NATIONAL REAL ESTATE EXAM 1
1. Jeanetta leases an apartment from Quad City Leasing. Jeanetta has fileda complaint with
the state real estate licensing division stating that Maris- sa, Quad City's property manager,
breached her fiduciary duty of loyalty to Jeanetta. Which of these statements about this
situation is true?: Property managers owe fiduciary duties to their clients (the landlord) and
the community asa whole, not to individual residents.
2. The MARIA acronym helps to identify the five tests of a fixture. Which of the following
tests refers to how and whether the item is attached to the
property?: Method of annexation refers to how and whether the item is attached tothe property.
This is the M in MARIA.
3. Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell
now owns 15.5 acres of bayfront property. Which naturalprocess was responsible for Lowell's
loss of acreage?: Avulsion is the loss ofland by a sudden, large-scale change in water flow. A
hurricane would create a sudden large change in water flow.
4. Easements are a type of encumbrance that can affect a property. Which of the following is
true about easements?: Easements are a type of encumbrance that can affect a property. Which
of the following is true about easements?
5. Dean and Michael have an oral contract. Dean said he would sell Michaelhis bike in
return for Michael's vinyl album collection. What does the record collection represent?:
Consideration, which is an essential element of a contract,is something of value which is
given from one party to the other party in exchange for goods or services.
6. Virginia is finally living her dream—she bought a coffeehouse in a charm-ing college
town. After she closed on it, her attorney sat down with her
to discuss various business licensing and legal requirements she'll have to meet. Virginia was
surprised to learn that her five-table establishment is
affected by the Americans with Disabilities Act. What must be true about the coffeehouse?: If
a business in a constructed building that serves the public, then itfalls under the ADA.
7. What does "Beginning at the corner of State Route 61 and Hallowell Road"represent?:
Bounds are physical features that define the boundaries of the property.Combined with
directions and distances (metes), these form the basis of a metes and bounds legal description.
8. When property changes hands, the deed is recorded. There's a fee for recording, so why
would anyone choose to pay this fee?: Recording and pos-session give the public constructive
notice that ownership has changed hands. It also protects the buyer from others' claims on the
property.
9. Elaina and Allen just purchased a home using a deed of trust. Which of the following is
most likely true about their home loan?: When a deed of trustsecures a loan, a trustee holds
the title until the loan is paid. Because the right to sell in the event of a default is part of the
,deed of trust's language, a non-judicial foreclosure may be used.
10. Turns out that there are hazardous materials that need to be cleaned upfirst. Latrell took
the prior owners to court, and the court ruled that Latrell
is responsible for the costs of cleanup. What kind of liability is this?: In strictliability, the
owner is responsible for cleanup, regardless of who created the initialproblem.
11. Sondra thinks the new business contract she's signed with her business partner is valid.
Both parties are legally competent, the purpose is a businesstransaction so it's a legal purpose,
an offer was made and accepted, and a fee has been negotiated and documented. Which
essential element of a valid contract has Sondra not yet considered?: The only element Sondra
hasn'tconsidered is whether the consent to enter into the contract was voluntarily given. Only
real estate contracts have to be in writing, and parties are legally competent to enter into
contracts from the age of 18.
12. Esmerelda makes regular monthly payments on her loan. In addition to paying interest,
she's slowly paying down the principal of the loan. With eachpayment she makes, more will
go towards the principal and less to interest. What type of loan does she have?: Amortized
mortgages are paid off in periodicregular payments of interest and principal. Over time, the
portion of the payment made toward principal increases as the portion used to pay interest
decreases.
13. On average, how many years does a home warranty cover structural damage?: Structural
damage can take a while to appear, so homeowners will wantto file a claim if it's a decade or
less.
14. Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and 40 and
41. These weeks are inheritable. What type of ownership is this?: Timeshare estates are owned
as fee simple estates. They convey all rights ofownership and can be sold or passed down to
heirs.
15. What is the doctrine of estoppel?: The doctrine of estoppel prevents individu- als from
making an assertion or claim, even by actions or behavior, and later denyingit.
16. Morty, a land surveyor, was called out to survey a property. After doing some research,
he located the legal description for the property in question.Now, if he could just find the
point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east
of the oak tree next to Bear
Creek. What type of legal description is Morty working with?: Point of beginningis common
with metes and bounds descriptions.
17. Jenson signed a seller's agency agreement with Susan. A few weeks afterthat, right before
closing, a hurricane destroyed the property. What happens to Jenson and Susan's agreement?:
Because the property was destroyed, the listing agreement terminates by force of law.
18. Which department typically decides which development projects require apermit or
approval?: This is the building department's domain.
, 19. Citytown officials know that they have an abandoned factory site that hasbeen identified
for cleanup under CERCLA. When city officials tried to trace the ownership of the property,
they found several shell corporations but can'tseem to determine which individual or corporate
entity actually owns the property. What is a likely outcome of this situation?: CERCLA
established a trust fund to finance both cleanup and enforcement actions. This fund is
sometimescalled the Superfund.
20. Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order
to pay the loan back and finally made her last payment this month. What happens now?: Because
the property deed was held by a third-party trustee instead of the lender, the trustee grants a
reconveyance deed to Olivia.
21. Warren signed a contract with the Samsons for the sale of property he didn't own. What
type of contract is this?: A party can't promise to do somethingimpossible in a contract. Doing
so makes the contract void.
22. Which amendment to CERCLA says that "innocent landowners" aren't re-sponsible for
clean-up of hazardous contamination?: The Superfund Amend-ments and Reauthorization
Act, or SARA, says that innocent landowners aren't responsible for clean-up of hazardous
contamination.
23. With the cost approach to value, what is the replacement cost?: The re- placement cost
reflects the cost to build a functionally equivalent improvement, asopposed to the
reproduction cost, which is the cost to build an exact replica of thesubject, with the same
materials and deficiencies.
24. Antje's clients closed on their property yesterday, but Antje still has somepaperwork that
she needs to deliver to them as soon as possible. Under whichfiduciary duty is Antje acting?: The
duty of accounting may continue even after thetransaction closes. The agent must account for
any documents or money belongingto the client until it is delivered to the appropriate party.
25. When real estate licensee Brian discovered that Arnold was using a 'ChooseYour Neighbor'
letter to market a property without also listing the property
in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could
he bring against Arnold to the National Association of REALTORS?: REALTOR Brian could
charge Arnold with violating Article 10 of theCode of Ethics, which prohibits REALTORS
from agreeing to discriminate againstpeople belonging to a protected class.
26. What is estate at sufferance?: Estate at sufferance is when a tenant remains on the
property after the lawful authority has expired (a holdover tenant), after whichthe landlord may
evict.
27. Which entity typically enforces the code restrictions and licensing and in- surance
requirements for contractors, thereby enforcing the building code?: -While builders and
developers self-regulate to some degree, they're not responsiblefor enforcing the building code.
This is the local building department's responsibility.
28. Under which types of agency agreement may a buyer and agent operate?: -
Open, exclusive right to represent, and exclusive agency
1. Jeanetta leases an apartment from Quad City Leasing. Jeanetta has fileda complaint with
the state real estate licensing division stating that Maris- sa, Quad City's property manager,
breached her fiduciary duty of loyalty to Jeanetta. Which of these statements about this
situation is true?: Property managers owe fiduciary duties to their clients (the landlord) and
the community asa whole, not to individual residents.
2. The MARIA acronym helps to identify the five tests of a fixture. Which of the following
tests refers to how and whether the item is attached to the
property?: Method of annexation refers to how and whether the item is attached tothe property.
This is the M in MARIA.
3. Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell
now owns 15.5 acres of bayfront property. Which naturalprocess was responsible for Lowell's
loss of acreage?: Avulsion is the loss ofland by a sudden, large-scale change in water flow. A
hurricane would create a sudden large change in water flow.
4. Easements are a type of encumbrance that can affect a property. Which of the following is
true about easements?: Easements are a type of encumbrance that can affect a property. Which
of the following is true about easements?
5. Dean and Michael have an oral contract. Dean said he would sell Michaelhis bike in
return for Michael's vinyl album collection. What does the record collection represent?:
Consideration, which is an essential element of a contract,is something of value which is
given from one party to the other party in exchange for goods or services.
6. Virginia is finally living her dream—she bought a coffeehouse in a charm-ing college
town. After she closed on it, her attorney sat down with her
to discuss various business licensing and legal requirements she'll have to meet. Virginia was
surprised to learn that her five-table establishment is
affected by the Americans with Disabilities Act. What must be true about the coffeehouse?: If
a business in a constructed building that serves the public, then itfalls under the ADA.
7. What does "Beginning at the corner of State Route 61 and Hallowell Road"represent?:
Bounds are physical features that define the boundaries of the property.Combined with
directions and distances (metes), these form the basis of a metes and bounds legal description.
8. When property changes hands, the deed is recorded. There's a fee for recording, so why
would anyone choose to pay this fee?: Recording and pos-session give the public constructive
notice that ownership has changed hands. It also protects the buyer from others' claims on the
property.
9. Elaina and Allen just purchased a home using a deed of trust. Which of the following is
most likely true about their home loan?: When a deed of trustsecures a loan, a trustee holds
the title until the loan is paid. Because the right to sell in the event of a default is part of the
,deed of trust's language, a non-judicial foreclosure may be used.
10. Turns out that there are hazardous materials that need to be cleaned upfirst. Latrell took
the prior owners to court, and the court ruled that Latrell
is responsible for the costs of cleanup. What kind of liability is this?: In strictliability, the
owner is responsible for cleanup, regardless of who created the initialproblem.
11. Sondra thinks the new business contract she's signed with her business partner is valid.
Both parties are legally competent, the purpose is a businesstransaction so it's a legal purpose,
an offer was made and accepted, and a fee has been negotiated and documented. Which
essential element of a valid contract has Sondra not yet considered?: The only element Sondra
hasn'tconsidered is whether the consent to enter into the contract was voluntarily given. Only
real estate contracts have to be in writing, and parties are legally competent to enter into
contracts from the age of 18.
12. Esmerelda makes regular monthly payments on her loan. In addition to paying interest,
she's slowly paying down the principal of the loan. With eachpayment she makes, more will
go towards the principal and less to interest. What type of loan does she have?: Amortized
mortgages are paid off in periodicregular payments of interest and principal. Over time, the
portion of the payment made toward principal increases as the portion used to pay interest
decreases.
13. On average, how many years does a home warranty cover structural damage?: Structural
damage can take a while to appear, so homeowners will wantto file a claim if it's a decade or
less.
14. Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and 40 and
41. These weeks are inheritable. What type of ownership is this?: Timeshare estates are owned
as fee simple estates. They convey all rights ofownership and can be sold or passed down to
heirs.
15. What is the doctrine of estoppel?: The doctrine of estoppel prevents individu- als from
making an assertion or claim, even by actions or behavior, and later denyingit.
16. Morty, a land surveyor, was called out to survey a property. After doing some research,
he located the legal description for the property in question.Now, if he could just find the
point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east
of the oak tree next to Bear
Creek. What type of legal description is Morty working with?: Point of beginningis common
with metes and bounds descriptions.
17. Jenson signed a seller's agency agreement with Susan. A few weeks afterthat, right before
closing, a hurricane destroyed the property. What happens to Jenson and Susan's agreement?:
Because the property was destroyed, the listing agreement terminates by force of law.
18. Which department typically decides which development projects require apermit or
approval?: This is the building department's domain.
, 19. Citytown officials know that they have an abandoned factory site that hasbeen identified
for cleanup under CERCLA. When city officials tried to trace the ownership of the property,
they found several shell corporations but can'tseem to determine which individual or corporate
entity actually owns the property. What is a likely outcome of this situation?: CERCLA
established a trust fund to finance both cleanup and enforcement actions. This fund is
sometimescalled the Superfund.
20. Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order
to pay the loan back and finally made her last payment this month. What happens now?: Because
the property deed was held by a third-party trustee instead of the lender, the trustee grants a
reconveyance deed to Olivia.
21. Warren signed a contract with the Samsons for the sale of property he didn't own. What
type of contract is this?: A party can't promise to do somethingimpossible in a contract. Doing
so makes the contract void.
22. Which amendment to CERCLA says that "innocent landowners" aren't re-sponsible for
clean-up of hazardous contamination?: The Superfund Amend-ments and Reauthorization
Act, or SARA, says that innocent landowners aren't responsible for clean-up of hazardous
contamination.
23. With the cost approach to value, what is the replacement cost?: The re- placement cost
reflects the cost to build a functionally equivalent improvement, asopposed to the
reproduction cost, which is the cost to build an exact replica of thesubject, with the same
materials and deficiencies.
24. Antje's clients closed on their property yesterday, but Antje still has somepaperwork that
she needs to deliver to them as soon as possible. Under whichfiduciary duty is Antje acting?: The
duty of accounting may continue even after thetransaction closes. The agent must account for
any documents or money belongingto the client until it is delivered to the appropriate party.
25. When real estate licensee Brian discovered that Arnold was using a 'ChooseYour Neighbor'
letter to market a property without also listing the property
in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could
he bring against Arnold to the National Association of REALTORS?: REALTOR Brian could
charge Arnold with violating Article 10 of theCode of Ethics, which prohibits REALTORS
from agreeing to discriminate againstpeople belonging to a protected class.
26. What is estate at sufferance?: Estate at sufferance is when a tenant remains on the
property after the lawful authority has expired (a holdover tenant), after whichthe landlord may
evict.
27. Which entity typically enforces the code restrictions and licensing and in- surance
requirements for contractors, thereby enforcing the building code?: -While builders and
developers self-regulate to some degree, they're not responsiblefor enforcing the building code.
This is the local building department's responsibility.
28. Under which types of agency agreement may a buyer and agent operate?: -
Open, exclusive right to represent, and exclusive agency
