WA Fundamentals Final Exam
A $4,500 earnest money check bounces because of insufficient funds. The first thing
the broker should do is:
A. notify escrow to charge this amount, plus the bounced check fee, to the buyer
B. Notify the borrower
C. Notify the principals
D. Write a personal check for $4,500 to cover the shortage - ANS-C. Notify the
principals
\A and B sign a rental agreement in which A agrees to lease her property to B in
exchange for rent. This contract is:
A. bilateral
B. Implied
C. unilateral
D. Voidable - ANS-A. bilateral
\A borrower is purchasing a $300,000 home. She will be using a loan with an LTV of
80%. She will also be total amount of cash that she will need to bring to closing?
A. $7,200
B. $13,200
C. $67,200
D. $69,000 - ANS-C $67,200
\A broker will be working for a firm as an independent contractor. The firm must
provide the broker with:
A. Advertising materials
B. an independent contractor agreement
C. business cards
D. insurance coverage - ANS-B. an independent contractor agreement
\A brokerage office must have a sign:
A. that measures at least two feet by three feet
B. positioned over every entrance and exit
C. that states how many branch offices this brokerage has
D. that states the firm's name as it appears on its license - ANS-D. the sates the
firm's name as it appears on its license
\A buyer accepts a warranty deed from a seller, believing that the seller is the sole
owner of the property. The buyer later finds out that the seller is only a co-owner. has
a covenant in the warranty deed been violated?
,A. No, the only covenant is a general warranty deed promises that the previous
owner didn't encumber the property
B. No, the principle of caveat emptor controls matters concerning a deed
C. Yes, there is a covenant providing equitable title
D. Yes, there is a covenant providing marketable title - ANS-D. Yes there is a
covenant providing marketable title
\A buyer and seller sign a contract for deed. Two weeks later, the buyer is declared
mentally incompetent. The buyer guardian contacts the seller and says he can
continue to make the buyer's payments as agreed. Which of the following is true?
A. The buyer can disaffirm the contract within a reasonable period of time
B. They buyer can finish out the contract as the buyer's guardian has proposed
C. The seller can agree to receive payments from the guardian and if the payment
becomes unreliable, the seller can then cancel the contract
D. The contract is automatically voided because of the buyer's incapacity, regardless
of what the guardian wants - ANS-B. The buyer can finish out the contract as the
buyers guardian has proposed
\A buyer is getting a loan to purchase a five-arce apple farm with no residence on it.
The Truth in Lending Act requires:
A. a three-day rescission period if the borrower changes her mind
B. disclosure of all settlements charges on a loan estimate form
C. disclosure of the finance charge
D. no disclosure, because the land is agricultural - ANS-D. no disclosure, because
the land is agricultural
\A buyer is unfamiliar with the concept of discount points and asks a licensee to
explain. The licensee responds, "Discount points are used to replace funds that are
being held by the Federal Reserve, so that more funds are available to lend. "Is the
description correct?
A. No, discount points are used to increase the yield for leaders who will sell the
loans on the secondary market
B. No, discount points are used to pay brokers' commissions
C. Yes, banks hold discount points in escrow until sufficient funds have been
accumulated to make more loans
D. Yes, discount points lower interest rates, making loans more affordable for
everyone - ANS-A. No, discount points are used to increase the yield for lenders who
will sell the loans on the secondary market
\A buyer makes an offer to purchase on May 2. The offer includes a promise to
deposit $5,000 in earnest money within two business days after mutual acceptance.
The offer is contingent on results of a soil feasibility report. On May 5 the seller
accepts the offer. On May 11 the soil report is ordered. On May 17 the soil feasibility
report comes back and is approved by the buyer. By what date does the earnest
money need to be deposited?
,A. May 4
B. May 7
C. May 13
D. May 19 - ANS-B. May 7
\A buyer would be protected from risk of loss due to a failed heating system through:
A. an agency disclosure statement
B. a home protection plan
C. Mortgage insurance
D. title insurance - ANS-B. A home protection plan
\A condensed history of the ownership of a property is called a/an:
A. Abstract of title
B. chain of title
C. Lis pendens
D. title insurance policy - ANS-A. Abstract of title
\A contract for deed wouldn't be a good idea if the seller's mortgage has a/an:
A. acceleration clause
B. alienation clause
C. defeasance clause
D. subordination clause - ANS-B. alienation clause
\A contract for the purchase and sale of real property does not contain an adequate
land description. The agreement is:
A. Unenforceable
B. Valid
C. Void
D. Voidable - ANS-A. Unenforceable
\A contract signed by a person who was intoxicated at the time of the signature
would be:
A. valid
B. void
C. voidable by the intoxicated party
D. voidable by the other non-intoxicated party - ANS-C. voidable by the intoxicated
party
\A Contract specifies that "time is of the essence." This means that:
A. the seller must fulfill her contractual duties by the date set forth in the contract, but
the buyer does not have to
B. the buyer must fulfill her contractual duties by the date set forth in the contract, but
the seller does not have to
C. the agent must fulfill his contractual duties by the date set forth in the contract, but
the buyer and seller do not have too
, D all contractual duties must be fulfilled on or before the date set forth in the contract
- ANS-D all contractual duties must be fulfilled on or before the date set forth in the
contract
\A couple in their 70's with no liens on their home would like some extra income, but
don't want to make monthly payments. What kind of loan might a lender offer them?
A. a reverse equity loan, since they are over 62 and have sufficient equity in their
home
B. A reverse equity loan, since they are over the age of 35
C. A reverse equity loan, but the couple will need to make monthly payments
D. None; a lender will probably refuse to lend to anyone over the age of 62 - ANS-A.
a reverse equity loan, since they are over 62 and have sufficient equity in their home
\A developer wants a construction loan to build 20 homes. The lender requires a
take-out commitment. This means the developer needs:
A. a clause that allows individuals lots to be released from the blanket lien when they
are sold to purchasers
B. a new mortgage that wraps around an existing first mortgage
C. a permanent lender who will provide financing once construction is completed
D. an interim contract guaranteeing that the property will be finished by certain date -
ANS-C. a permanent lender who will provide financing once construction is
completed
\A group of affiliated licensees form a team, the XYZ team, within the brokerage they
work for (ABC Real Estate). ABC has a firm license, but XYZ does not. Whose name
must appear in all the advertising of those affiliated licensees?
A. ABC Real Estate
B. XYZ Team
C. Both ABC Real Estate and XYZ Team
D. The name of each affiliated licensee - ANS-A. ABC Real Estate
\A home is listed for $200,000. A prospective buyer tells the listing agent that she
may make an offer for $190,00. The listing agent tells her that the seller won't accept
anything under $195,000. The buyer offers $195,000 and the seller accepts. Which
is correct?
A. The listing agent violated her fiduciary duty to the seller by engaging in
self-dealing
B. The listing agent violated her fiduciary duty to the seller by telling the buyer how
low the seller would go
C. The listing agent did not violate her fiduciary duty to the seller because that is not
information that the seller would expect to remain confidential
D. The listing agent fulfilled her fiduciary duty to the seller by facilitating a successful
offer and acceptance - ANS-B. The listing agent violated her fiduciary duty to the
seller by telling the buyer how low the seller would go
A $4,500 earnest money check bounces because of insufficient funds. The first thing
the broker should do is:
A. notify escrow to charge this amount, plus the bounced check fee, to the buyer
B. Notify the borrower
C. Notify the principals
D. Write a personal check for $4,500 to cover the shortage - ANS-C. Notify the
principals
\A and B sign a rental agreement in which A agrees to lease her property to B in
exchange for rent. This contract is:
A. bilateral
B. Implied
C. unilateral
D. Voidable - ANS-A. bilateral
\A borrower is purchasing a $300,000 home. She will be using a loan with an LTV of
80%. She will also be total amount of cash that she will need to bring to closing?
A. $7,200
B. $13,200
C. $67,200
D. $69,000 - ANS-C $67,200
\A broker will be working for a firm as an independent contractor. The firm must
provide the broker with:
A. Advertising materials
B. an independent contractor agreement
C. business cards
D. insurance coverage - ANS-B. an independent contractor agreement
\A brokerage office must have a sign:
A. that measures at least two feet by three feet
B. positioned over every entrance and exit
C. that states how many branch offices this brokerage has
D. that states the firm's name as it appears on its license - ANS-D. the sates the
firm's name as it appears on its license
\A buyer accepts a warranty deed from a seller, believing that the seller is the sole
owner of the property. The buyer later finds out that the seller is only a co-owner. has
a covenant in the warranty deed been violated?
,A. No, the only covenant is a general warranty deed promises that the previous
owner didn't encumber the property
B. No, the principle of caveat emptor controls matters concerning a deed
C. Yes, there is a covenant providing equitable title
D. Yes, there is a covenant providing marketable title - ANS-D. Yes there is a
covenant providing marketable title
\A buyer and seller sign a contract for deed. Two weeks later, the buyer is declared
mentally incompetent. The buyer guardian contacts the seller and says he can
continue to make the buyer's payments as agreed. Which of the following is true?
A. The buyer can disaffirm the contract within a reasonable period of time
B. They buyer can finish out the contract as the buyer's guardian has proposed
C. The seller can agree to receive payments from the guardian and if the payment
becomes unreliable, the seller can then cancel the contract
D. The contract is automatically voided because of the buyer's incapacity, regardless
of what the guardian wants - ANS-B. The buyer can finish out the contract as the
buyers guardian has proposed
\A buyer is getting a loan to purchase a five-arce apple farm with no residence on it.
The Truth in Lending Act requires:
A. a three-day rescission period if the borrower changes her mind
B. disclosure of all settlements charges on a loan estimate form
C. disclosure of the finance charge
D. no disclosure, because the land is agricultural - ANS-D. no disclosure, because
the land is agricultural
\A buyer is unfamiliar with the concept of discount points and asks a licensee to
explain. The licensee responds, "Discount points are used to replace funds that are
being held by the Federal Reserve, so that more funds are available to lend. "Is the
description correct?
A. No, discount points are used to increase the yield for leaders who will sell the
loans on the secondary market
B. No, discount points are used to pay brokers' commissions
C. Yes, banks hold discount points in escrow until sufficient funds have been
accumulated to make more loans
D. Yes, discount points lower interest rates, making loans more affordable for
everyone - ANS-A. No, discount points are used to increase the yield for lenders who
will sell the loans on the secondary market
\A buyer makes an offer to purchase on May 2. The offer includes a promise to
deposit $5,000 in earnest money within two business days after mutual acceptance.
The offer is contingent on results of a soil feasibility report. On May 5 the seller
accepts the offer. On May 11 the soil report is ordered. On May 17 the soil feasibility
report comes back and is approved by the buyer. By what date does the earnest
money need to be deposited?
,A. May 4
B. May 7
C. May 13
D. May 19 - ANS-B. May 7
\A buyer would be protected from risk of loss due to a failed heating system through:
A. an agency disclosure statement
B. a home protection plan
C. Mortgage insurance
D. title insurance - ANS-B. A home protection plan
\A condensed history of the ownership of a property is called a/an:
A. Abstract of title
B. chain of title
C. Lis pendens
D. title insurance policy - ANS-A. Abstract of title
\A contract for deed wouldn't be a good idea if the seller's mortgage has a/an:
A. acceleration clause
B. alienation clause
C. defeasance clause
D. subordination clause - ANS-B. alienation clause
\A contract for the purchase and sale of real property does not contain an adequate
land description. The agreement is:
A. Unenforceable
B. Valid
C. Void
D. Voidable - ANS-A. Unenforceable
\A contract signed by a person who was intoxicated at the time of the signature
would be:
A. valid
B. void
C. voidable by the intoxicated party
D. voidable by the other non-intoxicated party - ANS-C. voidable by the intoxicated
party
\A Contract specifies that "time is of the essence." This means that:
A. the seller must fulfill her contractual duties by the date set forth in the contract, but
the buyer does not have to
B. the buyer must fulfill her contractual duties by the date set forth in the contract, but
the seller does not have to
C. the agent must fulfill his contractual duties by the date set forth in the contract, but
the buyer and seller do not have too
, D all contractual duties must be fulfilled on or before the date set forth in the contract
- ANS-D all contractual duties must be fulfilled on or before the date set forth in the
contract
\A couple in their 70's with no liens on their home would like some extra income, but
don't want to make monthly payments. What kind of loan might a lender offer them?
A. a reverse equity loan, since they are over 62 and have sufficient equity in their
home
B. A reverse equity loan, since they are over the age of 35
C. A reverse equity loan, but the couple will need to make monthly payments
D. None; a lender will probably refuse to lend to anyone over the age of 62 - ANS-A.
a reverse equity loan, since they are over 62 and have sufficient equity in their home
\A developer wants a construction loan to build 20 homes. The lender requires a
take-out commitment. This means the developer needs:
A. a clause that allows individuals lots to be released from the blanket lien when they
are sold to purchasers
B. a new mortgage that wraps around an existing first mortgage
C. a permanent lender who will provide financing once construction is completed
D. an interim contract guaranteeing that the property will be finished by certain date -
ANS-C. a permanent lender who will provide financing once construction is
completed
\A group of affiliated licensees form a team, the XYZ team, within the brokerage they
work for (ABC Real Estate). ABC has a firm license, but XYZ does not. Whose name
must appear in all the advertising of those affiliated licensees?
A. ABC Real Estate
B. XYZ Team
C. Both ABC Real Estate and XYZ Team
D. The name of each affiliated licensee - ANS-A. ABC Real Estate
\A home is listed for $200,000. A prospective buyer tells the listing agent that she
may make an offer for $190,00. The listing agent tells her that the seller won't accept
anything under $195,000. The buyer offers $195,000 and the seller accepts. Which
is correct?
A. The listing agent violated her fiduciary duty to the seller by engaging in
self-dealing
B. The listing agent violated her fiduciary duty to the seller by telling the buyer how
low the seller would go
C. The listing agent did not violate her fiduciary duty to the seller because that is not
information that the seller would expect to remain confidential
D. The listing agent fulfilled her fiduciary duty to the seller by facilitating a successful
offer and acceptance - ANS-B. The listing agent violated her fiduciary duty to the
seller by telling the buyer how low the seller would go
