Ca Real Estate Brokers Exam

Front 1

Broker A accepted a deposit from Buyer B with an offer on a property, and promptly deposited the Buyer's check into his Trust Account. Seller rejected the odder and Buyer demanded the deposit back - immediately. Broker wrote check to Buyer from Trust Account, but later learned that Buyer's original check had not cleared due to insufficient funds. Which of the following statements is correct?

Back 1

Broker has shortages in his Trust Account - This was poor judgment on the part of the broker.

Front 2

The resale of which of the following would NOT require a notice to the Department of DRE?

Back 2

2 units in a planned development - The DRE requires a notice to be filed for the resale of 5 lots or more in a planned unit development.

Front 3

A real estate broker lends his own money to Buyer to aid in purchasing a home. The note is for $4,000, and will be secured by a trust deed on the purchased property. The note interest rate is 12% per year, with monthly payments of $40/ Final payoff will be on the 48th monthly payment. Which of the following is true?

Back 3

Final amount of payoff on the 48th month will be $4,040 - Payments are "interest only", resulting in no principal reduction. The final month payment PLUS the $4,000 principal is due at that time.

Front 4

National Fair Housing principles are founded on:

Back 4

13th Amendment to the Constitution - The 13th Amendment and Title 8 of the Civil Rights Act of 1968 both provide for fair housing on a national level.

Front 5

If notification of Default was filed on July 15 and publication of sale was started on Oct. 15 the right of the Trustor after Oct. 15 is:

Back 5

Pay the back payments and late charges and fees. & pay the balance due, including all penalties and late charges. - The loan can be reinstated until 5 days before the auction.

Front 6

What is NOT required to be disclosed under the truth in lending law?

Back 6

total finance charge in purchase of single-family, owner-occupied dwelling - ONLY the APR, length of loan and monthly payments are required.

Front 7

Over and above the strictly legal relationship, the Real Estate Commissioner feels that the relationship between the salesperson and the client should be like that higher and more important relationship of:

Back 7

trustee to beneficiary - Trustee has a "fiduciary" relationship with the beneficiary

Front 8

The expression “A Bundle of Rights” best describes:

Back 8

Rights or interest which an owner has in the thing he/she owns – the right to possess, use, encumber, dispose of and to exclude.

Front 9

What landmark care of the U.S. Supreme Court affected fair housing by prohibiting discrimination?

Back 9

Jones v. Mayer (after the Civil War) was the landmark case that helped create Title VIII of the Federal Civil Rights Act of 1968.

Front 10

A broker obtained an exclusive listing to sell a piece of property. He spend much time, money and energy. The seller refused to allow the broker to proceed under the agreement. The broker should:

Back 10

Consider the seller’s refusal a breach and sue for damages. – when seen from a technical point of view. In reality, sometimes relieving the seller of liability and work on improving the relationship so as to enable retaining future business would result in more favorable and profitable end results.

Front 11

In a period of tight money, the Federal Reserve Bank can increase the supply of money by:

Back 11

Lowering member bank reserve requirements – the resulting surplus reserve funds would increase money for customers to borrow from member banks.

Front 12

Mr. Traveler needs money to go on a trip. He possesses a $10,000 note and T.D. on the Mayor’s farm. Mr. Banks offers to loan Mr. Traveler the $4,000 he needs, providing he can hold the note and T.D. as security. If all agree, this would be an example of a:

Back 12

Negotiated pledge agreement – Mr. Traveler has pledged the note and trust deed as security.

Front 13

An investor purchased a $140,000 four-unit apartment building. For a “Cap Rate” of 10%, what would the owner have to get monthly from each of the two bedroom units?

Back 13

$292 – Value x Rate = Income; $140,000 x 10% = $14,000 Gross Annual Income; $14,000/4 bedrooms/12 months = $292

Front 14

Buyer purchased a home with a standard policy of title insurance. After moving in, she discovers that the roof eave is only two feet from the property line. The zoning requirements are five feet minimum. In this situation, the buyer may collect:

Back 14

Nothing. Standard title insurance policy (CTLA) does NOT provide on-site inspection. Extended coverage (ALTA) would have covered this type of defect, but a property inspection would have been made prior to policy issuance anyway.

Front 15

A broker arranges the sale of a home. There is a purchase money trust deed from the lender. The broker is NOT required to see that the trust deed is recorded if the:

Back 15

The beneficiary instructs him not to record the trust deed. – Only a lender (beneficiary can decide whether a promissory note and trust deed are to be recorded.

Front 16

Value levels in a residential neighborhood are influenced more by social characteristics of its present and prospective occupants than by any other factor. What would maintain high value in a given neighborhood?

Back 16

Everybody purchasing with comparable down payments and having approximately the same income levels. – Neighborhoods generally have similar physical structures based on common social, economic and political characteristics.

Front 17

It is unlawful for any person to affect the sale of any franchise that is regulated by the Franchise Investment Law, unless such person has made an application to the Corporation Commissioner, and is licensed by the:

Back 17

Franchise Tax Board

Front 18

Mr. E purchased property for $150,000 (improvement 80%: Land Ration 20%). If he used the straight-line method of depreciation with 35 years remaining life, what would the adjusted basis of the property be after 10 years

Back 18

$115,714 - $150,000-20% = $150,000 – 30,000 = $120,000 improvement value. $120,000 / 35 years = $3,428.57 x 10 years = $34,285.71 accrued depreciation. Adjusted Basis (10 years later) = $150,000 - $34,286 = $115,714

Front 19

The following is real property:
(A) A harvested crop of wheat
(B) A bearing wall in a single-family dwelling
(C) A built-in refrigerator in a mobile home which is not attached to a foundation
(D) A trade fixture attached in such a way that can be removed without damage

Back 19

A bearing wall in a single-family dwelling

Front 20

Which of the following would normally be considered real property?
(A) Trade fixtures
(B) Chattel reals
(C) Vegetation
(D) Deeds of trust

Back 20

Vegetation

Front 21

Stock in a mutual water company:
(A) must be held as tenants in common.
(B) must be mentioned in the deed in order to transfer it to the buyer.
(C) is appurtenant to the land and thus automatically transfers to the buyer.
(D) requires a separate written agreement in order to convey it to the buyer.

Back 21

is appurtenant to the land and thus automatically transfers to the buyer.

Front 22

Which of the following is considered real property?
(A) Rights of a mutual water company/stock in a mutual water company
(B) Unpicked fruit crop
(C) Unmined minerals
(D) All of the above

Back 22

All of the above

Front 23

The ownership of personal property is transferred by using a:
(A) grant deed.
(B) financing statement.
(C) trust deed.
(D) bill of sale.

Back 23

bill of sale.

Front 24

What kind of mobile home can a broker sell?
(A) Certified mobile home
(B) Registered mobile home
(C) Licensed mobile home
(D) All of the above

Back 24

Registered mobile home

Front 25

A real estate agent handles the sale of a personal property mobile home. The licensee must notify the local Department of Housing and Community Development in writing of the transfer within:
(A) 5 business days.
(B) 10 calendar days.
(C) 15 business days.
(D) 30 calendar days.

Back 25

10 calendar days.

Front 26

Another name for a freehold estate is:
(A) probate estate.
(B) fee simple defeasible.
(C) estate in fee.
(D) estate in sufferance.

Back 26

estate in fee.

Front 27

Duke sold his property to Jane with the condition that Jane must never use it for any purpose other than as a private residence. However, after owning the property for several years, Jane decided to start a board and care facility for handicapped adults. What is the status of the estate?
(A) It may revert to Duke because it is a fee simple defeasible estate.
(B) It may revert to Duke because it is a fee simple absolute estate.
(C) Duke has no claim because his condition is unlawful.
(D) Duke has no claim because the statute of limitations ran out on the condition.

Back 27

It may revert to Duke because it is a fee simple defeasible estate.

Front 28

A seven year lease would be considered a(n):
(A) estate for years.
(B) personal property.
(C) chattel real.
(D) all of the above.

Back 28

all of the above.

Front 29

A tenancy at sufferance would occur when:
(A) a tenant remains in the property after the end of an estate for years and continues to pay rent.
(B) a tenant remains in the property after expiration of a lease without the owner's consent.
(C) a landlord who delivers a 30 day notice to vacate the premises cannot find the tenant.
(D) a landlord cannot obtain a writ of execution from the courts.

Back 29

a tenant remains in the property after expiration of a lease without the owner's consent.

Front 30

A holdover tenant who stays and does not pay rent creates:
(A) a tenancy at will.
(B) a tenancy at sufferance.
(C) a periodic tenancy.
(D) an estate for years.

Back 30

a tenancy at sufferance.

Front 31

Which of the following is a benefit of a net lease?
(A) Lessee receives net income.
(B) Lessee does not have to pay taxes, maintenance, and insurance.
(C) Lessor receives net income.
(D) Lessor pays taxes, maintenance, and insurance.

Back 31

Lessor receives net income.

Front 32

What type of lease requires the lessee to pay monthly rent, taxes, and insurance to the lessor?
(A) Net lease
(B) Gross lease
(C) Percentage lease
(D) Modified gross lease

Back 32

Net lease

Front 33

Net leases are commonly used for:
(A) stores.
(B) industrial properties.
(C) offices.
(D) all of the above.

Back 33

stores.

Front 34

A single line of retail stores located along a major transportation corridor in a commercially zoned area would be known as a:
(A) street commercial zone development.
(B) commercial cluster center.
(C) strip commercial development.
(D) commercial redevelopment zone.

Back 34

strip commercial development.

Front 35

Which of the following is often used when a commercial lease contains an escalator clause to adjust the rental amount periodically (usually annually) for inflation?
(A) Average commercial rental rates in an area.
(B) The Consumer Price Index (CPI).
(C) General economic indicators averaged over the past 12 months.
(D) Standard and Poor's statistics of 500 individuals.

Back 35

The Consumer Price Index (CPI).

Front 36

Able holds a two year lease with an option to purchase and assigns it to Baker. Which of the following is correct?
(A) Baker would not hold the option.
(B) Able would continue to hold the option.
(C) This is not permissible.
(D) Baker would now hold the option.

Back 36

Baker would now hold the option.

Front 37

A tenant signed a written lease for two years on a home. The lease made no mention of assignments and/or subleasing. The tenant may:
(A) assign or sublease the home since the lease did not address those items.
(B) not assign or sublease the home to another tenant.
(C) only assign or sublease the home with the landlord's prior written approval.
(D) assign the lease to an assignee but cannot sublease the home to another tenant.

Back 37

assign or sublease the home since the lease did not address those items.

Front 38

Which of the following is usually considered real property?
(A) Crops which have been harvested.
(B) Minerals which have been mined.
(C) Stock in a mutual water company.
(D) Growing crops which have been sold.

Back 38

Stock in a mutual water company.

Front 39

Real property includes:
(A) chattel mortgages.
(B) trust deeds.
(C) vegetation.
(D) furniture.

Back 39

vegetation.

Front 40

John owns a life estate based upon his own life. He leases the property to a tenant on a five year lease. John, the life tenant, dies two years later. What happens to the lease?
(A) The lease continues in effect for the full five years.
(B) The lease is terminated.
(C) The lease continues in effect, but the tenant must renegotiate the monthly rent with the holder of the estate in reversion.
(D) The lease was always null and void, because a life tenant may not lease the life estate.

Back 40

The lease is terminated.

Front 41

Which of the following is an example of a freehold estate?
(A) The interest created by a trust deed.
(B) An estate at will.
(C) A life estate.
(D) A leasehold estate.

Back 41

A life estate.

Front 42

A tenant has entered into a two year lease. The lease makes no mention of assignment or subleasing. The tenant:
(A) may assign or sublease to another tenant, because the lease made no mention of assignment or subleasing.
(B) may sublease to another tenant, but only with the prior consent of the landlord.
(C) cannot sublease to another tenant.
(D) may assign the lease, but not the sublease.

Back 42

may assign or sublease to another tenant, because the lease made no mention of assignment or subleasing.

Front 43

The covenant of quiet enjoyment most directly relates to:
(A) nuisances maintained on adjoining property.
(B) possession of real property.
(C) title to real property.
(D) all of the above.

Back 43

possession of real property.

Front 44

The Consumer Price Index (CPI) might be used to adjust the rent of a:
(A) graduated lease.
(B) ground lease.
(C) gross lease.
(D) percentage lease.

Back 44

graduated lease.

Front 45

When describing land using townships and sections, the intersection of east and west, and north and south lines, respectively, are known as:
(A) metes and bounds.
(B) lines of demarcation.
(C) lot and blocks.
(D) base lines and meridian lines.

Back 45

base lines and meridian lines.

Front 46

A leasehold estate lasts for six months and was made in advance, what type of estate is it?
(A) Estate for years
(B) Estate from period-to-period
(C) Estate at will
(D) Estate at sufferance

Back 46

Estate for years

Front 47

Which of the following would be considered a personal property interest?
(A) Vacant land
(B) Mineral rights
(C) Leasehold
(D) Trees planted in nature

Back 47

Leasehold

Front 48

The Street Improvement Act of 1911 can be used by a developer for the following, except:
(A) constructing sewers.
(B) improving streets.
(C) constructing streets.
(D) purchase of land for subdividing.

Back 48

purchase of land for subdividing

Front 49

Which of the following will terminate an easement?
(A) Dominant tenant records a quitclaim deed.
(B) Servient tenant records a grant deed.
(C) Servient tenement records a grant deed.
(D) Dominant tenement records a quitclaim deed.

Back 49

Dominant tenement records a quitclaim deed.

Front 50

Which of the following is needed to transfer property deeded "Mary Smith, a married woman?"
(A) Husbands signature only
(B) Wife's signature only
(C) Both husband and wife's signature
(D) Husbands signature only, if the wife gives verbal consent.

Back 50

Both husband and wife's signature

Front 51

A condominium's CC&R's prohibit for sale signs. The owner may:
(A) sue the condo association.
(B) place a reasonably sized for sale sign on the property.
(C) not place a for sale sign on the property.
(D) none of the above.

Back 51

place a reasonably sized for sale sign on the property.

Front 52

If a condominium owner breaches a "condition" in the CC&R's this would be:
(A) enforced by the local building department.
(B) the same as violating a health code regulation.
(C) more stringent than breaching a covenant.
(D) the same as breaching a public restriction.

Back 52

more stringent than breaching a covenant.

Front 53

For three generations the Mendez family has owned the mining rights to mine gold on Diego's land. Last month Diego sold his land to a developer who promptly enclosed the land with a large chain-link fence that had only one access, a locked gate. What should the Mendez family do?
(A) Obtain a quitclaim deed from the developer.
(B) Sue the developer for specific performance.
(C) Institute a quiet title action.
(D) Nothing, the Mendez family is now without recourse.

Back 53

Institute a quiet title action.

Front 54

Daniel, who owned two pieces of adjacent land, sold one of them to Charles reserving an easement for himself at the time. Daniel soon left the state for 21 years during which time he did not use the easement. When Daniel finally returned to the state he discovered that:
(A) the easement was terminated after 5 years of non-use.
(B) the easement was still valid and enforceable.
(C) the owner of the servient tenement had died leaving Daniel with on easement rights at all.
(D) easements cannot be created by "reservation.”

Back 54

the easement was still valid and enforceable.

Front 55

Dick and Jane, brother and sister, own an apartment building in joint tenancy. Dick needs $10,000 to cover unexpected medical expenses, so he borrows the money from a lender signing a trust deed on the property which was soon recorded in the public records. 45 days later Dick dies. Which of the following is most correct?
(A) Jane is now responsible for the entire $10,000.
(B) Jane is now responsible for $5,000.
(C) Jane now owns the apartment building free and clear of the brother's $10,000 debt.
(D) if the loan is not repaid, the lender can foreclose only on Dick's 1/2 interest in the property.

Back 55

Jane now owns the apartment building free and clear of the brother's $10,000 debt.

Front 56

With regard to CC&R's:
(A) violation of a covenant can result in loss of title.
(B) Covenants, Conditions, and Restrictions (CC&R's) are for the benefit of the general public.
(C) violating a condition can result in loss of title to the property.
(D) Covenants, Conditions, and Restriction (CC&R's) are generally enforced by local governmental authorities.

Back 56

violating a condition can result in loss of title to the property.

Front 57

Al and Betty are brother and sister and own an apartment building in joint tenancy. Which of the following would not terminate this joint tenancy?
(A) Al deeding his 1/2 interest in the property to a third party.
(B) Betty transferring a 1/4 interest in the property to her son.
(C) Foreclosure of one of the party's 1/2 interest in the property.
(D) Al having a trust deed or mortgage recorded against his 1/2 interest in the property.

Back 57

Al having a trust deed or mortgage recorded against his 1/2 interest in the property.

Front 58

Landowner Jacobs granted the telephone company the right to erect telephone poles on his land. Which of the following best describes this situation?
(A) An encroachment
(B) An encumbrance
(C) An appurtenance
(D) accession

Back 58

An encumbrance

Front 59

Which of the following would have the least impact on property taxes?
(A) New development
(B) Compacted population density
(C) A recorded homestead
(D) Tax deferment

Back 59

A recorded homestead

Front 60

Which of the following is not an encumbrance?
(A) A lease
(B) An easement
(C) A lien
(D) A homestead

Back 60

A homestead

Front 61

Private restrictions on the use of land may be created by:
(A) private land use controls.
(B) written agreement.
(C) a developer’s general plan restrictions for a subdivision.
(D) All of the above.

Back 61

All of the above.

Front 62

When a project of improvement on real property has been completed and the owner has not filed a “notice of completion,” how many days do claimants have to file mechanic’s liens?
(A) 30 days
(B) 60 days
(C) 90 days
(D) Unlimited

Back 62

90 days

Front 63

A seller deeded a property which adjoined his home to a buyer and reserved an easement. The seller did not use the easement for 21 years. The seller now wants to use the easement. What will be the result?
(A) The easement is voidable by the holder of the servient tenement.
(B) The creation of the easement was null and void because an easement cannot be created by reservation.
(C) The easement was terminated by non-use for 21 years.
(D) The easement is valid.

Back 63

The easement is valid.

Front 64

The owner of a parcel of land granted an easement to the local telephone company to erect telephone poles across the land. This would create:
(A) encroachment.
(B) encumbrance.
(C) appurtenance.
(D) estate at sufferance

Back 64

encumbrance

Front 65

For more than three generations the Garcia family has owned the right to operate a gold mine on land which belonged to a neighbor. One day, the neighbor sold the land and the new owner Immediately fenced in the property and padlocked the gate to the entrance. What should the Garcias do?
(A) Get a quitclaim deed from the new owner.
(B) File a quiet title action in court.
(C) Give a quitclaim deed to the new owner.
(D) Do nothing.

Back 65

File a quiet title action in court.

Front 66

All of the following statement about covenants and conditions are false, except:
(A) the violation of a covenant results in loss of title.
(B) a violation of a condition can result in the loss of title.
(C) covenants and conditions must be for the benefit of the general public.
(D) private covenants and conditions are usually enforced by local government.

Back 66

a violation of a condition can result in the loss of title.

Front 67

A joint tenancy in real property can legally be created with the execution of a deed by:
(A) a husband and wife to themselves as joint tenants.
(B) existing joint tenants to themselves and others as joint tenants.
(C) existing tenants in common to themselves as joint tenants.
(D) any of the above ways.

Back 67

any of the above ways.

Front 68

Concurrent ownership of real property by two or more parties, each of whom has an undivided interest (not necessarily equal) without right of survivorship, would be described as:
(A) community property.
(B) joint tenancy.
(C) tenancy in common.
(D) ownership in severalty

Back 68

tenancy in common.

Front 69

John Bishop and Mary Bishop hold title with equal interest, they most likely hold title as:
(A) community property.
(B) tenants in common.
(C) tenants in severalty.
(D) a partnership.

Back 69

community property.

Front 70

A builder/contractor owns a parcel of real property on which he is about to complete a building. He is forced to use some backfill to:
(A) fill in the space around the foundation or around a retaining wall or other excavation.
(B) assist in landscaping the property.
(C) remove excess soil from the site caused by earlier excavation.
(D) none of the above.

Back 70

fill in the space around the foundation or around a retaining wall or other excavation.

Front 71

If a property is backfilled, it:
(A) will be landscaped.
(B) is a soil test.
(C) will beautify the land.
(D) will fill in around piers, columns, and footings

Back 71

will fill in around piers, columns, and footings

Front 72

Zoning, planning and governmental land use are important examples of:
(A) encumbrances.
(B) eminent domain.
(C) deed restrictions.
(D) exercise of police power.

Back 72

exercise of police power

Front 73

Zoning changes can be initiated by:
(A) local authorities.
(B) subdividers.
(C) individuals.
(D) all of the above

Back 73

all of the above.

Front 74

According to local zoning laws, the designation "M" most likely will refer to:
(A) residential.
(B) commercial.
(C) industrial.
(D) any of the above.

Back 74

industrial.

Front 75

Which of the following zoning codes refers to multi-family?
(A) M1
(B) C2
(C) SC
(D) R3

Back 75

R3

Front 76

The three steps or phases in construction of a home would be:
(A) land acquisition, development, construction.
(B) syndication, subdivision map approval, map recording.
(C) map approval, building approval, construction.
(D) building approval, construction, locate a buyer.

Back 76

land acquisition, development, construction.

Front 77

A turnkey property is:
(A) a single-family home ready to move into.
(B) an information booth in a shopping mall.
(C) similar to a flag lot.
(D) none of the above.

Back 77

a single-family home ready to move into.

Front 78

A grandfather clause is:
(A) prearranged.
(B) a clause in a will.
(C) usually in a living trust.
(D) none of the above.

Back 78

prearranged.

Front 79

A roof sloping on all four sides is called a:
(A) hip roof.
(B) gambrel roof.
(C) gable roof.
(D) none of the above.

Back 79

hip roof.

Front 80

A footing is called:
(A) a concrete deck.
(B) the element to which the collar beam is attached.
(C) the spreading element that supports a pier, column, wall or foundation.
(D) a corner bracing.

Back 80

the spreading element that supports a pier, column, wall or foundation.

Front 81

You have a plan that refers to piers, columns, and footings. This is a/an:
(A) plot plan.
(B) foundation plan.
(C) floor plan.
(D) elevation

Back 81

foundation plan.

Front 82

Parallel wooden members used to support floor and ceiling loads are called:
(A) joists.
(B) studs.
(C) headers.
(D) rafters.

Back 82

joists.

Front 83

When an air conditioning unit has a higher energy efficiency ratio (EER), the:
(A) unit needs more watts of electricity.
(B) unit is more efficient.
(C) unit is less efficient.
(D) BTU's are larger.

Back 83

unit is more efficient.

Front 84

A timeshare company/developer sends out a mailing that offers a prize/microwave to those who respond. The mailing does not state any requirement for persons to listen to a sales presentation, however, the timeshare company/developer requires the prospect to listen to the sales presentation before they receive the prize/microwave. This is:
(A) good business practice to get people interested in the project.
(B) illegal because he did not disclose the attendance requirements.
(C) not illegal, and can general public interest in new projects.
(D) none of the above.

Back 84

illegal because he did not disclose the attendance requirements.

Front 85

A timeshare company advertises the sale of timeshares on a billboard. If the billboard does not disclose the requirement to listen to a sales presentation in order to receive the promised prize, this is:
(A) legal, if the prospect is notified within 24 hours after purchasing the time share.
(B) illegal, because the broker did not disclose the requirement to listen to a sales presentation in order to receive the prize.
(C) legal.
(D) illegal, only if the timeshare company is a corporation.

Back 85

illegal, because the broker did not disclose the requirement to listen to a sales presentation in order to receive the prize.

Front 86

"HVAC" refers to:
(A) heating, ventilation, and air conditioning systems in commercial buildings.
(B) Home Value After Correlation.
(C) Highest Value Appraising Consideration.
(D) House Vitality Area Consultants.

Back 86

heating, ventilation, and air conditioning systems in commercial buildings.

Front 87

A "Negative Declaration" is:
(A) part of the agent's section in the Transfer Disclosure Statement (TDS).
(B) issued by the title company if the property is unmarketable due to certain matters of record listed in the abstract of title.
(C) utilized by escrow if there are sufficient funds available to close escrow.
(D) a statement by an expert affirming that a new subdivision will have no significant negative impact on the environment.

Back 87

a statement by an expert affirming that a new subdivision will have no significant negative impact on the environment.

Front 88

What is the primary tool used by planning commissions to implement a general plan?
(A) Eminent domain
(B) Adverse possession
(C) Zoning
(D) Master plan

Back 88

Zoning

Front 89

The city planning commission recently changed the zoning for a residential neighborhood to allow for the construction of multiple family residential dwellings. The new zoning would most likely be:
(A) A-3
(B) C-3
(C) M-3
(D) R-3

Back 89

R-3

Front 90

Which of the following laws exert the greatest control over the California housing and construction industries?
(A) Uniform Building Code, National Electrical Code, Uniform Plumbing Code
(B) State Housing Law, Local building codes, Contractor License Law
(C) Subdivision Map Act, Local building codes, city’s master plan
(D) Eminent domain, zoning ordinances, State Housing Law

Back 90

State Housing Law, Local building codes, Contractor License Law

Front 91

Which of the following must be given to every buyer of a condominium unit?
(A) Copy of the CC&R’s
(B) Copy of the bylaws
(C) Copy of the most recent financial statement of the condo association
(D) All of the above

Back 91

Copy of the most recent financial statement of the condo association

Front 92

After several lots have been sold in a subdivision, the Real Estate Commissioner was informed of misrepresentation being made by a developer. The Commissioner may stop the sale of more lots by:
(A) revoking the final public report.
(B) issuing a writ of prohibition.
(C) issuing a desist and refrain order.
(D) filing an accusation in court.

Back 92

filing an accusation in court.

Front 93

A “negative declaration” in a discussion of environmental impact means that the proposed subdivision:
(A) has been disapproved by the Real Estate Commissioner for the issuance of a public report and the developer may not proceed with the construction.
(B) will have a negative impact on the environment and create an environmental hazard.
(C) will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental impact report.
(D) has been disapproved because of other environmental hazards in the neighborhood.

Back 93

will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental impact report.

Front 94

The sheet metal used to protect a roof from seepage is called:
(A) Sheathing.
(B) gutter.
(C) flashing.
(D) none of the above.

Back 94

flashing.

Front 95

A real estate agency disclosure form must be given to all parties when the transaction involves:
(A) the sale of a yogurt shop.
(B) the 1031 exchange of an office building for a business opportunity.
(C) the sale of a residential triplex.
(D) the purchase or lease/purchase option of a commercial center.

Back 95

the sale of a residential triplex.

Front 96

Real estate broker Brown, acting as a sub-agent of the seller, has a fiduciary duty to:
(A) the seller only.
(B) the buyer only.
(C) the seller and buyer equally.
(D) the seller and the agent who appointed him as sub-agent.

Back 96

the seller and the agent who appointed him as sub-agent.

Front 97

Each of the following can terminate a typical agency, except:
(A) death of the principal.
(B) destruction of the subject property.
(C) estoppel.
(D) mutual consent of the principal and his agent.

Back 97

estoppel.

Front 98

The broker, as agent of the seller, owes the buyer:
(A) only a duty to disclose any item which relates directly to the sales price of the property.
(B) the same fiduciary obligations he owes to the seller.
(C) only the duty to answer questions honestly.
(D) the duty of honest and fair dealing.

Back 98

the duty of honest and fair dealing.

Front 99

A broker holds a purchase-option on land owned by Nelson. When exercising the option to purchase the broker must disclose to Seller Nelson that the broker is:
(A) the principal.
(B) the optionor or the optionee, whichever is appropriate.
(C) the seller's agent.
(D) a fiduciary.

Back 99

the principal.

Front 100

The three steps to agency disclosure are:
(A) disclose, elect, confirm.
(B) prepare, analyze, disclose.
(C) analyze, disclose, reaffirm.
(D) analyze, disclose, execute.

Back 100

disclose, elect, confirm.

Front 101

A listing broker who appoints a subagent owes a fiduciary duty to the:
(A) buyer.
(B) seller.
(C) selling broker.
(D) any third party.

Back 101

seller.

Front 102

In a "buyer's " agency:
(A) agents represent buyers only.
(B) agents represent buyers first.
(C) agents represent buyers and sellers equally.
(D) the listing creates a dual fiduciary obligation.

Back 102

agents represent buyers only.

Front 103

Which of the following is true concerning a “buyer agency”?
(A) A buyer agency is illegal in California.
(B) In a “buyer agency,” the agent represents buyers only.
(C) In a “buyer agency,” the agent represents mostly buyers, but some sellers.
(D) In a “buyer agency,” the agent must charge an advance fee to the buyer.

Back 103

In a “buyer agency,” the agent represents buyers only

Front 104

A real estate licensee generally acts as a(n):
(A) ostensible agent.
(B) fiduciary.
(C) subcontractor for the seller.
(D) dual agent

Back 104

fiduciary.

Front 105

When a house of greater value is adversely affected by houses of comparably lesser value, it is called:
(A) anticipation.
(B) regression.
(C) contribution.
(D) balance.

Back 105

regression.

Front 106

Market value of real property is the:
(A) price at which a property is offered for sale.
(B) asking price of a property that is for sale in the marketplace.
(C) what one pays for a property.
(D) most probable price a property should bring on an open and competitive market.

Back 106

most probable price a property should bring on an open and competitive market.

Front 107

When two properties are joined to make one property, and becomes more valuable than the sum of the properties separately, it is called:
(A) leverage.
(B) inflation.
(C) plottage.
(D) subdividing.

Back 107

plottage.

Front 108

When the highest and best use of a property is expected to change, the current use is called:
(A) the interim use.
(B) the temporary use.
(C) the transitional use.
(D) the possible use.

Back 108

the interim use.

Front 109

When a residential neighborhood is composed mostly of owner-occupied residential properties it tends to:
(A) attract commercial shopping centers to the neighborhood.
(B) stabilize values.
(C) deteriorate faster than areas with many rental properties.
(D) lower property values.

Back 109

stabilize values.

Front 110

The primary purpose of a site analysis by an appraiser is to determine the:
(A) applicable zoning laws.
(B) highest and best use.
(C) soil conditions
(D) available amenities.

Back 110

highest and best use.

Front 111

In real estate appraisal, “market value” is primarily based upon which of the following?
(A) The asking price on the listing.
(B) The reproduction cost of the property.
(C) Whatever a buyer is willing to pay.
(D) The willing buyer and willing seller concept.

Back 111

The willing buyer and willing seller concept.

Front 112

Agent Able notices a crack in the wall and the doors are not closing properly. Able should:
(A) advise the buyer to get a home protection policy.
(B) refer to the zoning map.
(C) advise the buyer to get a soil report.
(D) advise the buyer to get a Structural Pest Control Board Report.

Back 112

advise the buyer to get a soil report.

Front 113

An appraiser is trying to determine the amount of economic obsolescence when appraising a commercial property. The answer to which of the following questions would be helpful?
(A) If the owner managing the property himself?
(B) Should a fire escape be installed?
(C) Are the tenants in the neighborhood prospering?
(D) Are the rents being charged the tenant fair and equitable?

Back 113

Are the tenants in the neighborhood prospering?

Front 114

An airport flight pattern is changed and causes the affected homes to decrease in value due to:
(A) economic obsolescence.
(B) aviation obsolescence.
(C) political obsolescence.
(D) functional obsolescence.

Back 114

economic obsolescence.

Front 115

How long is an appraisal effective?
(A) It is effective on the date of the inspection.
(B) For six months.
(C) For three months.
(D) It is effective on the date the appraiser submits his report.

Back 115

It is effective on the date of the inspection.

Front 116

When appropriate, an appraiser would use the cost approach to determine the value of:
(A) special purpose property or service buildings.
(B) vacant land.
(C) an expensive family home.
(D) constructing a building.

Back 116

special purpose property or service buildings.

Front 117

The cost approach is the most accurate when:
(A) many comparables are available.
(B) appraising an apartment building.
(C) the property is new.
(D) dealing with a building contractor.

Back 117

the property is new.

Front 118

A 19 year-old home looks like it is only 6 years old because it has been well maintained. The estimated life of the home is 40 years. Using the cost approach to appraise the home, the appraiser most likely would use the:
(A) effective age of the improvements.
(B) economic age of the improvements.
(C) physical age of the improvements.
(D) chronological age of the improvements.

Back 118

effective age of the improvements.

Front 119

A capitalization rate can be determined by:
(A) summation.
(B) band of investment theory.
(C) market data (comparison).
(D) all of the above.

Back 119

all of the above.

Front 120

What would cause real estate values to be unstable?
(A) A large number of expensive priced homes moving into an area of moderate priced homes.
(B) Average priced homes coming into an area of expensive priced homes.
(C) A good master plan for the community.
(D) None of the above.

Back 120

Average priced homes coming into an area of expensive priced homes.

Front 121

An appraiser using the market data approach in appraising would be most interested in the date that:
(A) the offer was written.
(B) the buyer moved into the property.
(C) the price was agreed upon.
(D) recording occurred.

Back 121

the price was agreed upon.

Front 122

The best appraisal approach is use on a shopping center would be the:
(A) income-gross rent multiplier.
(B) cost-gross rent multiplier method.
(C) market data -income method.
(D) cost-income method.

Back 122

cost-income method.

Front 123

An appraiser is using the replacement cost approach to appraise a building built in 1901. The appraiser would:
(A) determine the labor cost in 1901 adjust for inflation based on the consumer price index (CPI) since 1901.
(B) use the cost to build the building in 1901 if the data is available. Otherwise, use the available data from the closest year to 1901.
(C) use the current cost to build the building today and deduct the depreciation over the economic life of the building.
(D) utilize the average labor costs over the building's economic life.

Back 123

use the current cost to build the building today and deduct the depreciation over the economic life of the building.

Front 124

Which appraisal report would typically contain the headings, "Introduction", "Site and Improvement", "Property Description", "Supporting Data", and "Final Value Estimate”?
(A) The letter form report.
(B) The short form report.
(C) The narrative report.
(D) The certified general report.

Back 124

The narrative report.

Front 125

Owner-occupancy in a residential neighborhood tends to lead to:
(A) deteriorating buildings.
(B) a stability of values in the area.
(C) encroachment of commercial activity.
(D) economic obsolescence.

Back 125

a stability of values in the area.

Front 126

An owner of a vacant building is trying to decide whether to lease his building to a hardware store or to a post office. The owner would likely prefer the post office because the post office would probably:
(A) have a higher capitalization rate than that of the hardware store.
(B) have a lower capitalization rate than that of the hardware store.
(C) provide a higher return for the owner than the hardware store.
(D) sign a longer lease if unemployment rises in the area.

Back 126

have a lower capitalization rate than that of the hardware store.

Front 127

All of the following would be considered operating expenses when appraising an apartment building, except:
(A) the cost of water service.
(B) cost to replace a water heater.
(C) cost of capital.
(D) property taxes.

Back 127

cost of capital.

Front 128

What level of appraisal licensing would be needed to appraise a strip mall valued at approximately $540,000?
(A) A commercial specialist license
(B) The certified universal license
(C) The certified commercial license
(D) The certified general license

Back 128

The certified general license

Front 129

After the appraiser has collected all the data and applied the appropriate appraisal method(s), what is the next step in the appraisal process?
(A) Simply average out the value estimates.
(B) Reconcile or correlate the adjusted sales price of the comparables.
(C) Assign appropriate value to individual estimates and average the total number.
(D) Give the client the bill.

Back 129

Reconcile or correlate the adjusted sales price of the comparables.

Front 130

Which of the following would be an example of functional obsolescence?
(A) New zoning laws
(B) Incompatible land use in the neighborhood
(C) A deteriorated driveway
(D) A one-car garage

Back 130

A one-car garage

Front 131

The best definition of a straight note is:
(A) sometimes secured by a trust deed.
(B) sometimes used to finance real property.
(C) principal is all due at one time.
(D) all of the above.

Back 131

principal is all due at one time.

Front 132

LTV (loan-to-value) ratio is best defined as:
(A) mortgage loan as a percent of appraised value.
(B) mortgage loan as a percent of assessed value.
(C) trust deed loan as a percent of replacement cost.
(D) trust deed loan as a percent of PGI.

Back 132

mortgage loan as a percent of appraised value.

Front 133

As a part of the purchase price, the seller of a parcel of land accepted a purchase money first trust deed which contained a subordination clause. This clause would:
(A) guarantee priority of the first trust deed.
(B) preclude the buyer from placing construction loans on the property.
(C) permit the buyer to place a future loan on the property that would have priority.
(D) permit additional liens to be placed against the property without the buyer's consent.

Back 133

permit the buyer to place a future loan on the property that would have priority.

Front 134

A clause in a trust deed providing that the rights of the beneficiary are secondary to those of holders of subsequently recorded trust deed is known as a/an:
(A) subordination.
(B) alienation.
(C) acceleration.
(D) subrogation.

Back 134

subordination.

Front 135

A subordination clause in a trust deed may:
(A) give priority to liens subsequently recorded against the property.
(B) allow for periodic renegotiation and adjustment in the terms of the obligation.
(C) prohibit the trustor from making an additional loan against the property before the trust deed is paid off.
(D) permit the obligation to be paid off ahead of schedule.

Back 135

give priority to liens subsequently recorded against the property.

Front 136

A clause in a junior lien that permits the first lien to be refinanced without suffering loss of position is called:
(A) an alienation clause.
(B) an acceleration clause.
(C) a subordination clause.
(D) a power of sale clause.

Back 136

a subordination clause.

Front 137

The main purpose of a subordination clause is to:
(A) make one loan or encumbrance take an inferior position to another loan or encumbrance.
(B) make one loan or encumbrance take a collateral position to another loan or encumbrance.
(C) move one trustor's foreclosure priority to another trustor.
(D) All of the above.

Back 137

make one loan or encumbrance take an inferior position to another loan or encumbrance.

Front 138

If a trust deed states that subsequent financing will take priority, it will likely contain:
(A) an alienation clause.
(B) a subordination clause.
(C) an acceleration clause.
(D) a due-on-sale clause.

Back 138

a subordination clause.

Front 139

A promissory note and deed of trust are given to a seller to finance the purchase of vacant land. The buyer will place a construction loan on the land. The deed of trust will most likely contain:
(A) an alienation clause.
(B) a subordination clause.
(C) an acceleration clause.
(D) a due-on-sale clause.

Back 139

a subordination clause.

Front 140

If an owner wants to refinance a first deed of trust and a second deed of trust exists on the property, the lender on the first trust deed will probably require the second trust deed to contain:
(A) an alienation clause.
(B) a subordination clause.
(C) an acceleration clause.
(D) a due-on-sale clause.

Back 140

a subordination clause.

Front 141

Who will benefit the most by a subordination clause in a deed of trust and note?
(A) Beneficiary
(B) Trustee
(C) Trustor
(D) Mortgagee

Back 141

Trustor

Front 142

Able buys Blackacre from Baker, taking title to the property subject to the existing loan. The person primarily responsible for the repayment of the loan would be:
(A) Able.
(B) Baker.
(C) either Able or Baker.
(D) neither Able or Baker.

Back 142

Baker.

Front 143

If a buyer takes the property subject to the existing loan, "subject to" most nearly means:
(A) both the buyer and seller will be liable on the loan.
(B) only the buyer will be liable for the loan.
(C) the seller has no liability for the loan.
(D) the buyer will not be personally liable for the loan.

Back 143

the buyer will not be personally liable for the loan.

Front 144

A request for notice of default is recorded to protect:
(A) the beneficiary on the first loan.
(B) the beneficiary on the second loan/trust deed.
(C) trustor on the first loan.
(D) trustor on the second loan.

Back 144

the beneficiary on the second loan/trust deed.

Front 145

If a lender accepts a deed in lieu of foreclosure, who becomes the new owner of the property?
(A) The trustor, under certain circumstances.
(B) The beneficiary.
(C) The trustee.
(D) Any of the three parties depending on the value of the property and the amount of any liens on the property.

Back 145

The beneficiary.

Front 146

A lender might consider it an advantage to waive a prepayment penalty:
(A) if the FED lowers the discount rate.
(B) during a tight money market.
(C) during deflationary times.
(D) during a period of high unemployment.

Back 146

during a tight money market.

Front 147

A vendee under a land contract should:
(A) record the land contract for his protection.
(B) hold legal title in a safe deposit box.
(C) obtain a CLTA title insurance policy to assure that the vendor cannot encumber the property.
(D) have a reconveyance deed held in escrow.

Back 147

record the land contract for his protection.

Front 148

A property sold in California as a result of the borrower's defaulting on a $200,000 loan, resulting in a deficiency of $42,000. A deficiency judgment can be obtained by the lender if:
(A) the loan was a purchase money loan on the borrower's residence.
(B) the fair market value of the property exceeded the loan amount at the time of auction.
(C) the property was auctioned at a trustee's sale.
(D) none of the above.

Back 148

none of the above.

Front 149

Davis purchased 10 pieces of vacant land from Finch making a 20% down payment and financing the remaining 80% of the purchase price with a promissory note and mortgage contract in favor of Finch payable over the next 20 years. If the loan was secured with all 10 properties, this would create:
(A) a hard money loan.
(B) a blanket encumbrance.
(C) a general lien.
(D) a wrap-around mortgage.

Back 149

a blanket encumbrance.

Front 150

A person purchased a home with a $162,000 deed of trust. In the long term, if the home increases in value, who benefits?
(A) Beneficiary
(B) Trustee
(C) Trustor
(D) None of the above

Back 150

Trustor

Front 151

For appraisal purposes, “capitalization” is a process used to:
(A) establish current market value.
(B) determine annual net income.
(C) find interest rate.
(D) convert income into value.

Back 151

convert income into value.

Front 152

In a deed of trust, the power of sale in event of foreclosure is given from the:
(A) trustee to the trustor.
(B) beneficiary to the trustor.
(C) trustor to the trustee.
(D) trustee to the beneficiary.

Back 152

trustor to the trustee.

Front 153

When a trustor defaults on his or her payments and refuses to reinstate the deed of trust, the most expedient thing for the beneficiary to do is to institute a:
(A) sheriff’s sale.
(B) lien sale.
(C) trustee’s sale.
(D) judicial foreclosure sale

Back 153

trustee’s sale.

Front 154

A loan secured by real property usually consists of:
(A) financing statement and trust deed.
(B) a promissory note and a trust deed.
(C) FHA or VA insurance.
(D) security agreement and financing statement.

Back 154

a promissory note and a trust deed.

Front 155

A lender may also be called a:
(A) mortgagor.
(B) beneficiary.
(C) trustor.
(D) trustee.

Back 155

beneficiary.

Front 156

When the buyer has recently purchased a home with a valid land sales contract, what type of title does the buyer have?
(A) Sole title
(B) Equitable title
(C) Pending title
(D) Legal title

Back 156

Equitable title

Front 157

When a debt has been paid in full, the trustee will record what legal instrument to remove the lien of a trust deed from the public record?
(A) Satisfaction of payment
(B) Complete release statement
(C) Deed of reconveyance
(D) Redemption certificate

Back 157

Deed of reconveyance

Front 158

California law controls the timing of a trustee’s sale. What must the trustee do at least three weeks before conducting a trustee’s sale?
(A) Publish a notice of reconveyance.
(B) Publish a notice of trustee’s sale.
(C) Record a notice of redemption.
(D) Evict the trustor.

Back 158

Publish a notice of trustee’s sale.

Front 159

The opposite of “alienation” is which of the following?
(A) Accretion
(B) Acquisition
(C) Ad valorem
(D) Amortization

Back 159

Acquisition

Front 160

Elizabeth purchased a home with a low down payment and long-term loan. This financing would most likely result in:
(A) increasing the total financing cost.
(B) decreasing the total financing cost.
(C) having no effect on the total financing cost.
(D) accelerating the amortization of the debt.

Back 160

increasing the total financing cost.

Front 161

When lending money to two of more joint tenants using a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the joint tenants?
(A) Personally and corporately
(B) Together as individuals
(C) Individually and severally
(D) Joint and severally

Back 161

Joint and severally

Front 162

The secondary mortgage market provides:
(A) funds for investment in income properties.
(B) additional funds to mortgage lenders.
(C) financing for second deeds of trust.
(D) None of the above.

Back 162

additional funds to mortgage lenders.

Front 163

Of the following, which homeowner would most likely pay a premium for mutual mortgage insurance?
(A) The homeowner who assumes an FHA loan.
(B) The homeowner who wishes to insure both real and personal property.
(C) The homeowner with a loan form a life insurance company.
(D) A homeowner with a VA loan

Back 163

The homeowner who assumes an FHA loan.

Front 164

The FHA's role in financing the purchase of real property is to:
(A) purchase specific trust deeds.
(B) act as the lender of funds.
(C) insure loans made by approved lenders.
(D) do all the of the above.

Back 164

insure loans made by approved lenders

Front 165

Under which of the following will the borrower be expected to purchase insurance for a loan?
(A) FHA loans only
(B) VA loans only
(C) FNMA, GNMA, and Freddie Mac loans
(D) FHA or PMI

Back 165

FHA or PMI

Front 166

The 1% loan fee on FHA loans is usually paid by the:
(A) borrower.
(B) seller.
(C) lender.
(D) PMI.

Back 166

seller.

Front 167

FHA loans, when compared to conventional loans, generally:
(A) are not available through the same sources as conventional sources.
(B) has flexible maturity periods.
(C) has lower interest rates.
(D) require PMI for loans with greater than 80% LTV.

Back 167

has lower interest rates.

Front 168

The amount of down payment on a VA loan is determined by:
(A) the CRV.
(B) 3% of the purchase price.
(C) the amount of the discount.
(D) no down payment is required on a VA loan.

Back 168

the CRV.

Front 169

A person would be allowed to purchase a residential property with no down payment (100% financing) through:
(A) CalVet.
(B) FNMA.
(C) FHA.
(D) VA.

Back 169

VA.

Front 170

A loan officer gives a broker a small referral fee in return for his referral of a client looking to purchase a single-family home. Under RESPA:
(A) this is legal, if disclosures are made to all parties.
(B) this is forbidden.
(C) this is illegal if this fact is not disclosed to the buyer.
(D) this is legal.

Back 170

this is forbidden.

Front 171

Under RESPA, a lender cannot charge for:
(A) appraisal fees.
(B) loan documents.
(C) credit reports.
(D) uniform settlements statements (HUD-1).

Back 171

uniform settlements statements (HUD-1).

Front 172

RESPA requires that the Uniform Settlement Statement be delivered or mailed to the borrower no later than:
(A) at or before the date of settlement.
(B) 3 days after signing the loan application.
(C) at the time the mortgage loan disclosure statement is signed.
(D) at the time the loan application is made.

Back 172

at or before the date of settlement.

Front 173

The right to rescind lasts for 3 days from the last of these events to occur:
(A) delivery of the notice of right to rescind.
(B) signing of the transaction.
(C) delivery of the truth-in-lending disclosure.
(D) All of the above.

Back 173

All of the above.

Front 174

When a borrower uses the same creditor to refinance a loan already secured by his home:
(A) there is no right of rescission, unless new money is also advanced. Then the transaction is rescindable only to the extent of the new money.
(B) there is a 2 day right of rescission period.
(C) the right of rescission period is 3 days.
(D) None of the above.

Back 174

there is no right of rescission, unless new money is also advanced. Then the transaction is rescindable only to the extent of the new money.

Front 175

A lender would be exempt from the requirement of providing the borrower with a Federal Right To Rescind Notice:
(A) when the loan is for business expansion.
(B) when the security for the loan is commercial property.
(C) when the loan is for more than $25,000 and it is not secured by the borrower's personal residence.
(D) All of the above.

Back 175

All of the above

Front 176

A lender would not be exempt from the requirement of providing the borrower with a Federal Right to Rescind Notice when the:
(A) loan is for more than $25,000 and is not secured by the borrower's personal residence.
(B) security for the loan is commercial property.
(C) loan is for business expansion.
(D) borrower is refinancing his personal residence.

Back 176

borrower is refinancing his personal residence.

Front 177

The notice of right to rescind is given to the consumer by:
(A) the creditor.
(B) the trustor.
(C) the trustee.
(D) the mortgagee.

Back 177

the creditor.

Front 178

According to Federal Truth in Lending, the lender must disclose the annual percentage rate of a loan, which is:
(A) the nominal interest rate.
(B) the cost of credit, including interest and other financing costs, expressed as an annual rate.
(C) the yearly compounded interest rate.
(D) None of the above.

Back 178

the cost of credit, including interest and other financing costs, expressed as an annual rate.

Front 179

If an owner does not record a Notice of Completion, unpaid creditors must file a mechanic's lien within:
(A) 30 days.
(B) 60 days.
(C) 90 days.
(D) None of the above.

Back 179

90 days.

Front 180

A loan broker who arranges a home equity loan for a homeowner for $9,600 must provide the borrower with:
(A) a beneficiary statement.
(B) a broker closing statement.
(C) a loan broker disclosure statement.
(D) all of the above.

Back 180

a loan broker disclosure statement.

Front 181

A mortgage loan correspondent may be licensed by the:
(A) Department of Real Estate.
(B) Department of Corporations.
(C) Secretary of State.
(D) either a or b.

Back 181

either a or b.

Front 182

A credit agent refused to provide a copy of a credit report to a credit applicant who was denied credit. The applicant can:
(A) file a civil action against the credit agency.
(B) negotiate a settlement with the credit agency.
(C) require the credit agency to pay all legal fees.
(D) any and all of the above.

Back 182

any and all of the above.

Front 183

For which of the following is an FHA loan available, but not a Cal-Vet loan?
(A) A loan to purchase a single-family dwelling to be rented to a tenant.
(B) A loan to purchase a business opportunity.
(C) A loan to purchase agricultural land.
(D) A loan to purchase farm equipment.

Back 183

A loan to purchase a single-family dwelling to be rented to a tenant.

Front 184

When the Real Estate Commissioner discovers a developer has made certain misrepresentations in the marketing of parcels in a new subdivision, the Real Estate Commissioner can stop future sales by:
(A) issuing an injunction against the developer.
(B) issuing a desist and refrain order.
(C) revoking a public report.
(D) filing civil action in a court of law.

Back 184

issuing a desist and refrain order.

Front 185

Under the CalVet program the buyer receives:
(A) a purchase/option.
(B) a contract of sale.
(C) a trust deed.
(D) none of the above.

Back 185

a contract of sale.

Front 186

When a buyer initially purchases a home with CalVet financing, the buyer receives a:
(A) bill of sale.
(B) contract of sale.
(C) trust deed.
(D) lease with an option to buy.

Back 186

contract of sale.

Front 187

Many lenders consider the liquidity and marketability of loans to be very important when they make a loan secured by a mortgage. The importance of liquidity and marketability relates to:
(A) activities of the secondary mortgage markets.
(B) desirability of fixed rate loans over adjustable rate loans.
(C) ability to resell homes.
(D) the mix of loans made by banks only.

Back 187

activities of the secondary mortgage markets.

Front 188

Institutions that specialize in making home loans get their funds from (Money for loans is most commonly obtained from):
(A) mortgage bankers.
(B) mortgage brokers.
(C) individual savings.
(D) Federal Reserve.

Back 188

individual savings.

Front 189

With regard to inflation:
(A) market value increases and sales price increases.
(B) sales price increases and market value decreases.
(C) market value decreases and sale price decreases.
(D) sale price decreases and market value increases.

Back 189

market value increases and sales price increases.

Front 190

When the federal reserve wants a LOOSE money market:
(A) government buys back bonds and lowers reserve requirements of banks.
(B) government sells bonds and increases the reserve requirements of banks.
(C) government sells bonds and keeps the reserve requirements the same.
(D) None of the above.

Back 190

government buys back bonds and lowers reserve requirements of banks.

Front 191

When calculating the Consumer Price Index (CPI), housing expenses are one of the largest denominators because:
(A) the CPI is based upon all consumer purchases.
(B) more people buy homes than buy businesses.
(C) housing impacts economy.
(D) housing is one of the largest expenses for consumers.

Back 191

housing is one of the largest expenses for consumers.

Front 192

Riparian rights generally:
(A) are detailed in the trust deed.
(B) concern the use of moving water from a river or stream within the watershed.
(C) are detailed in the public records of all counties affected by surface waters.
(D) are absolute and universal.

Back 192

concern the use of moving water from a river or stream within the watershed.

Front 193

Riparian rights:
(A) include parcels of land not near a watercourse.
(B) has the same meaning as appropriation.
(C) include the right to reasonably appropriate water as needed.
(D) always pertain to percolation of underground waters.

Back 193

include the right to reasonably appropriate water as needed.

Front 194

Riparian rights can be severed by:
(A) servient tenement.
(B) dominant tenement.
(C) police power.
(D) condemnation or prescription.

Back 194

condemnation or prescription.

Front 195

A percolation test would usually be conducted in connection with:
(A) subsoil fertility.
(B) soil analysis.
(C) a water well.
(D) sewage disposal.

Back 195

sewage disposal.

Front 196

A percolation test determines:
(A) installation dept of footings.
(B) size of cistern necessary to service a given house.
(C) quantity and potability of water.
(D) capacity of soil to absorb water.

Back 196

capacity of soil to absorb water.

Front 197

The owner of property adjacent to the water flow can be acquired by:
(A) avulsion.
(B) alluvium.
(C) percolation.
(D) accession.

Back 197

accession.

Front 198

When selling his home to John, Bert negotiated a leaseback arrangement in order to continue renting and occupying the property for the next two years. John immediately placed the unrecorded grant deed into a safe deposit box for ultimate security. Two days later, Bert "sold" the home a second time to Julie who promptly recorded her deed. Which of the following is most correct?
(A) John is the rightful owner of the home provided he can produce this first deed to the property.
(B) Julie is the likely owner of the property by virtue of recording her deed first.
(C) Bert still owns the home until he vacates.
(D) The title company will decide who is the rightful owner of the property.

Back 198

Julie is the likely owner of the property by virtue of recording her deed first.

Front 199

"Potable water" refers to:
(A) well water on the property.
(B) water suitable for irrigation.
(C) water suitable for drinking.
(D) water suitable for cooking.

Back 199

water suitable for drinking.

Front 200

Water is seeping up from the soil from an unknown source. This would most likely be:
(A) littoral waters.
(B) riparian waters.
(C) percolating waters.
(D) sewage overflow.

Back 200

percolating waters.

Front 201

An owner of land owns riparian rights to water on, under, or adjacent to the land in which of the following?
(A) Oceans and bays
(B) Rivers and streams
(C) Underground caves with water
(D) All of the above

Back 201

Rivers and streams

Front 202

Water that is suitable for drinking and is not contaminated is said to be:
(A) potable water.
(B) privy water.
(C) alluvium water.
(D) avulsion liquid.

Back 202

potable water.

Front 203

If an owner acquires land which includes riparian rights appurtenant, such riparian rights:
(A) give the owner absolute ownership of the water.
(B) must be expressed in the trust deed.
(C) may be determined accurately from an examination of the public records at the County Recorder’s Office.
(D) concern the use of moving water, such as a stream within the watershed.

Back 203

concern the use of moving water, such as a stream within the watershed.

Front 204

What type of title insurance policy is most often used?
(A) Standard
(B) Standard coverage (CLTA)
(C) ALTA
(D) Extended-coverage.

Back 204

Standard coverage (CLTA)

Front 205

If a problem arose during escrow, a broker will file:
(A) an interpleader action.
(B) a formal written protest to the seller.
(C) a formal written apology to the buyer.
(D) none of the above

Back 205

an interpleader action.

Front 206

Which of the following would not be prorated in escrow?
(A) Rents
(B) Impounds
(C) Title insurance premium
(D) Property taxes

Back 206

Title insurance premium

Front 207

An escrow agent may short-rate:
(A) fire insurance/insurance.
(B) impounds.
(C) title insurance.
(D) all of the above.

Back 207

fire insurance/insurance.

Front 208

Which of the following types of title policies covers everything?
(A) The ALTA polciy
(B) The Universal Coverage Policy
(C) The extended coverage policy
(D) No title policy covers everything

Back 208

No title policy covers everything

Front 209

Which of the following is a warranty found in a grant deed which is not covered by a CLTA, standard coverage title policy?
(A) The grantor is under age.
(B) There is no break in the chain of title.
(C) There are no undisclosed encumbrances on the property.
(D) All prior conveyances were proper and valid.

Back 209

There are no undisclosed encumbrances on the property.

Front 210

When one party agrees to indemnify another for a named loss in return for periodic payments, it is called:
(A) a fidelity bond.
(B) insurance.
(C) performance agreement.
(D) none of the above.

Back 210

insurance.

Front 211

The Escrow Act is found in the:
(A) Business Code.
(B) Civil Code.
(C) Administrative Code.
(D) Financial Code.

Back 211

Financial Code.

Front 212

A single-family home sold for $90,750 and the buyer assumed an existing $30,000 first deed of trust. What is the documentary transfer tax?
(A) $67
(B) $167
(C) $101
(D) $7,000

Back 212

$67

Front 213

The county assessor accumulates a list of all private owners of real property in his jurisdiction. The assessment roll is used to:
(A) set the tax rate for each year.
(B) establish the tax base for the county.
(C) to determine the taxes to be paid by individual property owners.
(D) to equalize the assessment throughout the county.

Back 213

establish the tax base for the county.

Front 214

Able owned community property with a cost basis of $95,000 and a fair market value of $125,000. He exchanged this property for another property with a fair market value of $85,000 and received $30,000 cash and a $10,000 promissory note paid over four years. For federal income tax purposes:
(A) the entire purchase price of $85,000 is taxable.
(B) Able's new basis is $95,000 and he would be able to defer all capital gains taxes until the future.
(C) Able's new basis is $95,000, however, he would have to pay boot on the $30,000 cash.
(D) Able's new basis is $95,000, however he would have to pay boot on the $30,000 cash and the
$10,000 promissory note.

Back 214

the entire purchase price of $85,000 is taxable.

Front 215

Under Federal Income Tax Laws, most real estate licensees are considered:
(A) employees of the broker.
(B) employees of the seller.
(C) independent contractors.
(D) any of the above.

Back 215

independent contractors.

Front 216

According to California Real Estate Law, most real estate licensees are considered:
(A) employees of the broker.
(B) employees of the seller.
(C) independent contractors.
(D) any of the above.

Back 216

employees of the broker.

Front 217

An apartment building is purchased for $450,000 with land valued as $33,700. Using a 40-year straight line depreciation schedule, what would be the depreciated book value of the property after 16 years?
(A) $249,780
(B) $271,100
(C) $283,480
(D) $308,660

Back 217

$283,480

Front 218

A home sold for $200,000. The buyer assumed an existing loan against the property for $160,000. The documentary transfer tax for this county is $.55 per $500 of consideration. The transfer tax is:
(A) $11.
(B) $22.
(C) $33.
(D) $44.

Back 218

$44.

Front 219

The difference between property taxes and special assessments is that:
(A) assessment liens are always subordinate to property tax liens.
(B) assessment liens can only be levied by local improvement districts.
(C) foreclosure of assessment liens can only be achieved by court foreclosure.
(D) special assessments are levied for the cost of specific local improvements, while property tax revenue goes into the general fund.

Back 219

special assessments are levied for the cost of specific local improvements, while property tax revenue goes into the general fund.

Front 220

Which of the following is true regarding the depreciation of land under federal income tax law?
(A) Land may be depreciated by the 125% declining balance method.
(B) Owner may deduct the accrued depreciation of land over time.
(C) Land may be depreciated by the sum of the year’s digits method.
(D) Land cannot be depreciated under federal income tax law.

Back 220

Land cannot be depreciated under federal income tax law.

Front 221

Each of the following would be subject to property taxes, except:
(A) a possessory interest of the lessee in oil and gas rights in real property owned by the government.
(B) a manufactured home installed on a permanent foundation system.
(C) intangible personal property.
(D) vacant land in an unincorporated section of the county.

Back 221

intangible personal property.

Front 222

Senior citizens may be able to defer the payment of the property taxes on their residence. In order to find out if they qualify for the program, the senior citizen should contact the:
(A) Real Estate Commissioner.
(B) State Franchise Tax Board.
(C) State Housing Authority.
(D) County Tax Assessor.

Back 222

State Franchise Tax Board.

Front 223

Maturity in property management means:
(A) it is an old property.
(B) income has decreases significantly over the years.
(C) income has stabilized.
(D) income is increasing

Back 223

income has stabilized.

Front 224

Property management contracts usually provide for the property manager to be compensated in which of the following ways?
(A) A simple salary.
(B) A percent of gross income plus reimbursement of expenses.
(C) Flat fee plus a percentage of gross income.
(D) Reimbursement of out-of-pocket expense.

Back 224

Flat fee plus a percentage of gross income.

Front 225

To effectuate the safety clause (also called broker's protection clause or protection period clause), the broker must:
(A) have notified the seller in writing of the names of all prospective buyers negotiated with during the listing and must be delivered not later than the listing termination date.
(B) verbally appraise the seller of all prospects contacted during the listing period.
(C) hold the buyer's deposit check until he can be checked out via his bank.
(D) None of the above.

Back 225

have notified the seller in writing of the names of all prospective buyers negotiated with during the listing and must be delivered not later than the listing termination date.

Front 226

The maximum recovery from the Department of Real Estate's Education and Research Account is:
(A) unlimited.
(B) $100,000 per individual licensee ($20,000 maximum per occurrence).
(C) $20,000 per individual licensee.
(D) none of the above.

Back 226

$100,000 per individual licensee ($20,000 maximum per occurrence).

Front 227

A broker runs the following ad on his listings: "4 BR, 3 BATH home with swimming pool and spa for sale for $154,000. Call 555-1234." This is called:
(A) misleading.
(B) a false ad.
(C) a blind ad.
(D) a violation of Regulation Z.

Back 227

a blind ad

Front 228

Seller Charlie sold his home through a real estate broker. The broker agreed verbally with Charlie that he would find him an acceptable place to live when the sale was completed. The home sold, but broker does not keep his promise to the seller. Under these circumstances, the:
(A) seller can withdraw from the purchase offer due to the broker not finding him another home as promised.
(B) seller has the option of trying to recover damages in a court action against the broker.
(C) seller has no recourse because the contract was not in writing.
(D) buyer can back out of the sales transaction.

Back 228

seller has the option of trying to recover damages in a court action against the broker.

Front 229

What happens to a real estate license if it is not renewed?
(A) The licensee has a two year grace period and late renewal fees.
(B) The licensee will lose his license.
(C) The license is immediately revoked and the person must pass the State Exam.
(D) None of the above.

Back 229

The licensee has a two year grace period and late renewal fees.

Front 230

Which of the following is most correct about "puffing”?
(A) It is legal, and property business tactics.
(B) It is usually unethical unless approved by the agent's broker.
(C) It is only an "opinion of value" of a specific property as of a given date.
(D) It could be considered misrepresentation if a reasonable person would consider it a "statement of fact."

Back 230

It could be considered misrepresentation if a reasonable person would consider it a "statement of fact."

Front 231

When inspecting a seller's home the agent discovers several physical defects which the agent fails to disclose to the buyer. The buyer can file civil action against the agent for up to:
(A) 2 years.
(B) 3 years.
(C) 4 years.
(D) 5 years.

Back 231

2 years.

Front 232

The seller must provide the buyer with a TDS (Transfer Disclosure Statement) for which of the following?
(A) The sale of a residential triplex.
(B) The sale or lease of a commercial building.
(C) The sale of a vacant lot.
(D) All of the above.

Back 232

The sale of a residential triplex.

Front 233

What is the proper way to write an advertisement selling a home?
(A) Attention and Interest
(B) Desire
(C) Action
(D) All of the above

Back 233

All of the above

Front 234

Which of the following could be used by a buyer as earnest money deposit in purchasing real property?
(A) A promissory note secured by a deed of trust.
(B) A postdated check.
(C) An unsecured promissory note.
(D) All of the above.

Back 234

All of the above.

Front 235

Structural pest control reports are kept on file for:
(A) one year.
(B) two years.
(C) three years.
(D) five years.

Back 235

two years

Front 236

The desk cost for a broker would be:
(A) the total operating expenses divided by the number of agents in the office.
(B) the office rent and telephone expenses divided by the number of desks in the office.
(C) the cost of equipment and telephone plus the rent divided by the number of desks in the office.
(D) the cost of equipment and telephone divided by the number of desks in the office.

Back 236

the total operating expenses divided by the number of agents in the office.

Front 237

The maximum fine the Real Estate Commissioner can levy against a broker who pays an unlicensed person for soliciting borrowers or negotiating loans is:
(A) $2,000.
(B) $5,000.
(C) $10,000.
(D) $20,000.

Back 237

$10,000.

Front 238

If a broker uses the term "Realtor" or "Realtist" and is not a member of that group, this is:
(A) unethical.
(B) unlawful.
(C) both A and B.
(D) neither A nor B.

Back 238

both A and B.

Front 239

Misuse of the name "Realtor" is:
(A) a violation of the California Real Estate Law.
(B) a violation of the Business and Professions Code.
(C) a violation of the Civil Code.
(D) a violation of common law.

Back 239

a violation of the California Real Estate Law.

Front 240

To file a fictitious business name, the broker must:
(A) file a fictitious business name statement in the county he intends to operate.
(B) publish the fictitious business name in a newspaper of general circulation.
(C) obtain approval of the name by the Real Estate Commissioner and issue a license in the name of the fictitious business name.
(D) All of the above.

Back 240

All of the above.

Front 241

According to the Real Estate Commissioner, any person employed as a salesperson by a broker is considered a/n:
(A) independent contractor.
(B) employee.
(C) attorney-in-fact.
(D) power of attorney.

Back 241

employee.

Front 242

How much of a broker's personal funds can he keep in his trust account without being guilty of commingling?
(A) $100
(B) $200
(C) $400
(D) As much as he wants

Back 242

$200

Front 243

A real estate broker advertises that he will give a seller a $50 credit in escrow on his commission to any seller who lists with him and that he will pay $50 to any buyer who purchases a property from him. This type of advertising is:
(A) illegal.
(B) legal since the amount offered is less than $100.
(C) legal if disclosure is made to all parties as to the transaction.
(D) prohibited if this is a RESPA transaction.

Back 243

legal if disclosure is made to all parties as to the transaction.

Front 244

Seller Able accepted an offer on his home and the acceptance was communicated back to the buyer. Prior to opening escrow, however, Seller Able received an all cash offer to purchase the property. He decided to cancel the original contract and notified Broker Baker of his decision. Which of the following is most correct?
(A) Broker Baker has a good legal basis to collect a commission (excellent chance).
(B) Broker Baker is not owed a commission.
(C) Broker Baker is owed a commission if he can prove he is the procuring cause.
(D) None of the above.

Back 244

Broker Baker has a good legal basis to collect a commission (excellent chance).

Front 245

The Real Estate Commissioner will start an action against a licensee with:
(A) an injunction.
(B) a lawsuit.
(C) an accusation.
(D) a lis pendens.

Back 245

an accusation.

Front 246

A broker negotiates a deal between buyer and seller and then opens escrow. The buyer deposits a check directly into escrow. The broker must:
(A) log the deposit in his trust account under undeposited funds.
(B) only log it in his trust account if it goes into his account.
(C) not log into his trust account, unless it is within 5 days of the contract date.
(D) none of the above.

Back 246

log the deposit in his trust account under undeposited funds.

Front 247

The primary responsibility for disclosing any Mello-Roos bonds or assessments to a buyer when a home is sold lies with:
(A) the seller.
(B) the seller's agent.
(C) the buyer's agent.
(D) all of the above.

Back 247

the seller.

Front 248

A subdivider wanted to subdivide his property into many lots and sell individual lots to potential builders of single-family homes. To finance the off-site improvements which include streets, sidewalks, and schools he would:
(A) approach the State of California for funding.
(B) ask the local governmental bodies to institute a special assessment to pay for the improvements.
(C) institute a Mello-Roos municipal bond.
(D) obtain a blanket encumbrance.

Back 248

institute a Mello-Roos municipal bond.

Front 249

An earthquake hazards disclosure must be given to a purchaser:
(A) even if the property is not in an earthquake fault zone.
(B) if the property is in an Alquist-Priolo Special Studies Earthquake Zones Act area.
(C) if the property is within 1/4 mile of an active earthquake fault.
(D) none of the above.

Back 249

even if the property is not in an earthquake fault zone.

Front 250

A real estate salesperson owes the Department of Child Support services for back child support payments. He may:
(A) obtain a temporary license for 150 days.
(B) not obtain a license until the past due funds are paid.
(C) obtain a license after a hearing by the Real Estate Commissioner.
(D) not obtain a license.

Back 250

obtain a temporary license for 150 days.

Front 251

The Alquist-Priolo Earthquake Special Studies Zones Act applies to:
(A) all states with earthquake activity.
(B) all regions in The United States.
(C) all counties in California.
(D) all areas along fault lines.

Back 251

all counties in California.

Front 252

When was the earthquake zones/hazards disclosure first required?
(A) 1950
(B) 1963
(C) 1968
(D) 1972

Back 252

1972

Front 253

A real estate broker presented a full price offer to a seller which the seller accepted. During escrow the seller was shocked to learn that the buyer was the brother of the broker. The seller:
(A) has no recourse since the property sold for full price.
(B) may sue the broker for specific performance.
(C) can refuse to sell to the buyer, however, the seller will owe a full commission.
(D) can cancel the transaction without liability for the commission.

Back 253

can cancel the transaction without liability for the commission.

Front 254

A broker's brother purchased a home for the asking price. The fact that the buyer is the broker’s brother:
(A) is not a material fact and is not required to be disclosed.
(B) is not a material fact because the buyer paid the asking price for the property.
(C) is a material fact if it sold for less than the list price.
(D) is a material fact and must be disclosed to all parties to the transaction.

Back 254

is a material fact and must be disclosed to all parties to the transaction.

Front 255

A broker/agent is helping his brother negotiate a lease/purchase option on a seller's home. The broker/agent must disclose that he is the brother of the lessee/optionee to which of the following?
(A) The seller
(B) The seller's agent
(C) Both the seller and the seller's agent
(D) No one

Back 255

The seller

Front 256

When leasing industrial space, the landlord and landlord's property manager must make certain that the property being leased:
(A) complies with the American's With Disabilities Act (ADA).
(B) has no undisclosed encumbrances on it.
(C) is not in default.
(D) complies with all local building and health codes.

Back 256

complies with all local building and health codes.

Front 257

The commission paid to the broker selling agricultural property can be in the form of:
(A) a trust deed on the property.
(B) cash or check.
(C) funds paid from escrow.
(D) any of the above.

Back 257

any of the above.

Front 258

Broker Sam holds an oral listing on Carl's home. Carl accepts a bona fide offer from a buyer and demands that the deposit check be turned over to Seller Carl. The agent must:
(A) deposit the trust funds in a neutral escrow within 3 business days.
(B) return the check to the buyer within 3 business day.
(C) give the check to the seller/give the check to the seller, with the consent of the buyer.
(D) deposit the check into the trust account within 3 business days.

Back 258

give the check to the seller/give the check to the seller, with the consent of the buyer.

Front 259

One week after entering into a legally binding purchase contract the buyer backed out of the agreement. The seller:
(A) can sue the buyer for money damages.
(B) must return the deposit to the buyer.
(C) must attempt to resell the property to another buyer in an attempt to minimize damages.
(D) all of the above.

Back 259

all of the above.

Front 260

At close of escrow the seller decided not to pay the commission. The broker/agent can:
(A) file a complaint with the Department of Real Estate.
(B) file civil action in court.
(C) file a vendor's lien on the seller's home.
(D) ask a contractor/friend to place a mechanic's lien on the property for the agent.

Back 260

file civil action in court.

Front 261

A buyer made a bona fide offer to purchase Wilson's home. The offer included a request that the existing furniture be included in the deal. Wilson agreed to accept the offer, but was unwilling to include the furniture. When the agent was unable to contact the buyer because the buyer was out of town, the agent crossed out the item about the furniture so that Wilson would accept the offer. The agent's action are:
(A) unethical, but understandable.
(B) illegal.
(C) unethical and illegal.
(D) completely appropriate.

Back 261

unethical and illegal.

Front 262

A broker/agent can pay a finder's fee to an unlicensed individual:
(A) provided the finder's fee is no more than $100.
(B) provided the finder's fee is not more than $250.
(C) only for introducing a client to the broker/agent.
(D) never.

Back 262

only for introducing a client to the broker/agent.

Front 263

An offer made by a prospective buyer was contingent on the sale of the buyer's current residence. Seller Billings made a counter offer accepting the offer provided the seller could continue to market the home in an attempt to obtain a better offer while granting the buyer a "first right of refusal" to remove the sale contingency if another offer was presented. The buyer accepted the terms and immediately listed his current residence for sale. One week later, Billings notified the buyer that a better offer with no contingencies was "on the table." The agent representing the buyer should:
(A) advise the buyer to immediately remove the sale contingency.
(B) advise the buyer to obtain a bridge loan in order to assure that the escrow will be completed without the need of the contingency.
(C) advise the buyer about the advantage and disadvantages of removing the contingency feature at this time.
(D) under no circumstances give advice about the contingency feature. The buyer must consult an attorney.

Back 263

advise the buyer about the advantage and disadvantages of removing the contingency feature at this time.

Front 264

Seller Skinner signed a 90 day exclusive right to sell listing with Broker Bill. Two weeks later, Skinner cancelled the listing with Bill and gave an open listing to Broker Carl and another open listing to Broker Paul. Three weeks later, Paul presented an offer to Skinner which the seller accepted. Which of the following is most correct?
(A) Broker Bill only is entitled to a full commission.
(B) A full commission will be divided equally between Bill, Carl, and Paul.
(C) Broker Paul only is entitled to a full commission.
(D) Paul is entitled to a full commission and Bill is entitled to a full commission as well.

Back 264

Paul is entitled to a full commission and Bill is entitled to a full commission as well.

Front 265

Broker Charles operates a real estate sales office as well as a property management firm. Charles also owns an apartment building which he manages himself. Which of the following is most correct?
(A) Monies received from all three sources can be placed into the same trust account, provided detailed records are kept identifying the amount of funds coming from each source.
(B) Charles must maintain at least two separate trust accounts - one for real estate activity and another for property management activity.
(C) It is illegal for Charles to place rents collected on his apartment building into the client's trust account.
(D) Charles can place funds received from property management contracts into his personal checking account provided detailed records are kept to identify the funds.

Back 265

It is illegal for Charles to place rents collected on his apartment building into the client's trust account

Front 266

An unlicensed employee of a broker who is authorized in writing can make withdrawals from the broker's trust account provided the employee:
(A) has no personal funds in the account.
(B) is the spouse of the broker.
(C) has been employed by the broker for at least 3 years.
(D) is covered by a fidelity bond for at least the amount of the funds to which the employee has access at any given time.

Back 266

is covered by a fidelity bond for at least the amount of the funds to which the employee has access at any given time.

Front 267

A real estate broker hires Jose, an unlicensed assistant, to hand out door hanger fliers in his farm and to make telephone cold calls on Monday and Wednesday evenings soliciting prospective buyers, seller, and borrowers. This is:
(A) unethical for Jose only.
(B) unlawful for the broker only.
(C) unlawful for both the broker and the unlicensed assistant.
(D) completely legal, appropriate, and common practice.

Back 267

unlawful for both the broker and the unlicensed assistant.

Front 268

In order to obtain information about the ethical or unethical conduct of a real estate licensee, one would most likely consult:
(A) the "Realtor's Golden Rule."
(B) the Business and Professional Code.
(C) the California Criminal Code.
(D) generally accepted business practices of highly trained real estate professionals.

Back 268

the Business and Professional Code.

Front 269

Two days after entering into a binding purchase contract, the buyer and seller decided to mutually surrender the contract. With respect to the deposit, the agent representing both parties:
(A) should divide the deposit between the seller and himself provided the deposit is not more than 3% of the purchase price.
(B) should file an interpleader action.
(C) should return the balance of the deposit to the buyer after deducting sales expenses.
(D) must return the entire deposit to the buyer immediately.

Back 269

must return the entire deposit to the buyer immediately.

Front 270

The broker in a large real estate office dies. All listings:
(A) usually belong to the sub-agents according to the terms of the broker/associate contract.
(B) are continued during probate, unless the sub-agent moves to another firm.
(C) are automatically cancelled and the new broker would need to re-list the properties.
(D) may be cancelled unilaterally by each principal with 24 hours written notice.

Back 270

are automatically cancelled and the new broker would need to re-list the properties.

Front 271

When listing her farm for sale with Broker Ed, Daisy informed the broker that she would not consider any offer with more than a 23% down payment. The broker presented a full price, all cash offer to the seller which Daisy rejected. Which of the following is more correct?
(A) Ed has earned a full commission.
(B) Ed is entitled to a commission based only on 23% of the purchase price.
(C) Ed should advise Daisy to place all funds in excess of 23% of the purchase price in a CD.
(D) The seller can reject the offer without liability since the offer did not meet the exact terms of the listing.

Back 271

The seller can reject the offer without liability since the offer did not meet the exact terms of the listing.

Front 272

"Advance fee" contracts must include all of the following features, except:
(A) the total amount of compensation or fee to be paid to the agent.
(B) a complete description of the services to be provided by the broker.
(C) a guarantee that the sale, lease, or exchange will be completed.
(D) the date and terms for payment of the compensation.

Back 272

a guarantee that the sale, lease, or exchange will be completed.

Front 273

The ultimate responsibility for the maintenance of an apartment building rests with:
(A) the property management firm.
(B) the owner.
(C) the local building department.
(D) the lessee.

Back 273

the owner.

Front 274

Davidson, a licensed Real Estate Broker, listed a home for sale for nine months without any success. He knew that it needed some major structural repair and that it was overpriced by 10%. He wrote the following advertisement in a local newspaper: “Charming cute Victorian home, move right in, you will not believe the price. Call Davidson 410-9718.” What is wrong with this advertisement?
(A) It doesn’t specify the asking price and therefore violated the Truth-In-Lending law.
(B) The ad was misleading and deceptive because Davidson knew the home needed major repair.
(C) It is unethical to overprice and advertise a home for sale.
(D) The newspaper will be held liable if someone purchases the home and relies on the advertisement.

Back 274

The ad was misleading and deceptive because Davidson knew the home needed major repair.

Front 275

What state agency would a consumer contact in order to obtain a written report disclosing the presence of wood destroying organisms?
(A) Department of Real Estate
(B) Department of Corporations
(C) Structural Pest Control Board
(D) Department of Housing and Community Development

Back 275

Structural Pest Control Board

Front 276

A real estate licensee has inspected a home for sale and has discovered some problems in the property. How long does the buyer have to sue for the failure of the licensee to disclose problems in the property?
(A) 1 year
(B) 2 years
(C) 3 years
(D) 5 years

Back 276

2 years

Front 277

A real estate broker wrote up an offer for his buyers. The offer was made contingent upon the approval of the home by the buyer’s uncle. The buyers informed the broker that their uncle was currently in Europe and they were unsure when he would return. The broker replied that the uncle’s being out of the country would be “no problem.” The broker then presented the offer to the seller without disclosing that the buyer’s uncle was out of the country. The seller accepted the offer. Under these circumstances, the broker’s conduct was:
(A) lawful.
(B) unlawful.
(C) ethical.
(D) unethical.

Back 277

unlawful.

Front 278

The maximum commission which can be charged by a real estate broker in the sale of residential income property is:
(A) limited by California Real Estate Law.
(B) negotiable between the principal and broker.
(C) limited to no more than 9 percent of the total sales price.
(D) set by local custom.

Back 278

negotiable between the principal and broker.

Front 279

The agency that would receive complaints concerning fair housing laws is:
(A) Department of Community Development.
(B) Department of Real Estate.
(C) Department of Fair Employment and Housing.
(D) none of the above.

Back 279

Department of Fair Employment and Housing.

Front 280

Which of the following would be exempt from Fair Housing Laws?
(A) an apartment rented through a leasing agency.
(B) apartment complexes built to accommodate the physically handicapped.
(C) a landlord renting a non-owner occupied condominium.
(D) an owner renting out four rooms in a single family dwelling occupied by the owner.

Back 280

an owner renting out four rooms in a single family dwelling occupied by the owner.

Front 281

If a loan application includes a section requesting information about marital status and race, an applicant may:
(A) sue the lender for fraud.
(B) file a complaint under The Housing Financial Discrimination Act of 1977.
(C) refuse to complete this section of the application.
(D) all of the above.

Back 281

refuse to complete this section of the application.

Front 282

Which of the following, if it appears on a loan application, can a borrower refuse to answer?
(A) Request for information about the property being financed.
(B) Request for information on sources of income and analysis.
(C) Request for information on marital status or race.
(D) Request for information on monthly housing expenses.

Back 282

Request for information on marital status or race.

Front 283

A lender charges an additional fee of 1/8% per annum for processing loans to non-English speaking applicants since the lender must hire non-English speaking employees to communicate with these borrowers. This would be considered:
(A) good business practice.
(B) an unethical business practice as defined in the UCC.
(C) legal in the lender must pay higher wages to accommodate the non-English speaking clients.
(D) a form of illegal discrimination.

Back 283

a form of illegal discrimination.

Front 284

Which of the following is discriminatory in an advertisement?
(A) Chapel on premises
(B) Seeking female roommate
(C) Retirees dream home
(D) All of the above

Back 284

Chapel on premises

Front 285

When discrimination takes place, the aggrieved party may:
(A) file civil suit in federal court.
(B) file civil suit in state or local court.
(C) file a complaint with HUD.
(D) All of the above.

Back 285

file a complaint with HUD.

Front 286

A person who has been given the right to act on behalf of another is known as a/an:
(A) affidavit.
(B) attorney-in-fact.
(C) executor.
(D) principal.

Back 286

attorney-in-fact.

Front 287

If a buyer and seller enter into a valid binding contract and one of the parties dies or becomes incompetent, the contract is:
(A) void by statute.
(B) valid, if it was signed before the party died or became incompetent.
(C) voidable by one of the parties.
(D) valid.

Back 287

valid, if it was signed before the party died or became incompetent.

Front 288

When accepting an offer on his home, Seller Thomas changed one of the terms of the buyer's offer. This is best described as:
(A) a modification or amendment.
(B) a purchase contract.
(C) an alteration.
(D) a counter offer.

Back 288

a counter offer.

Front 289

The date of a purchase contract is generally the date:
(A) a bona fide offer is made by a ready, willing, and able buyer.
(B) the earnest money deposit is placed into a neutral escrow depository.
(C) the seller accepts a bona fide offer accompanied with a deposit check from a ready, willing, and able buyer.
(D) final acceptance is communicated back to the offeror.

Back 289

final acceptance is communicated back to the offeror.

Front 290

Many real estate contracts contain preprinted clauses and spaces for information to be hand written in. In a legal dispute, when there is a conflict between the preprinted clauses and the hand written information, which will control?
(A) Preprinted clauses take precedence over hand written information.
(B) The handwritten information takes precedence over the preprinted clauses.
(C) The preprinted clauses and hand written information are considered equally.
(D) Hand written information if illegal on preprinted contracts.

Back 290

The handwritten information takes precedence over the preprinted clauses.

Front 291

The term “express contract” describes a contract which is expressed:
(A) only orally.
(B) only in writing.
(C) in words, either oral or written.
(D) none of the above.

Back 291

in words, either oral or written.

Front 292

A contract based on an unlawful consideration is:
(A) valid, until voided.
(B) void.
(C) legal.
(D) enforceable, if in writing.

Back 292

void.

Front 293

The usual listing contract authorizes a broker to:
(A) sign for the seller.
(B) act as attorney-in-fact for the seller.
(C) find a purchaser and accept a deposit with an offer to purchase.
(D) all of the above.

Back 293

find a purchaser and accept a deposit with an offer to purchase.

Front 294

If a real estate broker sells a property where the buyer will take possession prior to transferring title, the document he would have the buyer and seller execute is called:
(A) an option.
(B) an interim occupancy agreement.
(C) a quitclaim deed.
(D) a land contract of sale.

Back 294

an interim occupancy agreement.

Front 295

A seller may revoke an exclusive right to sell listing by:
(A) sending a written letter to the broker.
(B) never.
(C) verbal revocation.
(D) none of the above.

Back 295

sending a written letter to the broker

Front 296

What type of listing allows the broker to list the property and purchase it if he desires?
(A) Exclusive agency
(B) open listing
(C) Option listing
(D) Exclusive right to sell

Back 296

Option listing

Front 297

The "time is of the essence" clause:
(A) is included in most offers stating that the offer will expire if not accepted within _____ days (or hours)
(B) is included in most listings requiring the agent to act swiftly
(C) is part of the deposit receipt requiring the earnest money deposit to be put into escrow within ____ days.
(D) applies to the entire contract

Back 297

applies to the entire contract

Front 298

A broker's "safety clause" would most likely be found in:
(A) a deposit receipt.
(B) option agreement.
(C) open listing.
(D) exclusive authorization and right to sell agreement.

Back 298

exclusive authorization and right to sell agreement.