Washington Real Estate Test Questions With Correct Answers

or an administrative law judge. (The director or an administrative law judge will conduct the hearing. Attorneys can represent the Department of Licensing, the licensee, and the person making the accusation.) There are no exceptions to fair housing law for - Answer racial considerations. The case of Jones v. Mayer in 1968 upheld the Civil Rights Act of 1866 and prohibits racial discrimination without exception. Taxes levied on a property owner to pay for installation of sidewalks or sewers are called - Answer special assessments. Special assessments are taxes levied on real estate to fund public improvements. A prepaid item by the seller is a(n) - Answer credit to the seller. Prepaid items are expenses that have been paid by the seller but are not fully used up, such as fuel oil. These items are prorated and appear as a credit to the seller. Schools would be considered part of which real estate classification? - Answer Special-purpose Special-purpose properties include schools, churches, cemeteries, and government-held lands. When a lien against a parcel of real estate may result from a lawsuit currently before the court, someone examining the public records would look for - Answer a lis pendens. A lis pendens is a notice of a possible future lien and is filed because there is often considerable delay between the time a lawsuit is filed and the time final judgment is rendered. Which of the following gives the BEST evidence of the buyer's intention to carry out the terms of the real estate purchase contract? - Answer The earnest money deposit The earnest money deposit is customary in real estate transactions to provide evidence of a buyer's intention to carry out the terms of the contract in good faith. It is also the seller's only remedy in a liquidated damages contract. The date and time a document was recorded help establish which of the following? - Answer Priority Time of recordation is an important consideration in establishing the priority of claims in the event of a sale. Khalid has been making periodic payments of principal and interest on a loan, but the final payment will be larger than the others. This is a(n) - Answer balloon payment loan. When the periodic payments are not enough to fully amortize the loan by the time the final payment is due, the final payment is larger than the others, and this is called a balloon payment loan. That portion of the value of owners' property that exceeds the amount of their mortgage debt is called - Answer equity. The equity represents the increasing ownership interest (the paid-off share) in the property, as the mortgage debt, the principal, is reduced. The value of the property minus the mortgage debt equals equity. The MOST common source of harmful lead in older residential property is in - Answer alkyd oil-based paint. Lead was used as a pigment and drying agent in alkyd oil-based paint that is common on doors, window, and other woodwork. The federal government estimates that lead is present in about 75 percent of all private housing built before 1978. Under a percentage lease, a commercial lessee may agree to pay - Answer a percent of sales. With a percentage lease, the rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tenant doing business on the leased property. This type of lease is typically used for retail businesses. In a dual agency situation, a broker may represent both the seller and the buyer if - Answer both parties give their informed consent, usually in writing, to the dual agency. Dual agency, in states that allow it, requires informed written consent from both parties. In an executory contract, the - Answer buyer receives equitable title to the property. Equitable title occurs when the buyer and the seller have executed a sales contract, and the buyer acquires an interest in the land. Legal title will not pass until the transaction is closed. The federal Fair Housing Act does NOT prohibit - Answer discriminating on the basis of marital status. Marital status is not one of the seven protected classes under the federal Fair Housing Act. Every licensed real estate broker must maintain an office in Washington that is accessible to the - Answer public. Every licensed real estate broker must maintain an office in Washington that is accessible to the public. Which of the following would be used to clear a defect from the title records? - Answer Quiet title action If ownership cannot be traced through an unbroken chain, then a suit to quiet title may be necessary to establish ownership and clear the cloud on the title. The amount of money a property commands in the marketplace is its - Answer market price. Market value is what a property should sell for in an arm's-length transaction between informed parties, neither of which is under undue pressure, and the property has been exposed to the market for a reasonable length of time. The primary activity of Fannie Mae is to - Answer buy and pool blocks of conventional mortgages and sell bonds that use them as security. Fannie Mae buys and gathers into bundles (pools) existing conventional mortgages and raises money to do this by selling bonds backed by these pools of mortgages. In receiving a gift of a parcel of real estate, one of the two new owners was given an undivided 60 percent interest, and the other received an undivided 40 percent. They now hold their interests as - Answer Tenants in common. Unlike joint tenants, tenants in common do not need to hold equal ownership interests. The real estate license law consists of - Answer both laws and rules. The license law consists of laws passed by the state legislature and rules promulgated by the director of the Department of Licensing. All real estate licensees are required to obtain a copy of the license law, which is available from the Department of Licensing. In Washington, the real estate license law is administered by the - Answer Washington State Department of Licensing. The Washington State Department of Licensing administers the real estate license law. License law consists of laws passed by the state legislature and rules promulgated by the director of the Department of Licensing. All real estate licensees are required to obtain a copy of the license law, which is available from the Department of Licensing. If the potential gross rental income from a property is $20,000, the vacancy rate is 5 percent, and the additional income from the laundry facilities and extra storage is $700, what is the effective gross income? - Answer $19,700 Effective gross income is the result of all incomes minus any losses due to vacancy, bad checks, etc.: $20,000 (potential gross income) + $700 (other income) - $1,000 [vacancies at 5 percent (0.05)] = $19,700 A real estate broker wishes to maintain an office in a residential building. All of the following conditions must be met EXCEPT that the - Answer broker must live on the premises. A real estate broker may maintain an office in a residential building, provided that the office is separate from any living quarters, the office is identified as a real estate office by a sign at the office entrance that is visible to the public, the office is in conformance with existing zoning, and the office is accessible to the public by a street address that can be reasonably located. When a company furnishes materials for the construction of a house and is subsequently NOT paid, it may file a(n) - Answer mechanic's lien. A mechanic's lien gives security to persons or companies that perform labor or furnish material to improve real property, and can be filed when the owner has not fully paid for the work. Reconciliation is BEST described as - Answer analyzing the results obtained from the three approaches to value. Reconciliation is analyzing the results obtained from the three approaches to value and deciding how much weight to give to each approach. A final value is estimated from the results of the analysis and the judgment of the appraiser. Mortgagee title policies protect which parties against loss? - Answer Lenders A mortgagee title policy protects the mortgagee-the lender. An owner's policy protects the owner, heirs, and devisees. A municipality establishes development goals that are often used to control growth in its - Answer comprehensive plan. Local governments establish development goals by creating a comprehensive plan, which is also known as a master plan. A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements would own a - Answer condominium. A person who holds a fee simple title to a unit and a specified share of the undivided interest in the common elements would own a condominium. Which of the following is a TRUE statement about interest on a fully amortized mortgage or deed of trust loan? - Answer Interest may be paid in arrears, that is, at the end of each period for which it is earned. Interest may-and typically is-paid in arrears. The February 1 payment pays for the use of the borrowed money in January. Wella is a salesperson working for broker Vincent. Wella sells a $150,000 home listed with another brokerage. The listing commission is 6.5 percent of the selling price. Of this amount, 5 percent 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 Vincent and salesperson Wella agreed that she would receive 55 percent of any commission that she generated for their office. For this transaction, she is entitled to receive - Answer $3,217.50 $150,000 (sales price) x 6.5 percent (0.065) = $9,750 (listing commission); $9,750 x 60 percent (0.60 = $5,850 (cooperating broker's commission); $5,850 x 55 percent (0.55) = $3,217.50 (Wella's commission) Which of the following is a similarity between an open listing and an exclusive-agency listing? - Answer Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure. Both open and exclusive-agency listings allow the owner to sell without broker aid and thus escape paying a commission. Which lien affects all real and personal property of a debtor? - Answer General A general lien attaches to all of a debtor's property as opposed to a specific lien, which affects only a specific property. The Real Estate Brokerage Agency Law requires that the licensee do all of the following EXCEPT - Answer conduct a property inspection. The law does not require that the licensee conduct a property inspection. The duties of a licensee and the duties of the seller's agent under Chapter 18.86 RCW, Real Estate Brokerage Relationships, include the following: keep confidential information confidential, advise the consumer to seek expert advice for matters that are beyond the licensee's expertise (such as conducting a property inspection), and disclose all material facts known by the licensee. What is the 2 point funding fee on a $180,000 VA guaranteed loan? - Answer $3,600 $180,000 loan x 2% = $3,600 funding fee Under an existing ordinance, no signs that extend more than three feet above the highest point of a roof may be placed on any building. An owner wants to erect a nine-foot-high revolving sign on the roof of his store. In order to do this legally, the owner must get a - Answer variance. A variance permits a landowner to use the property in a manner that is strictly prohibited by the existing zoning, A listing taken by a real estate salesperson is technically an employment agreement between the seller and the - Answer brokerage. Only a licensed broker for the brokerage firm may enter into brokerage agreements. The broker's salespeople have authority only to assist in negotiating the agreements. The salesperson is merely the agent of the broker, but only the broker is the agent of the client and a party to the representation agreement. The salesperson is not a party to it. The legal advisor for the director of the Department of Licensing is - Answer The Washington state attorney general. The Washington state attorney general is the director's legal advisor. The director may appoint an adequate staff to assist him or her. Neither the director nor any employees can be involved in any real estate business. The title to real estate passes when a valid deed is - Answer Delivered and accepted. Title is not considered transferred until the deed is actually delivered to and accepted by the grantee. An option to purchase binds which of the following parties? - Answer Seller only The potential buyer (optionee) who purchases an option to purchase is not bound to purchase the property. However, should the optionee decide to exercise the option, the optionor (seller) is bound to proceed with the sale in keeping with all the details contained in the option. The type of loan that will MOST likely have the lowest loan-to-value ratio is a(n) - Answer conventional loan. Conventional loans are viewed as the most secure loans because their loan-to-value ratios are often the lowest. A personal assistant working under the direct instruction and supervision of a licensee must hold a real estate license in order to - Answer show properties to prospective buyers. A personal assistant is required to have a real estate license to show property to prospective buyers. According to the real estate commission, an unlicensed personal assistant who works under the direct instruction and supervision of a licensee may follow up on loan commitments, write and place advertisements, and obtain public information. A buyer should consider the disclosure statement to be a - Answer disclosure statement only. The disclosure statement is not considered part of any written agreement between the buyer and seller. The buyer should recognize that it is neither a warranty nor a guaranty. Because the seller is making the disclosures, the licensee cannot be held liable for the contents of the disclosure statement, unless the licensee had actual knowledge of a defect in the property. At a disciplinary hearing, all of the following may be represented by an attorney EXCEPT the - Answer administrative law judge. The director or an administrative law judge will conduct the hearing and thus will not be represented by an attorney. Attorneys can be present to represent the Department of Licensing, the licensee, and the person making the accusation. Radon poses the greatest potential health risk to humans when it is - Answer trapped and concentrates in inadequately ventilated areas. When radon gas accumulates in a poorly ventilated area in a structure or in a mine, its harmful effects are increased. When moving into a newly purchased home, the buyer discovered that the seller had taken the electric lighting fixtures that had been installed over the vanity in the bathroom at the time of purchase. The seller had not indicated that the fixtures would be removed, and the contract did not address this issue. Which of the following is TRUE? - Answer Lighting fixtures are normally considered to be real estate. Whatever fixtures are present in the structure at the time of contract, and are not mentioned in the contract, convey (pass to the purchaser). If the seller removes them the seller is in breach of contract. Replacement fixtures are not personal property of the resident; they became real estate when annexed (attached) to the building. The practice of channeling families with children away from other buildings into an apartment building where other families with children reside is - Answer illegal discrimination. All the buildings in the community must be made available to families with children under the familial status protection of the Fair Housing Act, and families cannot be directed to any one building, as this is illegal discrimination. The closing statements of all transactions in which a real estate broker participates must show all of the following EXCEPT - Answer clear evidence of title. There is no requirement on the closing statement for clear evidence of title. The dates of the adjustments will be shown, together with the names of the payees, makers, and assignees of all notes paid, made, or assumed. 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? - Answer $21,000 4,800 square feet ÷ 80 feet (one side) = 60 front feet; 60 x $350/foot = $21,000 (sales price) If the director makes a written finding of fact that the public interest will be irreparably harmed by a delay in issuing an order, the director may issue a - Answer temporary cease and desist order. The director may issue a temporary cease and desist order. Whenever possible, the director will give notice by telephone or otherwise of the proposal to issue the order before issuing the temporary cease and desist order. When the director receives a statement or accusation concerning a licensee, the director will - Answer carry out a preliminary investigation of the facts to determine whether formal action is warranted. When the director receives a statement or accusation, the director will carry out a preliminary investigation of the facts to determine whether the statement or accusation warrants formal action. If it does, the director will set the matter for hearing at a specified time and place. The director may not give out a warning or wait to see if other accusations are received. An important characteristic of land is that it 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 - Answer crops. Crops are either considered part of the natural real estate (fructus naturales) or emblements (fructus industriales), which are personal property, but in neither case are they improvements-artificial things attached to the land. Disciplinary sanctions will be warranted if the licensee misrepresents his or her membership in any - Answer state or national real estate association. Misrepresentation of a licensee's membership in any state or national real estate association will warrant disciplinary sanctions. All of the following are true regarding public records EXCEPT they - Answer guarantee marketable title. Proof of ownership is evidence that title is marketable and cannot be found in public records, but it can be ensured through a certificate of title, title insurance, or a Torrens certificate. Any vacancies on the Washington Real Estate Commission will be filled by - Answer appointment by the governor.