National Real Estate Exam – 2026/2027 Academic Year – Complete Questions and Correct Answers | Verified Study Guide | Grade A

National Real Estate Exam – 2026/2027 Academic Year – Complete Questions and Correct Answers | Verified Study Guide | Grade A 2026 / 2027 Academic Year Q: 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... Answer improvements Q: 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? Answer riparian Q: 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 Answer the tenant can take these as they are trade fixtures Q: 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? Answer plumbing work that was completed but never paid for Q: 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... Answer encroachment Answer are remaindermen Q: A father gives his son a life estate on a property. The son leases the property. The tenant dies. What happens to the property? Answer it goes back to the son until he dies Q: 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... Q: Which of the following statements about an easement is true? Answer an easement is a benefit to the dominant property owner Q: P, Q and R are joint tenants. P wants to sell the property, but Q and R do not. What can P do? Answer file a suit for partition Q: A, B and C are joint tenants. C dies. B sells his share to D. What type of ownership do A and D have? Answer tenants in common Q: Under what right can the government change property use from commercial to residential only? Answer police power Q: Ownership of the common areas of condominiums is most likely to be: Answer tenancy in common Q: What should a buyer do to ensure that his is getting the best title to real property? Answer get a general warranty deed Q: Which covenant in a deed guarantees that the owners will not suffer or be disturbed by any claims on the property? Answer the covenant of quiet enjoyment Q: Excess money at a foreclosure sale goes to... Answer the borrower Answer right of redemption Q: After defaulting on a real estate loan, a borrower is able to pay off the loan prior to the foreclosure sale. This is called: Q: The required distance between buildings and a federally protected endangered species wetlands is an example of... Answer a buffer zone Q: 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? Answer they must pay the fee as they have a tenancy in common interest in all common areas Q: Which of the following is personal property? Answer a lease Q: 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? Answer a percentage lease Q: A buyer has purchased a property and after closing the seller will continue to occupy the property. This is an example of... Answer sale and leaseback Q: 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? Answer lease with an option to buy Q: 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? Answer the tenants can stay until the end of the lease Q: A developer decides to build a commercial property in the middle of a residential subdivision. What is required? Answer a variance Q: A zoning ordinance would affect which of the following? Answer the concentration of housing in a residential area Q: If a person dies without a will, who receives their estate? Answer spouse and children Q: What are the requirements/ criteria for real estate to have values? Answer demand, utility, scarcity, transferability Q: What principle of value defines the most important factor for appraisal? Answer highest and best use Q: What approach would an appraiser most likely use to value a residential rent house in neighborhood where a majority of the homes are leased? Answer income approach Q: 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... Answer if he is a licensed appraiser Q: Which of the following is NOT an example of functional obsolescence? Answer deferred maintenance tract for $5 million for the next 6 months. What type of contract should he enter into with the seller? Q: According to the Statute of Frauds, which of the following leases must be in writing? Answer a lease for more than one year Q: Your client is an investor who would like to have the right to purchase a commercial Answer an option contract Q: A signed sales contract that has not yet gone to closing is... Answer executory Q: When does an offer become a contract? Answer When the offeree gives the offeror notice of the acceptance Answer a general agent Q: Which of the following statements is true about the duties of an agent according to the common law of agency? Answer an agent must treat both clients and customers with honesty and fairness Q: A property manager is hired and signs a management agreement with the owner. At this time, the property manager is... 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? Answer the contract is voidable by the buyer 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? Answer tell the seller and encourage the seller to complete the negotiated sale Answer the buyer's agent is guilty of negligence and the listing agent must disclose the information to the seller 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? 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? What is the difference between replacement cost and market value? Answer depreciation Economic life is defined as Answer years of depriciation An unlicensed assistant gets a call from a listing owner with questions about a contract- what should the assistant do? 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? Answer the contract is voidable at the minor's option A seller comes into the office to sign a contract. The seller is stumbling and smells of alcohol. How do you proceed? 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 Answer puffing Which of the following facts about listed property must be disclosed Answer death due to structural defects A lead paint disclosure is required for all properties built before 1978 Which of the following statements about lead is NOT true? the property owner must remediate the presence of lead CERCLA is under the administration of: EPA Which of the following used in 1978 is both extremely hazardous and friable? asbestos Which of the following properties would be the least desirable neighborhood? brownfields A seller must keep a copy of the lead paint disclosure he provided to the buyer for 3 years It has been found that mold can develop due to air tight windows and doors found in newer construction General liability insurance will protect a company's assets if someone is injured on company property A condo owner's policy will most likely cover the owner if a guest slips in the kitchen A condo complex has liability complex has liability insurance. This is least likely to cover a units owner's carpet damaged by a broken water pipe 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? 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? an agent with permission to advertise a property on social media does not have to worry about protecting confidential information about the client 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? liability insurance Prior to its amendments, the Civil Rights Act of 1968 prohibited discrimination based on... national origin An agent working with immigrant buyers must be careful not to steer the buyers to a neighborhood based on the language they speak An agent is accused of discrimination. What will HUD do... try mediation followed by a lawsuit if mediation fails 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? the landlord must provide an assigned reserved space for the tenant near to the tenant's unit 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. 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 mortgage payments Which of the following would be most likely to hire a property manager? an association 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... is guilty of conversion Which of the following is NOT an example of due diligence in a sales contract? 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 obtain the signatures of all owners on the listing agreement Wetlands typically contain which of the following? navigable waters What is the max amount of time allowed for a victim to file a Fair Housing complaint? 24 months When did the second amendment of the Federal Fair Housing Act go into effect? March 12, 1989 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? the landlord An apartment building owner has renovated and modified several units to be handicapped accessible. Can he advertise this accommodation? Yes What is the purpose of a property management trust account? to hold tenant security deposits Regulation Z applies to: ALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000. The main purpose of Regulation Z is to notify borrowers of the true cost of credit What is a requirement of the CFPB Lenders must provide borrowers with the LE form at the time of or within 3 business days of application What department of the government oversees the FHA insurance program? HUD Which of the following closings would be covered by RESPA (1-4 residential family housing) a condominium When does the buyer under contract for deed get title to the property? when the final loan payment is made What is another name for Contract for Deed installment contract 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? ARM Which of the following is unlikely to have a negative impact on seller's credit score? a straight assumption In rental properties, increased demand can be the result of high mortgage interest rates Which of the following would not be eligible for a VA loan a parent or sibling of a veteran What is required of a loan servicer before foreclosing on a VA loan 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? 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 Credit to the buyer What type of mortgage loan would allow the property owner to borrow additional funds at future dates 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? $187,500 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? $399,500 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? $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? $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? $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? 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? $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? $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? $890,000 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. $7,500 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? $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? $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? $91,568.75 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? $4010 debit the seller/ credit the buyer The fact that an individual must go to the land described which of the physical characteristics of land? 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? 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? 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? 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 The right of eminent domain 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? Request a variance from the zoning board 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? 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? 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? 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? Nothing- his property is automatically considered a non-conforming use A property owner receives a notice that his land is in an improvement district. What does this mean? He will receive an additional tax bill 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... 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? 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? A general warranty deed Appraisers are most often asked to determine: market value 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... 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? Pursue an action to quiet title in court A builder is using inferior siding and paint in an effort to construct affordable housing. This would be an example of... 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. The principle of competition When measuring gross area the appraiser measures the under roof Which of the following is the best definition of market value? most probable price What is the least important factor for a license holder preparing a CMA The information from expired listings of unsold property in the area In preparing an appraisal, which of the following would have the least impact on the appraiser's estimate of value? 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? Income approach An appraiser is using the Market Data Approach to determine the value of a residential property. What is FALSE? His comparables should not be more than one year old What expenses of home ownership can a buyer deduct on his income taxes? 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? 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? 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? Mark is not entitled to any commission as he did not bring the offer to the sellers The best description of a counteroffer is a rejection of an offer Which of the following contracts would be voidable? 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: 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? 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 They can accept the new offer, but only after withdrawing their counteroffer A broker owes customers honesty and fairness What are an agents duties to his principal? 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? 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: his buyer's ability to make a higher offer 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? Accounting 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? None Which of the following is not a duty of an agent? (OLD CAR) Trust A signed employment agreement is necessary to... sue for commission A listing agent would probably not disclose death on the property due to natural causes Which of the following properties would be the least desirable neighbor? Brownfields Which of the following deaths on the property should never be disclosed? Death due to HIV/AIDS How long must a seller or landlord keep a copy of the lead paint disclosure? 3 years All of the following are hazardous substances that a license holder should be aware of except Acrylic paint Which of the following is the best example of puffing 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? 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? both the new owners and the previous owners Who is responsible for providing a lead paint disclosure? The seller A property has lead paint in the interior and on the exterior. Which of the following statements is true? The seller has no duty to remediate lead, simply to disclose it 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? Antebellum style mansion Which claim for damages would most likely be covered by a homeowner warranty policy? 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? The air conditioning unit Which of the following statements about flood insurance is FALSE 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 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? 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 E signature or electronic signature are valid for parties that have agreed to their use with the consent of the other parties In senior housing communities, at least one person over the age of 55 must be living in what percent of the units? 80% 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 blockbusting The main goal of the ADA is the removal of barriers. All of the following are required under ADA except: levered door handles According to Regulation Z, which of the following is not a trigger term? APR Which of the following is false regarding the Civil Rights Act of 1968 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? 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? The CD at least three days before closing Which of the following does NOT pledge property as security for a debt? note Which of the following instruments is the promise to repay a debt? note What is the advantage to the borrower of a VA loan? the guarantee on the VA loan is free 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: Partial Amortization Loan For what group of buyers would the ARM be the least desirable? those on a fixed income Where can you expect to find MIP? On an FHA loan What is a point? 1% of the loan amount Where does the secondary market get its funds? 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? a reverse annuity mortgage 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? shared appreciation loan John has leased commercial property and pays rent based on the receipts of his business. This type of rent is referred to as percentage rent Which of the following would be considered an operating expense by a property manager preparing an operating budget for the owner? interior painting of apartments The property management agreement creates what kind of agency? General agency Who would use the remedy of Forcible Entry and Detainer? the landlord The landlord pays the expenses of the property. The tenants pay rent plus utilities. What type of lease is this? net lease When a landlord allows the property condition to deteriorate so much that the tenants are forced to leave it is called: 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? a periodic tenancy 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? the system stays as it is now a fixture What type of verbal lease agreement would be enforceable? a lease for one year or less What is the difference between a general partner and a limited partner? a general partner has full liability and a limited partner has limited liability 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? No, because he has a lease What type of business entity is owned by shareholders, but avoids "double taxation"? An S corporation A one on one relationship between a broker and a client is called agency A license holder sponsored by a broker must have a written agreement to work as an independent contractor 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: acceptable as long as he has written records Which of the following actions of a broker could jeopardize the independent contractor status of the license holders he sponsors? 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? 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: 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 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... Send the clients to an attorney of their choice before they sign A license holder advertises a listed property as having the most beautiful landscaping in the neighborhood. This is an example of... 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? She must point it out to the buyer Which of the following is false about a property manager? He is a universal agent to the owner A veteran cannot use his/her entitlement to obtain a commercial investment loan 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? 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? The broker is legally liable for the acts of all license holder, independent contractors and employees alike Wetlands are often associated with endangered species The due on sale clause is found in a mortgage 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? the duty of confidentiality never expires and the agent must keep that information confidential forever A metes and bounds description will always have a point of beginning Which of the following is an example of economic obsolescence? air pollution Which of the following best describes an FHA loan? it is totally insured by the FHA A salesperson designed an innovative tech in the office that would substantially improve service to clients. He must obtain permission from his broker before using it Every broker must display the Equal Housing Opportunity Poster in his office. The poster is usually distributed by HUD A broker is most often special agent What type of loan has a rate linked to an economic index? ARM When should an agent advise a client to get title work done? before closing What is considered evidence against a broker accused of discrimination? failure to display the equal housing poster in their office Unilateral Contract Contract containing ONE promise given in exchange for completing an act. NO obligation to act. Bilateral Contract Contract containing TWO promises. Example: A listing agreement is a bilateral contract Client/Principal A person who has entered into an agency relationship w/ a licensee & with whom there is a written contract Customer Any 3rd party w/ whom a licensee works In-Company Transaction Transaction in which the buyer and seller are both represented by the same brokerage. Management-Level License A licensee who is employed by or affiliated w/ a brokerage who has supervisory responsibility over other licensees. Statute of Frauds requires the following: 1) Certain contracts be in writing to be enforceable, 2) All real estate contracts for the sale of LAND & ALL LEASES for more than one year, options for more than 6 months, must be in writing & signed by all parties. Novation Substituting a new obligation for an old one. Also, a transfer of rights and/or duties under contract. Grantee is the Buyer If the original party to an agreement is replaced due to novation, are they liable? No Mailbox Rule Acceptance that becomes effective as soon as it is sent in the mail, unless the contract specified a certain means for delivery. Grantor is the Owner Optionor is the Seller Optionee is the Buyer Lessor is the Landlord Lessee is the Tenant Vendor is the Seller Vendee is the Buyer Mortgagor is the Buyer Mortgagee is the Lender Trustor is the Buyer Trustee is the 3rd Party to the transaction Regulation Z dictates Disclosure Requirements in Credit Transactions, including the disclosure of the Annual Percentage Rate (APR) Regulation Z applies to: ALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000. The Cooling Off Period is a condition of: Regulation Z. It gives the customer the right to rescind the transaction for up to 3 business days following the transaction for liens placed on a principal residence. RESPA stands for Real Estate Settlement Procedures Act RESPA requirements include: 1) Lenders must give borrowers a good faith estimate of closing costs. 2) Lenders must give borrowers a HUD booklet describing closing costs, settlement procedures & borrowers rights. 3) Closing agent must prepare a HUD stmt detailing how much was paid to what companies for what services 4) Borrower must be given right to inspect HUD stmt 1 day before close. 5) Lenders & other parties must give full disclosure of all business relationships. 6) Lender must disclose to borrower if the loan is likely to be sold to another investor. RESPA prohibits: 1) Kickbacks & fees for services not performed in connection w/ the closing 2) It limits the amount of escrow reserves a lender can hold 3) The sale may not be on the condition on the use of a certain title co or escrow co. chosen by the seller. Annexation is the act of bringing something or putting something on the land. When determining annexation, value of the item is RARELY considered. The RELATIONSHIP if the parties is more important. Doctrine of Emblements says that a TENANT farmer may return to pick the 1st crop after the land has been sold. Fixtures Man made attachments Bundle of Rights 1) Right of use 2) Right of enjoyment 3) Right of disposal Riparian Rights Rights of the landowner ADJACENT to a river Remember "R" - riparian/river Littoral Rights rights of a landowner adjacent to a lake Remember "L" - Littoral/Lake Appurtenances are rights that go along with real estate and include: Air Rights, Water Rights, & Mineral rights to name a few. Fee Simple (also called Fee Absolute) The best interest in real estate recognized by law; it represents the most complete ownership. Life Estate The estate CANNOT be passed on to the life estate holder's heirs. Pur Autre Vie A life estate that is dependent up the life of another. Estate for Years is a type of leasehold that: Has a specific expiration date or specific term. Period to Period is a type of leasehold that: Has no specific expiration but the length is specified (like a month to month lease) Joint Tenancy 2 or more ownership holders own a fraction of UNDIVIDED interest. Rights of survivorship apply. The types of deeds are: 1) Warranty Deed 2) Special (or limited) Warranty Deed 3) Quitclaim Deed 4) Special Purpose Deed 5) Transfer on Death Deed. Warranty Deed Offers the greatest protection that a deed can give. Special Warranty Deed (Limited warranty deed) 1) Owner warrants only that he has not done harm to the title 2) Covers only the period of time when the sellers owner the property. Quitclaim Deed The seller agrees to convey whatever interest, IF ANY, they have in the property. The reason a deed is recorded is for protection against a third party. Elements necessary to a valid deed: 1) signed & acknowledged by grantor 2) Lists marital status of the grantor 3) Use words of conveyance - also called a granting clause 4) Names & addresses of grantees 5) Acknowledged by Grantor in front of Notary Public 6) Signed in front of two witnesses (in most states) 7) Legal description 8) Delivery & acceptance of deed Lot & Block System Subdivision Township 36 Square Miles Eminent Domain The RIGHT of the government to condemn & take the property. Condemnation The PROCESS of the government taking a property by eminent domain. Escheat The state takes property upon an owners death if there is no will & no heirs exist. Examples of Specific Liens real estate taxes, mortgages, mechanics liens Adverse Possession A person takes possession & use of a property belonging to another. Possession must be open, notorious, hostile & uninterrupted for a certain period of time. Abstract of Title A complete history of ownership. Encumbrance A claim or liability that attaches to the land & is held by one who is NOT the fee owner. Easement Right to use a property for a specific use Easement in Gross An entity's personal right to use property. The receiver DOES NOT own the adjoining property. Example: utility easement Easement Appurtenant Runs with the land. Easement by Necessity Created when no other access to land exists...right of ingress & egress Alluvium (also Alluvion) The soil on a shore or bank of a river Easement by Prescription Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public. License A privilege granted to an individual for a specific purpose. It is NOT assignable to others. Accretion Physical addition to the land by natural forces. Lis Pendens A pending notice of a lawsuit giving notice of a possible claim to the property Writ of Attachment A document filed during a lawsuit that prevents a debtor from conveying the property Fixtures items of personal property attached to real property that are not removed by the seller Trade Fixtures Personal property used in a business and can be removed by the lessee when the lease terminates. Appraisal is an estimate or an opinion of value Market Value An estimate of probably price on the date of the appraisal. Market Price What the property actually sells for The 3 approaches to value are: 1) Market Data Approach (single family homes) 2) Cost Approach (commercial property) 3) Income Approach (income producing property) Blockbusting Encouraging owners to sell their properties because minorities are moving into a neighborhood Steering Trying to influence a buyer's housing choice using race, religion, ethinicity, national origin, or ancestory factors as the reasoning. Redlining Denying loans in certain areas due to race, religion, sex, familial status, or a disability. The Civil Rights Act of 1866 Covers: 1) Race 2) Color 3) Ancestry (it's the only act that covers this) It applies to all property (Real & Personal) There are no exceptions The Federal Fair Housing Act Covers: 1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Disability 7) Familial Status It applies ONLY to housing & land for housing Exceptions: 1) FSBO 2) FSBO - 4 plex 3) Religious Groups 4) Private Clubs The Federal Equal Credit Opportunity Act applies to: 1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Age 7) Marital Status 8) Receipt of Public Assistance A real estate broker is a Special Agent Dual Agent One broker representing both the buyer & the seller in a single transaction A salesperson is a subagent of the client, has no direct relationship to the principal, is only responsible to the broker. Puffing an opinion or exaggeration of the property's benefits. Fraud Intentional misrepresentation of facts Violations of the Sherman Antitrust Act include 1) Price Fixing 2) Allocation of the market Exclusive Right to Sell Listing 1) Only one broker is authorized to sell 2) the broker receives a commission no matter who finds the buyer Exclusive Agency Listing 1) Only one broker is authorized to sell 2) If the owner finds a buyer, no commission is owed Open Listing 1) Any # of brokers may be retained 2) The broker who sells the property receives the commission. After a purchaser signs a sales contract, the salesperson must do which of the following? 1 Keep the original contract & give the purchaser a copy the next day. 2. Give the purchaser a copy immediately 3. Mail the purchaser a copy after the statutory 3 day cooling off period 4. None of the above Answer: 2, Give the purchaser a copy immediately Which one of the following is NOT real property? 1 Wall to wall carpeting installed over plywood subfloor 2 Built-in dishwasher 3 drapes 4 sump pump Answer: 3, Drapes An unlicensed admin for a property manager can ONLY do which of the following tasks? 1 Collect rents 2 Publish a listing 3 Take a listing 4 Negotiate a contract Answer: 1, collect rents All of the following are examples of a specific lien, except: 1 Property Taxes 2 Judgment 3 Mechanic's lien 4 Mortgage Answer: 2, Judgment Baker conveys a life estate to her grandson & stipulates that upon her grandson's death the title will pass to her nephew. What is the nephew's interest called? 1 Estate in reversion 2 Estate for years 3 Estate in Remainder 4 Periodic estate Answer: 3, Estate in Remainder If a spouse owns a parcel of land separately, the spouse is said to own it: 1 As a joint tenant 2 As a tenant in common 3 As a tenant by the entireties 4 in severalty Answer: 4, in severalty Taxes are levied on a property owner to pay for improvements that benefit only that property are called: 1 Fees 2 General Property Taxes 3 Special Excise Taxes 4 Special Assessments Answer: 4, Special Assessments The market price of real estate is generally the same as: 1 Sales Price 2 Appraised Value 3 Highest and best use 4 Mortgage loan value Answer: 1, Sales price A mortgage note must be: 1 a negotiable instrument 2 Signed by the mortgagor 3 Signed by the mortgagee 4 Recorded to be valid Answer: 2, Signed by the mortgagor (the borrower) The Federal Truth in Lending Law: 1 Requires a lender to estimate a borrower's approximate loan closing costs before accepting a loan. 2 regulates advertising that contains information regarding mortgage terms 3 prevents brokers from using a phrase like "FHA financing available" in any ad 4 Dictates that mortgage applications be made on specific government forms Answer: 2, regulates advertising that contains information regarding mortgage terms The rights of the owner with property abutting the bank of a stream are called: 1 Littoral rights 2 riparian rights 3 avulsion 4 dominant tenenments Answer: 2, riparian rights What is the primary purpose of a deed? 1 Transfer of title 2 proof of ownership 3 recordation 4 legal evidence Answer: 1, transfer of title Who would NOT need a real estate license? 1 An attorney selling real estate in an estate 2 a salesperson working on a commission for a builder 3 a property management company 4 a friend selling a neighbor's lot for $1,000 Answer: 1, an attorney selling real estate in an estate The responsibility for recording a deed lies with the: 1 grantor 2 grantee 3 county 4 state Answer: 2, the grantee