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50 Cards in this Set
- Front
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A licensed real estate salesperson is primarily responsible to: a. the buyer. b. the seller. c. the principal who pays their commission. d. their employing broker. |
d. their employing broker. (The salesperson is an employee of the broker and primarily responsible to the broker. The broker represents the principal.) |
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What is the maximum amount that may be paid from the Real Estate Recovery Fund? a. 20000 b. 40000 c. 100000 d. 250000 |
d. 250000 (The maximum amount recoverable from the Real Estate Recovery Fund is $250,000.) |
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An appraiser describes "replacement cost" as: a. the original cost to build the structure. b. the current cost to build a replica of the original structure. c. the current cost to build a structure of similar utility using modern methods and materials. d. the current cost to build a structure representing the highest and best use of the site. |
c. the current cost to build a structure of similar utility using modern methods and materials. (Replacement cost is the cost to build a structure of a similar size and utility using modern methods and materials. Reproduction cost is creating something as similar as possible to the original. Both use current costs in the calculation.) |
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When rent is computed based on the gross sales of a business occupying the property, the lease is classified as a(n): a. valid lease. b. voidable lease. c. net lease. d. percentage lease. |
d. percentage lease. (As mentioned in the previous question, a percentage lease establishes the rental charge based on the sales of the business tenant.) |
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The act of restricting a person from seeking to buy a residential property in a community and redirecting them to other housing is known as: a. steering. b. driving. c. redlining. d. panic peddling. |
a. steering. (This is a Fair Housing question. Envision a sales agent "steering" the potential buyer away from neighborhoods the buyer might wish to see.) |
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An agency relationship would not be created by: a. a verbal agreement. b. ratification. c. implication. d. subrogation. |
d. subrogation. (Subrogation is the substitution of one person for another. Therefore, it would not create an agency relationship whereas all of the others are possible.) |
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A real estate broker acts from a position of trust for the seller or buyer. This is described legally as a(n): a. fiduciary relationship. b. ostensible agent. c. dual agent. d. independent contractor relationship. |
a. fiduciary relationship. (The relationship is described as fiduciary. None of the other answer selections describe a relationship of loyalty and trust.) |
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Which of the following deed provisions are enforceable? a. The property may not be sold to minorities. b. The property may not be used for religious purposes. c. The property may be occupied only by females. d. The property needs to remain with the grantor and their heirs in perpetuity. |
b. The property may not be used for religious purposes. (A deed restriction can prohibit religious use of a property but not discriminate against minorities or females.) |
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After a broker enters into a listing agreement for an apartment building with a corporation, the officers of the corporation die in an accident. What happens to the listing? a. The listing is withdrawn from the market until new corporate officers ratify the agreement b. The listing is automatically voided as the employing party has died. c. The listing is unaffected and enforceable. d. The listing converts to a debt obligation against the corporation in the amount of the broker's commission. |
c. The listing is unaffected and enforceable. (When a broker enters into a listing agreement for a property owned by a corporation, the listing contract is unaffected by the death of the corporate officers. Here, the broker is employed by the corporation, not the individual corporate officers.) |
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The Real Estate Commissioner is authorized to: a. impose fines on any real estate licensee who is convicted of fraudulent activities. b. promulgate rules and regulations to enforce the California real estate laws. c. issue non-resident real estate licenses to states which prohibit their residents from holding California real estate licenses. d. implement federal lending legislation to encourage a healthy housing market. |
b. promulgate rules and regulations to enforce the California real estate laws. (The chief officer of the Department of Real Estate is the Real Estate Commissioner. The Real Estate Commissioner's principal responsibility is to enforce all the real estate laws pertaining to real estate practice, licensing and the Subdivided Lands Act.) |
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A metropolitan area where the cities within it have grown together is known as a(n): a. megalopolis. b. suburb. c. planned unit development (PUD). d. matrix sprawl. |
a. megalopolis. (When a metropolitan area grows by the connection of various cities within it, it becomes a megalopolis.) |
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Under a land sales contract, title is conveyed to a buyer when they pay ___________ the remaining unpaid amount on the purchase price. a. one-fourth b. one-half c. three-fourths d. all |
d. all (Like most contracts, such as the purchase of an automobile, title is not conveyed until the final payment has been made.) |
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Which of the following zoning designations is suitable for land used as the site of multi- family residential developments? a. I-3. b. R-1. c. R-4. d. MU-4. |
c. R-4. (Residential use zoning is labeled with an R. Multiple units will have a number following the R other than 1, the precise number determined by each city or county.) |
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Marta borrowed $25,000 on a straight note. In eight months, she paid $1,500. What was the interest rate: a. 8%. b. 9%. c. 10%. d. Cannot be calculated. |
b. 9%. (This question calls for an interest rate calculation using the following formula: Interest = Principal x Rate x Time (I = PRT). $1,500 = $25,000 x R x 8/12 1,500 = 25,000 x R x 0.667 1,500 = 16,667 x R 1,500 / 16,667 = (16,667 x R) / 16,667 0.09 = R or 9%) |
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Blake sold his home to Frank but remained in possession and negotiated a two-year leaseback. Frank did not record the deed. During this two-year period, Blake sold the home to Sam who then recorded the deed. Who owns the home? a. Sam, because he recorded his deed. b. Blake, because he still has possession of the property. c. Blake, because both sales were fraudulent. d. Frank, because he received the first deed. |
a. Sam, because he recorded his deed. (Sam is the owner since he recorded the deed. Constructive notice can be either the recorded deed or possession. Since Blake retained possession, Sam had no way of knowing that Frank previously purchased the house. This makes Sam a bona fide buyer.) |
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The vacancy rate of an apartment building under normal competitive conditions is primarily the result of: a. employment fluctuations. b. housing supply and demand in the area. c. the cost of construction and the cost of money. d. taxes and insurance. |
b. housing supply and demand in the area. (The vacancy level and rental income will fluctuate as supply increases or demand grows or shrinks.) |
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Broker Sarah delivered an offer to purchase real property to Owner Martha. Owner Martha asked for 24 hours to consider the offer. Later that same day, Broker Sarah received two additional offers through other brokers. Broker Sarah believes the owner will reject all three offers. In order to comply with the law, Broker Sarah is to: a. hold the new offers until Owner Martha has made a decision on the first offer, then present the other offers. b. present the two additional offers in the order they arrived. c. simultaneously present the two additional offers to Owner Martha as soon as possible. d. refuse to receive the offers until Owner Martha decides not to accept the original offer. |
c. simultaneously present the two additional offers to Owner Martha as soon as possible. (The decision regarding any offer is for the seller to make. The broker in this question is required to notify the seller and present both additional offers as soon as possible.) |
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An American Land Title Association (ALTA) policy of title insurance goes beyond the protection afforded by a California Land Title Association (CLTA) policy in guarding against: a. existing liens and encumbrances as disclosed by the public records. b. a deed of reconveyance issued by a minor. c. the location of property lines according to a formal survey. d. an error in the sequence of recording trust deed loans. |
c. the location of property lines according to a formal survey. (Answer selection C is one of the extended benefits of an American Land Title Association (ALTA) policy.) |
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Which of the following is a cost associated with home ownership: a. amenity value. b. loss in value as a result of adverse zoning. c. loss of interest on owner's equity. d. improvement appreciation. |
c. loss of interest on owner's equity. (The owner's equity invested into a property cannot earn interest as it does when deposited in the bank.) |
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A prospective buyer gave their broker a personal check for $1,000 payable to the seller along with an offer to buy the property. The buyer told the broker the check was not to be cashed until the end of the month. Which of the following is correct? a. The broker is to refuse to accept the check. b. The broker is to accept the check, but deposit into their trust account within 24 hours. c. The broker needs to deliver the check either to the seller or escrow upon acceptance. d. The broker may hold the check, but needs to tell the seller it is being held uncashed before the seller accepts the offer. |
d. The broker may hold the check, but needs to tell the seller it is being held uncashed before the seller accepts the offer. (Proper disclosure practice requires that the seller be aware of the nature and condition of the deposit. The seller's acceptance of the offer, in part, is an acceptance of the condition of the deposit. This is a material fact regarding the offer.) |
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Randy recently bought a 12-unit apartment building. What is the minimum number of years in which he may depreciate the building for federal income tax purposes? a. 27.5 b. 39 c. 40.5 d. 50 |
a. 27.5 (The depreciation minimum is 27.5 years regardless of the number of units or property usage, as long as it is held as rental property for investment purposes.) |
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The stability of a residential neighborhood is maintained by all of these, except: a. a high home sale turnover rate and increasing population density. b. being located in the pathway of growth. c. having many family households with school age children. d. the conformity of residents with similar occupations. |
a. a high home sale turnover rate and increasing population density. (This is an EXCEPT question. Stability and a high turnover may be seen as the converse of one another. The alternative answer selections either support stability or at least do not directly work against it.) |
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David listed his house for sale with Broker Paulson for $400,000. David told Broker Paulson it was imperative that the property be sold quickly. Broker Paulson showed the property to Henry and told him David was financially insolvent and would accept $380,000. Based on Broker Paulson's statement, Henry offered David $380,000 for his property. David accepted the offer. Concerning Broker Paulson's actions, which of the following is true? a. Broker Paulson violated his fiduciary obligation to David since he acted in excess of his authority. b. When David accepted the offer, Broker Paulson's actions were vindicated. c. Broker Paulson's actions were proper since David stated he wanted an immediate sale. d. Broker Paulson interpreted David's wishes and produced a sale. Acceptance of the offer made Broker Paulson's actions acceptable. |
a. Broker Paulson violated his fiduciary obligation to David since he acted in excess of his authority. (The only correct interpretation of agency law is that broker Paulson acted outside his authority and revealed private financial information that may or may not have been true without client permission. The alternative answer selections may have a ring of truth, but the state exam is concerned with legal issues.) |
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A broker presented a written offer to their seller from a buyer. The offer stated that upon acceptance, the buyer would deposit $25,000 in escrow. The seller made a counteroffer but did not change the amount of the deposit and sent it back to the buyer. The buyer agreed to all the changes but lowered the amount of the deposit to $10,000. Which of the following statements is not correct? a. The broker needs to get the seller's acceptance of the counteroffer. b. The buyer has created a counteroffer due to the changed deposit amount. c. The contract is fully enforceable. d. No contract exists. |
c. The contract is fully enforceable. (Until both the buyer and seller have reached a mutual agreement and a meeting of the minds, there is no contract, and thus answer selection C. The contract is fully enforceable is not correct.) |
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Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodations in California due to race, color, sex, national origin or ancestry: a. the Department of Real Estate (DRE). b. the Unruh Department. c. the Department of Fair Employment and Housing. d. the Department of Housing and Urban Development (HUD). |
c. the Department of Fair Employment and Housing. (The Department of Fair Employment and Housing is the state agency empowered to enforce Fair Housing laws.) |
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An appurtenant easement granted to a neighboring property owner fails to state the term of the easement. How long does the easement last? a. Perpetuity. b. 99 years. c. The lifetime of the dominant tenement. d. 55years. |
a. Perpetuity. (When no termination date or length of time is stated, an easement exists in perpetuity.) |
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How soon must a broker deposit a client check that is made out to the broker's trust account? a. One business day. b. Two calendar days. c. Three business days. d. One week. |
c. Three business days. (Three business days is the time allowed to deposit a client's check into the broker's trust account.) |
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A broker is assured a fee under a safety clause in a listing agreement if: a. information about the property is provided to prospective buyers during the listing period by the listing agent. b. the seller is notified of the identification of the prospective buyers who later purchases the property as soon as possible after termination of the listing. c. a prospective buyer located during the term of the listing acquires the property as a result of negotiations commenced during the safety period. d. All of the above. |
d. All of the above. (The safety clause in an exclusive listing affirms the agent's right to a fee when any of the conditions provided as answer selections occur.) |
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A seller is required to deliver earthquake safety guides to buyers of most masonry buildings with wood frame floors or roofs built prior to: a. 2000 b. 1990 c. 1980 d. 1975 |
d. 1975 (Note that this question refers to a specific form of construction – masonry buildings with wood frame floors or roofs. Otherwise, the earthquake safety guide needs to be delivered to buyers of all homes built prior to 1960.) |
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The simplest method of estimating the replacement cost of an improvement is the: a. quantity survey method. b. index method. c. unit-in-place method. d. comparative method. |
d. comparative method. (The replacement cost of a property can most easily be determined under the comparative method, which uses a private costing service that provides generic pricing for property types based on quality and regional differences. Answer selections C. unit-in-place and A. quantity survey are more detailed and precise, while the index method is used for historic appraisals.) |
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The task of evaluating a property to qualify it as collateral for the repayment of a loan is completed by a(n): a. appraiser. b. agent. c. broker. d. home inspector. |
a. appraiser. (An appraiser determines value of a property rather than its condition, which is performed by a home inspector. For the purposes of qualifying the collateral which secures the loan, the lender requires an appraiser's determination of the property's value.) |
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A listing broker needs to present all offers received on a listing property until: a. an offer is accepted. b. escrow is opened. c. all contingencies are removed. d. escrow is closed. |
d. escrow is closed. (A sale is not complete until escrow closes. Thus, any offer received by the seller's broker prior to the close of escrow needs to be presented to the seller for consideration.) |
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If a lessee transfers all of their interests in a property, the transferee who receives the lessee's interest is classified as a(n): a. assignee. b. assignor. c. vendee. d. vendor.
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a. assignee. (An assignee is the individual to whom property or interests have been transferred. The assignor is the individual who assigns or transfers the rights or interests they hold in personal or real property. The choices offered are based on “vend” and “assign.” Vending is a sale – specifically a land sales contract – and therefore not applicable to a lease.) |
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Who generally benefits the most from an assignment of rent clause contained in a trust deed? a. The trustor. b. The trustee. c. The beneficiary. d. The purchaser.
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c. The beneficiary. (The person who benefits most from an assignment of rents clause is the beneficiary (lender). The assignment of rents allows the lender to receive the rents tendered by tenants when the borrower is in default.) |
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An irrevocable right to purchase property within a specific time period is called a(n): a. option to buy. b. novation. c. subrogation. d. right of first refusal.
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a. option to buy. (An irrevocable right to purchase a property for a specific price during a specified period of time is an option to buy. Answer selection D. right of first refusal, though similar, refers to an opportunity held by someone (often a tenant or neighbor) to purchase the property under the same price and terms offered by a third party.) |
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The phrase "the secondary mortgage market" refers to: a. government bonds. b. junior trust deeds. c. the kind of loans made by insurance companies or pension funds. d. a resale marketplace for existing trust deed loans. |
d. a resale marketplace for existing trust deed loans.(Don't confuse "second trust deed" with "secondary mortgage market." The secondary mortgage market is where lenders resell bundled loans.) |
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Appurtenances go with the land. Which of the following is not an appurtenance? a. Buildings. b. A swimming pool. c. Fences. d. A trade fixture. |
d. A trade fixture. (This is a NOT question. Trade fixtures belong to a commercial tenant and are to be removed at the end of their tenancy, and thus are not an appurtenance. Appurtenances run with the land and are transferred with it on its sale.) |
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When the Federal Reserve (the Fed) raises the discount rate charged to its member banks, this raises interest rates and: a. increases the supply of money in circulation. b. encourages mortgage borrowing. c. reduces the supply of money in circulation. d. promotes an increase in the homeownership rate.
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c. reduces the supply of money in circulation.(When member banks are charged a higher interest rate by the Federal Reserve (Fed), they charge a higher interest rate to their customers. This in turn reduces the amount of money in circulation.) |
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Which of the following is not an encumbrance? a. A lease. b. A homestead. c. A mechanic's lien. d. A mortgage.
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b. A homestead. (This is a NOT question. A homestead declaration protects a portion of the owner's equity in the property from seizure from creditors. An encumbrance is something that reduces the property owner's rights or equity.) |
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A broker's duty to act with the utmost good faith and diligence for the benefit of the principal they are contracted to represent is referred to as a(n): a. fiduciary duty. b. general duty. c. duty free. d. Sub-agency duty. |
a. fiduciary duty. (Fiduciary duty is the ultimate responsibility owed by the agent in an agency relationship. Among the alternative answer choices, C. duty free can be easily dismissed as being contrary to public policy, and D. sub-agency duty can be similarly dismissed since the question implies greater care. Answer selection B. general duty is the duty of honesty and fair dealing owed to other parties in the transaction.) |
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It is acceptable for a real estate licensee to refuse to show a home to a minority prospect if: a. the licensee sincerely believes that showing the property would cause panic in the neighborhood. b. the owner has stated in the listing that showings may be made only when they are present, and the owner is currently c. the owner has stated their home is not available to minority persons since they are exempt from the 1968 Fair Housing Law. d. the minority prospect has a criminal record and is on parole. |
b. the owner has stated in the listing that showings may be made only when they are present, and the owner is currently out of town. (Discriminatory practices are never allowable. The correct answer recognizes that a seller can restrict showings only if they are not discriminatory in nature, such as the requirement to show their property only when they are in town. Here's a great example of how Fair Housing laws need to be addressed with sellers and how buyers need to be respected.) |
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Which of the following is true? a. Every real estate broker needs to maintain a definite place of business in California. b. An advertisement must include the licensee's name and license number. c. Both a. and b. d. Neither a. nor b.
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c. Both a. and b. (A licensee's name and license number is required on all promotional materials, including business cards. Further, a broker needs to have a physical address on record with the Department of Real Estate (DRE) to receive mailings and be subject to state audits.) |
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Writing “without recourse” on the back of a check creates a(n): a. qualified endorsement. b. blank endorsement. c. restrictive endorsement. d. open endorsement.
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a. qualified endorsement.(“Qualified” suggests the endorser meant to set certain restrictions on the check. In this instance, if the check is not honored, the endorser is not liable.) |
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The Real Estate Commissioner's stated policy is to create a "color blind" industry that facilitates voluntary, peaceful, equal opportunities in housing. What does this mean? a. That race, creed, sexual orientation and color is not a material fact in a real estate transaction. b. Brokers and salespeople are to maintain an attitude that is absolutely free from bias. c. Separate but equal. d. Both a. and b. |
d. Both a. and b. (The Real Estate Commissioner's goal is to create an industry that is color blind. Both choices A and B are reasonable descriptions of what is expected of agents with this primary goal in mind. Answer choice C is clearly wrong as it speaks to a time in the past when segregation was acceptable. Thus, answer selection D is the best answer.) |
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The word "tenancy" in real property law most nearly means: a. life tenant. b. the method or mode of holding interest to real property by the lessee or owner. c. the landlord-tenant relationship. d. the right to freely sell a property to another in the open market.
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b. the method or mode of holding interest to real property by the lessee or owner.(As with the term "estate," both the owner's position as well as the lessee's may be described as a "tenancy.") |
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Escrow instructions can be executed by: a. buyers. b. sellers. c. third parties. d. Any of the above. |
d. Any of the above. (A buyer, seller or third persons may execute escrow instructions.) |
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The words "time, title, interest and possession" are most closely related to which of the following concepts: a. severalty. b. joint tenancy. c. parol evidence. d. adverse possession.
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b. joint tenancy. (Time, title, interest and possession (TTIP) relate to joint tenancy only.) |
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A property was sold netting $410,000 for the seller after a 6% commission was paid. How much was the property sold for? a. 434370 b. 386400 c. 439180 d. 436170 |
d. 436170 (This is an example of a simple math problem that requires calculation since only answer selection B is clearly wrong. The equation is: $410,000 = 94% of X. 410,000/94 = 4,361.70. Then 4,361.70 x 100 = $436,170.) |
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The sequential steps of the Agency Law Disclosure are: a. disclose, elect, confirm. b. confirm, elect, disclose. c. disclose, confirm, dissolve. d. disclose, confirm, elect.
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a. disclose, elect, confirm.(The agency disclosure law requires the agent to first disclose the existence of the law at the earliest possible moment to the prospective client. Then, the agent needs to elect who they will represent and confirm that election.) |
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Which of the following is true regarding the agency duty held by a buyer's agent? a. The agent represents the buyer only. b. The agent is a dual agent of both the buyer and seller. c. The agent may charge an advance fee to the buyer. d. There are only agents of sellers in California.
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a. The agent represents the buyer only.(The questions states the agent is acting as a buyer's agent. Therefore, only answer choice A fulfills this description. Agency duty has nothing to do with advance fees.) |
