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40 Cards in this Set
- Front
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A negative amortizing loan allows unpaid interest to be added to the principle balance. This is an example of: of: a compounding interest. b. double interest. c. simple interest. d. flexible interest. |
a. compounding interest.(Compounding interest causes an additional cost of the interest expense on the interest not paid.) |
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Mr. Black purchased a home for $650,000. The terms of the sale stated Mr. Black will make a down payment of $200,000 and assume an existing first trust deed for the balance of the purchase price. At a basic rate of $0.55 per $500, how much will the transfer tax be? a. $715.00 b. $220.00 c. $495.00 d. $357.50 |
b. $220.00 (Transfer taxes are charges against new money only. Since the transaction included the assumption of a $450,000 existing mortgage, the only tax charged is against the $200,000 down payment. The transfer tax rate in the county where the property is located is $0.55 per $500, which equals $1.10 per $1,000. Multiply $1.10 by 200, totaling $220 in transfer taxes paid on the sale.) |
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Which of these actions does not create an agency relationship? a. Subornation. b. Implication. c. Ratification. d. A verbal agreement. |
a. Subornation. (This is a NOT question. Subornation is a legal matter, to induce someone to perform an illegal act such as perjury. It does not create an agency relationship. The alternative answer selections are all possible ways to create an agency relationship.) |
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An individual who is not employed by the client, but has been delegated agency duties by an agent of the client, is referred to as a(n): a. subcontractor. b. subaccount. c. subagent. d. tandem agent |
c. subagent. (A subagent is delegated agency duties by an agent of the client.) |
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An apartment building owner's newspaper advertisement is in violation of fair housing laws if it states: a. "adults only." b. "no smoking." c. "no pets." d. “spacious bathrooms.” |
a. "adults only." (Use of the expression “adults only” in advertising constitutes age discrimination. The only allowable age discrimination is senior housing.) |
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When the market turns from a seller's market to a buyer's market, which of the following is true? a. Interest rates go down. b. Prices rise. c. Prices fall. d. There is no change in price. |
c. Prices fall. (The changing of the market from being advantageous to a seller or buyer will only affect price. In a buyer's market, buyers maintain the competitive advantage as prices historically will go down.) |
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Which of the following is an acceptable termination date for an enforceable exclusive listing of residential real property? a. 30 days from completion of construction of the property. b. 3 days after the service of notice of rescission by either the seller or the listing agent. c. 60 days after receipt of a conditional loan commitment. d. 180 days after the listing agreement is signed. |
d. 180 days after the listing agreement is signed. (An exclusive listing requires a specific termination date. This is generally based on the date the listing contract is signed.) |
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To be eligible for a California real estate agent license, an applicant does not need to: a. pass the qualifying state licensing exam. b. be honest and truthful. c. be at least 18 years old. d. have at least two years of real estate-related experience. |
d. have at least two years of real estate-related experience. (The requirements for a real estate license include passing the state exam, being at least 18 years of age, and being honest and truthful.) |
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A newspaper advertisement is considered "blind" when it: a. doesn't include the property address. b. contains misleading information. c. doesn't state the sales price. d. fails to state the fact the advertiser is a broker or agent and does not include their Department of Real Estate (DRE) license number. |
d. fails to state the fact the advertiser is a broker or agent and does not include their Department of Real Estate (DRE) license number. (As with Question 2, the lack of licensee identification creates the blind ad.) |
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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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Which of the following is least likely to appear as a debit on a buyer's closing statement? a. Proration of property taxes. b. Interest on a loan assumed by the buyer. c. Discount points for a new Federal Housing Administration (FHA)-insured loan. d. Homeowner's insurance premiums. |
b. Interest on a loan assumed by the buyer. (This is a LEAST likely question. Answer selection B. may seem like a tempting red-herring. Interest on an assumed loan will be a credit on a buyer’s closing statement. The transaction didn't require new financing, but rather the assumption of an existing loan. Loan interest is paid in arrears. Thus, when escrow closes, the buyer will be credited for however many days there were between the due date of the previous payment and the close of escrow. All other answer selections will likely appear as a debit on the buyer's closing statement.) |
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If the state acquires title to an owner's property by escheat, how long must it wait before disposing it? a. No holding period is required. b. One year. c. Five years. d. Seven years. |
a. No holding period is required. (Once the state has acquired property through escheat, there is no requirement to delay disposing of the property.) |
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Agency, whatever the type, is created by: a. membership in a real estate trade union. b. the conduct of each broker and their agents when interacting with a buyer or seller in a transaction. c. membership in a multiple listing service (MLS). d. acquisition of a real estate license from the Department of Real Estate (DRE). |
b. the conduct of each broker and their agents when interacting with a buyer or seller in a transaction. (This is an opportunity to be reminded that agency is something agreed to between a broker and a principal. The membership in a trade group or union has nothing to do with it.) |
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The method of appraisal which emphasizes the present worth of future benefits to be received by the owner is the: a. replacement cost approach. b. reproduction cost approach. c. summation approach. d. income approach. |
d. income approach. (The income approach measures the current worth of future benefits – rental income. There are three appraisal approaches to determine value: cost, income and sales comparison.) |
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Which of the following pieces of lumber contains exactly one board foot? a. 6" x 2" x 12" b. 6" x 1" x 12" c. 6" x 6" x 6" d. 6" x 1 ft. x 1 ft. |
a. 6" x 2" x 12" (One board foot is the volume of a piece of lumber that measures 12 in. x 12 in. x 1 in. Only answer selection A contains the same amount of volume.) |
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When a broker represents the best interests of opposing parties in a transaction with full disclosure to both parties, the broker is known as a(n): a. unethical agent. b. subagent. c. Dual agent. d. finder. |
c. Dual agent. (Dual agency occurs when one broker represents both principals in the same transaction.) |
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Demand has no effect on value unless there is also: a. a need for the thing in demand. b. an adequate supply of the thing in demand. c. a scarcity of the thing in demand. d. purchasing power which enables the ability to buy the thing in demand. |
d. purchasing power which enables the ability to buy the thing in demand. (Demand requires the ability to pay, called purchasing power.) |
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Which of the following properties requires the use of a lead-based paint disclosure? a. Single family residences (SFRs) built in 1975. b. Senior citizen housing built in 1986. c. Homes for the disabled built after the passing of the Americans with Disability Act(ADA). d. Multi-family homes built after 1990. |
a. Single family residences (SFRs) built in 1975. (The lead-based paint (LBP) disclosure applies to residential properties built prior to 1978. The only answer choice that fits within that range is A.) |
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When a counteroffer is made: a. the original offer is void. b. the original offeree is still the offeree. c. the original offeror is still the offeror. d. the original offer is considered accepted with the exceptions noted in the counteroffer. |
a. the original offer is void. (Submission of a counteroffer voids the original offer. The roles of the offeree and offeror are reversed when a counteroffer is written.) |
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A seller's broker receives and presents a purchase offer that is accepted by the seller. The seller then requests the broker give them the buyer's deposit check. The broker needs to: a. first deposit the check into the broker's trust account before giving the deposit funds to the seller. b. write a counteroffer requesting the release of the deposit funds to the seller. c. obtain the written consent of the buyer before releasing the check to the seller. d. obtain written acknowledgement from the seller they have received the funds. |
c. obtain the written consent of the buyer before releasing the check to the seller. (The broker must seek the written consent from the buyer before releasing the deposit check to the seller. As the offer has already been accepted, a counteroffer is not possible.) |
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A roof on which all four sides slope to the eaves is classified as a: a. gambrel roof. b. gable roof. c. mansard roof. d. hip roof. |
d. hip roof. (A roof with four sides is called hip. A two-sided roof is gable.) |
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A real estate salesperson may only be paid a commission by: a. the buyer. b. the seller. c. the escrow company. d. their employing broker. employing broker. |
d. their employing broker. (Only the employing broker can compensate the salesperson. The broker receives their broker fee (commission) at the close of escrow and delivers a percentage of the fee to the salesperson involved in the transaction.) |
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A broker maintains a _______ for each owner of trust funds held in a trust account. a. subaccount ledger b. carbon record c. marketing package d. deposit receipt |
a. subaccount ledger (A broker maintains a subaccount ledger for each client whose monies are held in a trust account. None of the other answer selections apply to a trust account.) |
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A buyer of a property had a real estate agent write up an offer to purchase a home. The offer was contingent upon the sale of their existing home. The seller made a counter-offer accepting the buyer's offer, but reserved the right to continue marketing the home, seeking higher offers and granting the buyer a right of first refusal to remove their contingency if a better offer came in. The buyer accepted the seller's counteroffer and immediately listed their existing home for sale. Shortly thereafter, the seller notified the buyer's agent that a better offer had been received without contingencies. What should the agent advise the buyer to do? a. Advise the buyer to get a short term bridge loan so that they can purchase the home without first selling their existing home. b. Immediately advise the buyer to remove the contingency and open escrow with the seller. c. Advise the buyer of the advantages and disadvantages of removing the contingency and buying the home before the sale of their existing home. d. The buyer's agent should not offer advice to buyer on this issue. |
c. Advise the buyer of the advantages and disadvantages of removing the contingency and buying the home before the sale of their existing home. (Any time terms must be changed, as with a counteroffer, the principal must make the decision. It is the agent's responsibility to give the client all the information and allow them to make their own decision.) |
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A dispute over ownership rights and interests held in real property may be settled by: a. a quiet title action. b. a partition action. c. a declaratory relief action. d. a lis pendens. |
a. a quiet title action. (Quiet title is a court action to clear clouds on a property's title.) |
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A loan broker arranged a home equity loan for $9,600. The broker must provide the borrower with which of the following? a. Mortgage loan disclosure statement. b. Regulation Z disclosure statement. c. Loan balance statement. d. Broker closing statement |
a. Mortgage loan disclosure statement. (A lender who originates a home equity line of credit (HELOC) is required to deliver a copy of the mortgage loan disclosure statement to the borrower.) |
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A right to later buy a property at an undetermined price given to a tenant that does not compel the owner to sell is an example of a(n): a. land contract. b. lease with an option to purchase. c. right of first refusal. d. contract of adhesion. |
c. right of first refusal. (This is the only the answer selection which meets all the requirements set forth in the question. Options and contracts both obligate the seller and stipulate an agreed to price. A right of first refusal is a pre-emptive right to buy a property if the owner decides to sell.) |
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When a broker has a nonexclusive listing, to be legally entitled to a commission, they need to be able to prove they: a. timely provided a conflict of interest disclosure to the buyer. b. somehow contributed to ultimate sale of the property. c. they were the procuring cause of the sale. d. aggressively marketed the property. |
c. they were the procuring cause of the sale. (To collect a commission, the broker needs to locate a buyer who is ready, willing and able to buy, and they must prove they were the procuring cause of the sale.) |
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Which of the following is the most important reason for a broker to maintain a trust fund account separate from the business account? a. To impress clients. b. To satisfy California Bureau of Real Estate (CalBRE) auditors. c. To avoid the commingling and converting the funds. d. For ease of accounting. |
c. To avoid the commingling and converting the funds. (A broker is to maintain a trust fund account separate from their business account to avoid commingling and converting funds. Here, both answer selections B and D are reasonable alternatives, although they are not the most precise and best option available.) |
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Freddie, an unlicensed employee of a real estate broker, hands out door hangers and makes telephone solicitations seeking buyers and sellers. Under the real estate law, these activities are: a. unethical for the broker who employs Freddie as an unlicensed employee. b. commonly accepted behavior in the brokerage community. c. unlawful for Freddie. d. unlawful for both Freddie and his employing broker. |
d. unlawful for both Freddie and his employing broker. (An employing broker is liable for any wrongful act conducted by their employee.) |
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If one party in a contract is coerced or placed under duress by the other party, the contract is _________ at the discretion of the injured party. a. void b. voidable c. illegal d. unenforceable |
b. voidable (The party that suffers from duress has the right to cancel the contract. Therefore, the contract is voidable by the injured party only.) |
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An easement differs from a license in that a license: a. can be revoked. b. is assignable. c. is created by a written agreement. d. is transferable. |
a. can be revoked. (A license can be revoked; an easement cannot. Consider the common sign by a railroad crossing stating, “Permission to pass by license, revocable at any time.”) |
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Consider a seller who carries back a note secured by a deed of trust. If a loan broker takes on the duty of collection, state law requires them to: a. deliver a broker's loan statement to the note holder. b. post a bond. c. have written authorization from the holder of the note to service the loan. d. deposit the funds in a separate trust account. |
c. have written authorization from the holder of the note to service the loan. (A loan broker is a licensed agent. They can service a private note so long as they have written authority from the holder of the note to do so.) |
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If a deed provides for an easement granting ingress and egress over a neighboring property but fails to locate the easement, the: a. deed is void. b. deed is voidable. c. servient tenement holder can specify a particular area so long as it is reasonable. d. dominant tenement holder can choose any area for access. |
c. servient tenement holder can specify a particular area so long as it is reasonable. (The servient tenement (the owner of the neighboring property burdened by the easement) can define the location of the easement provided it is reasonable.) |
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Which of the following contracts must be in writing in order to be enforceable? a. An agreement by a buyer to assume an existing loan secured by a deed of trust. b. An agreement which is not to be performed within one year of being entered into. c. A listing to lease real property for one year. d. Both a. and b. |
d. Both a. and b. (This is very similar to Question 1. A slight derivation on another question will likely exist on the state exam.) |
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Surplus utility is an example of: a. substitution. b. contribution. c. functional obsolescence. d. economic obsolescence. |
c. functional obsolescence. (Surplus utility is an example of functional obsolescence. Functional obsolescence is created by items on the property that are either outdated or over-improved. Economic obsolescence refers to conditions off the property. The other alternative choices are principles of value.) |
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Which of the following is least likely to be a benefit of using Federal Housing Administration (FHA)-insured financing? a. A low down payment. b. Minimum property requirements. c. A long loan term which yields lower monthly payments. d. Title does not transfer until the loan is fully repaid. |
d. Title does not transfer until the loan is fully repaid. (The benefits of a federal housing administration (FHA)-insured loan includes a lower down payment requirement, lower monthly payments, and minimum building standards.) |
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A real estate agent may represent all principals in a transaction if: a. they have obtained the consent of all parties to this dual agency relationship. b. they have informed all principals that they are the agent for each principal. c. they are collecting a commission from each principal with the knowledge of the other party. d. All of the above. |
d. All of the above. (In order to properly be a dual agent, the dual agency status needs to be disclosed as soon as possible and all parties must consent.) |
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Which of the following does not create an agency relationship? a. Implication. b. Ratification. c. Express agreement. d. Coercion. |
d. Coercion. (Agency cannot be created through coercion. This question presents a good opportunity to recognize the different ways agency is created.) |
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To establish title by adverse possession, an occupant must show: a. they have occupied the property in a way which constitutes no notice to the record owner. b. their occupancy is consistent with the owner's title. c. they have been in possession of the property for a continuous and uninterrupted period of at least two years. d. they have paid all taxes assessed against the property during their occupancy. |
d. they have paid all taxes assessed against the property during their occupancy. (Only answer choice D fits the requirements for adverse possession. The period of possession must be at least five years, not two. This is why answer choice C is incorrect.) |
