Real Estate Law ACTUAL UPDATED
Questions and CORRECT Answers
When a buyer receives an equitable title to a property, this entitles the buyer to:
A » assume the seller's existing loan
B » sue for specific performance
C » receive a novation
D » a non-freehold estate - CORRECT ANSWER -(B) A signed contract gives the buyer
an equitable title (the right to receive the deed at a later date, usually closing). Therefore, if the
seller backs out of the contract, the buyer can sue for specific performance - court action to force
completion. An equitable title does not deal with assuming loans (A). A novation is a new
contract that takes the place of an old contract (C). A non-freehold estate is a leasehold estate
(D).
Which of the following terms describes a court action to bring both parties to a contract back to
their original position?
A » Reversion
B » Rescission
C » Reconveyance
D » Reverse annuity - CORRECT ANSWER -Rescission (B) returns both parties to the
status quo, or the way they were before - back to square one. (A) deals with rights reverting back
to an original party, (C) is a document given a borrower once a loan has been paid off in a trust
deed state, and (D) is where older persons use the equity in their house to obtain money each
month to help them live in retirement.
A person with a large amount of equity in a home would like to obtain a new loan using the
equity in the home for investments. The existing mortgage on the home is 3% less than what is
currently available. Which of the following steps would BEST accomplish this?
A » Obtain a package mortgage
B » Refinance the existing home mortgage
C » Obtain a satisfaction of mortage
, D » Obtain a subordination agreement - CORRECT ANSWER -(B) Refinancing the
existing mortgage to a larger amount allows the owner to use the equity as security for the
additional money to use for investments. A package mortgage (A) uses real and personal
property as security for the loan. A satisfaction (C) piece is issued by the lender when the loan is
totally paid off to record and clear the public record of the lien. A subordination (D) agreement
changes a first mortgage to a second mortgage.
Each of the following contracts would be bi-lateral EXCEPT a:
A » lease purchase
B » sales contract
C » listing contract
D » lease option - CORRECT ANSWER -(D) An option contract is a uni-lateral (one-
way) contract, not a bi-lateral (two-way) contract. (A) A lease purchase, (B) sales contract and
(C) listing contract are all bi-lateral contracts with two parties making promises.
A contract would be considered executed when:
A » the deed has been delivered and accepted
B » all contract terms have been satisfied
C » the deed has been recorded
D » the deed has been acknowledged - CORRECT ANSWER -An executed contract is
one where all promises have been completed (B). The deed being delivered and accepted
transfers title (A). Recording of the deed gives the public constructive notice of the transaction
(C). An acknowledged deed is one that has been signed in the presence of a notary public (D).
Which of the following statements BEST illustrates the difference between a bilateral and
unilateral contract?
A » The number of parties involved
B » The performance obligation of the parties
C » The value of the object in question
D » The nature of the object in question - CORRECT ANSWER -(B) With a bilateral
contract, one has a promise for a promise, where both parties have performance obligations.
With a unilateral contract, one has a promise for an action, where only one party has a
performance obligation. (A) In both bilateral and unilateral, typically there are at least two
,parties involved. (C) The value of the object and (D) the nature of the object really have nothing
to do with the question.
In an effort to obtain listings, a real estate agent was handing out fliers in a neighborhood telling
people that communes were coming into the neighborhood. This would be:
A » redlining
B » steering
C » dedication
D » blockbusting - CORRECT ANSWER -(D) Trying to obtain listing by saying certain
groups of people are moving into the neighborhood is blockbusting and therefore illegal under
Fair Housing Laws. (A) Redlining is lenders refusing to make loans in certain areas of a city. (B)
Steering is directing buyers toward certain areas based upon the buyers race, color, religion, etc.
(C) Dedication is donating land to the government.
A property manager was leasing units in an apartment complex. Which of the following
activities would the manager be allowed to do?
A » Increase the security deposit of a tenant due to ethnic background
B » Check the background of a tenant regarding the tenant's financial status
C » Refuse to rent to a tenant based on race per the owner's instructions
D » Refuse to rent to women as women are prone to have loud parties - CORRECT
ANSWER -(B) Checking out one`s financial status is allowed under Fair Housing Laws.
(A) Increasing the security deposit based on ethnicity, (C) refusing to rent based upon race and
(D) refusing to rent based on sex are all illegal under the Fair Housing Laws.
A property manager leased a space to a handicapped person. The handicapped person wanted to
make some modifications to the space. The property manager can require that the handicapped
person:
A » pay a security deposit equal to six months rent when normally the amount is equal to one
months rent
B » pay the first and last months rent in advance rather than the usual first month only
C » return the space to its original condition at the lessee's expense
D » pay the first six months rent in advance rather than usual monthly payments - CORRECT
ANSWER -A handicapped can modify the space to accommodate the handicapped person
, but must return the space to the landlord in the original condition (C). A manager cannot change
terms for a person who belongs to a protected class, such as being handicapped (A), (B), (D).
An investor built a three story apartment complex with no elevators. Under the 1988 Fair
Housing Amendments Act, which of the floors must be accessible to the handicapped?
A » Ground floor only
B » First and second floors only
C » All floors
D » Ground floor only unless a handicapped person specifically asks to be on the second or third
floors - then modifications must be made - CORRECT ANSWER -Under the 1988 Fair
Housing Amendments Act, if there is an elevator in the complex, then all floors must be
accessible to the handicapped. If there is no elevator, then ground floor units only must be
accessible. Therefore, (A) can be the only right answer.
Which of the following statements BEST illustrates the practice of blockbusting?
A » A broker raises the rent in a particular area of town because the majority of tenants belong to
a protected class
B » A broker goes around to neighbors advising them of the fact that people from a protected
class are moving into the neighborhood
C » A broker changes the terms of a sale of property because the buyer belongs to a protected
class
D » A broker shows a minority buyer homes only in minority neighborhoods - CORRECT
ANSWER -Blockbusting is where a licensee tries to scare people into selling by saying
persons of a protected class are moving into the neighborhood (B). Raising the rent (A) or
changing terms (C) based on a person belonging to a protected class is also illegal but is NOT
blockbusting. (D) refers to steering which is directing people to certain areas of town based on
their protected class.
A couple, in trying to buy a house, thought they had been discriminated against. Under the 1988
amendments to the Federal Fair Housing Law, how long does the couple have to file a complaint
with HUD?
A » 6 months
B » 1 year
C » 18 months
Questions and CORRECT Answers
When a buyer receives an equitable title to a property, this entitles the buyer to:
A » assume the seller's existing loan
B » sue for specific performance
C » receive a novation
D » a non-freehold estate - CORRECT ANSWER -(B) A signed contract gives the buyer
an equitable title (the right to receive the deed at a later date, usually closing). Therefore, if the
seller backs out of the contract, the buyer can sue for specific performance - court action to force
completion. An equitable title does not deal with assuming loans (A). A novation is a new
contract that takes the place of an old contract (C). A non-freehold estate is a leasehold estate
(D).
Which of the following terms describes a court action to bring both parties to a contract back to
their original position?
A » Reversion
B » Rescission
C » Reconveyance
D » Reverse annuity - CORRECT ANSWER -Rescission (B) returns both parties to the
status quo, or the way they were before - back to square one. (A) deals with rights reverting back
to an original party, (C) is a document given a borrower once a loan has been paid off in a trust
deed state, and (D) is where older persons use the equity in their house to obtain money each
month to help them live in retirement.
A person with a large amount of equity in a home would like to obtain a new loan using the
equity in the home for investments. The existing mortgage on the home is 3% less than what is
currently available. Which of the following steps would BEST accomplish this?
A » Obtain a package mortgage
B » Refinance the existing home mortgage
C » Obtain a satisfaction of mortage
, D » Obtain a subordination agreement - CORRECT ANSWER -(B) Refinancing the
existing mortgage to a larger amount allows the owner to use the equity as security for the
additional money to use for investments. A package mortgage (A) uses real and personal
property as security for the loan. A satisfaction (C) piece is issued by the lender when the loan is
totally paid off to record and clear the public record of the lien. A subordination (D) agreement
changes a first mortgage to a second mortgage.
Each of the following contracts would be bi-lateral EXCEPT a:
A » lease purchase
B » sales contract
C » listing contract
D » lease option - CORRECT ANSWER -(D) An option contract is a uni-lateral (one-
way) contract, not a bi-lateral (two-way) contract. (A) A lease purchase, (B) sales contract and
(C) listing contract are all bi-lateral contracts with two parties making promises.
A contract would be considered executed when:
A » the deed has been delivered and accepted
B » all contract terms have been satisfied
C » the deed has been recorded
D » the deed has been acknowledged - CORRECT ANSWER -An executed contract is
one where all promises have been completed (B). The deed being delivered and accepted
transfers title (A). Recording of the deed gives the public constructive notice of the transaction
(C). An acknowledged deed is one that has been signed in the presence of a notary public (D).
Which of the following statements BEST illustrates the difference between a bilateral and
unilateral contract?
A » The number of parties involved
B » The performance obligation of the parties
C » The value of the object in question
D » The nature of the object in question - CORRECT ANSWER -(B) With a bilateral
contract, one has a promise for a promise, where both parties have performance obligations.
With a unilateral contract, one has a promise for an action, where only one party has a
performance obligation. (A) In both bilateral and unilateral, typically there are at least two
,parties involved. (C) The value of the object and (D) the nature of the object really have nothing
to do with the question.
In an effort to obtain listings, a real estate agent was handing out fliers in a neighborhood telling
people that communes were coming into the neighborhood. This would be:
A » redlining
B » steering
C » dedication
D » blockbusting - CORRECT ANSWER -(D) Trying to obtain listing by saying certain
groups of people are moving into the neighborhood is blockbusting and therefore illegal under
Fair Housing Laws. (A) Redlining is lenders refusing to make loans in certain areas of a city. (B)
Steering is directing buyers toward certain areas based upon the buyers race, color, religion, etc.
(C) Dedication is donating land to the government.
A property manager was leasing units in an apartment complex. Which of the following
activities would the manager be allowed to do?
A » Increase the security deposit of a tenant due to ethnic background
B » Check the background of a tenant regarding the tenant's financial status
C » Refuse to rent to a tenant based on race per the owner's instructions
D » Refuse to rent to women as women are prone to have loud parties - CORRECT
ANSWER -(B) Checking out one`s financial status is allowed under Fair Housing Laws.
(A) Increasing the security deposit based on ethnicity, (C) refusing to rent based upon race and
(D) refusing to rent based on sex are all illegal under the Fair Housing Laws.
A property manager leased a space to a handicapped person. The handicapped person wanted to
make some modifications to the space. The property manager can require that the handicapped
person:
A » pay a security deposit equal to six months rent when normally the amount is equal to one
months rent
B » pay the first and last months rent in advance rather than the usual first month only
C » return the space to its original condition at the lessee's expense
D » pay the first six months rent in advance rather than usual monthly payments - CORRECT
ANSWER -A handicapped can modify the space to accommodate the handicapped person
, but must return the space to the landlord in the original condition (C). A manager cannot change
terms for a person who belongs to a protected class, such as being handicapped (A), (B), (D).
An investor built a three story apartment complex with no elevators. Under the 1988 Fair
Housing Amendments Act, which of the floors must be accessible to the handicapped?
A » Ground floor only
B » First and second floors only
C » All floors
D » Ground floor only unless a handicapped person specifically asks to be on the second or third
floors - then modifications must be made - CORRECT ANSWER -Under the 1988 Fair
Housing Amendments Act, if there is an elevator in the complex, then all floors must be
accessible to the handicapped. If there is no elevator, then ground floor units only must be
accessible. Therefore, (A) can be the only right answer.
Which of the following statements BEST illustrates the practice of blockbusting?
A » A broker raises the rent in a particular area of town because the majority of tenants belong to
a protected class
B » A broker goes around to neighbors advising them of the fact that people from a protected
class are moving into the neighborhood
C » A broker changes the terms of a sale of property because the buyer belongs to a protected
class
D » A broker shows a minority buyer homes only in minority neighborhoods - CORRECT
ANSWER -Blockbusting is where a licensee tries to scare people into selling by saying
persons of a protected class are moving into the neighborhood (B). Raising the rent (A) or
changing terms (C) based on a person belonging to a protected class is also illegal but is NOT
blockbusting. (D) refers to steering which is directing people to certain areas of town based on
their protected class.
A couple, in trying to buy a house, thought they had been discriminated against. Under the 1988
amendments to the Federal Fair Housing Law, how long does the couple have to file a complaint
with HUD?
A » 6 months
B » 1 year
C » 18 months
