NATIONAL REAL ESTATE EXAM PRACTICE QUESTIONS WITH VERIFIED CORRECT ANSWERS

NATIONAL REAL ESTATE EXAM PRACTICE QUESTIONS WITH VERIFIED CORRECT ANSWERS "A broker has written permission to represent both the seller and the buyer as a dual agent. Under these circumstances, which of the duties of the agent would be the easiest for him to fulfill? - CORRECT ANSWER Accounting" "Who is responsible for providing a lead paint disclosure? - CORRECT ANSWER The seller" "A property has lead paint in the interior and on the exterior. Which of the following statements is true? - CORRECT ANSWER The seller has no duty to remediate lead, simply to disclose it" "E signature or electronic signature - CORRECT ANSWER are valid for parties that have agreed to their use with the consent of the other parties" "A practice of trying to induce homeowners to sell by convincing them that a minority group is moving into the area causing property values to drop is - CORRECT ANSWER blockbusting" "John has a loan with equal regular payments of principal and interest. Long before the debt is satisfied, the balance is due in a payment substantially larger than all the others. This is best described as a: - CORRECT ANSWER Partial Amortization Loan" "An investor/developer has borrowed money to build a retail shopping center. His lender has provided a very competitive interest rate, however when the investment property is completed and sold the lender will collect the amount borrowed plus a percent of the developer's profits. What type of loan is this? - CORRECT ANSWER shared appreciation loan" "A young couple leases an apartment in an apartment complex for one year. During the year, they become concerned about crime in the area and ask for permission to install an alarm system in the apartment. The landlord grants permission. When the lease is up, what happens to the alarm system? - CORRECT ANSWER the system stays as it is now a fixture" "A broker has a trust account set up to hold client funds. He has earnest money deposits from several clients in the account at the same time. This is: - CORRECT ANSWER acceptable as long as he has written records" "A license holder is representing a young couple purchasing their first home. She shows them many properties and finally they find one to buy. They have some concerns about the contract and ask to speak an attorney. the agent should... - CORRECT ANSWER Send the clients to an attorney of their choice before they sign" "A sales agent had a listing and the property did not sell. The listing expired. During the term of the listing the seller had disclosed confidential information to the agent. Several months later, the agent has a buyer client interested in purchasing the same property. How long must the seller's private information be kept confidential? - CORRECT ANSWER the duty of confidentiality never expires and the agent must keep that information confidential forever" "A salesperson designed an innovative tech in the office that would substantially improve service to clients. He must - CORRECT ANSWER obtain permission from his broker before using it" "What is considered evidence against a broker accused of discrimination? - CORRECT ANSWER failure to display the equal housing poster in their office" "A property owner has a waterfront lot on a stream. He has the right to use the water from the stream. What is this right called? - CORRECT ANSWER riparian" "A tenant is aware that his lease will expire at the end of the month. He has begun to disassemble his display cabinets and shelves. Which of the following statements about this is true - CORRECT ANSWER the tenant can take these as they are trade fixtures" "A seller is attending the closing on his property. The title company has discovered an unsatisfied M&M lien on the property. Which of the following is the most likely reason for the lien? - CORRECT ANSWER plumbing work that was completed but never paid for" "Which of the following statements about an easement is true? - CORRECT ANSWER an easement is a benefit to the dominant property owner" "P, Q and R are joint tenants. P wants to sell the property, but Q and R do not. What can P do? - CORRECT ANSWER file a suit for partition" "A, B and C are joint tenants. C dies. B sells his share to D. What type of ownership do A and D have? - CORRECT ANSWER tenants in common" "Under what right can the government change property use from commercial to residential only? - CORRECT ANSWER police power" "Ownership of the common areas of condominiums is most likely to be: - CORRECT ANSWER tenancy in common" "What should a buyer do to ensure that his is getting the best title to real property? - CORRECT ANSWER get a general warranty deed" "Which covenant in a deed guarantees that the owners will not suffer or be disturbed by any claims on the property? - CORRECT ANSWER the covenant of quiet enjoyment" "Excess money at a foreclosure sale goes to... - CORRECT ANSWER the borrower" "After defaulting on a real estate loan, a borrower is able to pay off the loan prior to the foreclosure sale. This is called: - CORRECT ANSWER right of redemption" "The required distance between buildings and a federally protected endangered species wetlands is an example of... - CORRECT ANSWER a buffer zone" "Which of the following is personal property? - CORRECT ANSWER a lease" "A landlord leased space in his new retail property to an inexperienced business person. Based on location and the type of business, the landlord believes it will be a great success. What type of lease can he enter into with the tenant that will allow the landlord to benefit from the tenant's success? - CORRECT ANSWER a percentage lease" "Your client will be able to qualify for a property they wish to purchase in about 6 months, after they had an opportunity to reduce their consumer debt. They have found a property that they would like to purchase now. What type of agreement can they enter into with a seller that will allow them to occupy the property now and purchase it within the 6 months? - CORRECT ANSWER lease with an option to buy" "A developer decides to build a commercial property in the middle of a residential subdivision. What is required? - CORRECT ANSWER a variance" "A zoning ordinance would affect which of the following? - CORRECT ANSWER the concentration of housing in a residential area" "If a person dies without a will, who receives their estate? - CORRECT ANSWER spouse and children" "What are the requirements/ criteria for real estate to have values? - CORRECT ANSWER demand, utility, scarcity, transferability" "A licensed broker is advertising that he will perform a free appraisal if you contact him for a listing appointment. He is not in violation of the law... - CORRECT ANSWER if he is a licensed appraiser" "Which of the following is NOT an example of functional obsolescence? - CORRECT ANSWER deferred maintenance" "According to the Statute of Frauds, which of the following leases must be in writing? - CORRECT ANSWER a lease for more than one year" "A signed sales contract that has not yet gone to closing is... - CORRECT ANSWER executory" "When does an offer become a contract? - CORRECT ANSWER When the offeree gives the offeror notice of the acceptance" "Which of the following statements is true about the duties of an agent according to the common law of agency? - CORRECT ANSWER an agent must treat both clients and customers with honesty and fairness" "A licensee is representing a seller in a commercial transaction. The property is under contract and all contingencies have been met. The listing agent learns the State Department of Transportation has authorized the construction of an exit ramp to the interstate right behind the commercial property. The exit ramp will greatly increase the value of the seller's property. What should the agent do? - CORRECT ANSWER tell the seller and encourage the seller to complete the negotiated sale" "A listing agent is showing his listing to a buyer customer and notices a problem with the exterior of the property that he missed when he listed the property. What should he do? - CORRECT ANSWER point it out to the buyer as it is a material fact" "A buyer's agent has accidentally forwarded confidential information about his buyer's financial background to the listing agent. What is true? - CORRECT ANSWER the buyer's agent is guilty of negligence and the listing agent must disclose the information to the seller" "What is the difference between replacement cost and market value? - CORRECT ANSWER depreciation" "Economic life is defined as - CORRECT ANSWER years of depriciation" "An unlicensed assistant gets a call from a listing owner with questions about a contract- what should the assistant do? - CORRECT ANSWER take the information to the listing broker" "An underage college student signs a lease, then discloses his age to the landlord. What is true? - CORRECT ANSWER the contract is voidable at the minor's option" "Which of the following facts about listed property must be disclosed - CORRECT ANSWER death due to structural defects" "A lead paint disclosure is required for all properties built before - CORRECT ANSWER 1978" "Which of the following statements about lead is NOT true? - CORRECT ANSWER the property owner must remediate the presence of lead" "CERCLA is under the administration of: - CORRECT ANSWER EPA" "Which of the following used in 1978 is both extremely hazardous and friable? - CORRECT ANSWER asbestos" "Which of the following properties would be the least desirable neighborhood? - CORRECT ANSWER brownfields" "A seller must keep a copy of the lead paint disclosure he provided to the buyer for - CORRECT ANSWER 3 years" "It has been found that mold can develop due to - CORRECT ANSWER air tight windows and doors found in newer construction" "General liability insurance will - CORRECT ANSWER protect a company's assets if someone is injured on company property" "A condo owner's policy will most likely cover the owner if - CORRECT ANSWER a guest slips in the kitchen" "A condo complex has liability complex has liability insurance. This is least likely to cover - CORRECT ANSWER a units owner's carpet damaged by a broken water pipe" "A sales agent is showing a property. He trips in the house causes major damage to property of the owner. What type of insurance will cover this accident? - CORRECT ANSWER liability insurance" "Prior to its amendments, the Civil Rights Act of 1968 prohibited discrimination based on... - CORRECT ANSWER national origin" "An agent working with immigrant buyers must be careful - CORRECT ANSWER not to steer the buyers to a neighborhood based on the language they speak" "An agent is accused of discrimination. What will HUD do... - CORRECT ANSWER try mediation followed by a lawsuit if mediation fails" "An investor has 15 rent houses. He has hired an agent to lease the houses. Which of the following actions by the agent would NOT be in violation of fair housing laws. - CORRECT ANSWER refusing to show the houses to anyone over 75 years old" "Which of the following would NOT be an operating expense included in the property manager's operating budget - CORRECT ANSWER mortgage payments" "Which of the following would be most likely to hire a property manager? - CORRECT ANSWER an association" "Which of the following is NOT an example of due diligence in a sales contract? - CORRECT ANSWER a broker completes a CMA for a buyer client prior to the buyer making an offer" "A sales agent just obtained a listing. The seller told the agent that she needs to sell the property because she is going through a divorce. What must the salesperson do - CORRECT ANSWER obtain the signatures of all owners on the listing agreement" "Wetlands typically contain which of the following? - CORRECT ANSWER navigable waters" "What is the max amount of time allowed for a victim to file a Fair Housing complaint? - CORRECT ANSWER 24 months" "A property manager notices that the building stucco needs repair. He notifies the landlord and recommends a contractor. The landlord uses the contractor who does not do a good job. The new stucco leaks and mold grows. The tenant becomes ill from the mold. Who is responsible? - CORRECT ANSWER the landlord" "An apartment building owner has renovated and modified several units to be handicapped accessible. Can he advertise this accommodation? - CORRECT ANSWER Yes" "When did the second amendment of the Federal Fair Housing Act go into effect? - CORRECT ANSWER March 12, 1989" "What is the purpose of a property management trust account? - CORRECT ANSWER to hold tenant security deposits" "The main purpose of Regulation Z is - CORRECT ANSWER to notify borrowers of the true cost of credit" "What is a requirement of the CFPB - CORRECT ANSWER Lenders must provide borrowers with the LE form at the time of or within 3 business days of application" "Which of the following closings would be covered by RESPA (1-4 residential family housing) - CORRECT ANSWER a condominium" "When does the buyer under contract for deed get title to the property? - CORRECT ANSWER when the final loan payment is made" "What is another name for Contract for Deed - CORRECT ANSWER installment contract" "What department of the government oversees the FHA insurance program? - CORRECT ANSWER HUD" "A buyer is aware that the interest rates should go down over the nest few months. What type of loan should he get to enable him to buy now and take advantage of declining rates in the future? - CORRECT ANSWER ARM" "Which of the following is unlikely to have a negative impact on seller's credit score? - CORRECT ANSWER a straight assumption" "In rental properties, increased demand can be the result of - CORRECT ANSWER high mortgage interest rates" "Which of the following would not be eligible for a VA loan - CORRECT ANSWER a parent or sibling of a veteran" "What is required of a loan servicer before foreclosing on a VA loan - CORRECT ANSWER the VA must be notified before the foreclosure" "Who must be notified to take money out of the trust account in a real estate transaction? - CORRECT ANSWER both buyer and seller" "How is earnest money recorded on the closing disclosure a. debit to the seller b. debit to the buyer c. credit to the seller d. credit to the buyer - CORRECT ANSWER Credit to the buyer" "What type of mortgage loan would allow the property owner to borrow additional funds at future dates - CORRECT ANSWER an HELOC" "A seller has received $225,000 for the sale of his home. This represents a 20% profit. What did he pay for the house when he purchased it? - CORRECT ANSWER $187,500" "If an appraiser uses the cost approach to determine the value of a two story building 128 x 97 at $120/sq. ft, with $10,000 in depreciation and a $27,500 lot, what is the value of the property? - CORRECT ANSWER $2,997,340" "Mark purchased a home for $150,000 He had an 80% LTV. He has paid off $42,000 of his purchase mortgage. He is selling the house for $179,000. How much equity does he have? - CORRECT ANSWER $101,000" "Maria is planning to buy a house for $200,000. The lender has indicated that he will charge 3 points plus an origination point. Maria is considering the difference between an 80% LTV and a 75% LTV. How much will she save on points if she chooses the 75% LTV? - CORRECT ANSWER $400" "An office space is 24 feet long and 27 feet wide with 9-ft ceilings. The owner wants to carpet the office. How many square yards of carpet does he need? - CORRECT ANSWER 72" "A property is listed for $399,500. It sells for $396,000. The negotiated commission is 6% and will be split evenly between the selling broker and the listing broker. The selling broker pays his sales associates 60% of the broker's commission. How much does the selling broker earn? - CORRECT ANSWER $4,752" "A developer has 2,178,000 of property. He sells 80% of it for $5,000 an acre. What is the total sale price? - CORRECT ANSWER $200,000" "An office building has a potential gross rent of $20, month. It has a vacancy rate of 15%. Yearly expenses for the property toatl $115,000. If the owner is earning a 10% rate of return, what is the value of the building? - CORRECT ANSWER $890,000" "A seller is closing on the sale of his home on April 23rd. The property taxes have not been paid for this year. The annual tax bill is $2,008. Using a 360-day year, how much will the seller owe for taxes at closing? - CORRECT ANSWER $630" "An owner sold his house for $250,000 with a $50,000 take back. (A take back is seller financing. The seller receives a note for this amount at closing and will collect this amount over the agreed-upon term of the loan). He paid off his loan of $138,500 and ha paid a 5% commission. He had closing costs of $10,000. How much did the seller net at closing? - CORRECT ANSWER $39,000" "John is purchasing a lot 125 feet wide and 127 feet deep for $5.65 a square foot plus $15 a front foot. (A front foot refers to frontage and is the width of the lot.) How much will he pay for the lot? - CORRECT ANSWER $91,568.75" "The fact that an individual must go to the land described which of the physical characteristics of land? - CORRECT ANSWER Immobility" "John and Mary are co-owners of a property. John has 60% interest in the property and Mary has a 40% interest. What type of freehold estate do they have? - CORRECT ANSWER Tenancy in common" "A property is surveyed to determine a legal description. The surveyor works from a point of beginning, and measures terminal points and angles. What method of land description is he using? - CORRECT ANSWER Metes and bounds" "Mary and John are married with grown children. Both are intestate. If John dies and Mary becomes the owner of their home, what type of ownership did they have? - CORRECT ANSWER Tenancy by the entirety" "The local government needs your land to build a new high school. They have the right to take your land for the public good. This is called - CORRECT ANSWER The right of eminent domain" "One of the property owners in a subdivision is violating the deed restrictions. What can the other property owners do to get him to comply? - CORRECT ANSWER Seek an injunction from the courts" "Your property borders a non-navigable waterway and you have riparian rights. You have built a 10 foot pier at the water's edge. How do measure your property? - CORRECT ANSWER To the middle of the waterway" "Mary, a single woman, has no children. She owns real property and dies intestate. What happens to her real property? - CORRECT ANSWER The court will appoint an administrator and it will be distributed to her heirs by the Law of Descent" "A property owner has a gas station on his land. The zoning committee changes the zoning to R-1. What must the property owner do? - CORRECT ANSWER Nothing- his property is automatically considered a non-conforming use" "A property owner has installed a chain link fence on his property. He has received on official notice requiring the removal of this type of fence. This fence is most likely a violation of... - CORRECT ANSWER Deed restrictions or deed covenants" "A single property is regulated by building codes, zoning and deed restrictions. The rules are in conflict with one another. Which must the property owner obey? - CORRECT ANSWER The property owner must obey whichever rules are the strictest or most limiting" "Which of the following conveys title to real property and insure good title? - CORRECT ANSWER A general warranty deed" "A buyer has discovered a defect in title and has suffered a loss due to the defect. The title company has compensated the buyer for the loss. Subsequently, the buyer is awarded a judgement against the seller. The title company is entitled to a portion of the judgment as reimbursement for the claim it paid. This describes... - CORRECT ANSWER Subrogation" "A landowner wants to sell his property. A title search uncovers a cloud on the title. There is no one available to sign a quit claim deed to clear up the cloud. What can the owner do? - CORRECT ANSWER Pursue an action to quiet title in court" "Appraisers are most often asked to determine: - CORRECT ANSWER market value" "A builder is using inferior siding and paint in an effort to construct affordable housing. This would be an example of... - CORRECT ANSWER functional obsolescence" "A builder is very successful and active in a new subdivision. Homes in the subdivision are selling well, and the builder is making a good profit on the sales. Two new builders arrive and begin to sell in the same subdivision. All experience a lower level of profit. This demonstrates which principle of appraisal. - CORRECT ANSWER The principle of competition" "When measuring gross area the appraiser measures the - CORRECT ANSWER under roof" "Which of the following is the best definition of market value? - CORRECT ANSWER most probable price" "In preparing an appraisal, which of the following would have the least impact on the appraiser's estimate of value? - CORRECT ANSWER physical deterioration" "An appraiser has been hired to value a commercial office building that is fully leased. What approach to appraisal will he use to determine his opinion of value? - CORRECT ANSWER Income approach" "What is the least important factor for a license holder preparing a CMA - CORRECT ANSWER The information from expired listings of unsold property in the area" "An appraiser is using the Market Data Approach to determine the value of a residential property. What is FALSE? - CORRECT ANSWER His comparables should not be more than one year old" "What expenses of home ownership can a buyer deduct on his income taxes? - CORRECT ANSWER taxes and interest on his mortgage" "Mark has an option to purchase Bob's property. The option expires at the end of the month and Mark would like to extend the option. What would he need to do? - CORRECT ANSWER pay an additional option fee" "A buyer has signed an agreement to purchase a property from a seller. He has met all the terms and conditions of the listing. The listing broker has taken the agreement to the seller. The seller has changed his mind about selling and refuses to sign the agreement. What is true? - CORRECT ANSWER The seller does not have sell, but he owes the listing broker a commission" "Mark has an Open Listing on a seller's property. He had shown the property three times to the same potential buyers. Each time, he notified the sellers of the showing by phone. He heard from the sellers that he should no longer show the property as it was sold. Several weeks later, he learned that it was sold to the buyers he brought to the property. What are Mark's rights with respect to a commission from the sellers? - CORRECT ANSWER Mark is not entitled to any commission as he did not bring the offer to the sellers" "The best description of a counteroffer is - CORRECT ANSWER a rejection of an offer" "Which of the following contracts would be voidable? - CORRECT ANSWER A contract with a minor" "A buyer and his agent visit a listed property. The buyer loves the property and wants to purchase it. He speaks with the seller, who is at home at the time, and they come to an agreement regarding price and terms. They shake hands on the agreement and the buyer happily leaves the property. His agent should: - CORRECT ANSWER Warn the buyer that the verbal sales contract is unenforceable" "Which of the following terms is used to describe a situation where a buyer and seller agree to terminate a contract? - CORRECT ANSWER Mutual recession" "A seller's property is listed for $399,900. A buyer makes an offer for $389,000. The seller counter offers for $392,500. The buyers have not responded to the counteroffer. The sellers receive another offered for $395,000. They would like to accept this new offer. What is true - CORRECT ANSWER They can accept the new offer, but only after withdrawing their counteroffer" "A broker owes customers - CORRECT ANSWER honesty and fairness" "What are an agents duties to his principal? - CORRECT ANSWER Reasonable care, obedience, loyalty, disclosure, accounting and confidentiality" "An agent has acted without authority to do so. His principal has found out about the actions and accepted them. What kind of agency does this describe? - CORRECT ANSWER agency by ratification" "Broker B has signed a Buyer Representation Agreement with his clients. As a Buyer's agent he must disclose all of the following except: - CORRECT ANSWER his buyer's ability to make a higher offer" "A property at 123 Main street has been listed by Mary, a sales license holder at ABC Realty for several weeks. Last week, Mary died. What effect will Mary's death have on the Listing Agreement? - CORRECT ANSWER None" "Which of the following is not a duty of an agent? - CORRECT ANSWER (OLD CAR) Trust" "A signed employment agreement is necessary to... - CORRECT ANSWER sue for commission" "A listing agent would probably not disclose - CORRECT ANSWER death on the property due to natural causes" "Which of the following deaths on the property should never be disclosed? - CORRECT ANSWER Death due to HIV/AIDS" "Which of the following properties would be the least desirable neighbor? - CORRECT ANSWER Brownfields" "How long must a seller or landlord keep a copy of the lead paint disclosure? - CORRECT ANSWER 3 years" "All of the following are hazardous substances that a license holder should be aware of except - CORRECT ANSWER Acrylic paint" "Which of the following is the best example of puffing - CORRECT ANSWER I think this is the best floor plan available from this builder" "A buyer's agent has helped a buyer to find a home. The buyer has expressed concern about the possible presence of radon. What should the buyer's agent do in this case? - CORRECT ANSWER Recommend an inspection for hazardous materials" "A chemical manufacturing company purchases a plant. After closing they discover that the previous owners had spilled hazardous materials on the land. According to CERCLA, who is liable for the cost of the cleanup? - CORRECT ANSWER both the new owners and the previous owners" "A license holder has just taken a class on networking and marketing through social media. She is very excited about the possibilties and hes established Facebook, Twitter, Linkedln and Pinterest acocunts. She is also writing a blog. She has decided to market a new listing on these sites. The property has been built to resemble an Antebellum mansion. How can she advertise the propert? - CORRECT ANSWER Antebellum style mansion" "Which claim for damages would most likely be covered by a homeowner warranty policy? - CORRECT ANSWER A furnace that breaks down a few weeks after the buyer move in" "Under a new construction Home Owner Warranty policy, which of the following would not be covered? - CORRECT ANSWER The air conditioning unit" "Which of the following statements about flood insurance is FALSE - CORRECT ANSWER Flood insurance is not necessary if a property owner has a comprehensive homeowner's property" "After several years of selling residential property a license holder wishes to begin working on industrial sales. He should - CORRECT ANSWER align himself with a broker or sales license holder who has experience in industrial property in order to learn about and become proficient in industrial sales" "A property has foundation problems. The seller has painted over them to hide them. He lists his property for sale "as is", and does not disclose the problem. The listing broker views the property but does not detect any defects. A buyer purchases the property and after closing discovers the problems. Which of the following statements is true? - CORRECT ANSWER The broker will be protected by his E&O insurance because the problem was not able to be detected by visual inspection and the seller misrepresented the property" "In senior housing communities, at least one person over the age of 55 must be living in what percent of the units? - CORRECT ANSWER 80%" "The main goal of the ADA is the removal of barriers. All of the following are required under ADA except: - CORRECT ANSWER levered door handles" "According to Regulation Z, which of the following is not a trigger term? - CORRECT ANSWER APR" "Which of the following is false regarding the Civil Rights Act of 1968 - CORRECT ANSWER A FSBO who owns no more than four homes can discriminate when selling a home" "Which of the following loans would not have a 3 day right of recession? - CORRECT ANSWER A loan to purchase a vacation property" "What form replacing the HUD-1 must be provided to the consumer and when must it be provided? - CORRECT ANSWER The CD at least three days before closing" "Which of the following does NOT pledge property as security for a debt? - CORRECT ANSWER note" "Which of the following instruments is the promise to repay a debt? - CORRECT ANSWER note" "What is the advantage to the borrower of a VA loan? - CORRECT ANSWER the guarantee on the VA loan is free" "For what group of buyers would the ARM be the least desirable? - CORRECT ANSWER those on a fixed income" "Where can you expect to find MIP? - CORRECT ANSWER On an FHA loan" "What is a point? - CORRECT ANSWER 1% of the loan amount" "Where does the secondary market get its funds? - CORRECT ANSWER From investors" "A retired couple is on a fixed income. They own their own home. They are having a hard time making ends meet, yet they do not want to sell their home. What type of loan should they consider? - CORRECT ANSWER a reverse annuity mortgage" "John has leased commercial property and pays rent based on the receipts of his business. This type of rent is referred to as - CORRECT ANSWER percentage rent" "Which of the following would be considered an operating expense by a property manager preparing an operating budget for the owner? - CORRECT ANSWER interior painting of apartments" "The property management agreement creates what kind of agency? - CORRECT ANSWER General agency" "Who would use the remedy of Forcible Entry and Detainer? - CORRECT ANSWER the landlord" "The landlord pays the expenses of the property. The tenants pay rent plus utilities. What type of lease is this? - CORRECT ANSWER net lease" "When a landlord allows the property condition to deteriorate so much that the tenants are forced to leave it is called: - CORRECT ANSWER constructive eviction" "A couple is moving to a new city and they would like time to learn the city before they purchase a home. What type of lease should their agent recommend? - CORRECT ANSWER a periodic tenancy" "What type of verbal lease agreement would be enforceable? - CORRECT ANSWER a lease for one year or less" "John has a three year lease on office space. In the second year the landlord dies. His heirs inherit the property. They do not want it and they sell it. The new owner wants John to move out. Does John have to leave? - CORRECT ANSWER No, because he has a lease" "What type of business entity is owned by shareholders, but avoids "double taxation"? - CORRECT ANSWER An S corporation" "What is the difference between a general partner and a limited partner? - CORRECT ANSWER a general partner has full liability and a limited partner has limited liability" "A one on one relationship between a broker and a client is called - CORRECT ANSWER agency" "A license holder sponsored by a broker must have a written agreement - CORRECT ANSWER to work as an independent contractor" "Which of the following actions of a broker could jeopardize the independent contractor status of the license holders he sponsors? - CORRECT ANSWER Requiring his license holders to work scheduled hours" "A buyer's agent is working with a buyer to purchase a property. The buyer is concerned about the location of the fence as it appears to be encroaching. What should the buyer's agent do? - CORRECT ANSWER Recommend a survey" "A couple is purchasing a home and ask their agent how they should take title so that if one spouse dies, immediately the surviving spouse will be the sole owner of the property. The license holder should: - CORRECT ANSWER Tell them to talk to an attorney, because the license holder is not permitted to give advice on how to take title" "A license holder advertises a listed property as having the most beautiful landscaping in the neighborhood. This is an example of... - CORRECT ANSWER Puffing" "A license holder is showing her own listing to a buyer customer. While showing the property she notices that there is a serious slope to the porch floor. What should she do? - CORRECT ANSWER She must point it out to the buyer" "Which of the following is false about a property manager? - CORRECT ANSWER He is a universal agent to the owner" "A leased property is not for sale at this time. The tenant has a four year lease on the space. The tenant also has the right to match or better any offer before the property will be sold to anyone else. What agreement between the landlord and tenant gave the tenant that right? - CORRECT ANSWER a lease with a Right of First Refusal" "Which of the following statements about the difference between a license holder who is an employee and a license holder who is an independent contractor would be true? - CORRECT ANSWER The broker is legally liable for the acts of all license holder, independent contractors and employees alike" "Wetlands are often associated with - CORRECT ANSWER endangered species" "A veteran cannot use his/her entitlement to obtain - CORRECT ANSWER a commercial investment loan" "The due on sale clause is found in a - CORRECT ANSWER mortgage" "A metes and bounds description will always - CORRECT ANSWER have a point of beginning" "Which of the following is an example of economic obsolescence? - CORRECT ANSWER air pollution" "Every broker must display the Equal Housing Opportunity Poster in his office. The poster is usually distributed by - CORRECT ANSWER HUD" "Which of the following best describes an FHA loan? - CORRECT ANSWER it is totally insured by the FHA" "A broker is most often - CORRECT ANSWER special agent" "What type of loan has a rate linked to an economic index? - CORRECT ANSWER ARM" "When should an agent advise a client to get title work done? - CORRECT ANSWER before closing" “A property owner has decided to do some landscaping work on his yard. He has planted a tree surrounded by some flowering shrubs. The tree and shrubs are an example of... - CORRECT ANSWER improvements" "A listing agent went to inspect a seller's property hoping to list it for sale. The seller told the listing agent that his neighbor's satellite dish trespasses on his property. This is an example of... - CORRECT ANSWER encroachment" "A father gives his son a life estate on a property. The son leases the property. The tenant dies. What happens to the property? - CORRECT ANSWER it goes back to the son until he dies" "A man leaves his second wife a life estate in their home after which the property goes to his children from his first marriage. The children... - CORRECT ANSWER are remaindermen" "A couple purchased a condominium. The complex has an exercise room for all residents. The couple does not use the exercise room and does not want to pay the monthly fee for the use of the facility. What can they do to avoid this fee? - CORRECT ANSWER they must pay the fee as they have a tenancy in common interest in all common areas" "A buyer has purchased a property and after closing the seller will continue to occupy the property. This is an example of... - CORRECT ANSWER sale and leaseback" "Tenants have signed a 3 year lease on a property. In the second year the owner dies and his heirs inherit the property. They give the tenants notice to vacate. What is true? - CORRECT ANSWER the tenants can stay until the end of the lease" "What principle of value defines the most important factor for appraisal? - CORRECT ANSWER highest and best use" "What approach would an appraiser most likely use to value a residential rent house in neighborhood where a majority of the homes are leased? - CORRECT ANSWER income approach" "Your client is an investor who would like to have the right to purchase a commercial tract for $5 million for the next 6 months. What type of contract should he enter into with the seller? - CORRECT ANSWER an option contract" "A property manager is hired and signs a management agreement with the owner. At this time, the property manager is... - CORRECT ANSWER a general agent" "A buyer and seller have negotiated a contract on the seller's property with a closing set for June 14th, time is of the essence. On June 12th the listing agent calls the buyer's agent and tells him the seller will be unable to close on the 14th. The seller can close on the 16th. At this time, what is true? - CORRECT ANSWER the contract is voidable by the buyer" "A seller comes into the office to sign a contract. The seller is stumbling and smells of alcohol. How do you proceed? - CORRECT ANSWER tell the seller to leave and return another time" "A high rise condominium property is advertised as having the "Most beautiful view of the city". This ad is best described as - CORRECT ANSWER puffing" "Accurate record keeping is the responsibility of all the brokers. If a broker's computers are stolen what steps could have been taken to protect records? - CORRECT ANSWER offsite or cloud storage" "A license holder has just attended a training seminar about technology in real estate and is excited about using social media with her clients. Which of the following statements about social media in real estate is NOT true? - CORRECT ANSWER an agent with permission to advertise a property on social media does not have to worry about protecting confidential information about the client" "A mobility impaired tenant has leased an apartment in a complex with unassigned parking. He has requested an assigned reserved space near to his unit. What is true? - CORRECT ANSWER the landlord must provide an assigned reserved space for the tenant near to the tenant's unit" "A broker is running short of funds to meet this month's monthly operating expenses. He places a client's earnest money deposit in his business account and uses it to pay is rent. After his next closing, he replaces the client's deposit in his trust account. The broker... - CORRECT ANSWER is guilty of conversion" "Regulation Z applies to: - CORRECT ANSWER ALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000." "A seller wants to net $185,000 on the sale of his property. He must pay a loan balance of $180,530 and closing costs at $10,000. The commission to the listing broker will be 6%. What is the lowest price the property can sell for to accomplish this? - CORRECT ANSWER $399,500" "What monthly income will your buyers need to qualify for a $200,000 loan at 6% for 30 years if lenders are qualifying at 28%? (The loan factors is $6.00). Monthly taxes and insurance will be $900. - CORRECT ANSWER $7,500" "A sale is closing on June 15th and the annual property tax bill has not been paid. The house is assessed at $350,000 and the tax rate is $2.50 per $100. Using a 360-day year, how much will the seller owe for the taxes at closing (to the nearest dollar) and how will this be shown on the CD? - CORRECT ANSWER $4010 debit the seller/ credit the buyer" "You have recently purchased property in an area regulated by zoning. It has come to your attention that you have a zoning violation on the property. What should you do? - CORRECT ANSWER Request a variance from the zoning board" "A property owner receives a notice that his land is in an improvement district. What does this mean? - CORRECT ANSWER He will receive an additional tax bill"