Kentucky National Real Estate Practice Exam #1 Questions With Correct Answers

On a settlement statement the buyer can expect to see entries for - Answer property and transfer taxes Which of the following terms is NOT associated with a legal life estate? Dower, Curtesy, Community property, Homestead - Answer Community property Which of the following is an example of a conventional uninsured loan? Loan where the borrower must pay MIP, VA loan negotiated by a veteran, Loan with a loan-to-value ratio of 80%, Loan where the borrower must pay PMI - Answer Loan with a loan-to-value ration of 80% Which of the following entries would be a credit to a buyer on a settlement statement? Sales price, Interest paid in advance, Loan, Credit report fee - Answer Loan A loan is negotiated for 90% of the sale price of the property. If the semi-annual interest on the loan is $3,000 and the annual rate of interest is 9.75%, what is the sale price of the property? $59,203, $61,538, $68,376, $94,231 - Answer $68,376: ($3,000 * 2 = $6,000), ($6,000 / 9.75% = $61,538.46), ($61,538.46 / 90% = $68,376.00) Jose entered an offer to pay cash for the property thirty days from the execution of the contract by the seller. The offer stipulated that the seller must provide a marketable title. What is the status of the contract should the seller accept his offer? A. Executed, unilateral contract B. Executory, bilateral contract C. Executed, bilateral, voidable contract D. Executory, bilateral, voidable contract - Answer D. Executory, bilateral, voidable contract A buyer agreed to pay the seller $105,000 for a property. Upon applying for the loan, the lender agreed to loan 95% of the appraised value of $103,000. What was the loan amount? - Answer $97,850 ($103,000 x 95% = $97,850) A tenant's lease expired at 11:59 p.m. last night. The tenant refuses to move. This BEST describes a/an - Answer tenancy at sufferance. According the Statue of Frauds, all of the following documents must be in writing EXCEPT - Answer the sale of farm equipment. Melissa, an agent EFG Brokerage, listed a home. Redford, an agent for IEE Brokerage, presented an offer which was accepted. Tejasi, an agent for JKR Realty lives in another state and referred the buyer to Redford. At the conclusion of the transaction, Tejasi was paid $4,375 as a 25% referral fee. Redford was paid 70% of his broker's fee. The 5% commission was split between EFG Brokerage and IEE brokerage. What was the sale price of the property? - Answer $1,000,000 (5% ÷ 2 = 2.5%$4,375 ÷ 25% = $17,500$17,500 ÷ 70% = $25,000$25,000 ÷ 2.5% = $1,000,000) Which of the following legal descriptions is characterized by degrees, minutes and seconds? - Answer Metes and bounds survey A sandwich lease would be associated with a/an - Answer sublease Which of the following may impose private, restrictive covenants on real estate which limit the rights of a property owner? - Answer A land developer If a quarterly income of $95,000 yields an investor a 9% return, the estimated value of the property is - Answer $4,222,222.00 ($95,000 x 4 = $380,000$380,000 ÷ 9% = $4,222,222) A partial release clause would be found in which of the following mortgages? - Answer Blanket mortgage Jayne, Fran, and Kay are co-owners of the property. When Jayne dies testate, Fran and Kay are the devisees to her one-third interest in the property. How do they own the property? A. Joint tenancy B. Tenancy in common C. Severalty D. Periodic tenancy - Answer Tenancy in common A lender is negotiating a loan for a qualified borrower. The lender will require - Answer a mortgagee's title insurance policy. The Lead Based Paint Hazardous Reduction Act requires that owners of homes built prior to 1978 to provide buyers with how many days to have the home inspected for lead based paint? - Answer 10 days and the buyer may waive the right for the inspection In a ruling, the judge said, "The buyers made a decision to purchase the property based on information they thought was true, but it was not. The sellers simply forgot to disclose a repair. It was not intentional." The sellers will MOST LIKELY be found guilty of - Answer misrepresentation and the contract is voidable When determining if an article is a fixture, a person would consider the - Answer method of annexation. Wendy made an offer on Thomas's property contingent on Thomas painting the front porch before closing. On the day before closing, Wendy discovers that Thomas has not painted the porch. She decides to go ahead with the closing. This is an example of - Answer a waiver. An application received her Loan Estimate and found the following information: origination fee - 1%; processing fee - $250; underwriting fee - $450; and discount points - 1%. If the borrower secures the loan the above fees may change - Answer 0% at closing The EPAs recommended radon action level is - Answer 4 picoCuries per liter of air. In 1968 the Supreme Court upheld the Civil Rights Act of 1866 in the Jones vs. Mayer case. The decision of this case is significant because - Answer the 1866 law prohibits all racial discrimination without exception Under the law of agency, which of the following are duties that a broker owes to a client? - Answer Disclosure, loyalty, care, and obedience Under the American with Disabilities Act, the definition of a disabled person would include all of the following EXCEPT - Answer someone addicted to meth The lender will consider all of the following factors in the qualifications of a borrower EXCEPT - Answer gender. When an investor can only lose the amount of money invested and has no voice in decisions that are made in the company, he/she is called a/an - Answer limited partner. An agent is driving to the office and notices a For Sale By Owner (FSBO) yard sign on a neighborhood property. At this point, the agent may call the FSBO - Answer to make an appointment for a legitimate buyer. The willingness to enter into an agreement BEST defines a/an - Answer Offer Which of the following is LEAST LIKELY to create an encumbrance to the property? A. Lis pendens notice B. License C. Encroachment D. Easement - Answer License The greatest potential hazard that underground storage tanks pose on the environment is - Answer the contamination of groundwater. A listing agent has three offers to present to the sellers. Which offer must be presented first? - Answer All offers should be presented to the sellers and the sellers should decide which offer to accept, counter or ignore. In regards to radon, the EPA recommends that - Answer every home be tested and the action level for mitigation if radon is detected is 4 picocuries per liter of air (4 pCi/L). A borrower has applied for a loan to purchase a single family home. Today she received the Loan Estimate from the lender. She has how many days to notify the lender if she is going to proceed with the loan? - Answer 10 business days Which of the following laws requires the disclosure of the discount points charged to a borrower? A. RESPA B. Regulation B C. Equal Credit Opportunity Act D. TRID - Answer TRID All of the following circumstances would terminate an offer EXCEPT A. the death of the offeror. B. a change of the terms of the offer. C. unequivocal acceptance. D. revocation of the offer. - Answer C. unequivocal acceptance Ann sold a parcel of vacant land and the legal description in the deed stated that the parcel contained 9.96 acres of land. The buyer waived the right to have the property surveyed. After the closing, the buyer had the property surveyed and it contained 9.06 acres of land. The broker is - Answer not liable; agents are to rely on information given in public records.