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50 Cards in this Set
- Front
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Real property does not include: a. watercourses. b. improvements. c. fences. d. leasehold estates. |
d. leasehold estates. (A leasehold estate is less-than-freehold, and therefore not real property.) |
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Broker Stan acts as a dual agent for both Buyer Esmerelda and Seller Geoffrey. At no point does Broker Stan reveal their dual agency status. Which is the least likely outcome? a. The broker is forced to forfeit their broker fee. b. The broker is disciplined by the Department of Real Estate (DRE). c. The broker is liable for their principals’ money losses. d. The broker faces a criminal conviction. |
d. The broker faces a criminal conviction. (When a broker fails to disclose their dual agency status, the seller does not have to pay the broker’s fee on a closed transaction. Further, the broker may be liable for the financial losses suffered by the client (though not more than triple the client’s losses). However, there is no criminal liability for the failure to disclose a dual agency relationship.) |
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The Transfer Disclosure Statement (TDS) requires a broker to: a. visually inspect the property and inform the buyer of any material facts. b. inspect the common areas in a condominium community. c. inspect the inaccessible areas of the property. d. pay for a mold and radon gas inspection. |
a. visually inspect the property and inform the buyer of any material facts. (Brokers are obligated to perform a competent visual inspection when completing the mandated Transfer Disclosure Statement (TDS) form and disclose any known material facts that may affect the buyer's decision to buy the property. A broker is not required to perform any of the activities described in the other answer selections.) |
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Which of the following contracts must be in writing in order to be enforceable? a. An agreement by a buyer to assume an existing loan secured by a deed of trust. b. An agreement which is not to be performed within one year of being entered into. c. A listing to lease real property for one year. d. Both a. and b. |
d. Both a. and b. (This is very similar to Question 1. A slight derivation on another question will likely exist on the state exam.) |
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Which of the following is an example of personal property? a. An appurtenant easement. b. Trade fixtures. c. Fixtures installed in a property for manufacturing purposes. d. Mineral rights. |
b. Trade fixtures. (Only trade fixtures belong to the tenant as personal property and are to be removed by the tenant on the termination of the lease.) |
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All of the following terminate an easement, except: a. merger of the tenements. b. release by the owner of the servient tenement. c. abandonment. d. destruction of the servient tenement. |
b. release by the owner of the servient tenement. (This is an EXCEPT question. The termination of an easement may occur for any of the reasons cited in the answer selections, except the release by the servient tenement. The servient tenement is the party burdened by the easement and they cannot unilaterally terminate the easement.) |
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Which of the following is not a recognized purpose of the Equal Credit Opportunity Act? a. Standardizing the methods for obtaining credit. b. Regulating the printing or publishing of an advertisement for the sale or rental of residential property that indicates a wrongful discriminatory preference. c. Discouraging discrimination in lending based on age, sex, race, marital status, color, religion or national origin. d. Regulating the total amount of credit given to a borrower. |
b. Regulating the printing or publishing of an advertisement for the sale or rental of residential property that indicates a wrongful discriminatory preference. (Answer selections a, c, and d each reference the stated goals of the Equal Credit Opportunity Act. However, the printing or publishing of an advertisement for the sale or rental of residential property that indicates a wrongful discriminatory preference is a violation of the Federal Fair Housing Act (FFHA).) |
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When two properties are perceived as comparable, buyers tend to concentrate on price. This principle is called: a. contribution. b. anticipation. c. balance. d. substitution. |
d. substitution. (The principle of substitution states that the value of a property is equal in amount to the amount that would be paid to buy an equivalent property available in the open market. Alternatively, the principle of contribution holds that an improvement to a property is only worth what it adds to the value, not what it costs. The principle of anticipation holds that a perceived change in the future will have an effect on the present worth of the property. The principle of balance refers to the ratio of land and improvement value that will maximize the overall value of the property.) |
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A real estate agent is obligated to communicate any offer to the principal: a. unless the offer is patently frivolous or the agent is acting on written instructions of their seller. b. only if it is in writing. c. whether the offer is verbal or written until the agency is terminated. d. unless the offer is terminated. |
a. unless the offer is patently frivolous or the agent is acting on written instructions of their seller. (The agent's fiduciary duty requires them to present every offer received, allowing the seller to decide how to respond. However, if the offer is clearly frivolous or the agent receives specific instructions from their seller, the agent is not required to submit the offer.) |
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The period of time a structure continues to earn sufficient income to continue operations is referred to as the structure's: a. productive use. b. self-earning. c. economic life. d. physical life. |
c. economic life. (Economic life refers to the period of time a structure continues to earn income from its operations. The use of “earn sufficient income” in the question should help lead to this conclusion.) |
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A(n) __________ may be made to an offer received consisting of terms different from those of the offer rejected. a. waiver. b. counteroffer. c. ratification. d. novation. |
b. counteroffer. (A counteroffer is an offer which differs from the original offer. Any change from the original offer causes the original offer to be void.) |
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Easements which restrict an owner's ability to maintain or construct improvements interfering with a neighbor's solar energy system are known as ___________easements. a. airborne b. solar c. galactic d. greenway |
b. solar (Solar panels are generally located on the roof of a structure. A solar easement prohibits the blocking of those panels from exposure to the sun.) |
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Upon moving into the home he had just purchased, Lewis discovered his neighbor's garage encroached four feet over onto his property. lf a friendly settlement cannot be negotiated, who can Lewis charge responsible? a. the escrow company. b. the title company. c. the seller's agent for failure to disclose the encroachment. d. the neighbor since the encroachment is a trespass. |
d. the neighbor since the encroachment is a trespass.(Encroachment is a form of trespass. If a settlement cannot be reached between an owner and a neighbor who encroaches on their property, the owner is to sue the neighbor and allow the judicial system to resolve the matter. The escrow company and title company have no liability under normal conditions. The seller's agent is liable only if they knew or ought to have known the encroachment existed.) |
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A broker on any type of real estate transaction who fails to promptly disclose their dual agency is subject to: a. liability for their clients' money losses. b. a $25,000 penalty. c. disciplinary action by the Internal Revenue Service (IRS). d. deportation. |
a. liability for their clients' money losses. (The broker will be liable for any client financial losses when they fail to disclose their dual agency status.) |
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A tenant leases a unit in an apartment complex. The owner later sells the building to a new owner. The new owner: a. may force an immediate payoff of the lease. b. may increase the security deposit. c. may raise the rent d. needs to honor the existing lease contract. |
d. needs to honor the existing lease contract. (An existing lease must be honored when a building is purchased by a new owner.) |
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Without being licensed as an escrow officer, a broker may not handle escrow activities when they: a. represent the buyer. b. represent the seller. c. act as the principal. d. are not otherwise involved in a transaction. |
d. are not otherwise involved in a transaction. (The broker needs to be involved in the transaction representing one of the principals or themselves in order to act as the escrow officer.) |
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Based on recent comparable sales, an agent's opinion of a property's fair market value (FMV) is referred to as a(n): a. broker price opinion (BPO). b. comp. c. appraisal. d. home inspection report. |
a. broker price opinion (BPO). (The broker's price opinion (BPO) is based on comparable sales only.) |
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If a newspaper advertisement run by a licensee fails to identify their name or license number,this is referred to as: a. misleading conduct. b. a violation of the Truth-in-Lending Act (TILA). c. a blind ad. d. unethical behavior. |
c. a blind ad. (A blind ad is marketing material that fails to alert the reader to the fact that the advertisement was placed by a licensed real estate agent or broker.) |
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A seller listed their house for sale with a broker for $700,000. The seller informed their broker the property needed to be sold quickly. The broker showed the property to a buyer and told them that the seller was desperate and would accept $600,000. Based on the broker's statement, the buyer offered $600,000 for the seller's property. The seller accepted the offer. Concerning the broker's actions, which of the following is true? a. The broker interpreted the seller's wishes and produced a sale. Their ratification of the offer made the broker's actions acceptable. b. The broker's actions were reasonable since the seller accepted the offer and was able to sell quickly. c. The broker's actions were proper because the seller stated they wanted an immediate sale. d. The broker violated their fiduciary obligation to the seller since they acted in excess of their authority. |
d. The broker violated their fiduciary obligation to the seller since they acted in excess of their authority. (A broker cannot disclose a client's personal financial information or acceptable price and terms other than what the listing states. In this question, the broker violated their fiduciary duty owed to the seller by exceeding their authority.) |
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The sale of property in which the amount of the net proceeds is less than the principal balance owed but is accepted by the lender in full satisfaction of the loan is called a(n): a. reverse mortgage. b. short sale. c. deed-in-lieu of foreclosure. d. piggyback sale. |
b. short sale. (Short sales are those where a lender has accepted as full consideration sale proceeds that are short of the amount owed.) |
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A property's effective gross income is found by deducting which of the following from the scheduled gross income? a. Property management fees. b. Vacancies and credit losses. c. Debt service. d. Depreciation. |
b. Vacancies and credit losses. (To estimate the effective gross income, subtract the vacancies and credit losses from the scheduled gross income. To determine net operating income (NOI), subtract operating expenses from effective gross income.) |
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The total positive balances due to all beneficiaries of a broker's trust account need to at all times equal the account's: a. shortage. b. balance. c. overage. d. fidelity bond coverage. |
b. balance. (Just as with a personal checkbook, a trust account needs to balance.) |
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In a §1031 exchange, a person is most likely to be taxed for a gain when: a. giving cash boot. b. trading up. c. trading down. d. trading residential apartments for commercial property. |
c. trading down. (Trading down suggests either cash or another form of balancing compensation was received. The taxable gain occurs when anything other than like-kind real estate is received on the exchange.) |
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A broker who simultaneously represents the best interests of both opposing parties in a transaction is known as a(n): a. finder. b. dual agent. c. subagent. d. unlawful agent. |
b. dual agent. (A dual agent represents both principals in a transaction – buyer/seller or lessee/lessor.) |
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A person who is not among the protected groups under the Americans with Disabilities Act (ADA) and can therefore be refused a rental is a(n): a. alcoholic. b. pregnant women. c. drug addict. d. blind individual with a guide dog. |
c. drug addict. (Only a drug addict is not a protected class under the Americans with Disabilities Act (ADA).) |
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Under a land sales contract, title is conveyed to a buyer when they pay ___________ the remaining unpaid amount on the purchase price. a. one-fourth b. one-half c. three-fourths d. all |
d. all (Like most contracts, such as the purchase of an automobile, title is not conveyed until the final payment has been made.) |
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A seller's broker needs to disclose: a. the broker's acquisition of any direct or indirect interest in the seller's property. b. whether any person holding a special relationship with the broker will acquire an interest in the seller's property. c. Both a. and b. d. Neither a. nor b. |
c. Both a. and b. (Relationships that may affect loyalty or fiduciary responsibilities need to be disclosed as they constitute a conflict of interest.) |
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Marta's city built a new park in her neighborhood. This may result in a(n): a. special assessment. b. general assessment. c. tax rate increase. d. income tax increase. |
a. special assessment. (In this question, the park is built within a specific neighborhood. If an assessment is made for the cost to build and/or maintain the park, it would apply to just the owners of property in that neighborhood as a special assessment.) |
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Use of the Natural Hazard Disclosure (NHD) statement is required by sellers on: a. court-ordered transfers or sales and transfers to or by governmental entities. b. transfers between co-owners and transfers to relatives or spouses. c. Both a. and b. d. Neither a. nor b. |
d. Neither a. nor b. (Sellers in certain transactions do not need to use the statutory Natural Hazard Disclosure (NHD) statement to make their property disclosures.) |
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Acquisition is the opposite of: a. ad valorem. b. amortization. c. alienation. d. avulsion. |
c. alienation. (Alienation is a transfer of property, such as a sale. Thus, it is the opposite of acquisition, which is a purchase of a property.) |
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The vacancy rate of an apartment building under normal competitive conditions is primarily the result of: a. employment fluctuations. b. housing supply and demand in the area. c. the cost of construction and the cost of money. d. taxes and insurance. |
b. housing supply and demand in the area. (The vacancy level and rental income will fluctuate as supply increases or demand grows or shrinks.) |
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Any broker negotiating a transaction as an agent for either party has a(n) ____________ to disclose title conditions affecting ownership or use of the property to both parties, not just their client. a. agency duty b. general duty c. fiduciary duty d. common law duty |
b. general duty (A fiduciary duty is owed only to a broker's client. However, the broker also owes a general duty to all parties to disclose any material facts about a property, such as title conditions affecting the property's use.) |
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A seller insists on selling their property "as is" and refuses to disclose known problems on the Transfer Disclosure Statement (TDS). The broker is aware the roof leaks, but does not inform the buyer who purchases the property. The buyer can sue: a. the seller only. b. the broker only. c. both the seller and their broker. d. no one, since “as is” is recognized as constructive notice of a problem. |
c. both the seller and their broker. (If both the seller and broker fail to disclose known material facts negatively affecting the property, both will be held responsible.) |
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Which of the following is not a true statement about easements? a. An easement is owned by the dominant tenement. b. An easement in gross is a right in another's land created for the benefit of adjacent land. c. An owner cannot have an easement over their own land. d. An easement limits the use of the land by the owner. |
b. An easement in gross is a right in another's land created for the benefit of adjacent land. (This is a NOT question. Answer selection B is not true since an easement in gross is not for the benefit of an adjacent property owner, but frequently for a utility company.) |
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Basic regulation of the housing and construction industries is performed by: a. the State Housing Act. b. local building codes. c. the state Contractor's License Law. d. All the above. |
d. All the above. (All the above. Each entity plays a role in construction and housing standards.) |
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When the buyer takes title to the property subject to the existing loan, "subject to" most nearly means: a. both the buyer and seller will then be equally liable for the loan. b. the seller has no liability for the loan. c. only the buyer will be liable for the loan. d. the buyer will not be personally liable for the loan. |
d. the buyer will not be personally liable for the loan. (As opposed to assuming a loan, when the buyer takes title "subject to" an existing loan, the seller remains liable for the debt.) |
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A real estate commission is normally calculated as a percentage of the: a. asking price. b. sales price. c. owner's equity in the property being sold. d. fair market value (FMV) of the property being sold. |
b. sales price. (Real estate commissions are based on a percentage of the sales price mutually agreed to by the participants.) |
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Which of the following parties is in the weakest position against loss of property due to a claim of title by a third party? a. The person possessing an unrecorded quitclaim deed who does not occupy the property. b. The person possessing an unrecorded grant deed who occupies the property. c. The person possessing a certificate of title issued by a title company. d. The person possessing a recorded deed who rents the property to a tenant. |
a. The person possessing an unrecorded quitclaim deed who does not occupy the property. (The question speaks to constructive notice. Answer selection A refers to a quitclaim deed that is not recorded nor does the person occupy the property. Recording documents as well as physical possession of a property are both cause for someone to recognize and question an interest in property. |
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A walk-up refers to: a. an apartment building with no elevator. b. agricultural land. c. a drive-in restaurant. d. a trailer park. |
a. an apartment building with no elevator. (While uncommon in California and more prevalent on the east coast, a multi-story apartment building without an elevator is referred to as a walk-up.) |
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When the due-on clause in a trust deed is triggered, the lender may recast or call the loan, also known as: a. subordination. b. waiver by proxy. c. reconciliation. d. acceleration. |
d. acceleration. (The due-on clause accelerates the payoff of the loan. Only answer choice A also pertains to loans, but it allows a new loan to become senior to an existing mortgage.) |
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A listing broker needs to present all offers until: a. an offer is accepted. b. escrow is opened. c. all contingencies are removed. d. escrow is closed. |
d. escrow is closed. (Unless otherwise instructed, all offers need to be presented until the close of escrow, the point at which the sale becomes final.) |
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The annual property taxes an owner of a home needs to pay are determined by: a. assessing the land and improvements separately, then multiplying the total by one tax rate. b. assessing the land and improvements together, then multiplying by one tax rate. c. assessing the land and improvements separately, then multiplying by different tax rates. d. subtracting the value of the improvements from the value of the land, then multiplying the total by one tax rate. |
a. assessing the land and improvements separately, then multiplying the total by one tax rate. (The land and improvements are valued separately though the tax rate is the same.) |
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Sally applied for a real estate loan. The lender can lawfully require her to answer questions in regards to her: a. marital status. b. race. c. gender. d. income. |
d. income. (A lender cannot ask a borrower about marital status, gender or religion under discrimination law.) |
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Confidential financial information about a principal obtained by a broker during the course of a real estate transaction needs to be kept confidential for how long? a. Three years after the close of escrow. b. Only until the close of escrow. c. So long as the agency relationship lasts. d. Forever. |
d. Forever. (Confidentiality has no time limit. Any such confidential financial information needs to be kept secret for perpetuity.) |
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The existence of which of the following is required under disclosure law? a. Minorities live next door to a residential property. b. The prior tenant of a property was afflicted with AIDS. c. A death occurred in the house four years earlier. d. The property is located next to a military ordinance site. |
d. The property is located next to a military ordinance site. (This question provides a good opportunity to recognize unnecessary or improper disclosures.) |
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What type of notice is given by recording a deed? a. Mutual notice. b. Separate notice. c. Constructive notice. d. Actual notice. |
c. Constructive notice. (Constructive notice is a matter of recording a document or something that is visually obvious. Actual notice requires personal delivery by mail or in person.) |
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A federally chartered bank charges an additional $200 fee on loans made to non-English speaking borrowers. This fee is: a. permitted if the fee is justified by the additional cost of translating contracts and hiring an interpreter. b. in violation of the Holden Act. c. not in violation of the any Fair Housing laws or regulations. d. prohibited under the Statute of Frauds. |
b. in violation of the Holden Act. (The California Holden Act makes it unlawful to discriminate in real estate financing by charging additional fees only to a certain group of people.) |
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Escrow closes on the 16th day of February (28 days). The seller receives $500 in rent for the month of February. The seller: a. owes the buyer $250. b. owes the buyer more than $250. c. owes the buyer less than $250. d. keeps the entire $500. |
a. owes the buyer $250. (Remember, escrow calculates a month as 30 days, as stated in Question 2 so disregard the reference to the literal number of days in the month. The 16th day of the month is first day of the second half of the month and thus the seller owes the buyer precisely half of $500.) |
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The phrase "company dollar" most nearly means: a. capital funds invested in a new company. b. profit after expenses have been deducted. c. the broker's share of the commission received. d. total fees received by all employees at an office. |
c. the broker's share of the commission received. (The company dollar is that which remains after paying the salesperson their split of the commission earned on a closed transaction.) |
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A brokerage office with a high degree of turnover and failure amongst its staff is most likely aresult of: a. not enough good listings. b. not enough advertising. c. lack of supervision and training. d. too low a commission structure. |
c. lack of supervision and training. (Lack of supervision and poor training create a high degree of turnover in a brokerage office.) |
