ROCKWELL REAL ESTATE ACTUAL REVISION EXAM
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔A mortgage often includes a clause requiring the lender's consent before another
borrower may assume the mortgage. This clause is called a/ an:
A. power of sale clause
B. subordination clause
C. defeasance clause
D. alienation clause (due-on-sale clause) - ✔✔D. Alienation clause (due-on-sale clause)
an Alienation clause prevents assumption without the lender's consent by stipulating
that the loan balance is due and payable in full if the property is sold.
✔✔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 that
description correct?
A. No, discount points are used to increase yield for lenders 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, which make loans more affordable for
everyone - ✔✔A. No, discount points are used to increase the yield for lenders who will
sell the loans on the secondary market.
Discount points are paid to a lender in order to increase the lender's upfront yield on a
loan. Typically, the lender will compensate for this by charging a below-market interest
rate.
✔✔A small house is situated n a larger lot in a mixed-use neighborhood. The city
decides that the area will, in the future, be zoned commercial. What will most likely
happen to the property's value?
A. It will increase, because of the fears of new businesses built nearby
B. It will increase in anticipation of the changing uses
C. No effect, since the house is a nonconforming use
D. No effect, until the change actually occurs - ✔✔B. It will increase, in anticipation of
the changing uses.
Under the principle of anticipation, a property's value is based on expectations of what
will happen to the property in the future. Generally commercial land is worth more than
residential land. A small house on a large lot would be viewed as a tear down.
✔✔The Real Estate Settlement Procedure Act ( RESPA) applies to:
A. contracts for deed
,B. seller-financed transactions
C. commercial and residential mortgages
D. residential first mortgages - ✔✔D. residential first mortgages
RESPA applies to mortgages secured by a dwelling with up to four units. It does not
apply to commercial transactions or seller financing. (A contract for deed, which is the
same thing as a land contract, can only be used in a seller-financed transaction.)
✔✔A homeowner bought his home for $150,000. Ten years later, he refinanced his
mortgage and borrowed $100,000. Which of the following is true for this type of
property?
A. Interest on the difference between the original loan amount and the refinanced
amount is not deductible
B. Interest on only half of the difference between the original amount and refinanced
amount is deductible
C. Interest on loans such as this one for the purchase or refinance of a principal
residence is deductible
D. Interest deductibility will depend on the borrower's tax bracket - ✔✔C. Interest on
loans such as this one for the purchase or refinance of a principal residence is
deductible
For a principal residence, interest on a purchase or refinance loan is fully deductible.
Interest on a home equity loan of up to $100,000 is also deductible, regardless of the
size of the purchase loan, and regardless of the taxpayer's income.
✔✔Under Title VIII of the Civil RIghts act of 1968, certain transactions are exempt.
Which one of the situations below would be exempted and not a violation of the act?]
A. A church-owned apartment complex where the language in the lease restrict tenancy
to memers of a specific national orgin
B. Members of a certain ethnic group are denied lodging in facilities operated by a
private club for commercial purposes
C. An unlisted home that is for sale by owner, where the only advertising is a sign in
front of the property that simply reads " For Sale" and the owner owns only one other
home
D. An Absentee owner who rents units in a four-plex without the help of a real estate
agent - ✔✔C. An unlisted hoe that is for sale by woenr, where the only advertising is a
sign in front of the property that simply reads "For Sale" and the owner owns only one
other home
The Federal Fair Housing Act ( Title VIII of the Civil Rights Act of 1968) does not apply
to the sale or rental of a single-family home by its owner, provided that the owner
doesn't own more than three such homes, no real estate agent is used, and no
discriminatory advertising is used.
✔✔As a property manager, you may:
A. advertise that units are available, even when their not
,B. use diferent application forms for minority applicants
C. require credit checks for some applicants, but not others
D. offer inducements to prospective tenants - ✔✔D. offer inducements to prospective
tenants
Property managers may offer inducements to attract tenants; waiving the first month's
rent. A property manager should perform credit checks on all prospective tenants.
✔✔Price fixing is prohibited by the:
A. state usuary act
B. federal Regulation Z
C. Sherman Antitrust Act and state antitrust laws
D. federal Real Estate Settlement Procedures Act - ✔✔C. Sherman Antitrust Act and
state antitrust laws
The Sherman Antitrust Act and state antitrust laws prohibits price fixing, group boycotts,
market allocation, and tie-in arrangements.
✔✔A metes and bounds description reads as follows: "started at the intersection of
Route 120 and Wells Lane. Proceed due south 1,815 feet, then due east 1,200 feet.
Proceed due north 1,815 feet, then return west to point of beginning." How many acres
is this property?
A. 5
B. 20
C. 50
D. 100 - ✔✔C. 50
Sketch as described. Area = Length x Width. Multiple 1,815 x 1,200 = 2,178,000 sq. ft.
convert to acreage by dividing by 43,560, which equals 50. (43,560 equals square feet
in one acre.)
✔✔A survey has been completed, and stakes have been placed marking off the
property. The survey can be used to:
A. construct fences and driveways
B. measure soil stability
C. determine freehold interests
D. verify known liens - ✔✔A. construct fences and driveways
survery is used to determine where exactly a property's boundary lines fall.
✔✔Erin entered into a lease that begins February 1, and is to end on January 31 three
years later. This leasehold is a/an:
A. estate for years
B. tenancy at sufferance
C. periodic tenancy
, D. estate from year to year - ✔✔A. estate for years
An estate for years begins on a certain date an ends ona certain date.
✔✔Which of the following is true about survey's?
A. they determine placement of improvements on a property
B. They identify setback lines from property boundaries
C. The protect against easements by prescription
D. They reveal encroachments not of public record - ✔✔D. They reveal encroachments
not of public record
A survey may reveal matters that are not part of the public record that would only be
discovered through a personal inspection, such as encroachments. Why they are
performed as part of obtaining extended coverage title insurance policy.
✔✔Allen begins providing construction services on May 2 and records a construction
lien on May 5. Bart begins providing services on May 3 and records a construction lien
on May 4. On May 10, a judgment lien against the property is recorded. The property's
owner also receives on May 10 that he is in arrears on his property tax payments.
Which lien has lien priority?
A. Allen's Lien
B. Bart's Lien
C. Judgement Lien
D. Tax Lien - ✔✔D. Tax Lien
Property tax liens take priority over other liens, including construction liens. Allen's lien
still takes priority over Bart's. As a construction lien takes priority based on the date of
the start of construction, but the tax lien takes priority over both.
✔✔Which of the following is true about building designated a historical landmark?
A. All lead paint must be removed immediately
B. It ay not be willfully destroyed without a permit
C. It may only be sold to family members
D. It must comply with all local ordinances - ✔✔B. It may not be willfully destroyed
without a permit,
Historical preservation ordinances may protect exsiting buildings of historical value, and
cannot be destroyed or modified without approval from an appropriate local authority.
✔✔W, age 17, enters into an installment contract to purchase a five-year-old-car fro S,
an adult. From a legal point of view, the contract is:
A. void
B. voidable by W only
C. voidable by S only
D. voidable by either S or W - ✔✔B. voidable by W only
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔A mortgage often includes a clause requiring the lender's consent before another
borrower may assume the mortgage. This clause is called a/ an:
A. power of sale clause
B. subordination clause
C. defeasance clause
D. alienation clause (due-on-sale clause) - ✔✔D. Alienation clause (due-on-sale clause)
an Alienation clause prevents assumption without the lender's consent by stipulating
that the loan balance is due and payable in full if the property is sold.
✔✔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 that
description correct?
A. No, discount points are used to increase yield for lenders 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, which make loans more affordable for
everyone - ✔✔A. No, discount points are used to increase the yield for lenders who will
sell the loans on the secondary market.
Discount points are paid to a lender in order to increase the lender's upfront yield on a
loan. Typically, the lender will compensate for this by charging a below-market interest
rate.
✔✔A small house is situated n a larger lot in a mixed-use neighborhood. The city
decides that the area will, in the future, be zoned commercial. What will most likely
happen to the property's value?
A. It will increase, because of the fears of new businesses built nearby
B. It will increase in anticipation of the changing uses
C. No effect, since the house is a nonconforming use
D. No effect, until the change actually occurs - ✔✔B. It will increase, in anticipation of
the changing uses.
Under the principle of anticipation, a property's value is based on expectations of what
will happen to the property in the future. Generally commercial land is worth more than
residential land. A small house on a large lot would be viewed as a tear down.
✔✔The Real Estate Settlement Procedure Act ( RESPA) applies to:
A. contracts for deed
,B. seller-financed transactions
C. commercial and residential mortgages
D. residential first mortgages - ✔✔D. residential first mortgages
RESPA applies to mortgages secured by a dwelling with up to four units. It does not
apply to commercial transactions or seller financing. (A contract for deed, which is the
same thing as a land contract, can only be used in a seller-financed transaction.)
✔✔A homeowner bought his home for $150,000. Ten years later, he refinanced his
mortgage and borrowed $100,000. Which of the following is true for this type of
property?
A. Interest on the difference between the original loan amount and the refinanced
amount is not deductible
B. Interest on only half of the difference between the original amount and refinanced
amount is deductible
C. Interest on loans such as this one for the purchase or refinance of a principal
residence is deductible
D. Interest deductibility will depend on the borrower's tax bracket - ✔✔C. Interest on
loans such as this one for the purchase or refinance of a principal residence is
deductible
For a principal residence, interest on a purchase or refinance loan is fully deductible.
Interest on a home equity loan of up to $100,000 is also deductible, regardless of the
size of the purchase loan, and regardless of the taxpayer's income.
✔✔Under Title VIII of the Civil RIghts act of 1968, certain transactions are exempt.
Which one of the situations below would be exempted and not a violation of the act?]
A. A church-owned apartment complex where the language in the lease restrict tenancy
to memers of a specific national orgin
B. Members of a certain ethnic group are denied lodging in facilities operated by a
private club for commercial purposes
C. An unlisted home that is for sale by owner, where the only advertising is a sign in
front of the property that simply reads " For Sale" and the owner owns only one other
home
D. An Absentee owner who rents units in a four-plex without the help of a real estate
agent - ✔✔C. An unlisted hoe that is for sale by woenr, where the only advertising is a
sign in front of the property that simply reads "For Sale" and the owner owns only one
other home
The Federal Fair Housing Act ( Title VIII of the Civil Rights Act of 1968) does not apply
to the sale or rental of a single-family home by its owner, provided that the owner
doesn't own more than three such homes, no real estate agent is used, and no
discriminatory advertising is used.
✔✔As a property manager, you may:
A. advertise that units are available, even when their not
,B. use diferent application forms for minority applicants
C. require credit checks for some applicants, but not others
D. offer inducements to prospective tenants - ✔✔D. offer inducements to prospective
tenants
Property managers may offer inducements to attract tenants; waiving the first month's
rent. A property manager should perform credit checks on all prospective tenants.
✔✔Price fixing is prohibited by the:
A. state usuary act
B. federal Regulation Z
C. Sherman Antitrust Act and state antitrust laws
D. federal Real Estate Settlement Procedures Act - ✔✔C. Sherman Antitrust Act and
state antitrust laws
The Sherman Antitrust Act and state antitrust laws prohibits price fixing, group boycotts,
market allocation, and tie-in arrangements.
✔✔A metes and bounds description reads as follows: "started at the intersection of
Route 120 and Wells Lane. Proceed due south 1,815 feet, then due east 1,200 feet.
Proceed due north 1,815 feet, then return west to point of beginning." How many acres
is this property?
A. 5
B. 20
C. 50
D. 100 - ✔✔C. 50
Sketch as described. Area = Length x Width. Multiple 1,815 x 1,200 = 2,178,000 sq. ft.
convert to acreage by dividing by 43,560, which equals 50. (43,560 equals square feet
in one acre.)
✔✔A survey has been completed, and stakes have been placed marking off the
property. The survey can be used to:
A. construct fences and driveways
B. measure soil stability
C. determine freehold interests
D. verify known liens - ✔✔A. construct fences and driveways
survery is used to determine where exactly a property's boundary lines fall.
✔✔Erin entered into a lease that begins February 1, and is to end on January 31 three
years later. This leasehold is a/an:
A. estate for years
B. tenancy at sufferance
C. periodic tenancy
, D. estate from year to year - ✔✔A. estate for years
An estate for years begins on a certain date an ends ona certain date.
✔✔Which of the following is true about survey's?
A. they determine placement of improvements on a property
B. They identify setback lines from property boundaries
C. The protect against easements by prescription
D. They reveal encroachments not of public record - ✔✔D. They reveal encroachments
not of public record
A survey may reveal matters that are not part of the public record that would only be
discovered through a personal inspection, such as encroachments. Why they are
performed as part of obtaining extended coverage title insurance policy.
✔✔Allen begins providing construction services on May 2 and records a construction
lien on May 5. Bart begins providing services on May 3 and records a construction lien
on May 4. On May 10, a judgment lien against the property is recorded. The property's
owner also receives on May 10 that he is in arrears on his property tax payments.
Which lien has lien priority?
A. Allen's Lien
B. Bart's Lien
C. Judgement Lien
D. Tax Lien - ✔✔D. Tax Lien
Property tax liens take priority over other liens, including construction liens. Allen's lien
still takes priority over Bart's. As a construction lien takes priority based on the date of
the start of construction, but the tax lien takes priority over both.
✔✔Which of the following is true about building designated a historical landmark?
A. All lead paint must be removed immediately
B. It ay not be willfully destroyed without a permit
C. It may only be sold to family members
D. It must comply with all local ordinances - ✔✔B. It may not be willfully destroyed
without a permit,
Historical preservation ordinances may protect exsiting buildings of historical value, and
cannot be destroyed or modified without approval from an appropriate local authority.
✔✔W, age 17, enters into an installment contract to purchase a five-year-old-car fro S,
an adult. From a legal point of view, the contract is:
A. void
B. voidable by W only
C. voidable by S only
D. voidable by either S or W - ✔✔B. voidable by W only
