Real Estate Prep for State Exam – California-
Revision Questions with Correct Answers 2024.
All of the following about an estate for years is true, except:
a) It automatically terminates when the lease term expires, no notice is required from
either party
b) It must have a term lasting at least a year
c) It must have a fixed term.
d) It can only be established by express agreement. - Correct Answer-b: It must have a
term lasting at least a year
An estate for years — aka, a term tenancy — belies its name by having no requirement for
a term of a year or more, just for a definite duration.
Which of following are examples of negligent misrepresentation by a real estate licensee:
a) An agent exaggerates the advantages of a property she is showing
b) A broker intentionally misrepresents a material fact about a listing in order to gain a
financial advantage
c) A broker was not aware (but should have been) that her statement about a material fact
was incorrect
d) A broker instructs a seller to lie to a buyer about a material fact in order to close a sale -
Correct Answer-c: A broker was not aware (but should have been) that her statement
about a material fact was incorrect
Negligent misrepresentation occurs when a licensee recklessly makes a statement about
a material fact that he should have known to be false, but didn't.
The following are requirements for the forming of an easement by implication:
a) It must be necessary for the enjoyment of the property
b) There should be an obvious prior use
,c) Both A & B
d) Neither A nor B - Correct Answer-c: Both A & B
Easement by implication is an unwritten form of easement, originating from the
subdivision of land for continual, obvious use of the adjacent land, such as access to a
road, or to a water source.
The term "mortage warehousing" refers to:
a) Grouping of mortgages sold on the secondary market
b) Collection of mortgages stored in a large commercial structure
c) Mortgages extended to commercial builders
d) Mortgage records kept on paper rather than electronically - Correct Answer-a:
Grouping of mortgages sold on the secondary market
Mortgage warehousing begins as a line of credit extended by a financial institution to a
loan originator to fund a mortgage that the borrower initially used to buy a property. The
loan typically lasts from when it was originated to when the loan is sold into the secondary
market.
Generally, escrow companies base their prorations on a year consisting of:
a) 355 days
b) 360 days
c) 365 days
d) 366 days - Correct Answer-b: 360 days
Escrow firms rely on 30-days months; a 360-day year.
Which of the following is considered an advantage of FHA loans over conventional loans:
a) FHA loans usually have a higher loan-to-value (LTV) ratio than conventional loans
b) FHA loans do not have to be paid back until at least four years after the loan is made
c) FHA loans are more likely to have lower interest rates than conventional loans
,d) Both A & C - Correct Answer-Both A & C: a) FHA loans usually have a higher loan-to-
value (LTV) ratio than conventional loans. c) FHA loans are more likely to have lower
interest rates than conventional loans
Due to FHA loan's higher LTV, an FHA loan typically requires less cash put down at
closing than with conventional loans. And, because FHA insurance lessens the lenders
risk, they can charge lower interest rates.
Which of these kinds of loans would probably require the lowest amount of settlement
costs:
a) VA
b) Cal-Vet
c) Conforming
d) There are no differences in closing costs between these loans - Correct Answer-b: Cal-
Vet
There are no escrow charges for Cal-Vet loans.
Changing an item from real property to personal property by detaching it from the land is
called:
a) Severance
b) Partition
c) Turnover
d) Realty transfer - Correct Answer-a: Severance
A personal privilege to use the land of another is called a:
a) Adverse possession
b) License
c) Easement
d) Possessory interest - Correct Answer-b: License
, The most common type of loan made by institutional lenders is the:
a) partially amortized installment note
b) straight note
c) fully amortized fixed-rate note
d) adjustable rate mortgage - Correct Answer-c: Fully amortized fixed-rate note
With a fully amortized fixed-rate loan, the interest rate is fixed for the life of the loan, while
payments remain the same and are so structured that the loan is repaid by the end of its
term.
The monthly net income of an investment property is $1,550. An investor is expecting a
13% rate of return. Using the capitalization appraisal approach, the value of the property
is:
a) $135,748
b) $143,076
c) $176,455
d) $260,000 - Correct Answer-b: $143,076
The capitalization formula is stated as: Income = Value x Capitalization Rate. (Note that
the income in the capitalization formula is the yearly net income produced by the
investment property; monthly income being $1,550, the yearly income is $18,600.)
Formula: I = V x %
Substitute: $18,600 = V x .13
Rearrange the formula to isolate the V (the unknown quantity): $18,600 ÷ .13 = $143,076
Even though he knows the correct boundary line of his property, Owner Owen fails to
bring a lawsuit to establish title until after Neighbor Nathan finishes building a house which
encroaches on Owen's property. Owen's suit will be:
a) Successful, if Owen's property is being encroached upon
b) Barred by the legal doctrine of laches
Revision Questions with Correct Answers 2024.
All of the following about an estate for years is true, except:
a) It automatically terminates when the lease term expires, no notice is required from
either party
b) It must have a term lasting at least a year
c) It must have a fixed term.
d) It can only be established by express agreement. - Correct Answer-b: It must have a
term lasting at least a year
An estate for years — aka, a term tenancy — belies its name by having no requirement for
a term of a year or more, just for a definite duration.
Which of following are examples of negligent misrepresentation by a real estate licensee:
a) An agent exaggerates the advantages of a property she is showing
b) A broker intentionally misrepresents a material fact about a listing in order to gain a
financial advantage
c) A broker was not aware (but should have been) that her statement about a material fact
was incorrect
d) A broker instructs a seller to lie to a buyer about a material fact in order to close a sale -
Correct Answer-c: A broker was not aware (but should have been) that her statement
about a material fact was incorrect
Negligent misrepresentation occurs when a licensee recklessly makes a statement about
a material fact that he should have known to be false, but didn't.
The following are requirements for the forming of an easement by implication:
a) It must be necessary for the enjoyment of the property
b) There should be an obvious prior use
,c) Both A & B
d) Neither A nor B - Correct Answer-c: Both A & B
Easement by implication is an unwritten form of easement, originating from the
subdivision of land for continual, obvious use of the adjacent land, such as access to a
road, or to a water source.
The term "mortage warehousing" refers to:
a) Grouping of mortgages sold on the secondary market
b) Collection of mortgages stored in a large commercial structure
c) Mortgages extended to commercial builders
d) Mortgage records kept on paper rather than electronically - Correct Answer-a:
Grouping of mortgages sold on the secondary market
Mortgage warehousing begins as a line of credit extended by a financial institution to a
loan originator to fund a mortgage that the borrower initially used to buy a property. The
loan typically lasts from when it was originated to when the loan is sold into the secondary
market.
Generally, escrow companies base their prorations on a year consisting of:
a) 355 days
b) 360 days
c) 365 days
d) 366 days - Correct Answer-b: 360 days
Escrow firms rely on 30-days months; a 360-day year.
Which of the following is considered an advantage of FHA loans over conventional loans:
a) FHA loans usually have a higher loan-to-value (LTV) ratio than conventional loans
b) FHA loans do not have to be paid back until at least four years after the loan is made
c) FHA loans are more likely to have lower interest rates than conventional loans
,d) Both A & C - Correct Answer-Both A & C: a) FHA loans usually have a higher loan-to-
value (LTV) ratio than conventional loans. c) FHA loans are more likely to have lower
interest rates than conventional loans
Due to FHA loan's higher LTV, an FHA loan typically requires less cash put down at
closing than with conventional loans. And, because FHA insurance lessens the lenders
risk, they can charge lower interest rates.
Which of these kinds of loans would probably require the lowest amount of settlement
costs:
a) VA
b) Cal-Vet
c) Conforming
d) There are no differences in closing costs between these loans - Correct Answer-b: Cal-
Vet
There are no escrow charges for Cal-Vet loans.
Changing an item from real property to personal property by detaching it from the land is
called:
a) Severance
b) Partition
c) Turnover
d) Realty transfer - Correct Answer-a: Severance
A personal privilege to use the land of another is called a:
a) Adverse possession
b) License
c) Easement
d) Possessory interest - Correct Answer-b: License
, The most common type of loan made by institutional lenders is the:
a) partially amortized installment note
b) straight note
c) fully amortized fixed-rate note
d) adjustable rate mortgage - Correct Answer-c: Fully amortized fixed-rate note
With a fully amortized fixed-rate loan, the interest rate is fixed for the life of the loan, while
payments remain the same and are so structured that the loan is repaid by the end of its
term.
The monthly net income of an investment property is $1,550. An investor is expecting a
13% rate of return. Using the capitalization appraisal approach, the value of the property
is:
a) $135,748
b) $143,076
c) $176,455
d) $260,000 - Correct Answer-b: $143,076
The capitalization formula is stated as: Income = Value x Capitalization Rate. (Note that
the income in the capitalization formula is the yearly net income produced by the
investment property; monthly income being $1,550, the yearly income is $18,600.)
Formula: I = V x %
Substitute: $18,600 = V x .13
Rearrange the formula to isolate the V (the unknown quantity): $18,600 ÷ .13 = $143,076
Even though he knows the correct boundary line of his property, Owner Owen fails to
bring a lawsuit to establish title until after Neighbor Nathan finishes building a house which
encroaches on Owen's property. Owen's suit will be:
a) Successful, if Owen's property is being encroached upon
b) Barred by the legal doctrine of laches
