Real Estate License Michigan Test Bank
Questions with Complete Solutions
A borrower obtained a $7,000 second mortgage loan for five
years at a 6% interest annual interest rate. Monthly payments of
principal and interest were $50. The final payment included the
remaining outstanding principal balance. What type of loan is
this?
A) Straight loan
B) Accelerated loan
C) Partially amortized loan
D) Fully amortized loan Correct Answer C) partially amortized
loan.
A partially amortized loan is a loan with a partial balloon
payment. Principal is still owed at the end of the term, because
periodic payments are not enough to fully amortize the loan and
the final payment is larger than the others.
A broker cannot allow a nonprincipal broker to negotiate a
clause into a(n)
A) independent contractor agreement that nullifies the broker's
responsibility to supervise the licensee's transactions.
B) service provision agreement that limits the services that the
licensee will provide.
C) representation agreement.
D) service provision agreement that nullifies the listing if the
seller finds his own buyer. Correct Answer A) independent
,contractor agreement that nullifies the broker's responsibility to
supervise the licensee's transactions.
A broker deposits earnest money into the company's operations
account. This action is
A)
legal if the trust account is reimbursed by the end of the calendar
month.
B)
legal if both parties to a transaction give consent in writing.
C)
legal if the seller gives consent in writing.
D)
commingling of funds and is illegal.
Explanation
The answer is commingling of funds and is illegal. The mixing
of trust funds with a broker's personal funds is commingling.
Commingling is illegal, regardless of any plan to later reimburse
the account and is not legal even with written consent from any
party in a transaction. Correct Answer
A broker finds a shopping center that meets the buyer's
requirements under a buyer representation agreement. Rather
than showing it to the buyer, he sells it to his wife who lists it
with the broker at a marked-up price. The broker has
A) met the minimum duties under the service provision
agreement.
B) breached the duty or reasonable care.
C) violated the duty of loyalty to the interest of the client.
D) engaged in a prudent business transaction. Correct Answer
C) violated the duty of loyalty to the interest of the client.
,A broker found that he was short of funds for a week in the
firm's operations account. He deposited an earnest money check
into the account and then, after a closing the following week, put
the earnest money amount into the trust account. In this case, the
broker
A) used standard operating procedures for trust account.
B) is fine because the movement of funds occurred within a
week.
C) is guilty of conversion.
D) may be guilty of commingling. Correct Answer C) is guilty
of conversion.
Conversion is knowingly misappropriating funds, which the
broker in this instance did. Commingling is mixing of funds but
without the intention. Depositing trust funds into an operations
account is never acceptable.
A broker has brought a ready, willing, and able buyer to a seller.
In MOST listing contracts, the broker has earned his
commission when Correct Answer The seller accepts the offer.
A broker has found a buyer for a seller's home. The buyer has
indicated in writing a willingness to buy the property by signing
a written agreement. The seller is out of town for the weekend,
and the broker has been unable to inform the seller of the signed
document. At this point, the buyer has signed
A) a voidable contract.
B) an executory contract.
, C) an offer.
D) an implied contract. Correct Answer C) an offer.
A broker has inherited a one-tenth interest in her father's house.
If the heirs agree to sell the property as for sale by owner, the
broker must
A) provide proof to the Department that she owns less than a
50% interest.
B) quitclaim her ownership to the other heirs before the property
is placed on the market in order to avoid a conflict of interest.
C) disclose her ownership interest and licensure to a buyer
before an offer is signed.
D) disclose her interest to the cooperating broker before the
property is shown. Correct Answer C) disclose her ownership
interest and licensure to a buyer before an offer is signed.
A broker who discusses commission rates with other brokers in
his city may be guilty of
A) an illegal conspiracy to control prices.
B) creation of a monopoly.
C) an unlawful tying arrangement.
D) unnatural horizontal marketing. Correct Answer A) an
illegal conspiracy to control prices.
A broker whose license has been revoked continues to represent
a seller by selling the previously listed property and closing the
transaction. The broker is guilty of
A) a misdemeanor because he is unlicensed.
Questions with Complete Solutions
A borrower obtained a $7,000 second mortgage loan for five
years at a 6% interest annual interest rate. Monthly payments of
principal and interest were $50. The final payment included the
remaining outstanding principal balance. What type of loan is
this?
A) Straight loan
B) Accelerated loan
C) Partially amortized loan
D) Fully amortized loan Correct Answer C) partially amortized
loan.
A partially amortized loan is a loan with a partial balloon
payment. Principal is still owed at the end of the term, because
periodic payments are not enough to fully amortize the loan and
the final payment is larger than the others.
A broker cannot allow a nonprincipal broker to negotiate a
clause into a(n)
A) independent contractor agreement that nullifies the broker's
responsibility to supervise the licensee's transactions.
B) service provision agreement that limits the services that the
licensee will provide.
C) representation agreement.
D) service provision agreement that nullifies the listing if the
seller finds his own buyer. Correct Answer A) independent
,contractor agreement that nullifies the broker's responsibility to
supervise the licensee's transactions.
A broker deposits earnest money into the company's operations
account. This action is
A)
legal if the trust account is reimbursed by the end of the calendar
month.
B)
legal if both parties to a transaction give consent in writing.
C)
legal if the seller gives consent in writing.
D)
commingling of funds and is illegal.
Explanation
The answer is commingling of funds and is illegal. The mixing
of trust funds with a broker's personal funds is commingling.
Commingling is illegal, regardless of any plan to later reimburse
the account and is not legal even with written consent from any
party in a transaction. Correct Answer
A broker finds a shopping center that meets the buyer's
requirements under a buyer representation agreement. Rather
than showing it to the buyer, he sells it to his wife who lists it
with the broker at a marked-up price. The broker has
A) met the minimum duties under the service provision
agreement.
B) breached the duty or reasonable care.
C) violated the duty of loyalty to the interest of the client.
D) engaged in a prudent business transaction. Correct Answer
C) violated the duty of loyalty to the interest of the client.
,A broker found that he was short of funds for a week in the
firm's operations account. He deposited an earnest money check
into the account and then, after a closing the following week, put
the earnest money amount into the trust account. In this case, the
broker
A) used standard operating procedures for trust account.
B) is fine because the movement of funds occurred within a
week.
C) is guilty of conversion.
D) may be guilty of commingling. Correct Answer C) is guilty
of conversion.
Conversion is knowingly misappropriating funds, which the
broker in this instance did. Commingling is mixing of funds but
without the intention. Depositing trust funds into an operations
account is never acceptable.
A broker has brought a ready, willing, and able buyer to a seller.
In MOST listing contracts, the broker has earned his
commission when Correct Answer The seller accepts the offer.
A broker has found a buyer for a seller's home. The buyer has
indicated in writing a willingness to buy the property by signing
a written agreement. The seller is out of town for the weekend,
and the broker has been unable to inform the seller of the signed
document. At this point, the buyer has signed
A) a voidable contract.
B) an executory contract.
, C) an offer.
D) an implied contract. Correct Answer C) an offer.
A broker has inherited a one-tenth interest in her father's house.
If the heirs agree to sell the property as for sale by owner, the
broker must
A) provide proof to the Department that she owns less than a
50% interest.
B) quitclaim her ownership to the other heirs before the property
is placed on the market in order to avoid a conflict of interest.
C) disclose her ownership interest and licensure to a buyer
before an offer is signed.
D) disclose her interest to the cooperating broker before the
property is shown. Correct Answer C) disclose her ownership
interest and licensure to a buyer before an offer is signed.
A broker who discusses commission rates with other brokers in
his city may be guilty of
A) an illegal conspiracy to control prices.
B) creation of a monopoly.
C) an unlawful tying arrangement.
D) unnatural horizontal marketing. Correct Answer A) an
illegal conspiracy to control prices.
A broker whose license has been revoked continues to represent
a seller by selling the previously listed property and closing the
transaction. The broker is guilty of
A) a misdemeanor because he is unlicensed.
