CONNECTICUT REAL ESTATE PRACTICE EXAM ACTUAL QUESTIONS & VERIFIED ANSWERS FOR GUARANTEED PASS

CONNECTICUT REAL ESTATE PRACTICE EXAM ACTUAL QUESTIONS & VERIFIED ANSWERS FOR GUARANTEED PASS "1. A broker's office policy is that a sales associate's share of a commission is 65%. What is the sales associate's compensation if the sales price of a property is $195,000, the broker is entitled to a 5.5% commission, and there is no cooperating broker? a. $697.13 b. $6,971.25 c. $8,872.50 d. $69,712.50 - CORRECT ANSWER b. $6,971.25" "2. An investment property now worth $180,000 was purchased seven years ago for $142,000. At the time of the purchase, the land was valued at $18,000. Using a 39-year life for straight-line depreciation purposes, the present book value of the property is a. $95,071.35. b. $113,071.00. c. $119,743.58. d. $126,000.50. - CORRECT ANSWER c. $119,743.58" "3. An owner of a ranch enters into a sale-and-leaseback agreement with a buyer. Which statement is TRUE of this arrangement? a. The buyer is the lessor. b. The owner retains title to the ranch. c. The buyer receives possession of the property. d. The owner is the lessor. - CORRECT ANSWER a. The buyer is the lessor." "4. A real estate broker acting as a property manager leased a building for 10 years at an annual rent of $48,000. The will receive a commission of 7.5% for the first five years, 5% for the next three years, and 3.5% for the final two years. What will the broker's gross income be from this commission over the life of the lease? a. $18,000 b. $25,200 c. $28,560 d. $30,000 - CORRECT ANSWER c. $28,560" "5. If the quarterly interest on a loan at 5.5% is $450, the principal amount of the loan is a. $8,181. b. $9.900. c. $16,636. d. $32,727. - CORRECT ANSWER d. $32,727." "6. If a mortgage loan is 70% of the appraised value of a house and the interest rate of 5% amounts to $500 for the first month, the appraised value of the house is a. $14,285. b. $120,000. c. $165,428. d. $171,428. - CORRECT ANSWER d. $171,428." "7. If the borrower paid $189.06 interest last month on a $27,500 loan, what is the interest rate? a. 7% b. 7 3/4% c. 8 1⁄4% d. 8 1⁄2% - CORRECT ANSWER c. 8 1/4%" "8. Which of the following is an example of involuntary alienation? a. Selling a property to pay off debts b. Having a piece of land sold for delinquent taxes c. Giving a piece of land to the park district. d. Letting another person plant crops on an unused portion of a piece of land - CORRECT ANSWER b. Having a piece of land sold for delinquent taxes" "9. Grantee is to a deed as devisee is to a a. will. b. trust. c. estate. d. leasehold. - CORRECT ANSWER a. will." "10. What will happen to real estate when its deceased owner did NOT write a will and no heirs can be located? a. The ownership will escheat. b. The ownership will pass by devise. c. The ownership will revert to the previous owner. d. The courts will seize the ownership. - CORRECT ANSWER a. The owndership will escheat." "11. A house was listed for sale at $184,900. The seller received $171,000 after paying the broker a 5% commission. What was the selling price of the property (rounded to the nearest dollar)? a. $176,424 b. $178,957 c. $180,000 d. $189,346 - CORRECT ANSWER c. $180,000" "12. The seller wants to net $650,000 on the sale of his house after paying a sales commission of 5%. How much must the gross selling price be (rounded to the nearest dollar)? a. $684,211 b. $694,737 c. $705,263 d. $715,263 - CORRECT ANSWER a. $684,211" "13. A listing agreement provides that a seller under which the seller will receive $22,000 from the sale of a lot and the listing broker will receive any sale proceeds over that amount. This type of listing is a. a gross listing. b. a net listing. c. a legal and ethical way to ensure that the broker is compensated. d. an exclusive agency. - CORRECT ANSWER b. a net listing." "14. Under what circumstance would a listing agreement be automatically terminated? a. There are no circumstances for automatic termination of a listing agreement. b. The seller, after signing the agreement and receiving no offers, decided to work with a different real estate broker. c. The seller died after signing the agreement, but before any offers were presented. d. The seller wanted to lower the sales price of the home. - CORRECT ANSWER c. The seller died after signing the agreement, but before any offers were presented." "15. The main purpose of police power is to a. ensure the health, safety, and welfare of the community. b. demonstrate the authority of the state. c. set limits on the amount and kinds of businesses in a given area. d. protect residential neighborhoods from encroachment by business and industry - CORRECT ANSWER a. demonstrate the authority of the state." "16. For land to be taken by the government under its right of eminent domain, which of the following must apply? a. There must be a statutory dedication. b. This must be an adverse action. c. The taking must be for a public purpose. d. There must be constructive notice. - CORRECT ANSWER c. The taking must be for a public purpose." "17. A property owner conveys a life estate to her son and stipulates that upon her death the estate will pass to her granddaughter. The granddaughter has a. a reversionary interest. b. a remainder interest. c. an estate for years. d. a legal life estate. - CORRECT ANSWER b. a remainder interest." "18. A property owner conveys a house to a parent and stipulates that upon the parent's death he will recapture ownership. The interest the owner has in the property is a a. remainder interest. b. curtesy estate. c. reversionary interest. d. legal life estate. - CORRECT ANSWER c. reversionary interest." "19. A person who acquired ownership that can be willed to a devisee, with the provision that the land must always be used for recreational purposes, has which of the following? a. Fee simple estate b. Restricted estate c. Estate that cannot be sold d. Fee simple estate subject to condition subsequent - CORRECT ANSWER d. Fee simple estate subject to condition subsequent" "20. An owner divides a parcel into several lots, one of which is completely surrounded by other lots and has no street access. Which of the following is TRUE? a. An easement by necessity should be created for the landlocked parcel. b. The municipality must construct a street to create access. c. The owner must create an easement by condemnation to provide access. d. An easement by prescription should be granted. - CORRECT ANSWER a. An easement by necessity should be created for the landlocked parcel." "21. The road to a home is winding and long, but the shorter, more direct route is across a neighbor's land. The homeowner has used the more direct route for years and has never seen the neighbor. The homeowner hopes to eventually gain an easement by a. necessity. b. prescription. c. condemnation. d. license. - CORRECT ANSWER b. prescription" "22. One of two joint tenants sells the interest to a third party. What is the relationship of the other joint tenant and the new owner? a. They are joint tenants. b. There is no relationship because a joint tenant is not allowed to sell the interest to a third party. c. They are tenants in common. d. The remaining joint tenant owns a two-thirds interest and the new owner has a one-third interest. - CORRECT ANSWER c. They are tenants in common." "23. Tenancy with survivorship means a. the tenancy interest will be inherited. b. the tenant's heirs are survivors. c. the tenancy interest will pass to the surviving tenant(s) upon the death of a tenant. d. this is not a legal tenancy. - CORRECT ANSWER c. the tenancy interest will pass to the surviving tenant(s) upon the death of a tenant." "24. Because a couple no longer needs their large house, they decide to sell it and move into a cooperative apartment building. In a cooperative, they will a. own their individual apartment. b. own the common elements. c. receive a 20-year lease to their apartment. d. become shareholders in a corporation. - CORRECT ANSWER d. become shareholders in a corporation." "25. Which of the following is TRUE of condominium ownership? a. An owner's interest in the limited common elements cannot be sold separately. b. The individual units cannot be mortgaged. c. The corporation pays the real estate taxes. d. The ownership cannot be willed. - CORRECT ANSWER a. An ownser's interest in the limited common elements cannot be sold separately." "26. A cooperative obtains the funds necessary to cover ongoing operating expenses and mortgage payments by a. charging rent to each of the shareholders. b. selling the common elements. c. charging special assessments. d. collecting regular assessments from shareholders. - CORRECT ANSWER d. Collecting regular assessments from shareholders." "27. The primary survey line running north and south in any area described by the rectangular survey system is its a. township line. b. base line. c. principal meridian. d. range line. - CORRECT ANSWER c. principal meridian." "28. A recorded subdivision plat is used in the a. geodetic survey system. b. lot and block system. c. rectangular survey system. d. metes and bounds system. - CORRECT ANSWER b. lot and block system." "29. An FHA-insured loan in the amount of $157,500 at 4% for 30 years closed on July 17. The first monthly payment is due on September 1. Using a 360-day year and assuming that interest is being paid for the day of closing, what was the amount of the interest adjustment the buyer had to make at the closing? a. $262.50 b. $245.00 c. $24.06 d. $0.00 - CORRECT ANSWER b. $245.00" "30. At the closing of a real estate transaction, prepaid homeowners association fees are typically a a. credit to the buyer, debit to the seller. b. debit to the buyer, credit to the seller. c. credit to the seller only. d. debit to the seller only. - CORRECT ANSWER b. debit to the buyer, credit to the seller." “31. A bill of sale is used to transfer the ownership of a. real property. b. fixtures. c. appurtenances. d. personal property. - CORRECT ANSWER d. personal property." "32. The use of borrowed money to finance a purchase with a relatively small down payment is called a. an encroachment. b. leverage. c. capital gain. d. appreciation. - CORRECT ANSWER b. leverage." "33. A real estate licensee helps both buyers and sellers with paperwork for transferring property. The licensee is not an agent of either party and may not disclose either party's confidential information to the other. Which of the following BEST describes the licensee? a. Transactional broker b. Buyer's agent c. Independent contractor d. Dual agent - CORRECT ANSWER a. Transactional broker" "34. A buyer and seller are both clients of a real estate broker. Which of the following statements is TRUE of this situation? a. The real estate broker owes neither party the fiduciary duties of an agent. b. This arrangement is always illegal. c. The real estate broker owes the fiduciary duties of an agent only to the seller. d. The real estate broker owes the fiduciary duties of an agent to both. - CORRECT ANSWER d. The real estate broker owes the fiduciary duties of an agent to both." "35. A real estate sales associate shows properties listed for sale with the brokerage to a prospective buyer. The buyer has refused buyer representation. The buyer is the real estate brokerage's a. client. b. customer. c. principal. d. fiduciary. - CORRECT ANSWER b. customer." "36. A broker who represents a seller under an exclusive agency listing receives two offers for the property at the same time, one from a sales associate of the broker and one from the sales associate of a cooperating broker. The broker should a. submit both offers at the same time. b. submit the offer from the broker's sales associate first. c. submit the offer from the cooperating broker's sales associate first. d. submit the higher offer first. - CORRECT ANSWER a. submit both offers at the same time." "37. A real estate broker is helping a buyer and a seller fill out a sales contract but is not representing either party. The real estate broker is a. a traditional broker. b. a designated broker. c. a transactional broker. d. an unlicensed broker - CORRECT ANSWER c. transactional broker." "38. To net an owner $900,000 after the listing broker is paid a 6% commission, the list price would be a. $954,050. b. $957,447. c. $959,060. d. $960,000. - CORRECT ANSWER b. $957,447." "39. A small office building sold for $949,000, and the broker received a commission of $55,042. What was the broker's commission rate? a. 5.8% b. 6.2% c. 7% d. 11.3% - CORRECT ANSWER a. 5.8%" "40. A property owner wishes to net $56,500 from the sale of a vacant lot. After paying closing costs of $2,285 and a 7% commission, what must the selling price be (rounded to the nearest dollar)? a. $60,455 b. $60,753 c. $62,400 d. $63,210 - CORRECT ANSWER d. $63.210." "41. A person owned a parcel of land. Subsequent to the owner's death, the court determined the distribution of the land in accordance with state law. This process is called a. escheat. b. condemnation. c. probate. d. adverse possession. - CORRECT ANSWER c. probate." "42. The type of deed in which the grantor defends the title back to its beginning is a a. trustee's deed. b. quitclaim deed. c. special warranty deed. d. general warranty deed. - CORRECT ANSWER d. general warranty deed." "43. Which statement is TRUE regarding a special warranty deed? a. The grantor is making additional warranties beyond those given in a warranty deed. b. The grantor retains an interest in the ownership. c. The grantor is warranting that no encumbrances exist against the property. d. The grantor's warranties are limited to the time the grantor owned the property. - CORRECT ANSWER d. The grantor's warranties are limited to the time the grantor owned the property." "44. The type of deed in which the granting clause states "grant, bargain, and sell" is a a. bargain and sale deed. b. sale and warranty deed. c. general warranty deed. d. reconveyance deed. - CORRECT ANSWER a. bargain and sale deed." "45. A contract made by a person who has been legally declared insane is a. valid. b. void. c. legal. d. voidable. - CORRECT ANSWER b. void." "46. An amount that is stipulated in a sales contract that serves to compensate a seller in the event of buyer default is called a. actual damages. b. escrow funds. c. liquidated damages. d. earnest money. - CORRECT ANSWER c. liquidated damages." "47. Breach of contract is refusal or failure to comply with the terms of a contract. If the seller breaches a purchase contract, the buyer may do all of the following EXCEPT a. sue the seller for specific performance. b. rescind the contract and recover the earnest money. c. sue the seller for damages. d. sue the broker for nonperformance. - CORRECT ANSWER d. sue the broker for nonperformance." "48. To assign a contract for the sale of real estate means to a. record the contract with the county recorder's office. b. permit another broker to act as agent for the principal. c. allow the seller and the buyer to exchange positions. d. transfer one's rights under the contract. - CORRECT ANSWER d. transfer one's righrs under the contract." "49. A bilateral contract is one in which a. the promise of one party is given in exchange for the promise of the other party. b. only one of the parties is obligated to act. c. something is to be done by one party only. d. a restriction is placed in the contract by one party to limit the performance by the other. - CORRECT ANSWER a. the promise of one party is given in exchange for the promise of the other party." "50. At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil was firm enough to support the construction of a building when, in fact, he knew it was not. This contract is a. void. b. voidable by the buyer because of fraud. c. voidable by the seller because of the mistake. d. voidable by neither party because no harm was done yet. - CORRECT ANSWER b. voidable by the buyer because of fraud." "51. Office buildings and retail space are examples of a. commercial real estate. b. special-use real estate. c. residential property. d. industrial property. - CORRECT ANSWER a. commercial real estate." "52. Growing trees, fences, and buildings are all considered a. chattels. b. land. c. fixtures. d. real estate. - CORRECT ANSWER d. real estate." "53. A newspaper advertisement states, "One-bedroom apartment available immediately. Good neighborhood. Only able-bodied individuals should apply." Which of these is TRUE? a. The ad is not permitted under HUD's advertising guidelines because it discriminates on the basis of disability. b. The ad is acceptable under HUD's advertising guidelines. c. The ad is not permitted under HUD's advertising guidelines due to the remark, "Good neighborhood." d. Newspapers are inherently discriminatory because not everyone can afford to buy them. Modern Real Estate Practice Twentieth Edition - CORRECT ANSWER a. The ad is not permitted under HUD's advertising guidelines because it discriminates on the basis of disability." "54. A man files a notice in the public record of pending litigation affecting the title to a property. This notice is termed a. fee simple determinable. b. police power. c. an encroachment. d. a lis pendens. - CORRECT ANSWER d. a lis pendens." "55. Shareholders in a cooperative receive shares of stock that entitle them to a a. common element lease. b. trust deed. c. proprietary lease. d. corporate deed. - CORRECT ANSWER c. proprietary lease." "56. A property owner sells 6 acres of prime undeveloped property for $2.25 per square foot. How much did the buyer pay? a. $466,560 b. $588,060 c. $612,360 d. $733,860 - CORRECT ANSWER b. $588,060" "57. All of these are necessary to a valid deed EXCEPT a. recital of consideration. b. words of conveyance. c. the grantee's signature. d. delivery. - CORRECT ANSWER c. words of conveyance." "58. To serve as public notice, a deed is recorded in the a. city where the owner lives. b. county or, in some states, the town where the property is located. c. state capital. d. largest city in the state. - CORRECT ANSWER b. county, or in some states, the town where the property is locatedz" "59. A real estate broker had a listing agreement with a seller that specified a 6% commission. The broker showed the home to a prospective buyer. The next day, the buyer called the seller directly and offered to buy the house for 5% less than the asking price. The seller agreed to the price and informed the broker in writing that no further brokerage services would be required. The sale went to closing six weeks later. Based on these facts, which of these statements is TRUE? a. While the broker was the procuring cause of the sale, the seller properly canceled the contract; without a valid employment agreement in force at the time of closing, the broker is not entitled to a commission. b. The broker is entitled to a partial commission, and the buyer is obligated to pay it. c. Under these facts, the broker is not the procuring cause of this sale but is still entitled to a commission. d. The broker was the procuring cau - CORRECT ANSWER d. The broker was the procuring cause of the sale and is entitled to the full 6% commission." "60. A qualified buyer makes a written offer on a property on March 6 by filling out and signing a sales agreement. Later that day, the seller accepts and signs the agreement, keeping one copy. The broker gives a copy of the signed agreement to the buyer on March 8. The seller's deed is delivered on May 1. The deed is recorded on May 7, and the buyer takes possession on May 15. When is the broker's commission payable if this is a typical transaction? a. March 8 b. May 1 c. May 7 d. May 15 - CORRECT ANSWER b. May 1" "61. A $100,000 loan at 6% could be amortized with monthly payments of $843.86 on a 15-year basis or payments of $599.55 on a 30-year basis. The 30-year loan results in total payments of what percentage of the 15-year total payments? a. 158% b. 142% c. 106% d. 71% - CORRECT ANSWER b. 142%" "62. A home valued at $168,500 has just had a 70% mortgage loan placed on it. The interest rate is 5.25%. The monthly payment is $651.32 including principal and interest. What will the principal balance of the mortgage loan be after the next monthly payment is made? a. $117,560.28 b. $117,814.71 c. $117,913.56 d. $117,950.00 - CORRECT ANSWER b. $117,814.71" "63. A property manager is hired to manage a property while the owner is overseas for two years. The property manager is a. a special agent. b. a universal agent. c. a general agent. d. an attorney-in-fact. - CORRECT ANSWER c. a general agent." "64. If a home that cost $142,500 three years ago is now valued at 127% of its original cost, what is its current market value? a. $164,025 b. $172,205 c. $174,310 d. $180,975 - CORRECT ANSWER d. $180,975" "65. Using the income approach, find the value of a commercial property if the annual net income is $22,000 and the capitalization rate is 8%. a. $275,000 b. $200,000 c. $183,000 d. $176,000 - CORRECT ANSWER a. $275,000" "66. A home mortgage loan closed on July 1 for $165,000 at 4.5% interest amortized over 30 years at $836.03 per month. Using a 360-day year, what would the interest portion of the payment be on a payment made August 1? a. $51.85 b. $618.75 c. $700.00 d. $725.60 - CORRECT ANSWER b. $618.75" "67. A seller-landlord has collected the September rent from all five tenants: two pay $345 per month each and three pay $425 per month each. Determine the prorated amount to be allowed the buyer when the sale closes on September 19. a. $720.50 b. $786.00 c. $1,244.50 d. $1,965.00 - CORRECT ANSWER a. $720.50" "68. A buyer agrees to purchase a house for $234,500. The buyer pays $2,000 as earnest money and obtains a new mortgage loan for $167,500. The purchase contract provides for a March 15 closing. The buyer and the sellers prorate the previous year's real estate taxes of $4,880.96, which have been prepaid. The buyer has additional closing costs of $2,250, and the sellers have other closing costs of $1,850. How much cash must the buyer bring to the closing? a. $71,114.09 b. $76,389.00 c. $77,839.89 d. $79,639.17 - CORRECT ANSWER a. $71,114.09" "69. A 40-acre tract was sold for $2,200 per acre. The seller realized a 14.5% profit from the sale. What was the original cost of the tract? a. $75,240 b. $76,856 c. $100,760 d. $102,924 - CORRECT ANSWER b. $76,856" "70. The effective gross income from an office building is $73,500, and the annual operating expenses of the property total $52,300. If a prospective investor expects to receive an 11% return on the investment, what is the value of the property to the investor, to the nearest dollar? a. $125,800 b. $192,727 c. $475,454 d. $668,181 - CORRECT ANSWER b. $192,727" "71. The owner of a vacant lot adjacent to school was persuaded to make the lot available to the school, which need to extend its parking lot. The owner's attorney prepared a deed that conveyed ownership of the lot to the school "so long as it is not used for commercial purposes." After the completion of the transaction, the school will own a a. life estate. b. determinable fee estate. c. tenancy for years. d. periodic tenancy. - CORRECT ANSWER b. determinable fee estate." "72. Which of the following is an example of a legal life estate? a. Homestead estate b. Estate conveyed by one party to a second party for the life of the second party c. Use of a will to convey property d. Estate conveyed to a second party subject to a condition - CORRECT ANSWER a. Homestead estate" "73. A homeowner's neighbor wants to park a boat in the homeowner's driveway for the summer months. The homeowner agrees to let the neighbor do so. This arrangement is a. an easement appurtenant. b. an easement by necessity. c. a license. d. an estate in land. - CORRECT ANSWER c. a license." "74. A developer grants a local power company the right to install necessary transmission lines. This right is an example of a. an easement in gross. b. a license. c. an easement by prescription. d. a conditional use permit. - CORRECT ANSWER a. an easement in gross." "75. All of the following are subject to real property ownership rights EXCEPT a. buildings located on the land. b. air space above the land. c. easements running with the land. d. navigable rivers running through the land. - CORRECT ANSWER d. navigable rivers running through the land." "76. In a land trust, which of the following is FALSE ? a. Beneficial interest can be transferred by assignment. b. The beneficiary is usually the trustor. c. Public records list all the beneficiaries. d. The property can be pledged as security for a loan without recording a mortgage. - CORRECT ANSWER c. Public records list all the beneficiaries." "77. In a condominium, community features such as swimming pools, tennis courts, and biking trails are MOST likely owned by the a. condominium board. b. corporation in which the unit owners hold stock. c. unit owners in the form of percentage undivided interests. d. unit owners in the form of proportional divided interests. - CORRECT ANSWER c. unit owners in the form of percentage undivided interests." "78. How many acres are in the property described as follows: the NW1⁄4 of the SW1⁄4 of the NE1⁄4 of Section 16? a. 5 b. 10 c. 20 d. 40 - CORRECT ANSWER b. 10" "79. A section a. is one square mile. b. contains 460 acres. c. has a perimeter of 5,280 square feet. d. can be any number from 1 to 50. - CORRECT ANSWER a. is one square mile." "80. A general lien arises as a result of a. a judgment. b. estate or inheritance taxes. c. a decedent's debts. d. all of these. - CORRECT ANSWER d. all of these." "81. All of the following are generally exempt from paying real estate taxes EXCEPT a. for-profit assisted living facility. b. municipal government. c. charitable hospital. d. private nonprofit school. - CORRECT ANSWER a. for-profit assisted living facility." "82. In which type of contract is the promise of one party given in exchange for the promise of the other party? a. Bilateral b. Obligatory c. Unilateral d. Restricted - CORRECT ANSWER a. Bilateral" "83. Refusal or failure to comply with the terms of a contract is a. specific performance. b. a breach. c. not justification for failure to return earnest money. d. acceptable if no harm results. - CORRECT ANSWER b. a breach." "84. If an owner takes his property off the market for a definite period in exchange for some consideration but grants an individual the right to purchase the property within that period for a stated price, this is called a. a contract of sale. b. a right of first refusal. c. an installment agreement. d. an option. - CORRECT ANSWER d. an option." "85. A contract made by a person who has been adjudicated insane is void on the theory that the person a. was purposefully deceptive. b. is not a legal citizen. c. is not competent as a matter of public record. d. can perform under the terms of the contract. - CORRECT ANSWER c. is not competent as a matter of public record." "86. When grantors do NOT wish to convey certain property rights, they a. must note the exceptions in a separate document. b. may not do so because the deed conveys the entire premises. c. may note the exceptions in the deed of conveyance. d. must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor. - CORRECT ANSWER c. may note the exceptions in the deed of conveyance." "87. In a general warranty deed, a. very little protection is provided to the buyer. b. the grantor defends the title for only the grantor. c. the grantee defends the title against the grantee and all those who previously had title. d. the grantor defends the title back to its beginning. - CORRECT ANSWER d. the grantor defends the title back to its beginning." "88. The clause in the deed that conveys the rights and privileges of ownership is called the a. habendum clause. b. appurtenance clause. c. acknowledgment. d. granting clause. - CORRECT ANSWER b. appurtenance clause." "89. Having a piece of land sold for delinquent taxes is an example of a. voluntary alienation. b. involuntary alienation. c. revocation. d. remainder. - CORRECT ANSWER b. involuntary alienation." "90. Under the Torrens system, a. title passes when the grantee's application for registration has been approved and the real estate has been registered. b. the Torrens official performs exactly the same functions as the recorder of deeds. c. the original deed is mailed to the buyer after it has been registered. d. the registration of a title can be canceled by the owner at any time. - CORRECT ANSWER a. title passes when the grantee's application for registration has been approved and the real estate has been registered." "91. The agent's obligation to use skill and expertise on behalf of the principal arises under which of these common-law duties? a. Care b. Obedience c. Loyalty d. Disclosure - CORRECT ANSWER a. Care" "92. Buyer agents may be compensated in any of these ways EXCEPT a. flat fee for service. b. percentage of selling price. c. hourly rate. d. suit against the seller. - CORRECT ANSWER d. suit against the seller." "93. A buyer makes an offer on a house, and the seller accepts in writing. What is the current status of this relationship? a. The buyer and seller do not have a valid contract until the seller delivers title at closing. b. The buyer and seller have an express, bilateral executed contract. c. The buyer and seller have an express, bilateral executory contract. d. The buyer and seller have an implied, unilateral executory contract. - CORRECT ANSWER c. The buyer and seller have an express, bilateral executory contract." "94. The term improvements, when referring to real estate, includes a. sidewalks. b. shrubbery. c. trees. d. lawns. - CORRECT ANSWER a. sidewalks." "95. The owner of a house wants to fence the yard for her dog. When the fence is erected, the fencing materials are converted to real estate by a. annexation. b. severance. c. immobility. d. indestructibility. - CORRECT ANSWER a. annexation." "96. A real estate professional who is the agent of the buyer should do which of the following? a. Disclose to the seller that the buyer is a member of a protected class b. Disclose to the seller the maximum price the buyer is willing to pay c. Present to the seller only offers that are acceptable d. Advise the buyer if the listing price of the seller's house is unrealistic - CORRECT ANSWER d. Advise the buyer if the listing price of the seller's house is unrealistic" "97. Two sales associates working for the same broker obtained offers on a property listed with their firm. The first offer was obtained in the morning. A second offer for a higher purchase price was obtained in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make an informed decision about the first offer. Which of the following is TRUE ? a. The broker's actions are permissible provided the commission is split between the two sales associates. b. After the first offer was received, the broker should have told the sales associates that no additional offers would be accepted until the seller decided on the offer. c. The broker has no authority to withhold any offers from the seller. d. The broker was smart to protect the seller from getting into a negotiating battle over two offers. - CORRECT ANSWER c. The broker has no authority to withhold any offers from the seller." "98. Assuming that the listing broker and the selling broker in a transaction split their commission equally, what was the sales price of the property if the commission rate was 6.5% and the listing broker received $12,593.50? a. $139,900 b. $193,746 c. $256,200 d. $387,492 - CORRECT ANSWER d. $387,492" "99. A seller's broker does not have to prove to have been procuring cause to collect a commission if the seller sells the property without the broker's help because the broker has an a. option listing. b. open listing. c. exclusive agency listing. d. exclusive right to sell listing. - CORRECT ANSWER d. exclusive right to sell listing." "100. A vacant lot that measures 100 feet wide at the street and 125 feet deep is listed at a price of $250 per front foot. The broker will collect an 8% commission on the sale. If the lot sells for the full asking price, what will the broker earn? a. $2,500 b. $2,000 c. $1,500 d. $1,250 - CORRECT ANSWER b. $2,000" "101. A mechanic's lien could be obtained by the following unpaid providers of construction goods and services except for: a. Contractor who cleared the site for construction b. Supplier of materials c. Subcontractor working for the prime contractor d. Attorney who handled the property purchase and construction contracts - CORRECT ANSWER d. Attorney who handled the property purchase and construction contracts" "102. A real estate broker's responsibility to keep the principal informed of all the facts that could affect the transaction is the duty of: a. Care b. Disclosure c. Obedience d. Accounting - CORRECT ANSWER b. Disclosure" "103. In a typical agency relationship between broker and client, the broker's commission is determined by: a. State Law b. Local Real Estate Board c. Mutual agreement d. Minimums based on property type - CORRECT ANSWER c. Mutual agreement" "The amount of commission paid to the salesperson by the broker is determined by: a. State law b. Local real estate board c. Mutual agreement between agent and broker d. Mutual agreement with client - CORRECT ANSWER c. Mutual agreement between agent and broker" "Earnest money should be deposited into a trust account 1. in a timely manner, according to state laws. 2. upon removal of all contingencies. 3. at the broker's discretion. 4. according to MLS rules. - CORRECT ANSWER 1. in a timely manner, according to state laws." "A lender will make an 80% loan-to-value loan on a property that is appraised for $72,250 and sells for $73,500. If the buyer has saved $14,450 for a down payment, how much more (if any) will he need in order to make the down payment required under the terms of this loan? 1. He has $1,000 more than he needs for the down payment. 2. He has exactly the amount needed for the down payment. 3. He needs an additional $250 in order to make the down payment. 4. He needs an additional $1,250 in order to make the down payment. - CORRECT ANSWER 4. He needs an additional $1,250 in order to make the down payment." "A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given 1. actual notice. 2. prescriptive notice. 3. constructive notice. 4. exculpatory notice. - CORRECT ANSWER 3. constructive notice." "Even with title insurance, the policyholder may still suffer losses arising from 1. forged documents. 2. incompetent grantors. 3. defects found in recorded public records. 4. land use change due to zoning ordinances. - CORRECT ANSWER 4. land use change due to zoning ordinances." "Under the common law of agency, licensees owe the broker with whom they are associated all of the following duties EXCEPT 1. loyalty. 2. competence. 3. indemnification. 4. full disclosure. - CORRECT ANSWER 3. indemnification." "To be valid, every deed must 1. contain a warranty. 2. include granting language. 3. be executed by the grantor. 4. be signed by the grantee if there are covenants. - CORRECT ANSWER 3. be executed by the grantor." "State laws differ on whether a buyer is entitled to know about: 1. a suicide that occurred in the house last year. 2. possible lead paint in the property. 3. the flooding of the basement every spring. 4. the fact that the sellers are getting a divorce. - CORRECT ANSWER 1. a suicide that occurred in the house last year." "Three people buy a house as tenants in common. Subsequently, two of the owners want to sell, but the third discourages each potential purchaser. The two owners who wish to sell the house can: 1. sell without the third owner's consent. 2. file an action for partition against the third owner. 3. file for a lien against the third owner's interest as damages. 4. force the third owner to sell if they invoke the rule of specific performance. - CORRECT ANSWER 2. file an action for partition against the third owner." "A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of: 1. substitution. 2. contribution. 3. conformity. 4. anticipation. - CORRECT ANSWER 4. anticipation." "A gross lease can be best defined as one where the tenant pays, as a part of the rent, 1. all property changes excluding utilities. 2. no operating expenses of the leased space. 3. outside maintenance and property taxes only. 4. all property expenses except the interest on the owner's mortgage. - CORRECT ANSWER 2. no operating expenses of the leased space." "The Civil Rights Act of 1866 prohibits any type of discrimination based on: 1. gender. 2. race. 3. race and gender. 4. religion. - CORRECT ANSWER 2. race." "Ordinances that specify construction standards are: 1. building codes. 2. building permits. 3. construction alterations. 4. certificates of occupancy. - CORRECT ANSWER 1. building codes." "At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? 1. Credit seller $300; credit buyer $300. 2. Debit seller $300; debit buyer $300. 3. Credit seller $300; debit buyer $300. 4. Debit seller $300; credit buyer $300. - CORRECT ANSWER 4. Debit seller $300; credit buyer $300." "A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that: 1. the case will be more thoroughly reviewed. 2. there is no dollar limit on damages paid. 3. only a district court judge can order that the property be sold to the complaining party. 4. only a district court judge can order jail time for the guilty party. - CORRECT ANSWER 2. there is no dollar limit on damages paid." "A real estate salesperson is representing only the buyer in a transaction. Which of the following actions would be a violation of the salesperson's agency duties to the client? 1. disclosing the price the seller originally paid for the property 2. disclosing the highest price the buyer is willing to pay 3. preparing a competitive market analysis 4. identifying latent property defects - CORRECT ANSWER 2. disclosing the highest price the buyer is willing to pay" "Building codes are: 1. created to establish zoning in a neighborhood. 2. ordinances that specify construction standards. 3. established in each neighborhood or development. 4. set up to hear complaints about effects of zoning ordinances. - CORRECT ANSWER 2. ordinances that specify construction standards." "An environmental impact statement typically describes the effects of a proposed project on factors such as: 1. public health and safety. 2. zoning regulations. 3. highest and best use of the land. 4. mapping requirements. - CORRECT ANSWER 1. public health and safety." "To what party or parties does the broker owe the fiduciary duty of care? 1. the seller 2. both the buyer and the seller 3. the party or parties employing the broker 4. the party or parties paying the commission - CORRECT ANSWER 3. the party or parties employing the broker" "A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as: 1. steering. 2. blockbusting. 3. redlining. 4. conciliation. - CORRECT ANSWER 1. steering." "A broker and the buyers he represents are anxiously awaiting the closing on their new home. The closing is scheduled in 4 days. The buyers inform the broker that they just received revised Loan Estimate and Closing Disclosure forms from the lender, indicating the Annual Percentage Rate on their loan has increased by 0.3%. Based on the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this situation? 1. Assist the buyers in calculating the new loan payments and ask them if they want to proceed with the closing as scheduled. 2. Advise the buyers to file a legal action against the lender for violation of predatory lending practices under the Real Estate Settlement Procedures Act. 3. Call the lender and inform them that they are in violation of the seven-day waiting period and cannot change the terms of the loan this close to the closing. 4. Confirm with the seller's broker, the lender and the - CORRECT ANSWER 4. Confirm with the seller's broker, the lender and the closing entity that the closing must be delayed to allow for a new seven-day waiting period because of the interest rate revision." "The FHA functions MOST like: 1. a bank or savings and loan association. 2. a mortgage company. 3. an investment group. 4. an insurance company. - CORRECT ANSWER 4. an insurance company." "If the terms of a contract indicate that Party A will be obliged to perform her part of the contract only if Party B chooses to take a certain action, then the contract is a: 1. unilateral contract in which only Party B has made a promise to perform. 2. unilateral contract in which only Party A has made a promise to perform. 3. bilateral contract which both parties are obliged to perform. 4. void contract. - CORRECT ANSWER 2. unilateral contract in which only Party A has made a promise to perform." "A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have? 1. The buyer has no recourse because he negotiated the sale himself. 2. The buyer may declare the sales contract invalid. 3. The buyer may sue the seller for partial performance. 4. The buyer may sue the seller for specific performance. - CORRECT ANSWER 4. The buyer may sue the seller for specific performance." "A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when: 1. any offer is delivered to the seller. 2. the seller accepts the offer. 3. all contingencies are removed. 4. the sale closes. - CORRECT ANSWER 2. the seller accepts the offer." "An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than: 1. $100,000. 2. $250,000. 3. $500,000. 4. $1,000,000. - CORRECT ANSWER 2. $250,000." "Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells it, a commission will be due. What kind of listing contract do the owners have? 1. Multiple listing. 2. Net listing. 3. Exclusive agency listing. 4. Exclusive right to sell listing. - CORRECT ANSWER 3. Exclusive agency listing." "A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? 1. Seller. 2. Agent. 3. Company that manufactured the waste. 4. Federal government. - CORRECT ANSWER 1. Seller." "The main difference between tenancy in common and joint tenancy is that with tenancy in common, when a co-owner dies, 1. his undivided interest passes to his heirs. 2. the last surviving owner holds title in severalty. 3. his undivided interest passes to the surviving co-owners. 4. the principle of the right to survivorship determines the rights of the surviving co-owners. - CORRECT ANSWER 1. his undivided interest passes to his heirs." "Federal Truth-in-Lending laws are also known as 1. the Freedom of Information Act. 2. the Equal Credit Opportunity Act. 3. Regulation Z. 4. Title VIII. - CORRECT ANSWER 3. Regulation Z." "A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if 1. it satisfies or exceeds all terms included in the counteroffer. 2. the owner withdraws the counteroffer before it is accepted. 3. the owner gives the first buyer notice that another offer was received and an opportunity to revise the bid. 4. the first buyer is informed, in writing, of the owner's intent to accept another offer. - CORRECT ANSWER 2. the owner withdraws the counteroffer before it is accepted." "In an exclusive right-to-sell listing, an owner lists the property for sale with how many brokers? 1. One. 2. Two. 3. Three. 4. Any number. - CORRECT ANSWER 1. One." "According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the: 1. cash price or amount of the loan. 2. amount of down payment required. 3. number, amount, and frequency of payments. 4. prepayment penalties and rebates. - CORRECT ANSWER 4. prepayment penalties and rebates." "A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as: 1. void. 2. voidable. 3. valid. 4. unenforceable. - CORRECT ANSWER 1. void." "In MOST states, foreclosed property is sold through: 1. sealed bids. 2. public auction. 3. deficiency judgment. 4. right of redemption. - CORRECT ANSWER 2. public auction" "A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not? 1. Yes, because they were overqualified for the homes they had requested to see. 2. Yes, because it is the salesperson's job to tailor the properties shown to the needs of the buyer. 3. No, because it is appropriate to show any property for which the buyer is qualified. 4. No, because the presence of children requires granting occupancy if they desire it. - CORRECT ANSWER 3. No, because it is appropriate to show any property for which the buyer is qualified." "A deed restriction is applicable to the activities of: 1. the current owner only. 2. present and future owners. 3. future owners only. 4. mortgagors. - CORRECT ANSWER 2. present and future owners." "If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month? 1. $1,062 2. $1,150 3. $9,583 4. $13,800 - CORRECT ANSWER 2. $1,150" "A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have? 1. Gross lease. 2. Proprietary lease. 3. Tenancy at sufferance. 4. Tenancy at will. - CORRECT ANSWER 4. Tenancy at will." "The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should they give the prospective buyer? 1. Counteroffer. 2. Novation. 3. New listing contract. 4. Contingency. - CORRECT ANSWER 1. Counteroffer." "A licensee is listing a property in a known flood plain. The seller flatly denies that the structure and the property have ever been flooded. What is the licensee required to do in this situation? 1. Rely on the face value of seller's statement. 2. Inform the seller of potential legal consequences if this claim is untrue. 3. Inform the seller of the legal obligation to disclose facts regarding flood plains. 4. Refuse to list the property and explain to the seller that all properties in this area flood. - CORRECT ANSWER 3. Inform the seller of the legal obligation to disclose facts regarding flood plains." "Salesperson Susan was at the local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. Susan should: 1. excuse herself from the discussion as this could constitute illegal blockbusting. 2. advise her friends this could constitute a violation of Sherman Antitrust Act. 3. listen carefully so she can be more competitive in the market. 4. be certain her company is charging as much as the others. - CORRECT ANSWER 2. advise her friends this could constitute a violation of Sherman Antitrust Act." "An owner lists her home at a 7% commission rate and wants to net $45,000 after paying the mortgage balance of $68,000 and the broker's commission. To the nearest dollar, what should the selling price be to net her $45,000? 1. $105,090 2. $110,753 3. $120,910 4. $121,505 - CORRECT ANSWER 4. $121,505" "The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that: 1. he is no longer the listing agent. 2. he will set up an appointment for showing the home. 3. he will leave the key under the door mat. 4. the house is currently off the market. - CORRECT ANSWER 1. he is no longer the listing agent." "A landlord may legally refuse to rent to a prospective tenant if the tenant: 1. has a history of serious mental illness. 2. is unable to live alone without assistance. 3. has ever been convicted of using illegal drugs. 4. has ever been convicted of selling illegal drugs. - CORRECT ANSWER 4. has ever been convicted of selling illegal drugs." "During the listing presentation, the seller questions the amount of commission to be paid and is told: 1. the amount is set by law. 2. everyone charges the same amount. 3. the amount of commission is negotiable. 4. the agent that charges a lower commission will not do as good a job selling the property. - CORRECT ANSWER 3. the amount of commission is negotiable." "A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with: 1. the builder. 2. the buyers. 3. the builder and the buyers. 4. neither the builder nor the buyers. - CORRECT ANSWER 1. the builder." "When a home is purchased using an ARM, the monthly loan payment on the mortgage will: 1. rise slightly in each adjustment period until the cap is reached. 2. be adjusted automatically to ensure that negative amortization does not occur. 3. be based on a very low interest rate to begin with, but will rise to the market rate at the first adjustment. 4. vary over the life of the loan depending on fluctuations in the interest rate to which the loan is referenced. - CORRECT ANSWER 4. vary over the life of the loan depending on fluctuations in the interest rate to which the loan is referenced." "Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond? 1. If you feel it is in your best interest, please do so. 2. Since I represent the seller I am not able to answer your question. 3. I am not aware of any issues that such an inspection would identify. 4. Since the seller has provided a property disclosure, there should be no need for any further inspection. - CORRECT ANSWER 1. If you feel it is in your best interest, please do so." "A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable? 1. The seller cannot write and sign with an "X". 2. The listing contract specifies that no other broker may show the house. 3. The seller is heavily under the influence of alcohol at the time of signing. 4. The listing contract specifies that a commission will be paid only if the house is sold within 3 weeks. - CORRECT ANSWER 3. The seller is heavily under the influence of alcohol at the time of signing." "An equal housing opportunity notice MUST be: 1. displayed in the brokerage office. 2. included in all written advertisements. 3. specified in all listing agreements and offers to purchase. 4. given to all prospective clients. - CORRECT ANSWER 2. included in all written advertisements." "Which of these Federal laws regulates the advertisement of a lender's credit terms (rates, payment, etc.)? 1. Real Estate Settlement Procedures Act. 2. ECOA. 3. Regulation Z. 4. Federal Fair Housing Act of 1968. - CORRECT ANSWER 3. Regulation Z." "Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of: 1. eminent domain. 2. prior appropriation. 3. express reservation. 4. avulsion. - CORRECT ANSWER 2. prior appropriation." "A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender charges 2 points. How much money does the buyer need up front to make the purchase? 1. $2,720 2. $24,000 3. $24,408 4. $26,720 - CORRECT ANSWER 4. $26,720" "A seller signs a listing agreement with a broker. The seller can cancel the listing at any time without legal liability if: 1. an offer has not yet been accepted. 2. an offer has not yet been presented. 3. the broker is given at least 48 hours notice. 4. the broker violates the terms of the contract. - CORRECT ANSWER 4. the broker violates the terms of the contract." "Which of the following statements best describes the risk taken by NOT recording a deed? 1. Easements of record would become void. 2. There is no risk as long as the deed has been notarized. 3. The delivery of a deed to a grantee could be invalidated. 4. A subsequent purchaser's recorded deed could take precedence over any unrecorded instrument. - CORRECT ANSWER 4. A subsequent purchaser's recorded deed could take precedence over any unrecorded instrument." "When preparing a market data estimate of value, which of the following categories of adjustment is NOT essential? 1. The amount of square footage. 2. The location of the property. 3. The original cost of the building. 4. The date of sale of the comparables. - CORRECT ANSWER 3. The original cost of the building." "A contract for the sale of a home has been signed by both parties. This contract will remain executory until: 1. acceptance of the buyer's offer is delivered to the buyer. 2. the transaction has closed. 3. all contingencies have been met. 4. the buyer takes possession. - CORRECT ANSWER 2. the transaction has closed." "On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. 1. $285 2. $288 3. $380 4. $852 - CORRECT ANSWER 2. $288" "Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price? 1. The first sold. 2. The second sold. 3. The last sold. 4. Cannot tell from the information given. - CORRECT ANSWER 1. The first sold." "A competitive market analysis takes into consideration: 1. square footage of the subject property. 2. neighborhood nuisances. 3. unemployment levels in the community. 4. age of the sellers. - CORRECT ANSWER 1. square footage of the subject property." "If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5-1/2%, or a 20-year loan at 4-1/2%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION TABLE.): 1. $158,100 2. $158,300 3. $175,900 4. $176,100 - CORRECT ANSWER 4. $176,100" "According to the principle of progression, a three-bedroom, one-story home is MOST likely to bring the highest sales price if located in a neighborhood in which: 1. all homes are similar in size. 2. most homes are smaller than the sale home. 3. most homes are larger than the sale home. 4. most of the homes are rental properties. - CORRECT ANSWER 3. most homes are larger than the sale home." "When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should: 1. have short deadlines. 2. be discouraged by the broker. 3. be stated as briefly as possible. 4. be limited to mortgage arrangements. - CORRECT ANSWER 1. have short deadlines." "Even if a loan applicant's current income seems adequate to qualify for a certain loan, the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the applicant's main source of income is: 1. alimony. 2. commission sales. 3. pension fund. 4. child support payments. - CORRECT ANSWER 2. commission sales." “A couple listed their home with a broker. After 2 months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. This listing was MOST likely: 1. an exclusive agency listing. 2. an exclusive right to sell listing. 3. a net listing. 4. an advance fee listing. - CORRECT ANSWER 1. an exclusive agency listing." "A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called: 1. a buy-sell agreement. 2. an option contract. 3. an installment contract. 4. a vendor's lien interest. - CORRECT ANSWER 2. an option contract." "A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so? 1. The person must obtain prior written approval by a licensed psychiatrist or psychologist. 2. The person must be capable of understanding the transaction. 3. The person appointed by the court to act for the disabled person must contract on his or her behalf. 4. The person may enter a contract under any conditions, because the law prohibits discrimination against persons with disabilities. - CORRECT ANSWER 3. The person appointed by the court to act for the disabled person must contract on his or her behalf." "In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT: 1. closing costs may be lower. 2. loan originator has knowledge of the underwriter's policies. 3. more variety of loan programs available. 4. originator and lender are part of same company. - CORRECT ANSWER 3. more variety of loan programs available." "Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of: 1. puffing. 2. misrepresentation. 3. lack of care and diligence. 4. nothing; property taxes are a matter of public record and it was the buyer's responsibility to check them. - CORRECT ANSWER 2. misrepresentation." "An agency relationship between a property owner and a property manager is usually created by: 1. a management agreement. 2. payment of a management fee. 3. an exclusive agency agreement. 4. an independent contractor agreement. - CORRECT ANSWER 1. a management agreement" "An example of a contract terminated due to inability to perform would be one in which the 1. purchaser had suffered financial reverses so that she could not make payment as required by the contract. 2. seller had died after the contract bec