Chapter Test

Front 1

When air rights are sold from the rest of the land, they are:
A. Severed
B. Divided
C. Separated
D. Partitioned

Back 1

1

C.

Front 2

The method of land description which identifies a parcel by specifying its boundary lines along with the terminal points and the bearing of each side is known as:
A. Recorded plot
B. Metes and bounds
C. Lot, block, and tract
D. Government survey

Back 2

1

B.

Front 3

Billy planted pecan trees on his land as a future investment. The grove is:
A. An emblement.
B. An artificial attachment.
C. A natural attachment.
D. An improvement.

Back 3

1

C.
While the trees were planted by Billy, they grow as a result of nature. Therefore, the pecan trees are classified as natural attachments.

Front 4

Local governments use land as a basis for taxation because land is:
A. Immobile.
B. Indestructible.
C. Useful.
D. Valuable.

Back 4

1

A.

Front 5

When the listing agent seems unable to obtain a legal description for a buyer's broker, the buyer's agent should:
A. File a complaint with the Real Estate Commission.
B. Get it himself/herself.
C. Explain to the buyer that the other agent is incompetent.
D. Call the seller directly and complain.

Back 5

1

B.

Front 6

The value of a commodity is _______ influenced by its scarcity.
A. Always
B. Sometimes
C. Often
D. Never

Back 6

1

A

Front 7

All of the following are true about a trade fixture EXCEPT:
A. It may be removed only after the lease expires.
B. It is chattel real.
C. It belongs to the property owner if not removed in a timely manner.
D. It is personal property.

Back 7

1

A.

Front 8

Farmer Jones is dividing his land equally between three children. This will necessitate:
A. No new legal description.
B. Three new legal descriptions.
C. One new legal description.
D. Two new legal descriptions.

Back 8

1

B.

Front 9

Of the following items which is considered real property?
A. House plants.
B. Natural things moveable by law.
C. Notes secured by mortgages on real estate.
D. Riparian rights.

Back 9

1

D.

Front 10

When a home is sold, the sales contract should specify:
I. Any personal property items to be included in the sale.
II. Any fixtures to be removed.
A. I only
B. Neither I nor II
C. Both I and II
D. II only

Back 10

1

C.

Front 11

Which of the following is NOT an acceptable method of legally describing a parcel of real estate?
A. Recorded plat
B. Rectangular survey
C. Metes and bounds
D. Street address, county, and state

Back 11

1

D.

Front 12

In areas where water is scarce and the doctrine of prior appropriation applies, the riparian owner's right to use water is determined by:
A. Federal law.
B. Priority based on when the permit was acquired.
C. Correlative rights.
D. The water table.

Back 12

1

B.

Front 13

An oceanfront resort owner plans to build fences down to and into the water so that the public will be restricted from the beach in front of the hotel. This is:
A. Legal, if a building permit is obtained.
B. Legal, because the owner of the land has littoral rights.
C. Illegal because he owns only to the high tide line.
D. Illegal, unless the fence stops at the water's edge.

Back 13

1

C.

Front 14

Although littoral rights were not mentioned in Edward's deed, they went along with the land when he purchased it because they are:
A. Improvements.
B. Artificial attachments.
C. Natural attachments.
D. Appurtenances.

Back 14

1

D.
The littoral rights are said to appurtenant. That is, they run with the land.

Front 15

Which of the following is most important to an investor, considering the purchase of an apartment building?
A. The economic life of the property
B. The life of the land
C. The current occupancy rate of the apartment complex
D. The economic life of the amenities

Back 15

1

A.

Front 16

John is buying a house with a swimming pool, and would like to have the pool cleaning equipment included. This equipment is:
A. Part of the pool.
B. A fixture.
C. Personal property.
D. Real property.

Back 16

1

C.

Front 17

A datum would be used in the description of:
I. A condominium unit.
II. Mineral rights.
A. Both I and II
B. Neither I nor II
C. II only
D. I only

Back 17

1

A.

Front 18

A short form legal description would be incomplete if it lacked the name of:
A. The surveyor.
B. The owner.
C. The state.
D. The school district.

Back 18

1

C.

Front 19

Which of the following would be considered an artificial monument when used in a metes and bounds legal description?
A. A fence corner
B. A river
C. A tree
D. A large rock

Back 19

1

A.

Front 20

In a metes and bounds legal description, the direction from one monument to another is measured from either:
A. East or west and then north or south.
B. North or south and then east or west or East or west and then north or south.
C. North or south and then east or west.
D. Neither North or south and then east or west nor East or west and then north or south.

Back 20

1

C.

Front 21

In the offering of a lakeside home with a dock, a motorboat is included in the sales price. The boat is:
A. A fixture.
B. A chattel personal.
C. A chattel real.
D. Part of the real property.

Back 21

1

B.

Front 22

Dawson sold his five hundred acre farm to Harris but reserved the right to drill for oil. Later, when Dawson arrives, with oil drilling equipment he is denied the right of access to the land. Which party has correctly interpreted the agreement?
A. Harris, because the agreement was silent as to the right of entry.
B. Dawson, because he has an implied right of entry.
C. Dawson, but he must pay Harris a reasonable fee for the right of access and reimburse him for any damages caused by the drilling operation.
D. Harris, but he may be liable if his denial was unreasonable.

Back 22

1

B.

Front 23

Water table refers to the:
A. Difference between the high and low water level of a navigable body of water.
B. Level at which littoral rights apply.
C. Depth to which a landowner may drill in order to extract water in exercising the right of prior appropriation.
D. Level at which percolating water is found below the earth's surface.

Back 23

1

D.

Front 24

Mr. W. is having a well dug on his rural property. The depth to which he can dig is limited by:
A. Zoning.
B. Property limitations.
C. No limitations.
D. Agreement with next-door neighbors.

Back 24

1

C.

Front 25

The sum of all the value factors related to where a piece of property is located is called:
A. Situs.
B. Neighborhood.
C. Environment.
D. Location.

Back 25

1

A.
Situs is sometimes referred to as area preference.

Front 26

The shortest form of legal description is:
A. The reference to a recorded plat.
B. The rectangular survey.
C. The street address plus city, county and state.
D. The metes and bounds.

Back 26

1

A.
The short form - recorded plat method is the shortest and most simple form of legal description.

Front 27

In the rectangular survey method of describing land, an imaginary grid system is formed by:
I. Meridians and baselines.
II. Range lines and township lines.
A. Either I or II
B. I only
C. Both I and II
D. II only

Back 27

1

C.

Front 28

Under the law of capture, a property owner has NO right to:
A. Drill for oil on the land owned.
B. Extract oil from under neighboring land.
C. Prevent neighbors from drilling once the well is established.
D. Pocket the profits from wells on the owned land.

Back 28

1

C.

Front 29

Joanne's house has been sold. Her tomato plants have a bumper crop. She can pick the tomatoes and take them with her when she moves:
A. Only if the buyer agrees in writing.
B. And does not need permission; they are personal property.
C. Only if the sales contract so provides.
D. But should not because they are fructus naturales.

Back 29

1

B.

Front 30

Land might be said to have been destroyed:
A. When it is shaken by an earthquake.
B. Under no circumstances.
C. When it is covered with volcano ash.
D. When improvements are washed away in a storm.

Back 30

1

B.

Front 31

Included in the definition of real estate are all of the following EXCEPT:
A. Legal rights of ownership.
B. Fructus industriales.
C. Man-made structures.
D. Products of nature.

Back 31

1

B.
Fructus industriales (emblements) are crops that are planted and harvested annually and are classified as personal property.

Front 32

Surveyors show the shape of the earth's surface or the contour of the land on a:
I. Topographic map.
II. Plat of survey.
A. I only
B. Neither I nor II
C. Either I or II
D. II only

Back 32

1

A.

Front 33

When a selling agent is writing an offer, and does not have the legal description available, he/she should:
A. State Legal description to follow.
B. Call the Real Estate Commission.
C. Leave a blank for the listing agent to fill in.
D. Get the description before completing the offer.

Back 33

1

D.

Front 34

Real property is changed into personal property by:
A. The right of appropriation
B. The law of capture
C. Fructus naturals
D. Severance

Back 34

1

D.

Front 35

All of the following documents require legal descriptions in order to be enforceable EXCEPT:
A. A commercial lease.
B. A sales contract.
C. A security deed.
D. A bill of sale.

Back 35

1

D.

Front 36

The statement that no two parcels of land are exactly alike does NOT apply to:
A. Condominium apartments.
B. Undeveloped residential lots.
C. Tract houses.
D. Items of personal property.

Back 36

1

D.

Front 37

The recorded plat of a subdivision shows all of the following EXCEPT:
A. The name of the subdivision.
B. That areas will be set aside for public use.
C. The schools that will serve the subdivision.
D. Where utility easements will be located.

Back 37

1

C.

Front 38

Which of the following is an estate in land?
I. Easement.
II. Lien.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

Back 38

2

D.

Front 39

Ms. Jones pledged her real property as security for a loan. Which of the following statements is correct?
A. An involuntary lien is created when a mortgage is obtained.
B. A mortgage lien is classified as a voluntary general lien.
C. A mortgage lien and an attachment lien are synonymous.
D. A mortgage lien exists which, pledges the property as security for repayment.

Back 39

2

D.

Front 40

A property owner in the city of Shortview failed to pay a special assessment tax. The unpaid special assessment:
A. Becomes an involuntary specific lien against the property.
B. Becomes an attachment lien, and the court may seize the owners property to satisfy the special assessment.
C. Becomes an involuntary general lien against the property.
D. Becomes a voluntary specific lien against the property.

Back 40

2

A.

Front 41

A remainder estate may exist at the same time with all but which of the following?
A. Fee simple determinable.
B. Fee simple on a condition subsequent.
C. Fee simple absolute.
D. Life estate.

Back 41

2

C.

Front 42

Reversionary, remainder and legal life estates are examples of:
A. Estates at sufferance.
B. Non-possessory estates.
C. Possessory estates.
D. Estates in severalty.

Back 42

2

B.

Front 43

Under the feudal system of ownership, the king granted property to the feudal lords based on:
A. The amount the lord could pay for the land.
B. The lords' number of dependents.
C. Loyalty and service.
D. The academic achievements of the lord.

Back 43

2

C.

Front 44

General liens to be enforceable:
A. Must be recorded.
B. Must be ordered by the court.
C. Must be acknowledged.
D. Must be served on the debtor.

Back 44

2

A.

Front 45

The Timber Construction Company is given verbal permission to stack lumber on Mr. Oak's land. This best describes:
A. A personal easement in gross.
B. A license.
C. A commercial easement in gross.
D. An appurtenant easement.

Back 45

2

B.

Front 46

The right of _______________ gives the owner the right to dispose of real property.
A. Enjoyment
B. Possession.
C. Disposition.
D. Control.

Back 46

2

C.

Front 47

An easement may be created by:
I. Express reservation.
II. Merger.
III. Condemnation.
A. I, II and III
B. I and II only
C. II and III only
D. I and III only

Back 47

2

D.

Front 48

Which of the following is not an example of a lesser estate?
A. Fee simple determinable.
B. Fee simple on condition subsequent.
C. Legal life estate.
D. Reversionary estate.

Back 48

2

D.
A reversionary estate is an example of a non-possessory estate. The other answers are all classified as lesser estates.

Front 49

Jones owned fifty acres with frontage on Slater Mill Road. Jones sold the front thirty acres to Smith but reserved an easement for the right of access to the back twenty acres. Which of the following is NOT correct?
A. Smith has a servient estate.
B. Smith's estate is subject to Jones' interest.
C. Jones' estate in the twenty acres is subject to Smith's interest.
D. Jones has a dominant estate.

Back 49

2

C.

Front 50

In order to be assured the right to occupy property exclusively from others, the law must state that an owner has the right of:
A. Possession.
B. Enjoyment.
C. Control.
D. Eminent domain.

Back 50

2

A.

Front 51

Mr. Johnson granted Ms. Williams the right to cross a portion of his land for easier access to the main highway. Ms. Williams:
A. Has a license to use Mr. Johnson's property.
B. Has a possessory right to Mr. Johnson's land.
C. Has an incorporeal right to use Mr. Johnson's land.
D. Has an estate in land.

Back 51

2

C.
An easement is a non-possessory, incorporeal (intangible) right to use land of another in a specified manner and for a specific purpose.

Front 52

Amy Carson owns two-hundred acres which are rich in oil reserves. Her ownership interest is fee simple absolute. She may:
I. Sell the oil rights, but retain fee simple ownership in the land.
II. Sell the land but reserve the oil rights.
III. Sell the oil rights to one party and all remaining rights in the land to another.
A. I, II, or III
B. II or III only
C. I or II only
D. III only

Back 52

2

A.

Front 53

Which of the following is NOT correct concerning a conventional life estate?
A. A life estate may be sold, leased, or mortgaged.
B. Life estates always pass to the remainderman.
C. The owner does not have to die for the estate to end.
D. The owner is called the life tenant.

Back 53

2

B.

Front 54

Which of the following would be a less-than-freehold estate?
A. Life estate.
B. Fee simple estate.
C. Leasehold estate.
D. Fee simple determinable estate.

Back 54

2

C.

Front 55

An encumbrance may be defined as:
I. Anything which affects or limits the fee simple title.
II. The degree, quantity, nature, and extent of interest in real property.
III. Rights or interests held by someone other than the fee simple owner of the property.
IV. A claim, charge, or liability that attaches to real property.
A. II, III and IV only
B. I, II and III only
C. I, III and IV only
D. I, II and IV only

Back 55

2

C.
An encumbrance may be defined as a claim, charge or liability that attaches to real property or anything which affects or limits the fee simple title, such as rights or interests held by someone other than the fee simple owner of the property.

Front 56

Smith Heating and Air, Inc. installed a new central air system in the home of Don Jones. If Mr. Jones fails to pay, Smith Heating and Air Inc. may:
A. Return and remove the new air system without the permission of Mr. Jones.
B. File a vendee's lien against Mr. Jones property.
C. File a mechanic's lien against the property of Mr. Jones.
D. Sue for specific performance.

Back 56

2

C.

Front 57

Real estate taxes are assessed in order to generate revenue for:
A. Developing commercial land use districts.
B. Building courthouses and other municipal buildings.
C. Developing additional electrical energy sources.
D. Local hospital authorities.

Back 57

2

D.
Real estate taxes are levied to generate revenues to fund public services, such as hospitals, parks, and police and fire protection. Courthouses and other municipal buildings are typically funded through the issuance of bonds.

Front 58

The grantor of a life estate may retain a:
A. Remainder estate.
B. Reversionary estate.
C. Less-than-freehold estate.
D. Fee simple determinable estate.

Back 58

2

B.

Front 59

Statutory liens which are also specific include:
A. Mortgage lien.
B. Mechanic's lien.
C. Estate tax lien.
D. Judgment lien.

Back 59

2

B.

Front 60

Mr. Smith purchased the air rights to Mr. Jones' property. Mr. Smith decides to build a high rise office building on the property. Is Mr. Jones permission needed in order for Mr. Smith to build the building?
A. No, Mr. Smith and Mr. Jones are classified as owners in severalty, and permission to begin construction is not needed.
B. Yes, while they are concurrent owners, permission must be granted by Jones to Smith prior to beginning construction.
C. No, Mr. Smith and Mr. Jones are now concurrent owners, and each have the rights of possession, control, disposition and enjoyment over their separate interests.
D. Yes, while Mr. Jones sold the air rights, he must be advised prior to construction beginning.

Back 60

2

C.

Front 61

Estates which may exist for an indefinite period of time include:
I. Ordinary life estate.
II. Estate from period-to-period.
III. Fee simple absolute estate.
A. II and III only
B. I, II and III
C. I and III only
D. I and II only

Back 61

2

C.

Front 62

Mr. Acre conveyed to Mr. Land forty-five acres of land on the condition that the land be used specifically for church-related purposes. Which of the following statements is correct?
A. In the event Mr. Land uses the property for purposes other than that which is church-related, the property will automatically revert back to Mr. Acre or Mr. Acre's designated person in remainder.
B. The estate that has been created is classified as a fee simple estate, and will automatically revert to Mr. Acre upon the property being used for anything other than church-related purposes.
C. Mr. Acre conveyed to Mr. Land a fee simple determinable estate, and his estate will automatically revert to Mr. Acre.
D. In the event Mr. Land uses the property for purposes other than that which is for church-related purposes, Mr. Acre, Mr. Acre's heirs or Mr. Acre's designated person in remainder must terminate the estate and sue for possession.

Back 62

2

D.

Front 63

Homestead protection is:
A. A law which protects a portion of a family's home from debts, except taxes, mechanic's liens and mortgages that might result in a forced sale.
B. A legal life estate.
C. All of the answers.
D. Not the same as homestead exemption.

Back 63

2

C.

Front 64

A leasehold estate and a freehold estate are similar in that:
A. They are both non-possessory estates.
B. They are uncertain in duration.
C. They are both classified as possessory estates.
D. They are both classified as fee estates.

Back 64

2

A.

Front 65

A property owner who acquired an easement across neighboring property due to the property being land-locked, purchased an adjacent lot giving additional access to the property. What is the status of the easement created by necessity?
A. It may be terminated by the holder of the easement.
B. It may be used as the holder of the easement desires.
C. It remains unaffected.
D. It terminates.

Back 65

2

D.

Front 66

Which of the following is included in the "Bundle of Rights"?
A. Eminent Domain.
B. Governmental Rights.
C. Enjoyment.
D. Escheat.

Back 66

2

C.

Front 67

Mr. Land conveyed property to Ms. Rivers "on the condition that" she not sell alcoholic beverages on the property. Mr. Land designated his nephew John as his person in remainder. Nephew John is the holder of:
A. A possessory reversionary estate.
B. A possessory remainder estate.
C. A non-possessory remainder estate.
D. A non-possessory reversionary estate.

Back 67

2

C.

Front 68

An estate in land that is freely inheritable would be known as:
A. An ordinary life estate.
B. An estate at sufferance.
C. A fee simple estate.
D. An estate at will.

Back 68

2

C.

Front 69

A private deed restriction can be made INEFFECTIVE by which of the following?
I. Laches.
II. Conveyance of the property.
III. Voluntary cancellation by at least two-thirds of the affected property owners.
IV. Expiration of time.
A. III and IV only
B. II, III and IV only
C. I and II only
D. I and IV only

Back 69

2

D.
A private deed restriction can be made ineffective by both laches and the expiration of the specific covenant.

Front 70

What do dower and curtesy rights have in common?
I. Legal life estate.
II. Nonpossessory estate.
A. Both I and II
B. II only
C. Neither I nor II
D. I only

Back 70

2

A.

Front 71

Mr. Baker received notification his property was being taken and is to be put to public use. Mr. Baker:
A. Is entitled to receive just compensation, as determined by one or more independent appraisals.
B. Is entitled to receive only the fair market value for the property being taken, as determined by a comparative market analysis prepared by a real estate licensee.
C. File an injunction to stop the acquisition.
D. Is entitled to receive fair compensation, as determined by one or more licensed real estate brokers.

Back 71

2

A.

Front 72

Encroachments are usually discovered by:
I. Title search.
II. Physical inspection.
III. Survey.
A. I and II only
B. I and III only
C. I, II and III
D. II and III only

Back 72

2

D.

Front 73

Mr. Waters purchased property adjoining a small non-navigable river. Mr. Waters decided to pump water from the river to water his garden during the summer months. Mr. Waters:
A. Has no right to use the water without permission of surrounding owners having an interest in the river.
B. Has the right to pump water from the stream based on his right of enjoyment.
C. Has the right to pump water from the stream based on his right of control.
D. Must have permission from the corps of engineers before pumping.

Back 73

2

B.

Front 74

Ms. Brown owned a corner lot at a major intersection in Fulton County and desired to sell the property as a potential commercial site. At the last meeting of the Fulton County Zoning Board, the Board restricted the use of Ms. Brown's lot to residential purposes only. Ms. Brown:
A. May sue for damages due to the loss in value.
B. Has no claim against Fulton County.
C. May appeal the decision to the state Supreme Court.
D. Is entitled to receive just compensation.

Back 74

2

B.

Front 75

Which of the following statements is correct?
A. A lien holder has the right to force sell pledged property at any time to recover the funds owed by the debtor.
B.A lien must be properly recorded to establish a valid claim.
C. A lien establishes priority of claim.
D. All liens, when properly recorded, encumber both personal and real property.

Back 75

2

B.

Front 76

For ten years Mr. Jones had verbal permission to park a car in Mr. Smith's driveway. Smith sold to Johnson.
A. Jones had a license from Smith; Johnson may continue it or discontinue it as he chooses.
B. Smith's permission to Jones to use a portion of the land for a specific purpose created an easement appurtenant. Therefore, Johnson must allow Jones to continue parking in the driveway.
C. Jones' use of the driveway was a personal easement in gross, which ended when Smith sold to Johnson.
D. Jones' continuous use over ten years has probably created an easement by prescription, leaving Johnson powerless to revoke Jones' right to continue parking in the driveway.

Back 76

2

A.

Front 77

A seller leaves on vacation and requests that the home not be shown until after he returns from vacation. The broker has a qualified buyer and decides to show the property against the desire of the seller. The broker:
A. May be paid a bonus for stepping outside the scope of authority and showing the property - if the purchaser buys.
B. Has used wise judgment by proceeding to show the property to the prospective buyer.
C. Has violated his agency relationship by not obeying the instructions of the seller.
D. Has acted within the scope of the agency relationship, since the seller cannot restrict the broker from showing the property once it is listed.

Back 77

6

C.

Front 78

Prior to the existence of the dual agency relationship:
A. The broker should work with the parties as a universal agent.
B. The broker must give all parties three days notice prior to creating the dual agency relationship.
C. The broker should work with the parties as a specific agent.
D. A broker may withdraw from a client who has not consented to a dual agency relationship.

Back 78

6

D.

Front 79

Prior to entering into brokerage engagement relationships a broker must:
A. Advise the prospective client of the types of brokerage relationships available through the broker.
B. Advise the prospective client of any other brokerage relationships held by the broker which would conflict with any interests of the prospective client actually known to the broker.
C. Advise the prospective client as to the broker's compensation and whether the broker will share such compensation with other brokers who may represent other parties to the transaction.
D. All of the answers.

Back 79

6

D.

Front 80

Commission splits between the listing broker and the subagent:
A. Are established by the local multiple listing service.
B. Are prescribed by law.
C. Are a matter of negotiation
D. Are established by the Board of Realtors.

Back 80

6

C.

Front 81

The law will act to end a listing agreement:
I. If the owner declares bankruptcy.
II. By supervening illegality.
III. If the home is destroyed by fire.
A. I and II only
B. II and III only
C. I and III only
D. I, II and III

Back 81

6

D.

Front 82

Fraudulent misrepresentation subjects a real estate licensee to:
I. Disciplinary action by the state licensing authority.
II. Criminal action by the buyer.
III. Civil action by the buyer.
A. II and III only
B. I only
C. I, II and III
D. I and III only

Back 82

6

C.

Front 83

An agent's authority can arise from:
A. Ratification.
B. Implication.
C. All of the answers.
D. Custom.

Back 83

6

D.

Front 84

Under the laws of agency, a salesperson typically serves as a:
A. General agent.
B. Universal agent.
C. Special agent.
D. Ministerial agent.

Back 84

6

A.

Front 85

According to the law of agency, a fiduciary relationship exists between the:
I. Listing broker and seller.
II. Selling broker (subagent) and seller.
III. Selling broker (subagent) and listing broker.
IV. Salesperson and broker.
A. I and II only
B. I only
C. I, II, III and IV
D. I, II and III only

Back 85

6

C.

Front 86

A broker hires a salesperson to assist in carrying out brokerage activities. Subsequently, the new salesperson obtains a listing on the home of Mr. & Mrs. Jones. Which of the following statements is CORRECT?
A. Mr. & Mrs. Jones are the clients of the broker.
B. Mr. & Mrs. Jones are the agents for the broker.
C. The salesperson is Mr. & Mrs. Jones' principal.
D. Mr. & Mrs. Jones are clients of the salesperson.

Back 86

6

A.
In the listing agreement with Mr. & Mrs. Jones, the broker is the agent for the principal Mr. & Mrs. Jones. The salesperson is the agent for his/her principal broker.

Front 87

An owner desires to net $47,000 from the sale of her home. Broker Bailey accepts the listing with permission to offer the home for sale at $50,000.
I. The agreement constitutes a net listing.
II. The broker negotiated a six percent commission.
A. II only
B. I only
C. Both I and II
D. Neither I nor II

Back 87

6

A.

Front 88

If a broker drafts a sales contract for a relative, the broker:
A. Should disclose the relationship in writing to the seller.
B. Is not required to disclose the relationship.
C. Should notify the commission in writing of the transaction
D. Should not draft the offer and refer the relative to another broker.

Back 88

6

A.

Front 89

The security deposit in a lease agreement:
A. Is essential as it is the consideration in the contract
B. Must be retained by the broker in a trust account
C. Must never exceed one month's rent
D. Can be used for maintenance of the building

Back 89

11

B.

Front 90

A tenant's option to purchase the rented property might be contingent upon all of the following EXCEPT:
A. The tenant’s compliance with the lease terms.
B. The landlord's willingness to sell.
C. The tenant's ability to obtain financing.
D. The tenant's desire to exercise the option.

Back 90

11

B.

Front 91

Complex commercial leases are usually prepared by:
A. A salesperson representing the tenant.
B. Brokers.
C. Attorneys.
D. A salesperson representing the landlord.

Back 91

11

C.

Front 92

The Lindley’s new home will not close until July 15th and they are moving to town on June 1st, so they would like to rent the house until the closing. The agreement for this arrangement should avoid:
A. Specifying that until closing they are to be landlord and tenant
B. Providing for alternatives if the sale does not close
C. Prohibiting alterations and redecorating.
D. Providing for the Lindleys to pay compensation to the seller

Back 92

11

A.

Front 93

Which of the following may be used to figure accrued depreciation?

I. Age-life or straight line method.
II. Observed condition or cost-to-cure method.
A. Both I and II
B. Neither I nor II
C. I only
D. II only

Back 93

12

A.

Front 94

In making the preliminary study for an appraisal, which step applies?
A. Gathering internal data.
B. Calculating depreciation.
C. Gathering external data.
D. Deciding how much time will be needed.

Back 94

12

D.

Front 95

What is the range of value of a building for which an investor expects a twelve percent (12%) return, if the adjusted gross income is $122,000 and the expenses amount to thirty-five (35%) of the adjusted gross?
A. $350,000 - $360,000
B. $1,000,000 - $1,100,000
C. $660,000 - $665,000
D. $145,000 - $150,000

Back 95

12

C.
$122,000 x .65 (100 - 35) = $79,300
$79,300 divided by .12 = $660,833

Front 96

If a comparable property has an annual income of $46,000, a vacancy factor of two percent (2%) and expenses of $35,000; and if it sold recently for $390,000, what is the annual gross rent multiplier?
A. 38.69
B. 8.65
C. 35.45
D. 8.48

Back 96

12

D.
Neither the vacancy factor nor the expenses figure into this calculation. It is simply $390,000 divided by $46,000 = 8.48

Front 97

Which of the following approaches to value estimation is based upon the calculation of construction costs at current prices of a property that serves the same purpose or function as an original property?
A. Income.
B. Reproduction cost.
C. Sales comparison.
D. Replacement cost.

Back 97

12

D.

Front 98

There are two very similar buildings in a commercial block. One is currently leased for $2,000 per month as a retail shop, and the other for $1,100 per month as a library. The cap rate for the library is:
A. Cannot be calculated.
B. The same as the rate for the shop.
C. Higher than the rate of the shop.
D. Lower than the rate of the shop.

Back 98

12

D.
The return on the library is lower. If the value, for example, were $200,000, the rate for the shop would be $2,000 x 12 = $24,000 divided by $200,000 = 12%. For the library we have: $1,100 x 12 = $13,200 divided by $200,000 = 6.7%.

Front 99

At a social gathering, Salesperson Steve was discussing with a friend the possibilities of marketing his friend’s property. Since Steve was familiar with his friend’s property and the subdivision in which the property is located, Steve told his friend that in his opinion, the property should be valued at $175,000. Which of the following statements is TRUE?
A. Since Salesperson Steve is a licensed real estate salesperson, Steve may offer opinions of value of real property.
B. Since Salesperson Steve is familiar with his friend’s property, his indication of value was proper.
C. Salesperson Steve may indicate the price of recent sales in his friend’s neighborhood but should avoid indicating to his friend what the property is worth.
D. All of the answers.

Back 99

13

C.

Front 100

The best source for determining the building cost factor is:
A. From the office of the county building inspector.
B. From multiple listing service records.
C. From the employing broker.
D. An experienced reputable builder.

Back 100

13

D.

Front 101

The outside dimensions of a two story home measured sixty-feet (60) long by forty-feet (40) wide. After research, it is estimated that a present replacement cost factor of $62.00 per square foot should be used in determining the present replacement cost of the improvements. Depreciation is estimated at twenty percent (20%) of the present replacement cost value of the improvements. The market analysis completed on the land indicates the land is worth $30,000. What is the estimated value of the property based on the replacement cost method?
A. $268,080.
B. $149,040.
C. Insufficient information given to determine the value of the property based on the replacement cost approach.
D. $148,800

Back 101

13

A.
60 x 40 x 2 = 4800
4,800 x 62 = 297,600 x.80 = 238,080 + 30,000 (VALUE OF LAND) = 268,080
Value based on the replacement cost approach = $268,080

Front 102

Situations in which the market analysis cannot be used might include all of the following EXCEPT:
A. An area where numerous properties have been sold within the last six months.
B. A home is located in a neighborhood where there have not been recent sales to provide sufficient comparables.
C. A home is in a rural area where there are no comparables to use.
D. A specialty home unique because of age or design.

Back 102

13

A.

Front 103

The subject property is a three bedroom, two bath brick ranch home. Comparable one is a three bedroom, two bath frame home. Since a brick home is superior to an all frame home:
A. The sales price of the subject property should be reduced to reflect the difference in all brick vs. all frame.
B. The sales price of the comparable should be increased.
C. The sales price of the subject property must be increased to reflect the superiority of being all brick.
D. The sales price of the comparable should be decreased.

Back 103

13

B.
If the comparable property is better... subtract. (CBS) If the comparable is inferior... add. (CIA) An adjustment is never made to the subject property.

Front 104

The property for which a market price is being established is called:
A. The appraised property.
B. The sold property.
C. The subject property.
D. The comparable property.

Back 104

13

C.

Front 105

In completing the market analysis, the purpose of obtaining information on current listings is:
A. To provide the agent with additional properties for sale in an effort to increase sales.
B. To obtain a basis for making adjustments.
C. To obtain comparable properties for the purpose of completing the market analysis.
D. To provide the seller with information concerning current competition.

Back 105

13

D.

Front 106

Grandfather John died leaving instructions in his will for his home place to be sold by interested parties submitting sealed bids to the executor of the estate. Grandson Mike, in an effort to ensure he would have the highest bid, submitted a bid higher than what the property would bring on the open market. This could possibly be an example of:
A. Market value.
B. Price fixing.
C. Price gouging.
D. Sentimental value.

Back 106

13

D.

Front 107

Which of the following would be of least consideration in obtaining information on the lot of the subject property?
A. Total square footage of the lot.
B. Whether or not the lot is fenced.
C. The quality of landscaping and maintenance of the lot.
D. The type of grass planted on the lot.

Back 107

13

D.

Front 108

Which of the following might be considered a characteristic of a good comparable?
A. Closed sales similar to the subject property that have closed within the last six months.
B. Closed sales that are within $5,000 of the seller's asking price.
C. Closed sales within a five mile radius of the subject property.
D. Closed sales similar to the subject property that have closed within the past twelve months.

Back 108

13

A.

Front 109

The adjusted sales price of Comparable One is $68,500 and is closest in similarity to the subject property. You assess that Comparable One should be given fifty-percent (50%) weight. Comparable Two adjusted sales price is $66,300 and the adjusted sales price of Comparable Three is $67,400. You assess that Comparable Two and Comparable Three each be given twenty-five percent (25%) weight. What is the estimated market price of the subject property based on the weighted average of the comparables used?
A. $68,500
B. $68,000
C. $67,700
D. $67,400

Back 109

13

C.

Front 110

As a general rule of thumb, the highest price that a home will sell for is:
A. A conventional loan where the purchaser pays all closing costs.
B. All cash.
C. A loan assumption with substantial cash required.
D. At the best possible terms to the purchaser.

Back 110

13

D.

Front 111

When a buyer assumes an existing loan on a property, which is true?
A. No deficiency judgment can be filed against the buyer.
B. The buyer agrees to take over the payments.
C. The seller is primarily liable if a deficiency judgment is filled.
D. The seller is relieved of any obligation on the loan.

Back 111

14

B.
The buyer assumes the primary responsibility for the loan, but the seller remains secondarily liable. In case of a deficiency judgment, the lender would first go to the buyer and then to the seller.

Front 112

An acceleration clause gives the lender the right to:
A. Demand the entire balance owed due and payable upon default.
B. Adjust the amount of payments if interest rates increase.
C. Charge a prepayment penalty if the loan is paid off before maturity.
D. Increase the interest rate upon assumption.

Back 112

14

A.

Front 113

The main advantage of a wraparound mortgage is that it:
A. Gives the buyer needed funds at a rate only slightly higher than market rate.
B. Is well suited to finance the development of subdivisions.
C. Assures the originator of a first lien position.
D. Generally provides a rate of interest lower than market rate.

Back 113

14

D.
The buyer will usually pay a rate slightly lower than might be charged by conventional lenders. It is not a first lien, but a second.

Front 114

Barbara's mortgage loan was for the amount of $73,000 when she bought her house five years ago. Now the balance is $79,500. Her loan is probably:
A. An adjustable rate loan.
B. An amortized loan.
C. A graduated payment plan loan.
D. A straight loan

Back 114

14

C.
The loan balance has increased because of negative amortization, a characteristic of most graduated plan loans.

Front 115

A mortgage loan with even payments to principal and interest over the years might also be called:
A. A deferred equity loan.
B. An adjustable rate loan.
C. A fully amortized loan.
D. A graduated or step-up loan.

Back 115

14

C.

Front 116

The role played by the FHA in mortgage lending is primarily that of:
A. An insurer.
B. A rule-maker.
C. An appraiser.
D. A banker.

Back 116

14

A.
The FHA insures loans in the event of a borrower default.

Front 117

A subdivision developer obtained a construction loan to build new houses on twenty lots. What type of clause might be required in the security instrument for the construction loan?
A. Exculpatory.
B. Subordination.
C. Partial release.
D. Safety.

Back 117

14

C.

Front 118

The right of rescission in Truth-In-Lending Laws applies to:
A. A first loan for the purchase of a house.
B. An institutional second mortgage loan.
C. A purchase money mortgage loan made by a seller.
D. A first mortgage loan for residential construction.

Back 118

14

B.
The second mortgage loan made by a lending institution carries the right of rescission.

Front 119

When a loan is in default, the lender is usually:
A. Anticipating a profit from the foreclosure sale.
B. Reluctant to take quick action toward foreclosure.
C. Quick to file foreclosure proceedings.
D. Required to proceed with foreclosure proceedings immediately.

Back 119

14

B.
Lenders will generally make an effort to work with the borrower to clear the default. Lenders prefer to avoid foreclosure proceedings if at all possible.

Front 120

Loans that are neither insured nor guaranteed by the government are called ___________ loans.
A. Collateralized.
B. Jumbo.
C. Conventional.
D. Private.

Back 120

14

C.
The conventional loan is any loan that is not part of the FHA or VA program.

Front 121

The federal Truth-in-Lending Law is designed to protect:
A. Sellers.
B. Lenders.
C. Consumers.
D. Real Estate agents.

Back 121

14

C.

Front 122

A phenomenon which adversely affects thrift institutions when investment alternatives are more attractive to depositors is called:
A. Warehousing.
B. Disintermediation.
C. Hypothecation.
D. A pass through.

Back 122

14

B.

Front 123

Just before the sheriff begins the auction sale of foreclosed property, the delinquent borrower offers to pay the outstanding debt and all costs incurred because of the default. In such case:
A. The borrower may pay the judgment and reclaim the property under statutory rights or redemption.
B. The borrower may pay the judgment and reclaim the property under equitable rights of redemption.
C. The sale must proceed and the property sold to the highest bidder.
D. The lender may choose to either accept payment or proceed with the auction.

Back 123

14

B.

Front 124

Which of the following phrases, when used in an ad, would be a violation of Regulation Z?
A. Seller financing.
B. Assumable loan.
C. Easy terms.
D. No closing costs.

Back 124

14

D.
This is considered a trigger term because the phrase no closing costs is the same as saying zero closing costs and any use of a number may trigger the required disclosure.

Front 125

When the foreclosure sale of a property brings more money than is owed on the loan, the excess is:
A. Confiscated the state.
B. Returned to the borrower.
C. Retained by the lender.
D. Donated to charity.

Back 125

14

B.

Front 126

Dee is making fully amortized payments on a loan with an original balance of $78,000. She has recently inherited $14,000 and decides to use the money to pay down the principal of her mortgage. This will:
A. Reduce the time remaining for making payments.
B. Be classified as a balloon payment.
C. Reduce her monthly payments.
D. Change the loan from a fully amortized to a partially amortized loan.

Back 126

14

A.
The $14,000 was not a balloon, because it didn't retire the loan. The length of time needed for the final pay-off will be shortened. It remains a fully amortized loan, and the payments do not change.

Front 127

Which of the following characteristics apply to VA guaranteed loans?
A. None of the answers.
B. A veteran borrower is automatically released of liability if another veteran later assumes the loan.
C. Each veteran is entitled to only one VA guaranteed loan.
D. Interest rates are subject to state usury law.

Back 127

14

A.

Front 128

Betty and Bob are buying a house and need both incomes to qualify for the loan. The lender turns them down because they are not legally married. This is a violation of:
A. The Equal Credit Opportunity Act.
B. Regulation Z.
C. The Fair Housing Law.
D. Truth in Lending Law.

Back 128

14

A.
This falls under the Equal Credit Opportunity Act which prohibits the lender from discriminating based on marital status.

Front 129

The Conroys are in the process of buying a house. The rate they'll pay on their mortgage loan will probably be going up if:
A. The Fed is buying Treasury Certificates.
B. The Federal Reserve System is lowering the reserve requirements.
C. The prime rate is falling.
D. The Federal Reserve System is raising the reserve requirements.

Back 129

14

D.
Raising reserve requirements and buying Treasury Certificates will tend to increase interest, resulting in a slower economy. The prime rate is a short term concept that has little effect on mortgage loans.

Front 130

RESPA is administered by:
A. Federal Reserve.
B. HUD.
C. FTC.
D. OSHA.

Back 130

14

B.

Front 131

The powers of the Federal Reserve System are employed for the purpose of:
A. Reducing the foreclosure rate.
B. Increasing the rate of inflation.
C. Speeding a sluggish economy.
D. Enhancing government income.

Back 131

14

C.
The Federal Reserve System powers are employed to slow down inflation and speed a sluggish economy in periods of recession.

Front 132

When a borrower pays off a note that was secured by a deed of trust, then:
A. The borrower receives a document called a satisfaction piece.
B. The lender issues a release deed to the borrower.
C. The trustee issues a deed of reconveyance to the borrower.
D. The deed of trust is canceled.

Back 132

14

C.

Front 133

In a state where the lien theory of mortgage lending is practiced, one would NOT find a __________ clause in the mortgage agreement.
A. Granting.
B. Acceleration.
C. Mortgaging.
D. Alienation.

Back 133

14

A.
The granting clause is used in title theory states and conveys a title.

Front 134

A clause found in the security deed that authorizes the lender to convey title in the event the borrower defaults is called:
A. An acceleration clause.
B. A re-conveyance.
C. A power of sale.
D. An alienation clause.

Back 134

14

C.

Front 135

Which of the following items would NOT show up on a credit report?
A. A recent Chapter 11 bankruptcy.
B. A substantial loss in the stock market.
C. A judgment for unpaid alimony.
D. A past-due bill submitted to a collection agency.

Back 135

14

B.

Front 136

Seller Bob wants to sell his house as soon as possible. He has an existing low interest loan on the property. The note contains an alienation clause which is triggered by a transfer of title. Under these circumstances which of the following is true?
A. None of the answers.
B. The buyer will not be allowed to assume the loan under any circumstances.
C. The buyer will make the same payments the seller has been making.
D. The lender may call the loan.

Back 136

14

D.

Front 137

The instrument which pledges real property as security for a loan is:
A. A promissory note.
B. A mortgage.
C. A trust deed.
D. Either a mortgage or a trust deed.

Back 137

14

D.
Both a mortgage and a trust deed are instruments that pledge real property as security for a loan.

Front 138

George is refinancing his house in a title theory state. At the loan closing, George will have to sign _______ documents for recording:
A. One.
B. Three.
C. Two.
D. Four.

Back 138

14

C.
George will be required to sign a promissory note and also, a security or trust deed.

Front 139

Which statement is TRUE regarding a friendly foreclosure?
A. The lender acquires title by use of a sheriff's deed.
B. The property must be advertised.
C. The friendly foreclosure will not appear on the borrower's credit report.
D. Junior lien holder’s rights are terminated.

Back 139

14

C.
The borrower deeds the property to the lender, who must take title subject to junior liens. No advertising is necessary, but the consent of both borrower and lender is required.

Front 140

A package mortgage would be most appropriate in financing:
A. A purchase of unimproved land.
B. A farm and farm equipment.
C. A residence.
D. More than one parcel of property.

Back 140

14

B.
The package mortgage takes both real and personal property as collateral - the farm machinery being personal property.

Front 141

The lending practices of federally chartered commercial banks are regulated by:
A. The U.S. Treasury Department.
B. The Federal Home Loan Banks.
C. The Federal Reserve System.
D. The Federal Housing Administration.

Back 141

14

C.
It is the Federal Reserve System which regulates the reserve requirements and rediscount rates to which national banks must subscribe.

Front 142

The process of collecting loans and holding them until they can be sold to a secondary buyer is called:
A. Packaging.
B. Marketing.
C. Underwriting.
D. Warehousing.

Back 142

14

D.
The lender who holds the loans until they can be assembled into a package for sale on the secondary market is said to be warehousing loans.

Front 143

A buyer is purchasing a home for $175,000 with a loan of $125,000. A discount fee of $2,500 represents:
A. 2 points.
B. 1.5 points.
C. 3 points.
D. 1 point.

Back 143

14

A.

Front 144

The lender's decision to make a particular loan should be based on:
A. The area where the property to be mortgaged is located.
B. The number of dependents the borrower has.
C. The price level of the property to be mortgaged.
D. The value of the property and financial capability of the borrower.

Back 144

14

D.
The value of the property to be used as collateral and the ability of the borrower to repay the loan are the most important considerations.

Front 145

Interest rates on conventional loans are determined by:
A. Supply and demand of funds in the market.
B. State usury laws.
C. The Federal Reserve Banks.
D. The state banking commission.

Back 145

14

A.
Supply and demand determine interest rates.

Front 146

In states which require judicial foreclosure, certain steps must be taken by the lender in order to protect their interest. Place the following legal steps of foreclosure in proper chronological order:
I. Lawsuit.
II. Notify parties having legal interest.
III. Auction sale.
IV. File notice of lis pendens.
A. I, IV, II, III
B. II, IV, I. III
C. II, I, IV, III
D. I, II, III, IV

Back 146

14

A.
This is the right order.
I. Lawsuit.
IV. File notice of lis pendens.
II. Notify parties having legal interest.
III. Auction sale.

Front 147

Charles is buying a home in an older neighborhood that has become racially integrated. The lender is willing to make a mortgage loan but is requiring a higher down payment than would be charged in another neighborhood. Which of the following statements is TRUE?
A. This is not redlining, because the lender has not refused to make the loan.
B. The lender is justified, because integration causes values to fall.
C. This is discriminatory and therefore illegal.
D. The lender is justified, because the neighborhood is probably deteriorating.

Back 147

14

C.

Front 148

A promissory note creates:
A. A general lien.
B. A personal obligation.
C. A specific lien.
D. A statutory lien.

Back 148

14

B.
The promissory does not create a lien. The promissory note gives to the lender the right to collect payments and is simply the borrower's promise to pay.

Front 149

When a trust deed is used to pledge real property as security for a loan, the lender is the:
A. Mortgagee.
B. Trustee.
C. Beneficiary.
D. Trustor.

Back 149

14

C.

Front 150

When a buyer has purchased under a land contract and goes into default, the buyer is entitled to the return of _______________________ of the payments made to date.
A. Half.
B. All.
C. None
D. Some.

Back 150

14

C.
In the event of the default, the buyer is not entitled to any payments made under the land contract and must give up possession.

Front 151

All of the following statements about adjustable rate loans are TRUE EXCEPT:
A. Caps are limits placed on adjustments at each period and over the life of the loan.
B. Rates adjust upward but never downward.
C. The initial rate is usually lower than would on that of a fixed-rate amortized loan.
D. The change that will occur on the rate adjustment date is usually governed by a recognized economic index.

Back 151

14

B.

Front 152

The reverse annuity mortgage loan is most suitable for a property owner who has _______________ equity in the home.
A. Minimal.
B. Considerable.
C. Very limited.
D. Somewhat limited.

Back 152

14

B.
In fact the loan is most suitable if the property has no outstanding loan. This allows considerable borrowing flexibility for the owner.

Front 153

The re-discount rate refers to the rate at which banks can borrow from:
A. The World Bank.
B. The FDIC.
C. Other banks.
D. The Federal Reserve Bank.

Back 153

14

D.
The discount or rediscount rate is the rate at which member banks can borrow on a short term loan from the Fed to finance day-to-day operations.

Front 154

Which of the following is true regarding FHA loans?
A. The FHA lends money to homebuyers.
B. A 100% FHA loan can be acquired.
C. The borrower pays for FHA insurance.
D. The government pays for the FHA insurance.

Back 154

15

C.
The cost of FHA insurance is paid by the borrower.

Front 155

Which of the following describes a loan that does not have acceptability in the standard secondary market?
A. An FHA loan.
B. A non-conforming loan.
C. A conventional loan.
D. A 100% VA loan.

Back 155

15

B.
The non-conforming loan is one that the secondary market will not accept.

Front 156

In qualifying a buyer who plans to use a VA loan, you should:
I. Be sure you show houses that cost no more than three times the entitlement.
II. Be sure the veteran is buying in order to occupy.
A. Both I and II are true.
B. Neither I nor II is true.
C. Only I is true.
D. Only II is true.

Back 156

15

D.

Front 157

In determining if a borrower can make the monthly payments on a proposed loan, all of the following would be taken into account EXCEPT:
A. The payments on a standing balance on a credit card.
B.The husband's alimony payments to a previous wife.
C. An anticipated legacy.
D. The wife's commission income as a free-lance artist.

Back 157

15

C.

Front 158

If the sales price is $112,000 and the purchaser is assuming an existing loan in the amount of $80,000 and also obtaining a purchase money mortgage for $7,000, the transfer tax will be paid on:
A. The sales price minus the assumption.
B. The sales price minus the purchase money mortgage.
C. The sales price minus the purchase money mortgage and the assumption.
D. The sales price.

Back 158

16

A.

Front 159

If the seller renewed the hazard insurance for one year starting May 15th, and the closing is to be on November 5th:
A. Seller will be debited 190 days.
B. Seller will be credited 190 days.
C. Seller will be debited 174 days.
D. Seller will be credited 174 days.

Back 159

16

B.

Front 160

The best time to introduce a Net to Seller Worksheet is:
A. When countering an offer
B. When an offer is presented
C. When taking the listing
D. At time of closing

Back 160

16

C.

Front 161

A borrower is obtaining a 90% loan with a sales price of $125,000 and closing on February 25th. If the seller is paying the PMI in cash at closing, the approximate amount will be:
A. $2,258.
B. $2,250.
C. $2,500.
D. $2,259.

Back 161

16

B.
$2,250 is 2% of $112,500.

Front 162

When an existing loan is paid off at closing, the seller might be charged for:
A. All of the answers
B. Interest from date of last payment
C. Prepayment penalty if applicable
D. Balance due on the loan

Back 162

16

A.

Front 163

All of the following are true concerning prorations, except:
A. The daily rate for interest is calculated by dividing the annual interest by 365.
B. If paid-to-date for taxes precedes the closing date, it will be a credit to the buyer and a debit to the seller
C. If a buyer is assuming the seller's insurance, it will be a credit to the seller and a debit to the buyer
D. Interest due on an assumed loan is a credit to the buyer and a debit to the seller.

Back 163

16

A.
The daily rate for interest is calculated by dividing the annual interest by 360.

Front 164

At a closing to take place on March 30th, all of the following are true EXCEPT:
A. The buyer's interest will be a prepaid item
B. The seller will owe interest on the existing loan for 29 days
C. The buyer will owe interest on the new loan for 2 days
D. The seller will owe interest on the existing loan for 30 days

Back 164

17

B.
The seller's interest payment on the existing loan extends through the day of closing so is for 30 days.

Front 165

At a closing, the purchaser's cost for hazard insurance would include:
A. A one year prepaid policy.
B. One year policy plus at least two months in escrow.
C. Three months' cost paid to escrow.
D. The cost of a one year policy minus three months.

Back 165

17

B.

Front 166

In a conventional loan contract, where the purchaser is obtaining a 90 percent loan, the premium for mortgage insurance:
I. Can be paid at closing by either buyer or seller.
II. Can be financed over the period of the loan by either buyer or seller.
A. Only II is true.
B. Neither I nor II is true.
C. Both I and II are true.
D. Only I is true.

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D.

Front 167

At a closing to take place on June 16th, the purchaser's prepaid interest on a new loan charge at closing will be for:
A. Forty-six days.
B. Thirty-one days.
C. Fifteen days.
D. Fourteen days.

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C.

Front 168

If the purchaser will obtain a purchase money loan from the seller, it will appear on the estimated purchaser cost sheet as:
A. A debit to the buyer.
B. As a portion of the purchase price.
C. A debit to buyer and a credit to the seller.
D. A credit to the seller.

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B.
A PMI appears on the worksheet as part of the purchase price in the Down Payment section.