ROCKWELL TEST QUESTIONS AND ANSWERS
A couple with children would like to buy a house that was built in 1950. The home was
recently remodeled, with completely new paint and plumbing. In this situation, what
does the agent always have to do?
A.Ensure that the paint used during the remodel is lead-free
B.Make sure the buyers receive a pamphlet on lead-based paint
C.Provide them with a copy of a recent lead inspection report
D.Nothing; the house was remodeled so lead-based paint rules don't apply - Answers -
B.Make sure the buyers receive a pamphlet on lead-based paint
A seller of a house built before 1978 must always give buyers a copy of a pamphlet on
lead-based paint prepared by the Environmental Protection Agency. If (but only if) the
property has been inspected for lead-based paint, the seller must also give a copy of
the inspection report. The agent must make sure that the seller takes these steps.
A buyers' purchase and sale agreement contained a financing contingency. The buyers
applied for a loan with a local lender, who verbally informed them that their loan
application was denied. The buyers' agent should:
A.ask the sellers to provide a purchase money loan instead
B.have the sellers extend the contingency deadline
C.tell the buyers about their right to receive the denial in writing
D.terminate the agency relationship - Answers - C.tell the buyers about their right to
receive the denial in writing
Under the Fair Credit Reporting Act, when a lender takes an adverse action on the
basis of a credit report, the applicant or borrower must receive written notice of that
action. The consumer should also be notified of which consumer reporting agency
provided that information, so that the consumer can verify and, if necessary, contest
that information.
What information does an appraiser need in order to calculate a capitalization rate?
A.Price and gross income
B.Price and net income
C.Value and gross income
D.Value and net income - Answers - D.Value and net income
According to the Uniform Relocation Act, tenants whose leases terminate because of
the condemnation of their residence are entitled to at least 90 days' notice and
assistance with relocation, including payment of moving expenses. (A residential tenant
is not likely to have a compensable interest in the property. The tenant does not have
an ownership interest, and from an appraisal perspective a residential leasehold interest
is unlikely to have any financial value.)
,A former mansion has been divided into three apartments. The best approach to finding
the property's value is:
A.cost
B.income
C.reconciliation
D.sales comparison - Answers - B.income
The income approach is appropriate for properties that are oriented toward generating
income for the property's owner. That would be true even if the property originally was
intended as a single-family residence.
A licensee locates what seems like a ready, willing, and able buyer. However, the deal
falls through at closing because the buyer can't obtain necessary financing. At the same
time, though, the seller turns out to be unable to provide marketable title. Does the
seller still owe a commission to the listing agent in this case?
A.No, because the sale didn't close
B.No, because there was no ready, willing, and able buyer
C.Yes, because the licensee saw the transaction through to the closing date
D.Yes, because the seller has an absolute duty to provide marketable title at closing -
Answers - B.No, because there was no ready, willing, and able buyer
A seller becomes obligated to pay a commission as soon as a ready, willing, and able
buyer is found. A buyer who lacks the financial ability to complete the purchase isn't
"able," however. While in some cases a failure to close excuses the seller's duty to pay
a commission, that makes answer A only sometimes true. B is true without qualification
and therefore the better answer.
The deed that states that there is a conveyance of interest, if any, is the:
A.grant deed
B.bargain and sale deed
C.quitclaim deed
D.special warranty deed - Answers - C.quitclaim deed
When signing a quitclaim deed, the grantor is saying, "I hereby quitclaim, remise, and
release whatever interest I have in the property, if any."
The police powers of the government include:
A.defeasance
B.foreclosure
C.lis pendens
,D.building codes and zoning regulations - Answers - D.building codes and zoning
regulations
The government's police power is its authority to adopt laws that are necessary for the
protection of the public's health, safety, morals, and general welfare. Land use laws
such as building codes and zoning regulations are based on the police power.
A primary advantage of owning a property in severalty is:
A.flexibility
B.inheritability
C.joint occupancy
D.shared risk - Answers - A.flexibility
In order to calculate a property's value, an appraiser using the income approach would
need to know the property's net income and capitalization rate. So, conversely, if the
appraiser wanted to find the capitalization rate, he would need to know the property's
value and net income.
A federal law requires lenders to give a booklet about shopping for a home loan to all
prospective borrowers within three business days of loan application. What law is this?
A.Fraud Enforcement and Recovery Act
B.Home Loan Disclosure Act
C.RESPA
D.Truth in Lending Act - Answers - C.RESPA
RESPA requires, among other things, that lenders give prospective borrowers a copy of
a booklet about closing costs and the home buying process, entitled "Your Home Loan
Toolkit."
Which of the following actions by a developer would require a zoning variance or a
rezone, because it would result in a more intensive use of the land?
A.Deed restriction prohibiting further subdivision of individual lots
B.Deed restriction prohibiting painting houses non-earth-tone colors
C.Fewer outbuildings placed on each lot than allowed by law
D.Increase in number of lots per acre - Answers - D.Increase in number of lots per
acre
D is the only possible answer. An increased number of lots per acre would be a more
intensive use than before and since developers tend to build to the zoning limit, an
increase in the number of lots per acre would likely require either a variance or a
rezone.
Mineral rights associated with real property are always:
, A.conveyed along with the surface rights to the property
B.separable and divisible
C.sold separately from the property
D.an interest in personal property - Answers - B. separable and divisible
Mineral rights may be sold separately from the land. However, they are appurtenant to
the land and will be conveyed with the land unless there is an agreement otherwise.
An investor rents a property to a tenant. For tax purposes, depreciation on this property
is based on:
A.market value, plus capital improvements, minus land value
B.market value, plus rental income, minus land value
C.price, plus capital improvements, minus land value
D.price, plus rental income, minus land value - Answers - C.price, plus capital
improvements, minus land value.
Adjusted basis is calculated by starting with initial basis (the cost of obtaining the
property), adding capital expenditures, and then subtracting depreciation deductions.
The value of the land must also be subtracted from what is depreciable; land does not
wear out, so depreciation doesn't apply.
An apartment building is right where a new city park is going to be built. The city
condemns it. Can the city terminate the leases of the building's tenants?
A.No, because this is a violation of the federal Fair Housing Act
B.No; if the government forces a landlord to breach a contract with a tenant, it is
violating the Landlord-Tenant Act
C.Yes, if notice is provided to the tenants and they receive relocation assistance
D.Yes, if the tenants receive just compensation from the city - Answers - C.Yes, if
notice is provided to the tenants and they receive relocation assistance
Property owned by only one person ("in severalty") gives that owner more flexibility to
use or dispose of the property than she would have if she shared ownership. By
definition, ownership in severalty doesn't involve joint occupancy or shared risk. And
properties held in fee simple are generally inheritable whether there's only one owner or
more than one.
Net listings are strongly discouraged because they are likely to be unfair to the:
A.broker
B.buyer
C.seller
D.All of the above - Answers - C.seller
A couple with children would like to buy a house that was built in 1950. The home was
recently remodeled, with completely new paint and plumbing. In this situation, what
does the agent always have to do?
A.Ensure that the paint used during the remodel is lead-free
B.Make sure the buyers receive a pamphlet on lead-based paint
C.Provide them with a copy of a recent lead inspection report
D.Nothing; the house was remodeled so lead-based paint rules don't apply - Answers -
B.Make sure the buyers receive a pamphlet on lead-based paint
A seller of a house built before 1978 must always give buyers a copy of a pamphlet on
lead-based paint prepared by the Environmental Protection Agency. If (but only if) the
property has been inspected for lead-based paint, the seller must also give a copy of
the inspection report. The agent must make sure that the seller takes these steps.
A buyers' purchase and sale agreement contained a financing contingency. The buyers
applied for a loan with a local lender, who verbally informed them that their loan
application was denied. The buyers' agent should:
A.ask the sellers to provide a purchase money loan instead
B.have the sellers extend the contingency deadline
C.tell the buyers about their right to receive the denial in writing
D.terminate the agency relationship - Answers - C.tell the buyers about their right to
receive the denial in writing
Under the Fair Credit Reporting Act, when a lender takes an adverse action on the
basis of a credit report, the applicant or borrower must receive written notice of that
action. The consumer should also be notified of which consumer reporting agency
provided that information, so that the consumer can verify and, if necessary, contest
that information.
What information does an appraiser need in order to calculate a capitalization rate?
A.Price and gross income
B.Price and net income
C.Value and gross income
D.Value and net income - Answers - D.Value and net income
According to the Uniform Relocation Act, tenants whose leases terminate because of
the condemnation of their residence are entitled to at least 90 days' notice and
assistance with relocation, including payment of moving expenses. (A residential tenant
is not likely to have a compensable interest in the property. The tenant does not have
an ownership interest, and from an appraisal perspective a residential leasehold interest
is unlikely to have any financial value.)
,A former mansion has been divided into three apartments. The best approach to finding
the property's value is:
A.cost
B.income
C.reconciliation
D.sales comparison - Answers - B.income
The income approach is appropriate for properties that are oriented toward generating
income for the property's owner. That would be true even if the property originally was
intended as a single-family residence.
A licensee locates what seems like a ready, willing, and able buyer. However, the deal
falls through at closing because the buyer can't obtain necessary financing. At the same
time, though, the seller turns out to be unable to provide marketable title. Does the
seller still owe a commission to the listing agent in this case?
A.No, because the sale didn't close
B.No, because there was no ready, willing, and able buyer
C.Yes, because the licensee saw the transaction through to the closing date
D.Yes, because the seller has an absolute duty to provide marketable title at closing -
Answers - B.No, because there was no ready, willing, and able buyer
A seller becomes obligated to pay a commission as soon as a ready, willing, and able
buyer is found. A buyer who lacks the financial ability to complete the purchase isn't
"able," however. While in some cases a failure to close excuses the seller's duty to pay
a commission, that makes answer A only sometimes true. B is true without qualification
and therefore the better answer.
The deed that states that there is a conveyance of interest, if any, is the:
A.grant deed
B.bargain and sale deed
C.quitclaim deed
D.special warranty deed - Answers - C.quitclaim deed
When signing a quitclaim deed, the grantor is saying, "I hereby quitclaim, remise, and
release whatever interest I have in the property, if any."
The police powers of the government include:
A.defeasance
B.foreclosure
C.lis pendens
,D.building codes and zoning regulations - Answers - D.building codes and zoning
regulations
The government's police power is its authority to adopt laws that are necessary for the
protection of the public's health, safety, morals, and general welfare. Land use laws
such as building codes and zoning regulations are based on the police power.
A primary advantage of owning a property in severalty is:
A.flexibility
B.inheritability
C.joint occupancy
D.shared risk - Answers - A.flexibility
In order to calculate a property's value, an appraiser using the income approach would
need to know the property's net income and capitalization rate. So, conversely, if the
appraiser wanted to find the capitalization rate, he would need to know the property's
value and net income.
A federal law requires lenders to give a booklet about shopping for a home loan to all
prospective borrowers within three business days of loan application. What law is this?
A.Fraud Enforcement and Recovery Act
B.Home Loan Disclosure Act
C.RESPA
D.Truth in Lending Act - Answers - C.RESPA
RESPA requires, among other things, that lenders give prospective borrowers a copy of
a booklet about closing costs and the home buying process, entitled "Your Home Loan
Toolkit."
Which of the following actions by a developer would require a zoning variance or a
rezone, because it would result in a more intensive use of the land?
A.Deed restriction prohibiting further subdivision of individual lots
B.Deed restriction prohibiting painting houses non-earth-tone colors
C.Fewer outbuildings placed on each lot than allowed by law
D.Increase in number of lots per acre - Answers - D.Increase in number of lots per
acre
D is the only possible answer. An increased number of lots per acre would be a more
intensive use than before and since developers tend to build to the zoning limit, an
increase in the number of lots per acre would likely require either a variance or a
rezone.
Mineral rights associated with real property are always:
, A.conveyed along with the surface rights to the property
B.separable and divisible
C.sold separately from the property
D.an interest in personal property - Answers - B. separable and divisible
Mineral rights may be sold separately from the land. However, they are appurtenant to
the land and will be conveyed with the land unless there is an agreement otherwise.
An investor rents a property to a tenant. For tax purposes, depreciation on this property
is based on:
A.market value, plus capital improvements, minus land value
B.market value, plus rental income, minus land value
C.price, plus capital improvements, minus land value
D.price, plus rental income, minus land value - Answers - C.price, plus capital
improvements, minus land value.
Adjusted basis is calculated by starting with initial basis (the cost of obtaining the
property), adding capital expenditures, and then subtracting depreciation deductions.
The value of the land must also be subtracted from what is depreciable; land does not
wear out, so depreciation doesn't apply.
An apartment building is right where a new city park is going to be built. The city
condemns it. Can the city terminate the leases of the building's tenants?
A.No, because this is a violation of the federal Fair Housing Act
B.No; if the government forces a landlord to breach a contract with a tenant, it is
violating the Landlord-Tenant Act
C.Yes, if notice is provided to the tenants and they receive relocation assistance
D.Yes, if the tenants receive just compensation from the city - Answers - C.Yes, if
notice is provided to the tenants and they receive relocation assistance
Property owned by only one person ("in severalty") gives that owner more flexibility to
use or dispose of the property than she would have if she shared ownership. By
definition, ownership in severalty doesn't involve joint occupancy or shared risk. And
properties held in fee simple are generally inheritable whether there's only one owner or
more than one.
Net listings are strongly discouraged because they are likely to be unfair to the:
A.broker
B.buyer
C.seller
D.All of the above - Answers - C.seller
