MA Real Estate Practice Exam Questions With Correct Answers

Blockbusting causes: A Trust busting B Panic peddling C Blind advertising D Redlining - Answer B. Panic Peddling Blockbusting causes panic peddling (also known as panic selling), where homeowners quickly sell their homes for fear of a drop in home values due to the entry of a protected class into their neighborhood. Which of the following advertisements would violate fair housing law? A Private outdoor space B No elevator access C Walk-in closet D Easy access to the highway - Answer C Walk-in closet "Walk-in closet" is an example of discriminatory advertising directed toward those with a physical disability. A better choice of words would be "spacious closet" or "large closet." Which of the following activities would a salesperson be able to perform? A Take listings B Deposit client money C Advertise listings D All of the above - Answer D All of the above Salespersons are never allowed to handle client money or technically take listings, since the listings belong to the brokerage. The broker is the one who takes the listing and the salesperson may work to advertise, sell and negotiate the terms as an extension of the broker. Under the Fair Housing Act of 1968 and amendments, it is lawful to discriminate based on: A Religion B Children C National origin D Sexual orientation - Answer D Sexual orientation While sexual orientation is protected under many state's fair housing laws, it is not a protected class under the Fair Housing Act of 1968 and amendments All of the following are included in the four unities of joint tenancy, except: A Unity of time B Unity of measure C Unity of interest D Unity of possession - Answer B Unity of measure The four unities of joint tenancy are time, interest, possession, and title. A bill of sale is used to convey what? A Real property B Personal property C Property by will D None of the above - Answer B Personal property Bills of sale (or receipts) transfer ownership of personal propert Real property can become personal property by which process? A Fiduciary B Annexation C Severance D Hypothecation - Answer C Severance The act of severance makes real property become personal property; an example is digging up a tree. A lease creates an interest(s) known as a: A Freehold interest B Non-freehold interest C Non-freehold and rental only interest D Non-freehold, transference, and possession interest - Answer B Non-freehold interest A freehold is an ownership interest, and a non-freehold is a possessory interest (for example, a rental). Tom Brady gives Jimmy Garoppolo the right to his home so long as Jimmy is alive. However, once Jimmy passes away, the property will revert back to Tom. Jimmy throws wild parties and destroys the house. Tom brings a lawsuit against Jimmy in order to get him to leave. Under what cause of action would Tom bring his lawsuit? A Quiet title B Failure to pay rent C Waste D Partition - Answer C Waste Waste is a cause of action that future interest holders can bring against a life estate tenant when that tenant causes damage to the property. An ownership interest that is more of an ownership of time is a: A Timeshare B Interest for years C Estate for years D Non-freehold - Answer A Timeshare A timeshare is a form of ownership where the owner only owns the property for a specific period of time during the year in fee simple, along with a shared interest in the common areas. The key to a storage locker located in the basement of a condominium building is: A Realty B Personalty C trade fixture D An emblement - Answer B Personalty A key is an example of personalty (aka personal property or chattel) since it is not directly or indirectly attached to land. George is hired to pave Martha's driveway. After George finishes his work, he and Martha have a disagreement about the work that was done, and Martha refuses to pay him. George files for a lien against Martha's property to secure payment. This encumbrance is a: A Attachment lien B Judgment lien C Mechanic's lien D Contractor's lien - Answer C Mechanic's lien A mechanic's lien is a lien placed on real estate by someone who contributed to real property improvement, in order to secure payment for their work. Louis shares a driveway with Larry. Larry has an easement which gives him the right to walk across Louis' parking spot in order to gain access to his car. In this scenario, Louis owns the: A Servient tenement B Voluntary tenement C Dominant tenement D Involuntary tenement - Answer A Servient tenement The servient tenement is the property that is encumbered by someone else's right (the dominant tenement). In this scenario, Louis is the one who has to allow Larry to walk across his property; therefore, he is the one who is encumbered. A property owner wishes to build a six story office building in an area that limits building heights to four stories. What must they file for in order to build the six story building? A a variance B Non-conforming use permit C Title V permission D Police power exclusion - Answer A a variance A variance is special permission to do something that zoning prohibits. In this example, the property owner would need a variance to build their six story building. During month 9 of a 12 month lease that contains an option to purchase, the lease is: A Executory and unilateral B Executory and bilateral C Executed and unilateral D Executed and bilateral - Answer B Executory and bilateral A lease is bilateral (both parties make a promise) and executory (not yet completed). Options may be unilateral, but the lease is still bilateral even if it contains an option. A Purchase and Sale agreement was agreed to and signed by both buyer and seller on August 15th, with a closing scheduled for September 15th. From the 15th of August till the 15th of September, what is the best description of this contract's status? A Executed B Voidable C Executory D. Valid - Answer C Executory An executory status means that the promises in the contract have not yet been fulfilled, even though the contract has been signed and accepted. Claudia, a real estate agent is at an open house and using the bathroom. Upon exiting, Claudia forgets to shut off the faucet on the sink all the way. Claudia leaves the open house and when the sellers return from vacation three days later, they find that the sink has overflowed and caused damage to the floors in the hallways just outside the bathroom. Which of the following would likely cover this incident so Claudia doesn't have to pay out of pocket? A General Liability Insurance B Errors And Omissions Insurance C Professional Liability Insurance D Corporate Insurance - Answer A General Liability Insurance General liability insurance covers damage done by agents to personal or real property while on showings or at open houses. Which of the following activities would a salesperson be able to perform? A Take listings B Deposit client money C Advertise listings D All of the above - Answer C Advertise listings Salespersons are never allowed to handle client money or technically take listings, since the listings belong to the brokerage. The broker is the one who takes the listing and the salesperson may work to advertise, sell and negotiate the terms as an extension of the broker A facebook advertisement for a members-only studio residence at a private men's club lists, "only suitable for a single gentleman." Is this discriminatory advertising? A Yes, because the club is discriminating against women, which is a protected class under fair housing law B No, because it's a men's club; therefore, only men are allowed C Yes, because the club is advertising discrimination against women, and sex is a protected class under fair housing law D No, because private clubs are exempt from fair housing laws - Answer D No, because private clubs are exempt from fair housing law Private clubs are exempt from fair housing law (except race) when they offer housing only to their members for non commercial use. However, in this case, the club made a public facebook advertisement and therefore, they lose their ability to be exempt from fair housing law, and the advertisement is discriminatory. The highest form of ownership is: A Estate for years B Pur autre vie C Fee simple defeasible D Fee simple indefeasible - Answer D Fee simple indefeasible Fee simple indefeasible is the most complete form of ownership without limitations on rights of ownership, aside from any public or private restrictions. A fee simple defeasible estate is qualified in some way, and may have certain limitations or conditions to title. Donna lives in a luxury building called 300 Main Street LLC. Donna lives in the penthouse and pays a monthly fee towards the building's common area expenses, property taxes, mortgage, and full service amenities. Donna likely owns which type of property? A A condominium B A mixed use development C A cooperative D A subdivision - Answer C A cooperative A cooperative is a type of ownership where originally a corporation, often an LLC., was formed in order to provide housing to its shareholders. If two people are married, they can choose to co own a property as all of the following, except: A Tenancy in Common B Tenancy at Will C Tenancy by the Entirety D Joint Tenancy - Answer B Tenancy at Will Tenancy at will is a type of lease term and not co-ownership. In which of the following forms of ownership does the owner receive a lease to real estate, rather than a deed? Condominium A Condominium B Fee simple C Life estate D Cooperative - Answer D Cooperative In a cooperative property, owners receive shares in the cooperative, and proprietary leases to their individual units. The actual real estate is owned by the cooperative itself (which is often an LLC or other corporate entity). Richard is a retired, 64 year old fisherman. He qualifies for a $1,000 tax exemption as a result of his retirement status. His home is valued at $150,000, and assessed at 40% market value. His tax rate is $30 per $1000 of assessed value. What is his payment? A $800 B $400 C $3,500 D $1,800 - Answer A $800 Property taxes are calculated on the assessed value of the property, so that's the first place to start: $150,000 x 0.40 = $60,000 assessed value. The tax rate is $30 per $1000 of value, so the property taxes are: $60,000 / $1,000 = 60 x $30 = $1,800. Richard can take a an exemption of $1,000 from this tax bill, so his final tax bill is: $1,800 - $1,000 = $800 Sam has fallen on hard times and is unable to pay his property tax bill of $10,000. The town puts a property tax lien against Sam's house. The town sells Sam's house to Rick through a tax sale. A week after the tax sale, Sam wins $25,000 through a scratch ticket and wants to get his house back. Can he do so? A No, because the house was sold to Rick B Yes, because he can redeem the home by paying off the tax debt plus interest and costs C No, because Sam now owes more than $25,000 D Yes, because since Sam has fallen on hard times and so his house cannot be sold through a tax sale - Answer B Yes, because he can redeem the home by paying off the tax debt plus interest and costs If a property owner doesn't pay their taxes, the town or city in which the property is located will put a property tax lien against the house, and it may then sell the rights to that house subject to a right of redemption. If the owner pays off the taxes prior to the foreclosure of the right of redemption (meaning the end of their right to buy it back), the owner can get their property back. Timmy and Tammy are twins. When they are 14, they inherit a piece of land from their grandmother, Tracy. Timmy deeds his portion of Tracy's land to Tammy, and she puts it on the market for sale when she turns 15. Ned, a 31 year old real estate investor, offers to buy Tammy's land for $142,750. Tammy accepts Ned's written offer. What is the current legal status of Tammy and Ned's contract in this scenario? A The contract is unenforceable by either party B Ned cannot force Tammy to sell C Ned can force Tammy to sell D The contract will be void unless Timmy also agrees to the offer in writing - Answer B Ned cannot force Tammy to sell Since Tammy is under 18, Tammy and Ned's agreement is voidable. This means that the contract is valid until a court of law voids it, at the discretion of the party potentially harmed by the creation of the contract (in this case, Tammy). Ned will therefore be unable to force Tammy to sell, since doing so requires going to a court to enforce the contract, and that is where Tammy would then be able have the contract voided. So even though the contract is valid until voided, in practice Ned will not be able to force Tammy to sell the property if she changes her mind later. On the other hand, Tammy can choose to NOT have the contract voided, which means it would remain valid and she could go to court to enforce the contract thus forcing Ned to do what he promised. Which of the following verbal contracts would be enforceable in a court of law? A twenty year lease B A listing contract C An offer D A purchase and sale agreemen - Answer B A listing contract A listing contract, such as an open listing agreement, may be oral; however, it is best to put a listing contract in writing. Most real estate contracts must be in writing pursuant to the Statute of Frauds. An offer is not an agreement. A sum of money to be paid in the event of a breach of contract that is pre-agreed to in a contract is known as: A Damages B Liquidated damages C Estoppel D Specific performance - Answer B Liquidated damages Liquidated damages are damages that are pre-negotiated in a contract, and are paid out in the event of a breach (violation) of that contract. A P&S that is signed by both buyer and seller is considered: A Executory B Non Binding Executed D Non Recourse - Answer A Executory Executory is the status given to contracts that have not yet been finished. Although both parties have agreed to terms and conditions of the sale, the P&S has not yet been completed by both parties. Once all the terms and conditions have been met, then it will be considered executed, such as closing day. Captain Hook wants to buy Wendy's house, but Wendy doesn't want to sell to him. Captain Hook tells her that she will have to walk the plank and plunge into the ocean below if she doesn't sell her house to him. Wendy decides to sign a contract to sell her house to Captain Hook for reasonable market value. Has a contract been formed? A Yes, because Wendy signed the contract to sell B Yes, but Wendy may ask a judge to void the contract if she wants C No, because Captain Hook threatened Wendy and essentially forced her to sign the contract D No, because the contract lacks consideration - Answer B Yes, but Wendy may ask a judge to void the contract if she wants A contract that was created under duress is considered to be voidable. Captain Hook's threat of having Wendy walk a plank in order to get her to sign a contract would be an example of duress. Therefore, at Wendy's option, the contract may be voided or enforced. A sale-leaseback typically provides what for the seller? A Favorable tax treatment B Capital C Relief from debt service D All of the above - Answer D All of the above A sale-leaseback occurs when an owner sells their property to an investor, and simultaneously rents it back (often for a long term). It provides all of the benefits listed as answers. What deed implies, but does not warrant, that the grantor holds title to the property being granted? A Warranty B Special warranty C Quitclaim D Bargain and sale - Answer D Bargain and sale A bargain and sale deed implies an interest or rights to convey property, but it does not warrant (promise) title to it. Both General Warranty and Limited Warranty Deeds offer the grantee which of the following protections: A A warranty that the grantor did not cause any issues with title B A warranty that the grantor will take care of any title issues in the future C A warranty that the grantor has title insurance D A warranty that the grantor will be liable for any title claims that originated prior to their ownership - Answer A A warranty that the grantor did not cause any issues with title the grantor states that they did not cause any issues with title when they owned the property. This is the only guarantee that both deeds have in common. Adele has 5 lots, each a flat 65ft. x 75ft. plot. If Adele plans to sell each plot at $10/sqft, what would be her gross profit? A $48,750.00 B $53,750.00 C $150,750 D $243,750 - Answer D $243,750 Each lot is 65ft x 75ft which is a total of 4,875sqft. If she sells each lot for $10sqft, then we would multiply $4,875 x $10 = $48,750 to give us the gross profit she would make per lot. She has 5 total so $48,750 x 5 = $243,750 total gross. If a real estate developer asks you, their real estate agent, what type of financing they should use in order to purchase a 20 acre parcel of land that they could separate into lots for 10 houses and be able to pay off as they sold each home, what would you recommend? A Construction Mortgage B Blanket Mortgage C Wraparound Mortgage D Consult a mortgage banker or broker - Answer D Consult a mortgage banker or broker As real estate agents, we are not licensed mortgage bankers or brokers so to recommend a specific loan program to our clients would be operating outside our scope of expertise. If a client asks for specific financing information, you should recommend that they consult an expert in the field. A seller wants to net a profit of $305,000 after paying a 4% commission. What should the property sell for? A $317,200 B $317,508 C $317,708 D $317,900 - Answer C $317,708 $305,000 / .96 = $317,708 Fernando verbally hires Rachel to sell his home, located at 17 River Road. He promises to only list the property with Rachel to incentivize her to get top dollar for his listing. Rachel and Fernando's relationship is best described as: A Professional B Fiduciary C Exclusive D Unenforceable - Answer B Fiduciary Rachel has an agency relationship with Fernando, which means this is a fiduciary relationship (a relationship of trust). Their relationship is not exclusive because it is verbal (exclusive listings must be written), and it is an enforceable agreement (listings may be verbal, and are not subject to the Statute of Frauds). "Professional" is not correct because it is not the best answer to the question (watch out for this on the real licensing exam - be sure to read all of the answers!) Franny knows that the sellers of one of her friend's listings, the Smiths, are selling their home because they are getting divorced. One of Franny's clients, Sam, comes to look at the Smiths' property. When Sam asks Franny why the Smiths are selling, Franny should reply that: A They are getting divorced B They are changing school districts C That she can't answer that question, but that she knows that they have to sell fast DThat she can't answer that question - Answer A They are getting divorced If Franny represented the Smiths, she would have had to keep this information confidential. However, Franny represents Sam (the buyer) and not the Smiths (the sellers). This information is therefore confidential information about the other party to the transaction, and she must disclose this information to her client Sam. A seller needs to make a profit of $514,000 on a sale in order to discharge their existing loan. They have costs of $5,000, back taxes of $7,600, and are paying a commission of 4.5%. How much should they sell for? A $538,220 B $550,820 C $551,414 D $555,325 - Answer C $551,414 To calculate the sale price, first add the seller's costs (treating their net profit as a cost, since they must receive it when they sell their house): $514,000 + $7,600 + 5,000 = $526,600. Next, divide the seller's costs by the difference between 1 and the commission to find their sales price: $526,600 / 0.955 = $551,413.61 (rounded up to $551,414 in the answer). An income property grossed $10,000 this year. It paid management fees of 10% and paid for a heating system replacement that cost $2,500. What is the Net Operating Income for this property? A $10,000 B $9,000 C $6,750 D $6,500 - Answer B $9,000 The capitalization rate is the percentage of the property's value it receives as net operating income (NOI) every year. The NOI is Gross Income less operating expenses. To calculate this property's value based on the capitalization rate, we must first calculate our NOI: $10,000 x 0.1 = $1,000 management fee. $10,000 - $1,000 = $9,000 NOI. We do not include the heating system replacement since it is a capital improvement (an addition to the property), not a maintenance cost. George Washington has been tasked with appraising the White House. What approach should George use to estimate the value of the White House? A Sales comparison approach B Cost approach C Income approach D Market data approach - Answer B Cost approach The cost approach is used for unique buildings and improvements that lack adequate sales comparison data. Since the White House is unique and there are no other properties it can be compared to, the sales comparison approach cannot be used. Since the White House also lacks income, the income approach cannot be used either. The cost approach uses construction costs to determine the property value. A 3 bed 2 bath home would most likely sell for the highest price in a neighborhood where: A Most homes are a similar size B Most homes are larger C Most homes are smaller D Most homes are very differen - Answer B Most homes are larger Because of the principal of progression a property's value will be highest when the homes around it are nicer than it, increasing its value through substitution. A developer and a listing agent disagree on the listing price of 2 homes in a newly created subdivision. The developer believes that one of the homes which was designed as a "premier home" and includes marble floors throughout the house, real gold fixtures in the kitchen and a finished game room in the basement, complete with pool table should be worth a lot more money. The listing agent shows the developer that similar homes in the area do not have these lavish upgrades and buyers won't want to pay significantly more when they can have a home of similar size, that's also beautifully renovated for much less money. This is an example of which principle of value? A Contribution B Balance C Substitution D Anticipation - Answer C Substitution Substitution is the principle of value that says a buyer won't pay more for something than it costs to purchase something of similar quality. The TRID integrated disclosure was established under: A RESPA B TILA C Dodd Frank D The Federal Housing Act - Answer C Dodd Frank The TILA-RESPA integrated disclosure rule (TRID) was established under the Dodd Frank act If a lender charges 3 points to create the loan for a borrower, what will the borrower pay in points if the purchase price of the home is $600,000 and the borrower is putting 10% down? A $5,400 B $6,000 C $16,200 D $18,000 - Answer C $16,200 Points are always charged on the loan amount. So in this case, 10% downpayment on $600,000 home is $60,000. $600,000-$60,000 = $540,000 loan amount. Each point is equal to 1% of the loan amount, so 3 pts = 3% of $540,000. $540,000 x .03 = $16,200. A condo sale is set to close on October 25th. The seller has already paid their $350 per month condo fee and a $50 electric bill. What does the buyer owe the seller at closing, assuming a 365 day year and that the buyer owns the date of closing? A $171 B $90 C $175 D $110 - Answer B $90 Because the buyer will own the property from October 25th-October 31st (since the question specifies a 365 day year), proration of the condo fee and property taxes is required to refund the seller for those 7 days. We add the $350 condo fee per month and the $50 electric bill = $400/monthly expenses, of which we need to refund 7 days' worth back to the seller. $400/31 days in the month = $12.90/day x 7 days = $90.32 per day is the total pro-ration due to seller at closing, rounded to $90 in the answer choice. Which of the following acts as an insurer? A FNMA B Fannie Mae C FHA D GNMA - Answer C FHA The Federal Housing Administration (FHA) is a government program that insures lenders that make loans with more than 80% loan-to-value ratio (LTV) for homebuyers. These loans are meant to make homeownership more easily achievable for American homebuyers. Joshua has a gross annual salary of $50,000 and his current debts amount to about a $500 monthly payment. What is Joshua's current debt to income ratio? A 1% B 25% C 12% D 10 - Answer C 12% In this case, Josh has monthly debt payments in the amount of $500 versus a monthly income of about $4,166 ($50,000/12) Therefore Josh's DTI is about 12% which we get from dividing 500 / $4,166. Bob defaults on his loan and eventually the property is foreclosed upon. The lender does not go after Bob as the only security for the loan was the property. What type of a loan does Bob have? A Non-Recourse Loan B Wraparound Mortgage C Purchase Money Mortgage D Adjustable Rate Mortgage - Answer A Non-Recourse Loan A non-recourse loan is a loan in which the borrower is not personally liable for any deficiencies with the loan and the only security for the loan is the property. Mortgagee protection under a title insurance policy would cover which of the following? A An unrecorded easement B A change in zoning laws C A deed error D An outstanding loan balance - Answer D An outstanding loan balance Mortgagee protection means lender protection. The lender's title insurance policy covers an outstanding loan balance in the event of any title issues. The maximum penalty for acting as an agent without a license is A $500 B $5,000 C $10,000 D $25,000 - Answer A $500 Franny lives in an owner-occupied 2 family home in Newburyport, Massachusetts that was built in 1842. She is renting out her top floor apartment, and plans to avoid renting the apartment out to families with children under the age of six, because she cannot afford the cost of de-leading the unit. She is going to rent the unit herself, without using a real estate agent. This is: A Permissible, because owner-occupied 2 family homes are exempt under Massachusetts Fair Housing Law, so long as the owner rents the unit him or herself B Permissible, so long as Franny discloses the lead paint to prospective renters with the lead paint disclosure form C Not permissible, because under Massachusetts Fair Housing Law, age is a protected class D Not permissible, because Massachusetts Fair Housing Law exemptions don't apply in this instance - Answer D Not permissible, because Massachusetts Fair Housing Law exemptions don't apply in this instance If a licensed salesperson has signing power over an escrow account, which of the following statements is most accurate? A They are the office manager B Their broker will lose his or her license C Their broker must accept funds for the office D They may accept funds for the office - Answer B Their broker will lose his or her license Salespersons must not have access to client escrow accounts; this would subject both the salesperson and employing broker to possible loss of their license. Even though it's true that only the broker may access and control the escrow account (answer choice C), answer choice B is more accurate and specific to this question. Tax sales include a right of redemption for the foreclosed owner for: A Indefinitely B On a case by case basis C Six months from the sale D One year from the sale - Answer C Six months from the sale In Massachusetts, property owners have an equity right of redemption, or the right to pay their debt and regain ownership of their home, that extends six months from the date of sale at foreclosure. A tenant has a lease with a landlord that states that the tenant shall be responsible for snow removal during the winter months. It snows, and the sidewalks outside the property are not shoveled for several days. Who is legally responsible for the snow removal for the rental property? A The tenant B The landlord C The management company D The city or town in which the property is located - Answer B The landlord The landlord is legally responsible for snow removal under the Massachusetts sanitary code, regardless of any lease or management agreements that might be in place. A real estate salesperson and a broker of record can both do which of the following activities: A Take listings B Deposit checks C Send contract forms D Hire a part time agent - Answer C Send contract forms A salesperson can send out contracts, such as listing forms, offer forms and leases, however they may not perform any of the other tasks. Tom, a real estate agent, sells Tina's house. Tina gives him money to take a vacation in Vermont as thanks for how painless the transaction was. Is this acceptable? A No, any compensation must be accepted by the broker, not the agent B No, it is a conflict of interest C Yes, so long as Tom discloses D Yes - Answer A No, any compensation must be accepted by the broker, not the agent Massachusetts real estate licensing law requires that any compensation payable to a real estate salesperson be accepted on the behalf by their employing broker. Under Massachusetts law, real estate salespersons cannot be paid by their client directly. A broker must have a $5000 bond for: A The benefit of a person harmed by the broker losing escrow funds B Insurance in the event of a client dispute C To help pay agent commissions in the event of bankruptcy D As a fee for being licensed - Answer A The benefit of a person harmed by the broker losing escrow funds All licensed brokers, including corporations and inactive licensees, must provide the Board with a $5,000 surety bond. This bond is for the benefit of any person harmed by the loss of escrow funds caused by the broker; it is not insurance for the broker. Errors and ommission insurance would cover which of the following: A A fair housing fine B A consumer protection lawsuit C A lost offer deposit D A broken heirloom of a client - Answer C A lost offer deposit Errors and ommissions insurance is liability insurance that will cover mistakes made by a broker or their agents. E&O will not cover fair housing or consumer protection lawsuits. General liability insurance would cover personal property being broken, such as the client's heirloom. When asking a client pre qualifying questions before showing a home, it is best to refrain from asking: A If they have spoken to a lender yet B If they have children C If they have a downpayment D If they need to be close to public transportation - Answer B If they have children Asking someone if they have children would be in violation of fair housing law under the protected class of familial status. As a property owner, you have the right to rent or sell your property. This falls under which of your bundle of rights? A Disposition B Alienation C Possession D Exclusion - Answer A Disposition Disposition is the right to sell, rent, mortgage, or will the property to someone else What is the quarterly tax rate on a $840,000 home that is located in a town with a millage rate of $15 per $1,000? A $3,150 B $4,500 C $6,300 D $12,600 - Answer A $3,150 Step 1: $840,000 / 1,000 = 840 Step 2: 840 x $15 = $12,600 tax bill per year Step 3: $12,600 / 4 = $3,150 quarterly tax bill All of the following statements are true except: A Fannie Mae was established in 1938 in order to introduce liquidity into the secondary mortgage market B Any verbal agreement to sell real estate is automatically an open listing C The gradual deposit of detrital material by action of wind is know as alluvion D The government's ability to take property for the public good is carried out by condemnation - Answer C The gradual deposit of detrital material by action of wind is know as alluvion Alluvion is the gradual deposit of land by action of water, not wind. All of the other statements are correct. A lis pendens is notification of: A A cloud on title B A lien C A judgment D A pending listing - Answer A A cloud on title lis pendens is a publicly recorded notice that a property's ownership is subject to litigation. It is an issue with property ownership, and is therefore classified as a "cloud on title." It is not a lien, because it is not associated with a specific debt, though it is a financially related limitation on real estate. A P&S that is signed by both buyer and seller is considered: A Executory B Non Binding C Executed D Non Recourse - Answer A Executory Executory is the status given to contracts that have not yet been finished. Although both parties have agreed to terms and conditions of the sale, the P&S has not yet been completed by both parties. Once all the terms and conditions have been met, then it will be considered executed, such as closing day. Generally speaking, contingencies that rely on a third party should: A Require final approval by the seller B State the approved third parties C Have long deadlines D Have short deadlines - Answer D Have short deadlines To avoid unnecessary delays, it is a good rule to have short deadlines for any contingencies involving third parties (e.g. a home inspection). Mark signs an offer to sell his home to Mary. This is most similar to: A Offer B Recordation C Performance D Mutual Assent - Answer D Mutual Assent Mutual assent (also called meeting of the minds, mutual agreement, or offer and acceptance) is an agreement between two parties (usually evidenced by signature or offer and acceptance). Mark signing the offer signifies an agreement, and is therefore most similar to mutual assent (meeting of the minds). Contracts are only valid if: A They last no more than 5 years B They are made in writing C Their deadline for performance is no more than 4 years from the date of acceptance D None of the above - Answer D None of the above None of these answers are true regarding valid contracts. Valid contracts are those contracts that satisfy the essentials of contracts. Joan signs an offer to purchase a property. After signing, Joan finds out that her salesperson/agent was fired the day before she signed the offer. What is the status of Joan's offer? A Void B Valid C Executed D Unenforceable - Answer B Valid Agency relationships have no effect on an offer. Joan's offer is therefore valid (but not yet executed, since she has not yet purchased the property). During month 9 of a 12 month lease that contains an option to purchase, the lease is: A Executory and unilateral B Executory and bilateral C Executed and unilateral D Executed and bilateral - Answer B Executory and bilateral