Mr and Mrs Crest purchased a home two years ago, financing it with a long-term first trust deed and note. They encountered some financial difficulty and were unable to make their payment for two consecutive months. As a result, the beneficiary initiated f
c) reinstatement
Their right of reinstatement permits them to make up the delinquent payments plus any penalties during the three months following notification of default. Redemption refers to the right to pay the entire loan off, plus penalties, costs an
In negotiation for the purchase of a property, the broker failed to mention the installation of a septic tank. If the buyer finds that this material fact makes the property unacceptable, the buyer should
a) ask for a rescission of the contract
b) report t
a) ask for a rescission of the contract
If a buyer enters into a contract based on false or incorrect info given, the buyer has a basis for rescinding the contract.
The gross rent multiplier is developed by dividing the
a) gross monthly income by the assessed value
b) gross monthly income by the market value
c) gross monthly income by the sales price
d) sales price by the gross monthly income
d) sales price by the gross monthly income
To determine the gross monthly multiplier, divide the sales price by the gross monthly income.
Under most normal competitive conditions, what would be most likely to influence vacancy factors in apartment buildings
a) cost of construction funds
b) rent schedule
c) availability of housing units
d) size and number of units
c) availability of housing units
when overbuilding results in oversupply, the amount of space may exceed the demand, producing a general increase in vacancies
A broker used the following phraseology in his listing contract: "in consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchases." This is best described as
a) an agreement to advertise the prop
b) a necessary element in the creation of a bilateral contract
In exchange for the seller's promise to pay a commission, the broker promises to use diligence. This mutual exchange of promises makes it a bilateral contract. A unilateral contract requires a
A capital gain exclusion on a principal residence is
a) $250,000 for an individual or $500,000 for a married couple once in a lifetime if one of them is over 55 years of age.
B) $250,000
c) $250,000 for an individual or $500,000 for a married couple every
c) $250,000 for an individual or $500,000 for a married couple every two out of the last five years.
A married couple is currently entitled to a maximum exclusion from capital gains of $500,000. There is no limit on the number of times a couple or individ
During escrow, if an unresolved dispute should arise between the seller and buyer preventing the close of escrow, the escrow holder may legally
a) Sue for specific performance
b) enter court action with buyer and seller in an action of interpleader
c) act
b) enter court action with buyer and seller in an action of interpleader
The escrow holder is really only a stakeholder, not legally concerned with controversies between the parties, and is entitled to enjoin such parties in an action of interpleader to r
A listing agreement is
a) an employment contract
b) a promise for a promise
c) a bilateral executory contract
d) all of these
d) all of these
A listing agreement, being a promise of payment given for a promise of a personal service, is a bilateral, executory employment contract.
Which expense on a personal residence may be deducted from ordinary income for tax purposes
a) property taxes and mortgage interest
b) wear and tear
c) depreciation
d) general upkeep
a) property taxes and mortgage interest
For income tax purposes, property taxes and mortgage interest on a personal residence are deductible from ordinary income. Depreciation, upkeep, and wear and tear are not allowable deductions on a personal residence
Mr. Sharp lists his house with Agent Long, who finds a buyer and induces Mr. Sharp to accept the buyer's offer by making a verbal promise to find Sharp another suitable residence before escrow closes on the sale. Escrow close, and Long was unable to perfo
C) Sharp will initiate civil court action.
The seller cannot rescind his contract with the buyer, but may institute civil action for damages sustained for the unfulfilled promise of the broker that induced him to enter the purchase contract.
What would create an interest in property with possessory rights but no form of title?
A) easement
b) mortgage
c) sublease
d) land contract
c) sublease
A sublease is a transfer of less than the leasehold with the reversion in the sublessor and would create no form of title in the sublessee. A land contract transfers (1) possession, (2) equitable title, and (3) the right to acquire the fee tit
In a subdivision, who is generally responsible for assuring the installation of curbs, streets, and public utilities?
A) An incorporated group of homeowners
b) department of parks and recreation
c) developer
d) city or county
c) developer
The developer has the responsibility to assure the installation of these facilities. After installation and dedication, they must be maintained by the city or county.
Who is entitled to examine the records of the county recorder, without being an employee of the county recorder's office?
a) a bank employee
b) any interested citizen
c) any of these
d) employees of the office of the county recorder
C) any of these
The records of the office of the county recorder are public records, with access available to all persons
The term potable refers to
a) septic tanks
b) trust deeds
c) earth fill
d) water
d) water
potable means suitable for drinking and would refer to water.
In the sales comparison approach, the adjusted sales price of the comparable property is
A) indicated by agreement between the buyer and the seller
b) a direct relationship to market value
c) the only indication of the market value
d) an estimate of value
d) an estimate of value of the comparable property with similar prominent characteristics of the subject property.
Sales prices of "comps" are adjusted to reflect what the comparable property might have sold for had it been more nearly identical to the su
A grants an estate to B for the life of X. B dies. The estate
a) reverts to the original owner
b) ceases to exist
c) passes to the heirs or devisees of B
d) vests in X in trust until A dies
c) passes to the heirs or devisees of B
Since the life estate is based upon the life of X, it is not terminated by the death of B. B's interest would descend to his heirs, who would retain the life estate until the death of X.
An escrow company received two termite reports in which the estimates of cost of the work differed. Under these circumstances
a) the most expensive report should be used
b) the least expensive report should be used
c) the seller and broker should present
c) the seller and broker should present both reports to the buyer
the results of a pest control inspection report, including the cost of corrective work, would be material facts to a buyer and must be disclosed. If two or more inspections are made, all re
At what point would an individual be considered incapable of handling his own affairs because of mental incompetence.
a) an individual voluntarily commits himself to a mental institution for psychiatric treatment.
b) after proper procedures are followed,
d) a conservator is appointed by a court to oversee an individual's business affairs.
The point at which an individual would be considered legally incapable of handling his own affairs because of mental incompetence "...is when that has been judicially de
Which act or statement might be a cause for discipling a licensee
a) a statement to the buyer that is the lowest offer a seller will accept
b) misrepresentation that did not result in a loss to the principal
c) a statement to a buyer " this is the best ho
b) misrepresentation that did not result in a loss to the principal
The Bureau of Real Estate may take disciplinary action against an agent's license if the agent has been guilty of making any substantial misrepresentation.
Functional utility in a dwelling is dependent upon
a) the desires of its occupants
b) zoning in the area
c) the condition of heating system
d) its floor plan and equipment
a) the desires of its occupants
For a dwelling to have utility, it must have the power to give satisfaction or arouse desire for possession. The functional utility of a property is the sum of its (1) attractiveness (e.g. architecture) and (2) usefulness o
An appraiser determines the accrual for depreciation in the use of
a) none of these
b) the cost approach
c) the income approach
d) the sales comparison approach
c) the income approach
An accrual for depreciation is a part of the income approach in appraisal. Appraisers describer remaining economic life as the period over which an investor would expect to recapture an investment in a property. An accrual for depre
Which is NOT essential in the creation of an agency?
a) lawful object
b) fiduciary relationship
c) capacity of parties
d) payment of consideration
d) payment of consideration
duh.
An owner of a parcel of real property may have all of these rights EXCEPT
a) eminent domain
b) littoral rights
c) riparian rights
d) severance
a) eminent domain
The right of eminent domain is the right of government to take private property for public or quasi public use, although the U.S. Constitution does require the payment of just compensation. The right of eminent domain is never a part of
In comparing real estate investments to other types of investments, the turnover is
a) slightly slower than an average of other investments
b) faster than other commodities
c) slower than other investments
d) faster than stocks
C) slower than other investments
the liquidity of an investment is the ease with which it can be immediately converted to cash. Compared to stocks and commodity investments, real estate is less liquid so its turnover is slower than other investments.
Mr. and Mrs. jenkins owns a home worth $533,000 on which there is a $519,000 loan. Mrs Jenkins alone filed a declaration of homestead. If there were a judgment lien filed against them
a) the home could be sold to satisfy the judgment
b) the exemption woul
d) the home would not be sold because there is insufficient equity over and above the exemption and the secured lien to satisfy the creditor.
The property is held by the husband and wife. She may file a homestead exemption of $75,000. The report would not
In a purchase money mortgage, the mortgagor is identified as the party who
a) receives the note
b) holds the property in trust
c) signs the note
d) lends the money
c) signs the note
The mortgagor is the buyer of the property who is borrowing the money and would therefore sign the note. The mortgagee is the receiver of the note who lends the money or extends credit.
A property is sold in accordance with the listing terms and conditions. After the transaction is in escrow, the seller decides that he doesn't wish to complete the transaction and refuses to complete the sale. Under the Statute of Limitations, the buyer m
b) four years
The statute of limitations requires any legal action to commence within four years on any written contract
A specified charge against real property that is used as security is defined as
a) subdivision restrictions
b) a lien
c) zoning and planning
d) an easement
b) a lien
A lien makes specific property security for the debt
What is the minimum amount of time that a broker must keep signed copies of listings, deposit receipts, et cetera?
a) 1 year
b) 2 years
c) 3 years
d) 4 years
c) 3 years
required by real estate law that most documents be kept for a minimum of three years
A clause in a second trust deed that permits the first trust deed to be refinanced without affecting its priority would be know as an
a) lien waiver
b) acceleration clause
c) alienation clause
d) subordination clause
d) subordination clause
a subordination clause is an agreement by the lien holder to stay in a second or a junior position with regard to the priority of subsequent loans.
An executed contract is a contract
a) Under the jurisdiction of the probate court
b) the be rewritten
c) that has been signed
d) signed, notarized, and recorded
c) that has been signed
The word executed has two meanings. One meaning refers to a contract that has been signed. The other one, though not mentioned in the choices, refers to a contract that has been fully performed.
The first installment of real property taxes had been paid by the seller for the current fiscal year. Property taxes for the current fiscal year amounted to $1,200. If escrow closed on February 1, what amount of prorated taxes would the seller be required
c) $100
The date of the item (DI) is January 1. The close of escrow (COE) is February 1. Since the DI is short of COE, the seller owes for this one month. One month's taxes would be $100.
In accordance with the Real Estate Settlement Procedures Act, the lender must supply the borrower with a Uniform Settlement Statement
a) 10 days after loan commitment
b) 1 day prior to settlement
c) 3 days prior to settlement
d) at or before closing
d) at or before closing
Under RESPA, the lender must deliver to the borrower at Uniform Settlement Statement at or before settlement. If requested by the borrower the Uniform Settlement Statement may be inspected during the business day immediately preced
Mrs. Jones had Broker Smith negotiate a new $2,500 second trust deed on a home with a term of two years. What are the maximum costs and commission Mrs. Jones will have to pay?
a) $640
b) $415
c) $195
d) $250
a) $640
maximum costs: 5% or $390, whichever is greater $390
Maximum commission: Junior TDs of 2 years or more $250
Total costs and commission $640
Eminent domain and police power are governmental rights established by law. Which action would NOT be considered police power?
a) condemnation
b) Subdivision development regulations
c) Zoning laws
d) Building regulations
a) condemnation
The use of the power of eminent domain is often referred to as condemnation. Building regulations, zoning laws, and subdivision development regulations are all examples of police power.
The second installment of real property taxes would become due and delinquent on which date?
a) december 10 and february 1
b) november 1 and february 1
c) february 1 and april 10
d) december 10 and April 10
the second installment becomes due on February 1 and becomes delinquent on April 10
Smith buys an apartment building for $300,000. She keeps it for 10 years and sells it for $300,000 since the land and the building value did not increase. She had depreciated $110,000 over her period of ownership. As to her tax position
a) Her gain may be
d) she has to pay capital gains on the amount of depreciation.
Original cost $300,000 to acquire property
Recaptured - 110,000 by sheltering his income from tax ("Took depreciation" or recapture of investment)
Remaining book value $190,000
Sold for $300,0
In a sales transaction, the broker acted as an agent for both the buyer and the seller and collected a commission from each. He failed to disclose to either that he was receiving a commission from the other party. In this case, after the close of escrow,
a) any of these could happen
An agent cannot act for two principals in negotiations with each other unless both have knowledge of and consent to the dual agency. The agent could be denied commission from either and the undisclosed divided agency is a grou
A, an unlicensed person, offers B $1,000 an acre for 10 acres. B accepts the offer not knowing that A already has an offer of $2,000 an acre for the same parcel. The deal goes through as stated. B can
a) sue and get the land back
b) do nothing; the transa
B) do nothing, the transaction stands
There is nothing in the Real Estate Law that prohibits an unlicensed individual from purchasing land at one price and later selling it for a higher price.
To alienate title to real property, an individual
a) clouds a title
b) records a homestead
c) secures an ALTA policy of title insurance
d) conveys title
d ) conveys title
To alienate means title is conveyed from one owner to another. Alienation is the opposite of acquisition.
A purchase money mortgage may be defined ad one
a) taken on several parcels
b) taken on all or part of the purchase price
c) that includes chattels, such as household appliances, as additional collateral
d) that provides for additional advances to the mor
b) taken on all or part of the purchase price
A purchase money mortgage applies to any money used to purchase the ownership of property, either from credit extended by the seller ("soft money") or a cash loan from a lender ("hard money")
Which entity has the responsibility for determining property values for real property tax purposes?
a) tax commissioner
b) assessor's office
c) board of equalization
d) board of supervisors
b) assessor's office
The primary function of the county assessor is to establish an assessment roll each year that reflects the assessed value of real property within the county.
Which statement is NOT true with respect to depreciation as determined by an appraiser?
A) it is loss of value from any cause
b) It can be computed for both past and future
c) it is inherent in the property and not created by outside influences
d) it can
c) it is inherent in the property and not created by outside influences
Depreciation can be from either inherent or extraneous causes. Economic/social obsolescence is an outside factor that can have a great impact on value. Examples include an increase in
An apartment house under construction has many prospective renters. The city now wants to widen the street. This change results in a 10% loss of renters. This loss would be an example of
a) economic obsolescence
b) physical obsolescence
c) functional obso
a) economic obsolescence
Economic obsolescence is a loss in value due to factors outside of the subject property that adversely affect its value
A plot plan
a) shows exterior of structures to be built
b) is used as an exact guide for construction of improvements
c) is used as a guide to the placement of structures and related improvements on the lot.
d) shows contour of the land.
c) is used as a guide to the placement of structures and related improvements on the lot
a plot plan shows the layout of improvements on a property site (a plot). The plot plan usually includes location, dimensions, parking areas, landscaping and the like
The maximum possible income an income property can yield is
a) net income
b) effective gross income
c) net spendable income
d) gross scheduled income
d) gross scheduled income
Among the choices presented, gross scheduled income would yield the maximum possible income an income property can yield. "Scheduled income" represents the rent currently in effect on the property in question as if the property w
In order to arrive at an effective gross income for rental properties, an appraiser should deduct what from gross income?
a) depreciation
b) vacancies and collection losses
c) real property taxes
d) repairs
b) vacancies and collection losses
effective gross income is that income remaining after deducting vacancies and collection losses from gross income.
A home is being sold for $800,000 and has been appraised for $780,500. If the lender is willing to lend the maximum permitted by the Veterans Administration, the GI buyer is required to put up what amount in cash?
a) $20,000
b) $25,000
c) $20,500
d) $19,5
d) $19,500
Under a VA loan, the veteran is required to pay cash for an excess of the purchase price over the appraisal (certificate of reasonable value). No down payment is normally required unless the price exceeds the appraisal.
An agency agreement may be terminated by all of these occurrences EXCEPT
a) the principal's refusal of an offer to purchase presented in the name of a third person
b) renunciation of the agreement by the agent
c) destruction by fire of the property that i
a) the principal's refusal of an offer to purchase presented in the name of a third person
The parties may agree to terminate an agency. An agent may renounce it. An agency is terminated by extinction of the subject matter, but a principal's refusal of an
In an assignment of a lease, the assignee becomes the
a) sublessee
b) vendor
c) vendee
d) tenant
d) tenant
With the assignment of a contract (such as a lease) the assignee takes the position that was held by the assignor. The assignor of the lease was the tenant; therefore the assignee becomes the tenant