Perry Real Estate College Final Assignment Semester 1 Exam 2026

Perry Real Estate College Final Assignment Semester 1 Exam 2026 A house with outmoded plumbing is suffering from -curable physical deterioration -external depreciation -incurable physical deterioration -functional obsolescence - Correct Answer-functional obsolescence In order to be a License member of the commission, a person must be -a KY citizen -a non-felon -all of the above -a licensed broker - Correct Answer-all of the above 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) -sales affiliate -property manager -appraiser -broker - Correct Answer-broker A landowner constructed a building 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? -the owner must obtain a variance -it is nonconforming use -it is a conditional use -the building must be demolished - Correct Answer-it is a nonconforming use All of the following should be a consideration in selecting a tenant for the property EXCEPT -size of the available space relative to the tenant's requirements -compatibility of the tenant's business with those of other tenants -tenant's ability to make the rental payments -Ethnic background of the tenant and his or her employees - Correct Answer-Ethnic background of the tenant and his or her employees A mechanic's lien would be properly classified as a(n) -equitable lien. -voluntary lien. Real Estate Real Estate -general lien. -specific lien. - Correct Answer-specific lien All of the following are prohibited under the antitrust laws EXCEPT -Competing property management companies agreeing to standardized management fees -competing brokers allocating markets based on the value of homes -a broker's setting a company commission schedule -real estate companies agreeing NOT to cooperate with a broker because of the fees that broker charges - Correct Answer-a broker's setting a company commission schedule 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? -the federal government -the tenant to whom the property has been leased -the state government -the rancher - Correct Answer-the rancher Abel and Baker are joint tenants. Baker sells his interest to Charlie. What is the relationship of Abel and Charlie? -they are joint tenants -they are tenants in common -there is no relationship because Baker cannot sell to Charlie -Abel owns a 2/3 interest and Charlie owns a 1/3 interest - Correct Answer-they are tenants in common All of the following would be acceptable as evidence of marketable title EXCEPT -a property owner's warranty deed -an abstract and legal opinion -Torren's certificate -a title insurance policy - Correct Answer-a property owner's warranty deed The method of describing land that uses degrees, feet, and monuments is known as the -angular system. -metes and bounds system. -rectangular survey system. -lot and block system. - Correct Answer-metes and bounds system which of the following is true regarding a special warranty deed? -The grantors warranties are limited to the time the grantor owned the property -the grantor retains an interest in the ownership -the grantor is making additional warranties beyond those given in a warranty deed -the grantor is warranting that non encumbrances exist against the property - Correct Answer-The grantor's warranties are limited to the time the grantor owned the property Real Estate Real Estate If an owner takes his property off the market for a definite period in exchange for some consideration but grants an individual the right to purchase the property within that period for a stated price, this is called a(n) -contract of sale -installment agreement -right of first refusal -option - Correct Answer-option A licensee has a duty to report a conviction to the Commission -True, if it is a felony -False, as there is no duty to report -False, if it is a felony -True, if it is a felony or a misdemeanor - Correct Answer-True, if it is a felony If a license is revoked, which of the following is TRUE? -The license revocation is permanent -The license revocation is for 10 years -the license revocation is for 5 years -none of the above - Correct Answer-the license revocation is for 5 years 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 -graduated payment mortgage -growing equity mortgage -open end mortgage -wraparound loan - Correct Answer-open-end mortgage The Commission will not pursue a complaint unless it -has already been investigated -alleges a prima facie case of a license law violation -is typewritten -has already been litigated in court - Correct Answer-alleges a prima facie of a license law violation Assume that the listing and selling brokers split the commission evenly. What is the sales price of a house if the listing broker received $2,593.50 and the total rate is 6%? - Correct Answer-$86,450 The Commission can conduct an emergency hearing for -Any allegation -Allegations of gross negligence -alleged escrow account violations -alleged advertising violations - Correct Answer-alleged escrow account violations A trust is a legal arrangement in which property is held for the benefit of a third party by a(n) Real Estate Real Estate -attorney in fact -trustee -trustor -beneficiary - Correct Answer-trustee a bilateral contract is one in which -the promise of one party is given in exchange for the promise of the other party -something is to be done by one party only -only one of the parties is obligated to act -a restriction is placed in the contract by one party to limit the performance by the other - Correct Answer-the promise of one party is given in exchange for the promise of the other party When the supply of a commodity decreases while demand remains the same, -demand tends to rise -demand tends to drop -price tends to drop -price tends to rise - Correct Answer-price tends to rise As provided in a valid purchase contract, the real estate transaction must be closed. Closing requires all of the following EXCEPT -that the seller deliver the deed to the purchaser -that the broker be present to receive any commission -the purchaser pay the balance of the purchase price to the seller -that the seller clear the title so that the condition of the title complies with the terms of the contract - Correct Answer-that the broker be present to receive any commission A portion of Walter's building was inadvertently built on George's land. this caused an -accretion -avulsion -encroachment -easement - Correct Answer-encroachment if the Commission seeks injunctive relief, the case must be filed where? -In the county where the Commission is located -In the county where the unlawful activity took place -either of the above -none of the above - Correct Answer-Either of the above: in the county where the Commission is located or in the county where the unlawful activity took place A small office building sold for $949,000 and the broker received a commission of $54,990. What was the broker's commission rate? -7% -6.2% -11.3% -5.8% - Correct Answer-5.8% Real Estate Real Estate A lease should contain all of the following provisions EXCEPT -possession of the premises -use of the premises -term of the lease -sale and leaseback clause - Correct Answer-sale and leaseback clause All of the following would affect demand EXCEPT -population -fiscal policy -wage levels -demographics - Correct Answer-fiscal policy All of the following are true regarding public records EXCEPT -they provide constructive notice about interests in the property -they guarantee marketable title -they establish priority of liens -they give notice of encumbrances - Correct Answer-they guarantee marketable title 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% share in the 10% commission? - Correct Answer-$960 The commission is made up of the following: -4 brokers and 1 consumer -6 brokers and 1 consumer -1 consumer and 6 brokers -4 consumers and 1 licensee - Correct Answer-6 brokers and 1 consumer All of the following would acquire title to real property EXCEPT -the grantee -the lessee -the devisee -the vendee - Correct Answer-The lessee All of the following are required for a deed to be valid EXCEPT -date -name of the grantee -legal description -signature of the grantee - Correct Answer-signature of the grantee a lease that will terminate within one year of its inception -may be oral -must be in writing -violates the provisions of the statue of frauds -is invalid - Correct Answer-may be oral Real Estate Real Estate all of the following are true regarding public records EXCEPT -the provide constructive notice about interests in the property -they give notice of encumbrances -they guarantee marketable title -they establish priority of liens - Correct Answer-they guarantee marketable title The Commission is charged with determining if a license applicant meets all of the following criteria EXCEPT: -trustworthy -honest -competent to protect the public -never been adjudicated bankrupt - Correct Answer-never been adjudicated bankrupt The principal difference between an estate for years and an estate from year to year is that -an estate from year to year has no expiration date -an estate for years cannot be terminated -an estate for years is a life estate -an estate from year to year must be in writing - Correct Answer-an estate from year to year has no expiration date a tenant's lease has expired, but the tenant has not vacated the premise or negotiated a renewal lease. The landlord has declared that the tenant is not to remain in the building. This situation is an example of -an estate for years -tenancy at will -an estate from year to year -tenancy at sufferance - Correct Answer-tenancy at suffereance The Governor appoints Commissioners - Correct Answer-from a list provided by the Kentucky Association of REALTORS A standard rectangular survey system section contains -160 acres -640 acres -160 government lots -36 townships - Correct Answer-640 acres Which of the following is NOT required for the broker to remove money from his or her escrow account? -court order -a mutual release -performance on the contract -signed affidavit - Correct Answer-signed affidavit Real Estate Real Estate all of the following are essential to the formation of a contract EXCEPT -performance -consideration -offer -acceptance - Correct Answer-performance Broker Janna was accused of violating antitrust laws. Of the following, she was MOST likely accused of -not having an equal housing opportunity sign in her office window -dealing in unlicensed exchange services -price fixing -undisclosed dual agencies - Correct Answer-price fixing Under license laws, real estate advertising must contain which of the following? -company's address -listing agent's name -company's telephone number -company name or principal broker's name - Correct Answer-Company name or principal broker's name 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 -specific lien -general lien -special lien -voluntary lien - Correct Answer-specific lien Charging more interest than is legally allowed is known as -usury -a deficiency -escheat -an estoppel - Correct Answer-usury A third party holds title to property on behalf of someone else through the use of a -devise -deed in trust -bequest -quitclaim deed - Correct Answer-deed in trust Broker Kenneth arrives to present a purchase offer to Dorita, an invalid, and finds her son and his wife also present. In the presence of Broker Kenneth, both individuals persistently urge Dorita to accept the offer, even though it is much lower than the price she has been asking for her home. If Dorita accepts the offer, she may later claim that - Correct Answer-she was under duress from her son and daughter-in-law, and therefore, the contract is voidable Real Estate Real Estate All of the following are true about radon EXCEPT -modern construction reduces the potential for radon gas accumulation -it is colorless, odorless, and tasteless -radon levels will vary in certain weather conditions -levels can be reduced by installing ventilation systems - Correct Answer-modern construction reduces the potential for radon gas accumulation If a licensee fails to renew his or her license on time, the license is -expired -revoked -canceled -none of the above - Correct Answer-canceled A mortgage broker generally offers which of the following services? -granting real estate loans using investor funds -handling the escrow procedures -providing credit qualifications and evaluation reports -bringing the borrower and the lender together - Correct Answer-bringing the borrower and the lender together The Real Estate Settlement Procedures Act (RESPA) applies in a loan assumption if the -terms of the assumed loan are modified by the lender -lender charges less than $50 for the assumption -buyer must be approved by the lender for the assumption to occur -seller does NOT want to be liable for the loan in the future - Correct Answer-terms of the assumed loan are modified by the lender Normally, the priority of general liens is determined by the -order in which they are filed or recorded. -order in which the cause of action arose. -size of the claim. -court. - Correct Answer-the order in which they are filed or recorded A lot with a depth of 80 ft and an area of 4,800 sg ft was sold for $350 per front foot. What was the total sales price? -$35,000 -$21,000 -$28,000 -$31,800 - Correct Answer-$21,000 Which of the following has an indeterminable duration? -estate for years -license -freehold estate Real Estate Real Estate -less than freehold estate - Correct Answer-freehold estate A tire company has a manufacturing plant located in an area that has just been re zoned for residential usage. The company is allowed to continue operating the plant under the new zoning classification. However, if the plant is destroyed by fire, the tire company most likely - Correct Answer-would be forbidden to rebuild the plant in that neighborhood under any circumstances CERCLA regulations for administration of the Superfund, which helps pay for cleanup of uncontrolled hazardous waste sites, - Correct Answer-impose strict, joint and several, and retroactive liability on potentially responsible parties A principal broker must ensure that a personal assistant has which of the following? -reasonable access to his supervising licensee -training -reasonable supervision -all of the above - Correct Answer-all of the above Advantages of an investment in real estate include all of the following EXCEPT -the use of leverage to increase rates of return -tax deductions -the possibility of a tax-deferred exchange -high liquidity - Correct Answer-high liquidity The defeasance clause in a mortgage requires the mortgagee to execute a(n) -assignment of mortgage -satisfaction of mortgage -subordination agreement -partial release agreement - Correct Answer-satisfaction of mortgage Which of the following investments can not be depreciated? -commercial building -single family home -100 acres of vacant land -shopping mall - Correct Answer-100 acres of vacant land a broker who is the agent of the buyer should do which of the following? -present to the seller only offers that are acceptable -disclose to the seller that the buyer is a minority person -disclose to the seller the maximum price the buyer is willing to pay -advise the buyer if the listing price of the seller's house is unrealistic - Correct Answer advise the buyer if the listing price of the seller's house is unrealistic a sales associate with one year of experience is managing a broker's branch office, which is 45 miles from the main office. Which of the following is TRUE? -the sales associate is acting legally because she has enough experience Real Estate Real Estate -the sales associate is acting illegally because she does not have enough experience -the sales associate's experience does natter under license law -none of the above - Correct Answer-The sales associate is acting illegally because she does not have enough experience a recorded subdivision plat is used in the -metes and bounds system -rectangular survey system -geodetic survey system -lot and block system - Correct Answer-lot and block system The Commission cannot have more than __________ members from one political party - Correct Answer-4 A parcel of land described as "the NW 1/4 and the SW 1/4 of Section 6, T4N, R8W of the Third Principal Meridian" was sold for $2,500 per acre. The listing broker will receive a 5% commission on the total sales price. How much will the broker receive? - Correct Answer-$5,000 What is the cost of constructing a fence 6 ft 6 in high around a lot measuring 90' x 175', if the cost of erecting the fence is $1,25 per linear ft and the cost of material is $.825 per sg ft of fence? - Correct Answer-$3,505 A building is valued as $215,000 and contains 4 apartments that rent for $470 each per month. The owner estimates that the net operating income is 65% of the gross rental receipts. What is the capitalization rate? -3.7% -14.2% -10.5% -6.8% - Correct Answer-6.8% Carbon monoxide is not -quickly absorbed in the body -a result of incomplete combustion -a natural result of combustion -easy to detect - Correct Answer-Carbon monoxide is not easy to detect When compared with a 30 year payment period, taking out a loan with a 20 year payment period would result in -lower monthly payments -higher monthly payments -greater impound requirements -slower equity buildup - Correct Answer-higher monthly payments All of the following are subject to real property ownership rights EXCEPT -buildings located on the land Real Estate Real Estate -air space above the land -navigable rivers running through the land -easements running with the land - Correct Answer-navigable rivers running through the land All of the following are alternative risk management techniques EXCEPT -ignoring it -retaining it -transferring it -avoiding it - Correct Answer-ignoring it An important characteristic of land is that is may be modified or improved at some point in time. Depending on its type, an improvement may increase the value of real estate greatly. All of the following are considered to be improvements EXCEPT -buildings -crops -sewers -roads - Correct Answer-crops Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for -repairs and maintenance -hazard insurance premiums -principal and interest -real estate taxes - Correct Answer-real estate taxes Referral fees can be legally paid -from a licensed broker to a consumer who referred a client -from one licensed agent to another licensed agent -from one licensed broker to another licensed broker -from one consumer to another consumer - Correct Answer-from one licensed broker to another licensed broker A tenant has an estate for years. According to the written one-year lease, the tenancy will expire on May 1st. To obtain possession as of the date, the landlord -must give the tenant 30 days' notice -must give the tenant 60 days notice -is not required to give the tenant any notice -must give the tenant noticed before April 15th - Correct Answer-is not required to give the tenant any notice In Kentucky, errors and omissions insurance is -voluntary -recommended -not necessary -mandatory - Correct Answer-mandatory Real Estate Real Estate The type of listing agreement that provides for payment of a commission to the broker even though the owner makes the sale without the broker's aid is called an -exclusive right to sell listing -exclusive agency listing -open listing -option listing - Correct Answer-exclusive right to sell listing A person who has complete control of a parcel of real estate is said to own a -leasehold estate -fee simple estate -defeasible fee estate -life estate - Correct Answer-fee simple estate Capping is the method of -burying waste and covering with soil -piling waste into a hill at surface level and covering with clay -laying soil over the surface of a landfill and planting vegetation -compacting waste and sealing it in a container - Correct Answer-laying soil over the surface of a landfill and planting vegetation All of the following liens need to be recorded to be valid EXCEPT -Mechanic's lien -Judgement lien -Real estate tax lien -Mortgage lien - Correct Answer-real estate tax lien All of the following are included in the right to control one's property EXCEPT -the right to exclude the utilities' meter reader -the right to enjoy profits from its ownership -the right to erect "no trespassing" signs -The right to sell the property to a neighbor - Correct Answer-The right to exclude the utilities' meter reader If a licensee knows that a seller is under an exclusive listing with another brokerage, the licensee -may knock of the seller's door -may call the seller on the telephone -may not contact that seller - may send the seller a letter - Correct Answer-may not contact that seller All of the following are physical characteristics of land EXCEPT -scarcity -indestructibility -uniqueness -immobility - Correct Answer-scarcity Real Estate Real Estate If 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 -the market value of the property less the land value. -the lowest repair bid. -either the actual cash value or the prorated repair cost. -the total replacement cost. - Correct Answer-either the actual cash value or the prorated repair cost 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 gains possession of the property? -the remainderman -the father's other children -the mother -the daughter's heirs - Correct Answer-the daughters heirs Which of the following is true about land taken for public use? -the local use will benefit the residents in the immediate area -the health, safety, and welfare of the government must be the reason -the owner must be fairly compensated -the property is then established as a fee simple determinable estate for a particular use - Correct Answer-the owner must be fairly compensated if a licensee if found in violation of license law and discipline is ordered, the licensee __________ -can appeal to the Commission -can appeal to the attorney general -can appeal to the circuit court -has no recourse - Correct Answer-can appeal to the circuit court All of the following are exempt from licensure EXCEPT: -trustee -attorney -attorney in fact -personal assistant - Correct Answer-personal assistant Tenant security deposits must be placed where? -in the broker's operating account -in a separate account -in the owners account -none of the above - Correct Answer-in a separate account An earnest money deposit must be placed into escrow within _____ business days of receipt - Correct Answer-3 Real Estate Real Estate a bill of sale is used to transfer the ownership of -fixtures -appurtenances -real estate -personal property - Correct Answer-personal property All of the following affect how quickly the forces of supply and demand work EXCEPT -degree of standardization of the product's price -mobility of the parties to the transaction -degree of standardization of the product -mobility of the product - Correct Answer-degree of standardization of the products price A property manager must be licensed, unless: -he receives a rental unit as his compensation -he receives bonuses as his compensation -he only receives a fee for each lease as his compensation -he receives commissions as his compansation - Correct Answer-he receives a rental unit as his compensation all of the following are duties of a property manager EXCEPT -renting space to tenants -repairing tenant fixtures -complying with legal requirements -preparing a budget - Correct Answer-repairing tenant fixtures all of the following would be considered specific date EXCEPT: -the employment opportunities in the area -the gross rent multiplies for the area -the dimensions of the subject property -the sales data for comparable properties - Correct Answer-the employment opportunities in the area A salesperson who represents the seller is showing a house to a prospective buyer customer. The salesperson knows that the house has water problems in its basement. Which of the following is true? -disclosing the information violates the salesperson's fiduciary duty to the seller -disclosing the information could create a fiduciary relationship with the buyer -withholding the information properly protects the confidence of the seller -withhold the information prevents the buyer from making an informed decision - Correct Answer-withhold the information prevents the buyer from making an informed decision Which of the following would be considered legal? - Correct Answer-Requiring a person with a disability to establish an escrow account for the costs to restore a property after it has been modified Real Estate The primary survey line running north and south in any area described by the rectangular survey system is its -base line -principal meridian -township line -range line - Correct Answer-principal meridian a property manager's primary obligation is to -tenants -bankers -owners -government authorities - Correct Answer-owners Real Estate