreement is signed by a lessee who is 17 years of
age. Which of the following is true?
a. A 17 year old person cannot sign a lease.
b. The lease agreement is voidable.
c. The lease agreement is valid provided the security deposit
is increased.
d. The lease agreement is void.
b. The lease agreement is voidable.
An individual rents an apartment for one year. The landlord
sells the building during the one-year lease term. What effect
does the sale have on the lease?
a. The sale does not affect the lease.
b. The lease is automatically terminated.
c. The new landlord will decide whether to honor the existing
lease.
d. The lease is terminated after 60 days notice from the new
owner.
a. The sale does not affect the lease.
The purpose of a security deposit is to
a. provide additional revenue for the landlord.
b. repair damage to the property caused by the tenant.
c. pay for the last month's rent.
d. ensure that the lease is valid.
b. repair damage to the property caused by the tenant.
The lessor and lessee have agreed to a lease term of 5 years.
How could the lessor ensure that the rental income during the
term is reflective of the market conditions?
a. Negotiate a new lease each year.
b. Collect an additional security deposit each year.
c. Negotiate an index lease.
d. Negotiate a gross lease.
c. Negotiate an index lease.
A management agreement is to a property manager like a(n)
a. listing agreement is to a broker.
b. lease is to a tenant.
c. deed is to a buyer.
d. assignment.
a. listing agreement is to a broker.
A real estate broker acting as an owner's property manager
a. must not profit from private contracts at the expense
of the owner.
b. may manage the client's property to his or her own a
dvantage.
c. need not maintain complete and accurate trust account
records.
d. can personally collect the interest earned on trust
account funds.
a. must not profit from private contracts at the expense
Adaptations of property specifications to suit tenant requirements
are
a. tax-exempt improvements.
b. tenant improvements.
c. prohibited by most non-residential leases.
d. generally not a good idea.
b. tenant improvements.
A high vacancy rate may be caused by any of the following
EXCEPT
a. inept management.
b. poor location.
c. excessive rent.
d. strong amenities.
d. strong amenities.
In determining rental amounts, a property manager considers
the economic principle of
a. marginal contribution.
b. supply and demand.
c. conformity.
d. balance.
b. supply and demand.
Which of the following is NOT an important function of a
property manager ?
a. Supervising the maintenance of the property
b. Protecting the physical integrity of the property
c. Meeting the functional requirements of the tenants
d. Preparing the owner's income tax returns
d. Preparing the owner's income tax returns
When dealing with risk, the options of a property manager
include all of the following EXCEPT
a. avoid it.
b. retain it.
c. ignore it.
d. transfer it.
c. ignore it.
The property manager's chief concern should be that
a. the property is seldom vacant because it is consistently
rented at the lowest possible rents.
b. the property is managed to achieve the highest rate
of return possible for the owner's investment.
c. the property manager's time is maximized in his or her
management of the property.
d. the property exhibits the proper amount of the owner's
pride of ownership.
b. the property is managed to achieve the highest rate
of return possible for the owner's investment.
The type of maintenance that is most often overlooked is
a. corrective maintenance.
b. repairs.
c. routine maintenance.
d. preventative maintenance
d. preventative maintenance
A property manager's primary obligation is to
a. the tenants.
b. the owner.
c. the banker.
d. government authorities
b. the owner.
Which of the following should be NOT be a consideration
in selecting a tenant for the property?
a. Size of the available space relative to the tenant's
requirements
b. Tenant's ability to make the rental payments
c. Compatibility of the tenant's business with those of
other tenants
d. Ethnic background of the tenant and his or her
employees
d. Ethnic background of the tenant and his or her
employees
A property management firm CANNOT receive its
income from
a. a fixed fee.
b. a percentage of the net rentals collected.
c. a fixed fee with a percentage on new rentals.
d. a percentage of purchases made from suppliers
d. a percentage of purchases made from suppliers
The manager of a commercial building has many responsibilities
in connection with the operation and maintenance of the structure.
The manager would normally be considered the
a. agent of the lessor of the building.
b. lessee of the building.
c. lessor and the lessee.
d. resident manager.
a. agent of the lessor of the building.
The successful property manager does NOT
a. screen the tenants' ability to pay.
b. study rental rates in the area.
c. consider the type of business the tenant has.
d. appease the tenants by repairing their equipment.
d. appease the tenants by repairing their equipment.
Despite the complexity of the laws that affect today's
properties, a property manager does NOT need to
be familiar with
a. environmental hazards.
b. accessible construction.
c. nondiscriminatory practices.
d. investment securities laws.
d. investment securities laws.
The duties of a property manager generally do
NOT include
a. renting space to tenants.
b. preparing a budget.
c. developing a management plan.
d. repairing a tenant's fixture.
d. repairing a tenant's fixture.
The income approach to value would be most important
in the appraisal of a(n)
a. condominium.
b. office building.
c. single-family residence.
d. vacant residential lot.
b. office building.
. In an old retail building, which of the following would most
likely be a cause of incurable functional obsolescence?
a. Deficient and inadequate lighting
b. Closely-spaced internal support columns
c. An unattractive store front
d. A decrease in the area's population
b. Closely-spaced internal support columns
Which of the following is NOT a characteristics of value?
a. Scarcity
b. Transferability
c. Obsolescence
d. Utility
c. Obsolescence
The expression "more buildings are torn down than fall
down" refers to
a. curable physical deterioration.
b. incurable physical deterioration.
c. the enforcement of building codes.
d. functional and external depreciation.
d. functional and external depreciation.
An appraiser is responsible for
a. finding value.
b. computing value.
c. determining value.
d. estimating value.
d. estimating value.
The term depreciation refers to the
a. value of real estate after the expiration of its useful life.
b. loss of value in real estate from any cause.
c. costs incurred to renovate or modernize a building.
d. capitalized value of lost rental income.
b. loss of value in real estate from any cause.
. When appraising real estate, the first consideration of the
appraiser should be the
a. asking price of the property.
b. highest and best use of the property.
c. original cost of the property.
d. selling prices of similar properties.
b. highest and best use of the property.
Which of the following would be classified as external
depreciation?
a. A leaking roof that needs to be completely replaced
b. Poorly-maintained properties in the neighborhood
c. A poorly-designed floor plan that could be modified
d. Convenient access to schools and recreational facilities
b. Poorly-maintained properties in the neighborhood
It is necessary to calculate a dollar value for depreciation
when using which of the following?
a. The sales comparison approach to value
b. The cost approach to value
c. The income approach to value
d. Gross rent multipliers
b. The cost approach to value
. The income approach, as used by an appraiser, makes
use of which of the following?
a. Equalization
b. Depreciation
c. Appreciation
d. Capitalization
d. Capitalization
In the valuation of a large apartment complex, the most
weight would be given to which of the following approaches
to value?
a. The cost approach
b. The income approach
c. The sales comparison approach
d. All approaches equally weighted
b. The income approach
In the cost approach to value, the appraiser makes use of
a. the owner's original cost of the building.
b. the estimated replacement cost of the building.
c. the sales prices of similar buildings in the area.
d. the assessed value of the building.
b. the estimated replacement cost of the building.
. The sales comparison approach to value would be most
important when estimating the value of a(n)
a. existing residence.
b. apartment building.
c. retail location.
d. new residence.
a. existing residence
In the income approach, the appraiser makes use of
a. reproduction cost.
b. capitalization rate.
c. depreciation schedules.
d. replacement cost.
b. capitalization rate.
An appraiser who is using the sales comparison approach
to value would NOT use which of the following similar
homes as a comparable properties? One that was
a. sold over six months ago.
b. sold recently but is located in another similar neighborhood.
c. sold by the owners who were undergoing a foreclosure.
d. sold recently but is located on a much larger lot.
c. sold by the owners who were undergoing
Using which of the following would require the value of the land
to be calculated separately from the value of the improvements?
a. The income approach
b. The cost approach
c. The sales comparison approach
d. The gross rent multiplier
b. The cost approach
Reconciliation is best described as
a. selecting the highest value given by the three approaches to value.
b. comparing comparable properties and identifying their amenities.
c. determining the final value by selecting one value from those given.
d. analyzing the results obtained from the three approaches to value
d. analyzing the results obtained from the three approaches to value
A building is valued at $215,000 and contains 4 apartments that
rent for $470 each per month. The owner estimates that the net
operating income is 65 percent of the gross rental receipts. What
is the capitalization rate?
a. 3.7 percent
b. 7.0 percent
c. 10.5 percent
d. 14.2 percent
b. 7.0 percent
The steps in the appraisal process do NOT include
a. gathering specific data on the subject property.
b. gathering general data for the area of the subject property.
c. considering the seller's estimate of the property's value.
d. applying the three approaches to value to the collected data.
c. considering the seller's estimate of the property's value.
The gross rent multiplier is used as a guideline for estimating
value based on
a. the ratio of the gross rents to the net rents after expenses.
b. the proportion of rents due to the actual rents collected.
c. the capitalization of the annual gross rental income.
d. the relationship of the sales prices to the rental income.
d. the relationship of the sales prices to the rental income.
. Defined as a loss in value from any cause, depreciation is
generally divided into three categories. The loss of value due
to the normal wear and tear on a property is called
a. external depreciation.
b. physical depreciation.
c. functional obsolescence.
d. economic deterioration.
b. physical depreciation.
. To find the value of a property using the income approach
to value, if the net operating income and the capitalization
rate were known, the appraiser would
a. multiply the net operating income by the capitalization rate.
b. multiply the effective gross income by the capitalization rate.
c. divide the net operating income by the capitalization rate.
d. divide the capitalization rate by the net operating income.
c. divide the net operating income by the capitalization rate.
. An appraiser has been employed to estimate the market
value of a parcel of vacant land. The resulting appraisal report
would NOT include reference to
a. the highest and best use of the parcel.
b. the listed price of the parcel.
c. the most probable price the parcel will bring.
d. the physical dimensions of the parcel.
b. the listed price of the parcel.
When appraising a commercial property, the appraiser is
most concerned with the
a. accrued depreciation on the property.
b. income generated by the property.
c. sales prices of comparable properties.
d. total debt service on the property.
b. income generated by the property.
. In the appraisal of an office building, which of the following
would be classified as external depreciation?
a. Termite damage to the structural components of the building
b. A poor architectural design resulting in a cluttered floor plan
c. An inadequate number of elevators and antiquated restroom facilities
d. A law requiring the building to be retrofitted with fire sprinklers.
d. A law requiring the building to be retrofitted with fire sprinklers.
The period of time over which an improvement to the property will
contribute to its value is known as its
a. amortized life.
b. chronological life.
c. actual life.
d. economic life.
d. economic life.
. Which of the following would be considered specific data?
a. The dimensions of the subject property
b. The employment opportunities in the area
c. The sales data for comparable properties
d. The gross rent multipliers for the area
a. The dimensions of the subject property
When estimating the value of property using the cost approach,
all of the following would be considered by the appraiser
EXCEPT the
a. loss of value due to uncollected delinquent rent.
b. estimated loss attributable to an outdated heating system.
c. quality of materials and workmanship in the original structure.
d. excessive amount of traffic noise outside the property
a. loss of value due to uncollected delinquent rent.
The market price of real estate is generally the same as
a. the sales price.
b. the market value.
c. the highest and best use.
d. the assessed value.
a. the sales price.
Reconciliation is an appraisal term used to describe
a. the appraiser's determination of a property's highest value.
b. an average of real estate values for properties similar to
the subject property.
c. the appraiser's analysis and comparison of the results
of each appraisal approach.
d. the method used to determine the most appropriate
capitalization rate for a property.
c. the appraiser's analysis and comparison of the results
of each appraisal approach.
An appraiser has been hired to prepare an appraisal on a
property that includes an elegant old mansion that is now
used as an insurance company office. Which approach to
value would the appraiser rely on most?
a. Income approach
b. Gross rent multiplier approach
c. Sales comparison approach
d. Replacement cost approach
a. Income approach
A house with outmoded plumbing is suffering from
a. functional obsolescence.
b. curable physical deterioration.
c. incurable physical deterioration.
d. external depreciation.
a. functional obsolescence.
A 4 bedroom house with 1 bathroom for today's standards
would be considered to be
a. physically obsolete.
b. functionally obsolete.
c. economically obsolete.
d. diminished.
b. functionally obsolete
In the cost approach an appraiser uses which of the following?
a. Sales prices of similar properties
b. The owner's original cost of construction
c. An estimate of the building's replacement cost
d. The property's depreciated value as used for income tax
purposes
c. An estimate of the building's replacement cost
The purpose of an appraisal is to
a. estimate the value of a property.
b. set the market price of a property.
c. determine the projected income of a property.
d. set the amount of consideration the seller should accept
from a purchaser.
a. estimate the value of a property.
. In the income approach, which of the following is NOT
considered when calculating the net operating income?
a. Real estate taxes
b. Management fees
c. Debt service
d. Utilities
c. Debt service
Zoning ordinances normally define specific uses for land
that are permitted within a municipality. Which of the
following is NOT a designated use in the ordinances?
a. Industrial
b. Commercial
c. Residential
d. Rental
d. Rental
The purpose of building permits is to
a. generate revenue for the municipality.
b. control the activities of building inspectors.
c. ensure compliance with building codes.
d. prevent encroachments.
c. ensure compliance with building codes.
When planning a subdivision, the developer should determine
the kinds of land uses to be involved and the amounts of land
to be allocated to each use by considering
a. which are the most profitable types of buildings to construct.
b. his or her concepts for what is considered as an ideal
development.
c. the application of the economic principle of highest and
best use.
d. the customs of the area and what other developers have
already done.
c. the application of the economic principle of highest and best use.
Deed restrictions are NOT created by which of the following?
a. Deed
b. Statute
c. Written agreement
d. General plan of a subdivision
b. Statute
A subdivider or developer who fails to comply with the
requirements of the Interstate Land Sales Full Disclosure Act
may be
a. subject to criminal penalties of fines and imprisonment.
b. ordered to cease and desist work on the project.
c. sanctioned and blacklisted by lenders in the area.
d. unable to secure FHA-insured and VA-guaranteed loans.
a. subject to criminal penalties of fines and imprisonment.
. In a new subdivision, streets, curbs, and sidewalks are usually
required by the
a. municipality.
b. property owners.
c. developer.
d. state.
a. municipality.
The purchaser of a property in a planned unit development will
usually NOT receive
a. an interest in the unit owners' association.
b. a proprietary lease for the unit to be occupied.
c. the title to the land on which the unit is built.
d. a share in the control of the commonly-owned elements.
b. a proprietary lease for the unit to be occupied.
In a new subdivision, streets, curbs, and sidewalks are usually
provided by the
a. municipality.
b. property owners.
c. developer.
d. state.
c. developer.
. According to the Interstate Land Sales Full Disclosure Act, if
the property report is NOT given to the prospective purchaser at
least three days before the contract is signed,
a. the purchaser may revoke the contract, at his or her option,
up to midnight of the seventh calendar day following the signing
of the contract.
b. the purchaser may revoke the contract up to two years
following the signing of the contract.
c. the subdivider or developer must see that the purchaser receives
the report within two years of the signing of the contract.
d. the subdivider or developer must see that the property report is
delivered to the purchaser before any construction is started
on the property.
b. the purchaser may revoke the contract up to two years
following the signing of the contract.
P is in the business of buying large tracts of land and then re-selling
them to consumers in small tracts. He is in the business as a
a. developer.
b. real estate broker.
c. engineer.
d. subdivider.
d. subdivider.
A subdivision was developed, and one of the deed restrictions
covering all of the properties in the subdivision set aside the back
six feet of each parcel as a combination green belt area and bicycle
path. Homeowner U plans to convert the back one-half of her yard
into an organic garden. Her neighbors can
a. do nothing because individual homeowners have no authority in
this matter.
b. go to court in an attempt to obtain injunctive relief.
c. force homeowner U to sell her property.
d. share in the profits from U's garden.
b. go to court in an attempt to obtain injunctive relief.
Q is in the business of buying tracts of land, constructing buildings
and making other improvements on them, and then selling them to the
general public. She is in the business as a
a. developer.
b. real estate broker.
c. engineer.
d. subdivider.
a. developer.
Restrictive covenants than run with the land
a. are no longer effective when the title is transferred.
b. apply only until the developer has conveyed the title.
c. can be removed by a court of competent jurisdiction.
d. apply to and bind all successive owners of the property.
d. apply to and bind all successive owners of the property.
The primary intent of zoning ordinances is to
a. ensure the health, safety, and welfare of the community.
b. demonstrate the police power of the state.
c. limit the amount and types of businesses in a given area.
d. protect residential neighborhoods from commercial
encroachment.
a. ensure the health, safety, and welfare of the community.
The condemnation of private property for public use is made
possible by the right of
a. police power.
b. escheat.
c. eminent domain.
d. confiscation.
c. eminent domain.
For the past 30 years, the Ls have operated a neighborhood
grocery store. Last week the city council passed a zoning ordinance
that prohibits packaged food sales in the area where the Ls' grocery
store is located. The store is now an example of a(n)
a. illegal enterprise.
b. nonconforming use.
c. violation of the zoning laws.
d. variance of the zoning laws.
b. nonconforming use.
Deed restrictions CANNOT legally restrict
a. sizes and types of structures to be built.
b. potential future uses of the properties.
c. future owners and occupants of the properties.
d. exterior finish and decoration of the structures.
c. future owners and occupants of the properties.
Which of the following best describes the purpose of a
building permit?
a. The method for overriding or substantiating deed restrictions
b. The municipal control over the volume of construction
c. The evidence of compliance with municipal regulations
d. The method of regulating the area and size of buildings
c. The evidence of compliance with municipal regulations
A residential developer's deed restrictions would NOT include
a. easements in gross for the installation of public utilities.
b. an agreement NOT to sell without the consent of the neighbors.
c. the minimum square-footage for any home to be built in the
subdivision.
d. a reference to the use of community facilities by residents only
b. an agreement NOT to sell without the consent of the neighbors.
. A development company owned property that the city wanted so
that it could extend the r unways at the municipal airport. If the
company refuses to negotiate with the city, then the city may acquire
the property by
a. escheat.
b. accretion.
c. confiscation.
d. eminent domain.
d. eminent domain.
A tire company has a manufacturing plant located in an area that
has just been rezoned for residential use. The company is allowed
to continue operating the plant under the new zoning classification.
However, the tire company
a. may not construct another plant in the neighborhood without
first applying for a zoning variance.
b. may not construct another plant in the neighborhood under
any circumstances.
c. may construct another plant if it obtains the consent of the
residents then living in the neighborhood.
d. may construct another plant without the residents' consent
as long as the homeowners' association approves it.
b. may not construct another plant in the neighborhood under
any circumstances.
. If the buyer of a vacant lot builds a house that violates the
restrictions in his or her deed, the buyer may
a. forfeit the title to the property.
b. be sued and required to alter the structure to conform with the
restrictions.
c. be sued and required to pay damages to the other residents in
the neighborhood.
d. do so without any fear of reprisal by the residents in the area.
b. be sued and required to alter the structure to conform with the
restrictions.
Which of the following is NOT an example of police power?
a. Zoning ordinances
b. Building codes
c. Restrictive covenants
d. City planning requirements
c. Restrictive covenants
Before the government can exercise its right of eminent domain,
the use of the property must be
a. a public use for which the property owner will be fairly compensated.
b. established for the health, safety, and welfare of the government.
c. a local use that will benefit the residents in the immediate area.
d. established as a fee simple determinable estate for a particular use.
a. a public use for which the property owner will be fairly compensated.
Legislation designed to convert residential zoning into
conservation or recreational purposes
a. is usually supported by all of the residents of a given
area so that the majority rules.
b. may be found by the courts to be a "taking" without
the payment of just compensation to the property owner.
c. generally is supported by special interest groups whose
power might be greater than that of the courts.
d. may be found to be an excessive use of police power
by the courts and therefore ruled as unconstitutional.
b. may be found by the courts to be a "taking" without the payment of just compensation to the property owner.
A conveyance that includes a condition controlling or limiting
the use of the property conveyed is an example of
a. the need for competent legal advice.
b. a deed restriction.
c. the need for a zoning appeal.
d. a zoning variance.
b. a deed restriction.
. In a widely-publicized dispute, H refused to sell his land to the
local school district. He believed that the price the school district
offered him for the land was not sufficient consideration. If the school
district were to pursue the matter in court, what legal proceeding
would it institute to force H to sell his land to them?
a. Escheat
b. Foreclosure
c. Probate
d. Condemnation
d. Condemnation
Control by local ordinances does NOT regulate
a. the height of buildings in an area.
b. the density of population.
c. the use of the property.
d. the price of the property.
d. the price of the property.
Deed restrictions are a means by which
a. local zoning laws are enforced.
b. the planning commission controls developers.
c. municipalities enforce building restrictions.
d. grantors control the future use of the ownership.
d. grantors control the future use of the ownership.
The owner constructed a building that is 7 stories high. Several
years later the municipality changed the zoning ordinance,
prohibiting buildings that exceed 6 stories in height. Which of
the following is true regarding the existing 7 story building?
a. It is a nonconforming use.
b. The building must be demolished.
c. It is a conditional use.
d. The owner must obtain a variance.
a. It is a nonconforming use.
Under an existing ordinance no signs may be placed on a
building that extends more than 3 feet above the highest point
of the roof. An owner wants to erect a 9 foot high revolving
sign on the roof of his store. In order to legally do this, the
owner must get a
a. deed to the air rights.
b. variance.
c. nonconforming use permit.
d. court order.
b. variance.
What cost would NOT be included as part of the development
costs of a lot ?
a. Curbs and gutters
b. The purchase price of the land
c. Site grading
d. Sanitary sewer installation
b. The purchase price of the land
The purpose of bulk zoning is to
a. ensure that certain kinds of uses are incorporated into
developments.
b. specify certain types of architecture for new buildings.
c. control density and avoid overcrowding.
d. set overall development goals for the community.
c. control density and avoid overcrowding.
. A municipality establishes development goals through its
a. subdivision regulations.
b. restrictive covenants.
c. environmental regulations.
d. comprehensive plan.
d. comprehensive plan.
Which of the following is a variance?
a. An exception to a zoning ordinance
b. A court order prohibiting certain activities
c. A reversion of ownership
d. A nullification of an easement
a. An exception to a zoning ordinance
The construction of a family room, additional bedroom and
extra bath has been completed on the owner's home.
Before the addition can be used, which of the following is true?
a. The municipality must issue a building permit.
b. The bath must be inspected by the plumbing inspector.
c. The municipality must issue an occupancy permit.
d. The municipality must issue a conditional-use permit.
c. The municipality must issue an occupancy permit.
The Civil Rights Act of 1866 prohibits discrimination in
housing based on
a. race.
b. religion.
c. sex.
d. handicap.
a. race.
The agency responsible for the enforcement of the Fair
Housing Act is the
a. Department of Justice.
b. Federal Housing Administration.
c. Department of Housing and Urban Development.
d. Department of Veteran Affairs.
c. Department of Housing and Urban Development.
. It is illegal for a lending institution to refuse to make a
residential real estate loan in a particular area
only because of the
a. questionable economic situation of the applicant.
b. physical location of the property.
c. applicant not being of legal age.
d. deteriorated condition of the premises.
b. physical location of the property.
. A discrimination suit may be filed in federal court by
a. the aggrieved person because of racial discrimination.
b. the Department of Housing and Urban Development.
c. the state or county nondiscrimination officer.
d. the Federal Housing Administration.
a. the aggrieved person because of racial
The federal Fair Housing Act does NOT prohibit
a. blockbusting.
b. discriminatory advertising.
c. redlining.
d. discriminating on the basis of marital status.
d. discriminating on the basis of marital status.
In order to file a complaint of discrimination, the
complainant must
a. be able to prove that discrimination occurred.
b. suspect that discrimination occurred.
c. be able to prove that the discrimination was intentional.
d. be able to produce witnesses to the discrimination
b. suspect that discrimination occurred.
The Fair Housing Act of 1968 is contained in
a. Title VIII of the Civil Rights Act of 1968.
b. the Civil Rights Act of 1866.
c. the Civil Rights Act of 1964.
d. Executive Order No. 11063.
a. Title VIII of the Civil Rights Act of 1968.
A prospective homebuyer who is black inquires about the
availability of a home in a predominately white residential
neighborhood. What should the broker say to this prospect?
a. "You wouldn't want to live in this area because the
neighbors are trying to protect the integrity of the area."
b. "I'd be happy to show you homes in other areas where
black people are welcome."
c. "The residents here have expressed a desire to keep
the area homogeneous with no minorities."
d. "I'll be pleased to show you any houses that you're
interested in."
d. "I'll be pleased to show you any houses that you're
interested in."
Real estate brokers are NOT required to
a. take affirmative marketing action in advertising.
b. take affirmative marketing action in canvassing.
c. show all of the properties they have listed.
d. prominently display the equal housing opportunity poster.
c. show all of the properties they have listed.
. Protection from threats or acts of violence against those who
assist and encourage open housing rights is found in the
a. Civil Rights Act of 1866.
b. Civil Rights Act of 1964.
c. Fair Housing Act of 1968.
d. Fair Housing Amendments Act of 1988.
c. Fair Housing Act of 1968.
The provisions of the Fair Housing Act apply
a. in all states.
b. only in those states that have ratified the act.
c. only in those states that do not have substantially
equivalent laws.
d. only in those states that do not have specific state
fair housing laws.
a. in all states.
The practice of channeling families with children away from
other buildings into an apartment building where other families
with children reside is
a. most practical.
b. blockbusting.
c. redlining.
d. steering.
d. steering.
. Actions that are made illegal by federal and state fair housing
laws do NOT include
a. offering advantageous loan terms to encourage the
re-segregation of a residential area.
b. refusing to show certain residential property to
non-English-speaking individuals.
c. channeling members of a certain minority group into an area
already predominately occupied by members of that minority.
d. refusing to show certain residential property to people who
are not financially qualified to purchase it.
d. refusing to show certain residential property to people who
are not financially qualified to purchase it.
The refusal of a lending institution to make a residential real estate
loan strictly because of the racial or ethnic composition of the
neighborhood is called
a. blockbusting.
b. redlining.
c. steering.
d. panic peddling.