KY Real Estate Mock Test 2 questions fully solved

The law which requires that an applicant receive a good faith estimate within three days of loan application is RESPA. RESPA requires borrowers to receive a good faith estimate (GFE) within three days of loan application. Upon passing the exam and sending the proper documentation to the KREC, the license of the new agent will be sent to the broker, at his business address. 1. The law which requires that an applicant receive a good faith estimate within three days of loan application is RESPA. RESPA requires borrowers to receive a good faith estimate (GFE) within three days of loan application. 2. Upon passing the exam and sending the proper documentation to the KREC, the license of the new agent will be sent to the broker, at his business address. 324.080. The license of each sales associate shall be delivered or mailed to the principal broker with whom the licensee is affiliated. 3. Jayne, Fran and Kay are co-owners of property. When Jayne dies testate, Fran and Kay are the devisees to her one-third interest in the property. How do they own the property? B. Tenancy in common. Real property is devised to the heirs through a will. Personal property is bequeathed. A devisee is a person who receives real property in a will. Tenants in common is the form of ownership that can be inherited in by a will. 4. The EPAs recommended radon action level is 4 picoCuries per liter of air. The EPA's recommended action level is 4 picoCuries per liter of air. It can also be seen as 4 pCi/L. 5. While showing a house, an agent tells the buyers that they will receive a gift certificate to a local department store if they buy their home through her. This is legal as long as it is disclosed in writing. 6. An owner hired a property manager. This relationship is BEST described as a fiduciary relationship that creates general agency. A general agent is authorized to perform acts on behalf of another in an on-going business relationship. 7. To determine if new construction complies with building codes an inspection is conducted. If the building meets code which of the following certificates would be issued? Certificate of occupancy. In new construction, a certificate of occupancy is issued after a building has been inspected an meets code. 8. When a seller was interviewing an agent, the seller asked the agent to match the commission that another company was charging. The agent replied, "It is true that the other company charges a lower commission than we do. However, has anyone told you that other brokers don't show their listings?" This statement would be group boycotting which is a violation of the Sherman Anti-trust laws. This is an example of group boycotting which is illegal under the Sherman Anti-trust laws. 9. A residential lease agreement is generally not affected when the property is sold. Residential lease agreement is not affected when the property is sold or upon the death of the landlord. 10. Which of the following would an appraiser NOT consider when appraising an apartment building? The debt service on the property. The debt service or mortgage payment is NOT considered by an appraiser when determining the value of a property. 11. The willingness to enter into an agreement BEST defines a/an offer. An offer is the willingness to enter into an agreement or contract. The offeror is the party giving the offer. The offeree is the party receiving the offer. 12. On a HUD-1 closing statement all of the following entries, if applicable, would be a debit to the seller EXCEPT the sales price. The sales price of the property would be a credit to the seller on a HUD-1. 13. A real estate agent is an investor one of her tenant's moved out. When interviewing new tenants, the agent must disclose that she is a licensed agent. 14. The law which established prohibitions and requirements concerning closed and abandoned hazardous waste sites, created liability for any person responsible for the release of hazardous waste, and established a trust fund to provide for clean-up is CERCLA. 15. After a hearing a licensee decided to appeal the decision of the Kentucky Real Estate Commission. The appeal would take place in the Circuit Court. 16. In the typical business relationship with a broker, the agent is usually a/an independent contractor. 17. An owner makes a monthly payment combines the first and second mortgages into one payment that is made to the lender. The owner has probably negotiated a wrap around mortgage. When a second mortgage is negotiated that "wraps around" and existing first mortgage, and only one payment is made to the lender, it is a "wrap around" mortgage. 18. When a licensee fails to renew a license, writes the commission a check for fees that is not honored, fails to re-affiliate with a principal broker, or fails to complete requirements for continuing education; his/her license will be canceled. "Canceled" means the status of a license when a licensee fails to renew a license, writes the commission a check for fees that is not honored, fails to re-affiliate with a principal broker, or fails to complete requirements for continuing education. 19. Which of the following is LEAST LIKELY to create an encumbrance to property? License. In real estate, a license is what you will get when you pass the state exam, submit the proper documents and pay the correct fees. However, the word license also means the permission that is given to use the property of another. It is revocable and is not considered an interest in real estate. An encumbrance is anything that would affect the value or use of the property. A license is NOT considered an encumbrance. 20. When an investor can only lose the amount of money invested and has no voice in decisions that are made in the company, he/she is called a/an limited partner. In a limited partnership, the investor can lose only the money that he/she invested and the investor would have no voice in the decisions that are made in the company. 21. A loan is negotiated for 90% of the sale price of the property. If the semi annual interest on the loan is $3,000 and the annual rate of interest is 9.75%, what is the sale price of the property? $68,376 $3,000 x 2 = $6,000 $6,000 ÷ 9.75% =$61,538.46$61,538.46 ÷ 90% = $68,376 22. Which of the following types of property would LEAST LIKELY be managed by a Homeowner's Association (HOA)? Single family home. Single family homes are not usually managed by a Homeowner's Association but they could be. Cooperatives, condominiums and time-share communities would MOST LIKELY be managed by a Homeowner's Association. The purpose of the HOA is to collect a monthly maintenance fee and make sure that the rules and regulations are followed. 23. The market value of a property is $60,000. It is assessed at 60% of its value. If the tax rate is $4.25 per $1,000 of the assessed value, what are the annual taxes? $153 $60,000 x 60% = $36,000$4.25 ÷ $1,000 = .00425 $36,000 x .00425 = $153 24. The two requirements for placing a For Sale sign on a property are a written listing and written permission from the owner. 25. During an inflationary period a tenant would like to negotiate a/an long-term fixed rate gross lease. If the economy is experiencing inflation, the tenant would like a long-term fixed rate gross lease because the tenant would not be responsible for property ownership expenses and the lease payment could not be raised. 26. Which of the following laws requires the disclosure of the discount points charged to a borrower? Truth-in-Lending. Truth-in-lending or Regulation Z requires the disclosure of finance fees charged in the negotiation of the loan. 27. An article that was once personal property but has become so affixed to the land or improvement that the law construes it to be a part of the real estate is a/an fixture. An article that was once personal property but has become so affixed to the land or improvement that the law construes it to be a part of the real estate is a fixture. 28. Land use controls are designed for all of the following EXCEPT to ensure the highest and best use of real estate. It is the owner's responsible to determine the highest and best use of real estate, not zoning laws. An appraiser will determine the highest and best use of the property in an appraisal. This is the use that will generate the highest profit or return to the owner. 29. In 1968 the Supreme Court upheld the Civil Rights Act of 1866 in the Jones vs. Mayer case. The decision of this case is significant because the 1866 law prohibits all racial discrimination without exception. The Civil Rights Act of 1866 prohibits discrimination based on race in any real estate or personal transaction. There are no exceptions to the law and there are no limits to punitive damages under the law. 30. Sterling borrowed $4,500 at 6.5% interest per annum. If she paid off the loan in one payment after 8 months, what was the payment? $4,695.00 $4,500 x 6.5% = $292.50 ÷ 12 = $24.38 x 8 = $195$4,500 + 195 = $4,695