1. When demand decreases and supply remains the same
a. prices tend to rise.
b. prices tend to fall.
c. prices are not affected.
d. the market becomes stagnant.
2. A licensed real estate professional acting as a point of contact
between two or more people in negotiating the sale, rental or purchase
of a property is known as a(n)
a. sales affiliate.
b. broker.
c. property manager.
d. appraiser.
3. Which of the following would NOT affect supply?
a. Population
b. Construction costs
c. Government controls
d. The labor force
4. Which of the following is NOT a category of the uses
of real property?
a. Residential
b. Developmental
c. Agricultural
d. Industrial
5. Which of the following would NOT affect demand
a. Population
b. Demographics
c. Wage levels
d. Fiscal policy
6. Which of the following does NOT affect how quickly the
forces of supply and demand work?
a. Degree of standardization of the product
b. Mobility of the product
c. Degree of standardization of
the product's price
d. Mobility of the parties
to the transaction
7. The point at which supply and demand are balanced is
known as
a. highest and best use.
b. balance.
c. conformity.
d. equilibrium.
8. When the supply of a commodity decreases
a. prices tend to rise.
b. prices tend to drop.
c. demand tends to rise.
d. demand tends to drop.
9. A broker responsible for maintaining a client’s property while
maximizing income return is
a. a rental agent.
b. a building maintenance specialist.
c. a property manager.
d. an investment counselor.
10. The study and description of the people in a community
is called
a. population.
b. demographics.
c. family lifestyles.
d. households.
Chapter 2 Answers
1. The phrase "bundle of legal rights" is properly included
in
a. the definition of real property.
b. a legal description.
c. real estate transactions.
d. leases for less than
one year.
2. Which of the following is NOT included in one’s right
to control their property?
a. The right to invite people
on the property for a political fundraiser
b. The right to exclude the utilities’
meter reader
c. The right to erect "no
trespassing" signs
d. The right to enjoy pride
of ownership
3. According to law, a trade fixture is
a. a fixture.
b. an easement.
c. personalty.
d. a license.
4. K is interested in a house that fits most of her needs, but it is
located in a busy area where she is not sure where she wants to live.
Her concern about the property's location is called
a. physical deterioration.
b. area preference.
c. permanence of investment.
d. immobility.
5. Which of the following is considered to be personal property?
a. Wood-burning fireplace
b. Awnings
c. Bathtubs
d. Patio furniture
6. Which of the following is NOT meant by the word “improvement”?
a. Streets
b. A sanitary sewer system
c. Trade fixtures
d. The foundation
7. Real property can become personal property by
a. severance.
b. purchase.
c. hypothecation.
d. attachment.
8. Which of the following is NOT a physical characteristics
of land ?
a. Indestructibility
b. Uniqueness
c. Immobility
d. Scarcity
9. A broker showed an owner-occupied property that had window
screens, venetian blinds and a wall bed. The
broker secured a buyer whose offer was accepted by the owner,
and the transaction was placed in escrow.
Before the close of escrow, the seller may remove
a. all of the identified
items as they are trade fixtures.
b. only the venetian blinds
as personal property.
c. only the wall bed because
it is real property.
d. none of the identified items.
10. Land is considered to be
a. indestructible.
b. a wasting asset.
c. immune to the forces
of supply and demand.
d. subordinate to real property
rights.
11. A rancher owns a parcel of land on which oil was discovered.
If the rancher has not previously conveyed
the oil rights, who owns the oil?
a. The rancher
b. The tenant to whom the
property
has been leased
c. The state government
d. The federal government
12. Certain items on the premises that are installed by
the tenant and are related to the tenant's business
are called
a. fixtures.
b. emblements.
c. trade fixtures.
d. easements.
13. Which of the following is NOT described as personal
property ?
a. Chattels
b. Trade fixtures
c. Emblements
d. Fixtures
14. Fixtures are
a. real property.
b. chattels.
c. removable by a tenant
before the expiration of the lease.
d. removable by a tenant
after the expiration of the lease.
15. After the construction of a building over a railroad
right-of-way, the trains can
a. operate as usual.
b. no longer use the tracks
under the building.
c. use the tracks under
the building only if they cause no problem for the building's occupants.
d. use the tracks under
the building as long as they first obtain the building owner's permission.
16. Which of the following is NOT an economic characteristic
of land ?
a. Scarcity
b. Permanence of investment
c. Uniqueness
d. Area preference
17. Generally, personal property can be distinguished from real
property by its
a. greater variety.
b. mobility.
c. price.
d. multiplicity of use.
18. An important characteristic of land is that it may be
modified or improved at any given time.
Depending on its type, an improvement may increase the value of real
estate greatly. Which one of the following would NOT be considered
to be an improvement ?
a. Sewers
b. Crops
c. Buildings
d. Roads
19. T leases store space to K for a restaurant, and K installs
his ovens, booths, counters and other equipment.
When do these items become real property?
a. When they are installed
b. When K defaults on his
rental payments
c. When the lease takes
effect
d. When the lease expires
20. The geographic location of any parcel of land
a. can be changed as some
substances are removable from the land.
b. can never be changed.
c. can be changed because
the topography can be changed.
d. can be changed only under
certain legal circumstances.
21. Legally, the term improvements when referring to real estate would
include
a. shrubbery.
b. trees.
c. sidewalks.
d. lawns.
22. Which of the following is NOT a test of determining a fixture?
a. Intent of the parties
b. Size of the item
c. Method of attachment of the item
d. Adaptation of the item to the real estate
23. The owner of a house wants to fence the yard for her dog. When the
fence is erected, the fencing materials are converted to real estate by
a. severance.
b. annexation.
c. immobility.
d. indestructibility.
24. The physical characteristics of land include which of the following?
a. Uniqueness
b. Scarcity
c. Permanence of investment
d. Adaptation
25. The rights of ownership of real property do NOT include the right
of
a. disposition.
b. exclusivity.
c. control.
d. compatibility.
26. Which of the following is considered to have the greatest impact
on the value of a property?
a. Area preference
b. Permanence of investment
c. Scarcity
d. Uniqueness
Chapter 3 Answers
1. The foremost consideration in the purchase of a home is its affordability.
What is the second?
a. Construction specifications
b. The age of the improvements
c. The location of the property
d. The landscaping and exterior
2. The real cost of owning a home includes certain costs
or expenses that many people overlook. Which of the following is
NOT such a cost/expense?
a. The income lost on cash
invested in the home
b. The interest paid on
borrowed capital
c. Maintenance and repair expenses
d. Personal property taxes
3. M listed her real estate for sale at $100,000. If her
cost was 80 percent of the listing price, what will her percentage of profit
be if her real estate is sold for the listing price?
a. 10 percent
b. 15 percent
c. 20 percent
d. 25 percent
4. Most homeowner's insurance policies contain which of
the following clauses?
a. A property improvement
clause
b. A coinsurance clause
c. A co-ownership clause
d. A property devaluation
clause
5. The value that an owner has in the property that exceeds the amount
of the mortgage debt is called
a. equality.
b. escrow.
c. surplus.
d. equity.
6. One of the expenses the homeowner may NOT deduct when
preparing his annual income tax return is
a. real estate taxes.
b. mortgage interest on
a first home.
c. mortgage interest on
a second home.
d. mortgage interest on a third
home.
7. In the event that a homeowner's insurance policy provides
coverage for less than 80 percent of the full replacement cost of the dwelling,
then the loss of the residence will be settled for
a. the market value of the
property
less the land value.
b. the lowest repaid bid.
c. either the actual cash value
or the prorated repair cost.
d. the total replacement
cost.
8. The Ls sold their vacation home for $88,000. If they made a
profit of 10 percent, what was the original cost of the property?
a. $61,000
b. $79,000
c. $79,200
d. $80,000
9. One factor that would NOT affect the desirability of
the location of a residence would be
a. retirement prospects.
b. employment opportunities.
c. social services.
d. cultural advantages.
10. The selling price of a property is $96,000. This can be financed
if the buyer can put 10 percent down and pay a loan origination fee of
1.5 percent. How much cash must the buyer produce to complete this
transaction?
a. $10,080
b. $10,896
c. $11,040
d. $11,084
11. Federal income tax law excludes gain realized on the sale of a primary
residence for singles and couples. The amount of the exclusion is
(single/couple):
a. $100,000/$200,000
b. $125,000/$250,000
c. $250,000/$500,000
d. $300,000/$600,000
12. Which of the following is NOT covered in a basic homeowner’s
policy? Damage caused by
a. fire and lightening.
b. vandalism.
c. windstorm and hail.
d. flooding waters.
13. Federal income tax regulations allow a homeowner to
reduce his or her taxable income by amounts paid for
a. repairs and maintenance.
b. hazard insurance premiums.
c. real estate taxes.
d. principal and interest.
14. A longer mortgage loan term will
a. decrease the number of
loans being made.
b. result in lower monthly mortgage
payments.
c. prevent many individuals
from owning homes.
d. cause interest rates
to increase.
15. The buyer of a $125,000 home has paid $2,000 as earnest
money and has a loan commitment for 70 percent of the purchase price.
The balance of the cash the buyer needs to complete the transaction is
a. $3,500.
b. $35,500.
c. $37,000.
d. $37,500.
16. A homeowner who wishes coverage greater than that provided
by a basic insurance policy may choose a broad-form policy for coverage
of which of the following additional perils?
a. Flood or earthquake
b. War of nuclear explosion
c. Falling objects
d. Volcanic eruption
17. Mr. and Mrs. H have been living in their condominium at the shore
for the past 4 years and leasing the house that they bought 25 years ago
to a tenant. When they sell their house, how much of the capital gain will
be taxable?
a. 0 percent
b. 40 percent
c. 50 percent
d. 100 percent if it is less than $500,000
18. The federal tax provisions allowing for the exclusion of a certain level of capital gain from taxation applies if the home is
a. single family.
b. condominium.
c. part of a pud.
e. any of the above.
Chapter Four
1. The real estate broker's responsibility to keep the principal informed of all of the facts that could affect a transaction is the duty of
a. care.
b. disclosure.
c. obedience.
d. accounting.
2. Which of the following would be considered to be a dual agency?
a. The broker acting for both the
buyer and the seller in the same transaction
b. Brokers cooperating with
each other
c. The broker representing
different principals
d. The broker listing and
selling the same property
3. The relationship of a broker to his or her client is that of a(n)
a. trustee.
b. subagent.
c. fiduciary.
d. attorney in fact.
4. A real estate broker acting as the agent of the seller
a. is obligated to render faithful
service to the principal.
b. can disclose the seller's
minimum price.
c. should present to the
seller only the highest offer for the property.
d. can accept an offer on behalf of the seller.
5. Statements by a real estate licensee exaggerating the benefits of a property are called
a. polishing.
b. puffing.
c. prospecting.
d. marketing.
6. A broker is permitted to represent both the seller and the buyer in the same transaction when
a. the principals are not
aware of such action.
b. the broker is a subagent
rather than the agent of the seller.
c. commissions are collected
from both parties.
d. both parties have been informed and
agree to the dual representation.
7. Which of the following would NOT be considered fraudulent practice?
a. Deceitful or dishonest
practices.
b. Exaggerated statements about
the property.
c. Omitted statements of
material fact.
d. Misstatements about the
property.
8. As an agent for the seller, a real estate broker can
a. guarantee a prospective
buyer that the seller will accept an offer at the listed price and terms.
b. solicit an offer to purchase
the property from a prospective buyer.
c. advise a prospective
buyer of the best manner of taking title to the property.
e. change the terms of the listing contract on behalf of the seller.
9. A seller has listed her home with a broker for $90,000, and the broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $85,000 and the seller accepts it. In this situation,
a. the broker has violated his
agency relationship with the seller.
b. the broker was unethical,
but the seller did get to sell her property.
c. the broker acted properly
to obtain a quick offer on the property.
d. any broker is authorized
to encourage such bids for the property.
10. When Broker H was told by his principal not to advertise her property in the XYZ newspaper, which was out of the area, Broker H complied because he
a. had never advertised in
the XYZ newspaper anyway.
b. must obey the lawful instructions
of his principal.
c. was NOT intending to
advertise the property at all.
d. is allowed to advertise
only in local newspapers.
11. It is the duty of an agent to disclose to the principal every step taken in the transaction of the principal's business. This is because the
a. commission can be adjusted
up or down according to the agent's efforts.
b. agent has fiduciary obligations
to the principal.
c. terms of the listing
contract require the agent to do so.
d. terms of the purchase
contract require the agent to do so.
12. Upon discovering a latent defect in the property, the
licensee should discuss
the problem with the seller and then
a. notify the seller that
the defect must be repaired.
b. arrange for the repairs
himself or herself.
c. inform any prospective buyers
of the defect.
d. contact the city building
inspector about the defect.
13. A landowner subdivides his acreage and offers the lots for sale. Broker E tells the landowner that she can sell the lots. After Broker E sells some of the lots, the landowner refuses to pay her a commission. Broker E can
a. report the landowner to
the real estate licensing authorities.
b. file a lien against the
landowner's remaining lots.
c. sue the landowner for
breach of contract.
d. do nothing.
14. A salesperson who is employed by a broker told a prospective buyer that the house she was looking at is "the best house in the area." Because of this statement
a. the salesperson was guilty of fraud.
b. the broker was guilty of fraud because the employing broker is responsible
for the actions of the salesperson.
c. the salesperson was guilty of puffing.
d. the salesperson would be guilty of fraud only if the buyer purchased
the house.
15. Which of the following best defines the "law of agency?"
a. The selling of another's property by an authorized agency
b. The rules of law that apply to the responsibilities of a person
who acts for another
c. The principles that govern one's conduct in business
d. The rules and regulations of the state's licensing agency
16. A broker who is the agent of the buyer should do which of the following?
a. Disclose to the seller that the buyer is a minority person
b. Disclose to the seller the maximum price the buyer is willing to
pay
c. Present to the seller only offers that are acceptable
d. Advise the buyer if the listing price of the seller's house is unrealistic
17. A salesperson sells a buyer a property listed by another brokerage firm in the MLS. The salesperson has been working with the buyer for many months but does not have an agency contract with the buyer. This salesperson has fiduciary obligations to
a. the seller.
b. the buyer.
c. no one.
d. the public.
18. A buyer who is shown properties listed for rent by a broker is the broker's
a. client.
b. principal.
c. customer.
d. fiduciary.
19. Mr. M's house has been listed for sale for more than one year and he is very anxious to move into a retirement condominium. A salesperson, who is a subagent of the seller, tells a prospective buyer to make a low offer because the salesperson is sure that the seller will accept it. Regarding the salesperson's conduct, which of the following would NOT be true?
a. the salesperson acted appropriately to get the seller's property
sold.
b. the salesperson violated the fiduciary to the seller.
c. the salesperson's conduct could indicate that she is working for
the buyer.
d. the salesperson should not assume that an anxious seller will
accept a lower offer
20. A salesperson who represents the seller is showing a house to a prospective buyer. The salesperson knows that the house has a wet basement. Which of the following is true?
a. Withholding the information protects the confidence of the seller.
b. Disclosing the information could create a fiduciary with the buyer.
c. Withholding the information prevents the buyer from making an informed
decision.
d. Disclosing the information violates the fiduciary to the seller.
21. Which of the following would NOT need to be licensed when acting for another person in the sale or lease of real estate?
a. One who is personally representing a dealer in real-estate
b. Anyone acting under a power of attorney
c. A relative of the party
d. A next-door neighbor
e.
22. A broker cannot legally collect commissions from both the
seller and the buyer without
a. notifying both parties of this fact verbally after the sale has closed.
b. notifying both parties of this fact in writing after the sale has
closed.
c. having exclusive listing agreements signed by both the seller and
the buyer.
d. having the prior knowledge and written consent of both the seller
and the buyer.
23. Broker W, in the course of selling a home to N, told her that the foundation was “solid as a rock” when he knew for a fact that it was slowly sinking into the landfill on which it was built. Which of the following is he NOT likely to be subjected to?
a. Having his real estate license revoked
b. Being sued criminally for restitution
c. Being sued civilly for damages
d. Being sued criminally for fraud
Chapter 5 Questions
1. The amount of commission due to a salesperson is determined by
a. state law.
b. the local real estate
board.
c. mutual agreement.
d. court decree.
2. Broker J was accused of violating antitrust laws. She was probably accused of
a. not having an equal housing
opportunity sign in her office window.
b. undisclosed dual agencies.
c. allocation of customers or
price fixing.
d. dealing in unlicensed
exchange services.
3. A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. This is referred to as a
a. pro forma.
b. procuring cause.
c. private offering.
d. proffered offer.
4. A salesperson may advertise a property for sale only if he or she
a. personally listed the
property.
b. uses the employing broker's
name in the advertisement.
c. personally pays for the
advertisement.
d. is a member of the local
real estate board.
5. A parcel of vacant land 80 feet wide and 200 feet deep was sold for $200 per front foot. How much money would a salesperson receive for her 60 percent share in the 10 percent commission?
a. $640
b. $960
c. $1,600
d. $2,400
6. A real estate salesperson who is an independent contractor receives
a. a monthly salary or hourly
wage.
b. company-provided health
insurance.
c. company-provided automobile.
d. negotiated commissions on transactions.
7. In a typical agency relationship between the broker and the client, the broker's commission is determined by
a. state law.
b. the local real estate
board.
c. mutual agreement.
d. minimums based on the
property type.
8. Salesperson N finally concluded some extremely difficult negotiations that resulted in the sale of a listed parcel of property. For all of her extra efforts, she can legally demand a performance bonus from
a. the seller.
b. the buyer.
c. her broker.
d. no one.
9. W is a salesperson working for Broker V. W sells a $150,000
home. The listed commission is 6.5 percent of the selling price. Out of
this amount, 5% is payable to the referral network that referred the buyer,
35 percent goes to the listing broker, and 60 percent belongs to the cooperating
broker. Broker V and W agreed that W would receive 55 percent of
any commission
that he generated for the office. For this transaction, W is entitled
to receive
a. $2,632.50
b. $3,217.50
c. $3,412.50
d. $5,850.00
10. Which of the following is NOT required of a broker in order for that broker to collect a commission on the sale of a property? That he or she
a. had a valid real estate
broker's license.
b. was a procuring cause.
c. was employed to perform
certain activities.
d. belonged to a real estate board.
11. A broker lists a property for sale at $100,000 with a 5 percent commission and he later obtains a verbal offer to purchase the property from a prospective buyer. The seller indicates to the broker that the offer would be acceptable if it were submitted in writing. Before it can be put in writing, the buyer backs out and revokes the verbal offer. In this situation, the broker would be entitled to
a. a commission of $5,000.
b. only a partial commission.
c. no commission.
d. the normal rate of commission.
12. Which of the following is NOT prohibited under the antitrust laws?
a. Property management companies standardizing management fees
b. Brokers allocating markets based on the value of homes
c. Real estate companies agreeing NOT to cooperate with a broker because
of the fees that broker charges
d. A broker deciding whether to join a MLS
13. A broker's salesperson lists a unit for sale in a condominium building. The salesperson in this transaction
a. has a direct contractual relationship with the owners of the unit.
b. acts on behalf of the broker.
c. acts on behalf of the condominium association.
d. must find a buyer for the unit to obtain a share of the commission.
14. There is a spectacular house that a salesperson from Firm A has been trying for several weeks to list for sale. The owners have been interviewing salespeople from different firms. They tell A's salesperson that Firm B will charge 2% less commission for selling the house. What should A's salesperson say to the owner to get the listing?
a. Salespeople will not show Firm B's listings because of their
commission fees.
b. Most brokers in the area charge a standard rate of commission, including
Firm A.
c. Firm B cannot provide good services because they charge less.
d. Firm A provides excellent services to market their sellers' properties.
15. A licensed salesperson may receive compensation or commission from
a. only the employing broker.
b. from the principal.
c. from any broker.
d. from a landlord.
16. The listing and selling brokers agree to split a 7% commission fifty-fifty on a $96,900 sale. The listing broker gives the listing salesperson 30% of his commission and the selling broker gives the selling salesperson 35% of his commission. How much does the selling salesperson earn from the sale?
a. $1,139.78
b. $1,174.78
c. $971.95
d. $1,187.03
17. Unless some other written agreement has been made, the broker will usually receive the sales commission when
a. the purchaser takes possession of the property.
b. the seller lists the property with the broker.
c. the transaction is closed.
d. an offer is procured from a ready, willing and able buyer.
Chapter 6 Questions
1. Which of the following is NOT a reason a listing
agreement may be terminated ?
a. Sale of the property
b. Death of the salesperson
c. Agreement of the parties
d. Destruction of the premises
2. By executing a listing agreement with a seller, a real estate broker has become
a. a procuring cause.
b. obligated to open a special
trust account.
c. an agent of the seller.
d. responsible for sharing
commissions.
3. The provision in a listing agreement that gives additional authority to the broker and obligates the broker to distribute the listing to other brokers is a(n)
a. joint listing clause.
b. multiple listing clause.
c. net listing clause.
d. open listing clause.
4. A building sold for $157,000. The broker charged a 6
percent commission and divided it as follows:
10 percent to the salesperson who took the listing;
one-half of the balance to the salesperson who made the sale;
and the remainder to the broker.
What was the listing salesperson's commission?
a. $239
b. $942
c. $1,570
d. $4,239
5. Broker W took a listing on a property and shortly thereafter discovered that her client had been previously declared incompetent by the court.The listing now is
a. binding as the broker
was acting
in good faith.
b. still valid.
c. the basis for commission
if the
broker produces a buyer.
d. void.
6. The type of listing agreement that provides for the payment of a commission to the broker even though the owner makes the sale without the aid of the broker is called a(n)
a. exclusive-right-to-sell listing.
b. open listing.
c. exclusive-agency listing.
d. option listing.
7. A property owner lists his property for sale with a broker. During the negotiations, the owner told the broker that the owner wanted $138,000 for the property, and anything above that amount the broker could keep as his commission. The listing with this type of provisions is known as the
a. gross listing.
b. net listing.
c. open listing.
d. non-exclusive listing.
8. Under which of the following listing agreements can the owner of listed property sell the property on his or her own without having to pay the listing broker a commission?
a. Exclusive-right-to-sell
listing
b. Exclusive-agency listing
c. Open listing
d. Both b and c
9. A property owner signed a 90-day listing agreement with a broker. The owner was killed in an accident before the listing expired. Now the listing is
a. binding on the owner's
spouse for the remainder of the 90 days.
b. still in effect as the
owner's intention was clearly defined.
c. binding only if the broker
can produce offers to purchase the
property.
d. terminated automatically upon
the death of the principal.
10. A listing contract in which the broker's commission is contingent on the broker being able to produce a buyer before the property is sold by the owner or another broker is called a(n)
a. open listing.
b. net listing.
c. exclusive-right-to-sell
listing.
d. exclusive-agency listing.
11. A broker who represents a seller under an exclusive listing receives two offers for the property at the same time, one from one of his salespeople and one from a salesperson of a cooperating broker. What should the broker do?
a. Submit the offer from
his salesperson first
b. Submit the offer from
the other salesperson first
c. Submit the higher offer
first
d. Submit both offers at the same time
12. Which of the following is NOT a typical provision of a listing agreement?
a. The price the seller is
asking for the property
b. The date the broker will schedule
an open house
c. The commission rate to
be paid to the listing broker
d. The responsibilities
of the broker
13. The type of listing agreement that provides the least protection for the listing broker is the
a. exclusive-right-to-sell
listing.
b. exclusive-agency listing.
c. open listing.
d. net listing.
14. If a seller needs to net $50,000 after the sale, how much must the real estate sell for if the selling costs include a 7% commission and $1,200 in other expenses?
a. $54,700.00
b. $54,963.44
c. $55,053.76
d. $55,633.25
15. A seller refused to pay a commission to the broker even though there was a valid listing agreement and the broker procured a buyer for the property. What can the broker do?
a. Sue the seller in court for the commission
b. File a lien on the seller's property for the amount of the commission
c. Obtain an injunction to stop the transaction until the commission
is paid
d. Collect the commission from the buyer
16. Under an exclusive agency listing, the listing broker would
NOT be entitled to
a commission if
a. the broker sells the property herself.
b. the property is sold through another broker.
c. the property is sold through the multiple-listing service.
d. the seller sells the property to a neighbor across the street who
has her property listed with another broker.
17. Which of the following is NOT a type of listing contract?
a. Open listing.
b. Exclusive agency.
c. Exclusive right-to-sell.
d. MLS contract.
18. Which of the following is NOT a
reason that a listing agreement may
be terminated ?
a. By mutual agreement
b. By operation of law
c. Because the seller can't find another house to buy
d. Because of impossibility of performance
19. The seller wants to net $65,000 on the sale of his house after paying the broker a fee of 6%. How much must the gross selling price be?
a. $69,149
b. $68,093
c. $67,035
d. $66,091
20. The broker enters into a listing agreement with a seller in which the seller will receive $12,000 from the sale of a lot and the broker will receive any sale proceeds over this amount. This type of listing is a(n)
a. gross listing.
b. legal and ethical way to ensure that the broker is compensated.
c. exclusive agency.
d. net listing.
21. In some states the following type of
listing is prohibited:
a. Exclusive-right-to-sell
b. Net listing
c. Buyer Agency Agreement
d. Open Listing
22. An owner who is interested in selling his house is usually concerned about how much money he can get when it sells. A competitive market analysis may help the seller determine a realistic listing price. Which of the following is true?
a. A competitive market analysis is the same as an appraisal.
b. A broker, not a salesperson, is permitted to prepare a competitive
market analysis.
c. A competitive market analysis is prepared by a certified real
estate appraiser.
d. A competitive market analysis contains a compilation of other similar
properties that have sold.
23. Two different brokerage companies claimed they were entitled to
a commission from the sale of a property that was listed by one of the
firms under an open listing agreement. The broker who is entitled to the
commission is the one who
a. listed the property.
b. advertised the property.
c. obtained the first offer.
d. was the procuring cause of the sale.
24. Broker P listed the Ks' property for sale under an exclusive-right-to-sell
agreement. Today, one of P's salespeople, T, obtained an offer to purchase
the property along with a certified check for 5 percent of the purchase
price as earnest money.
What should T do with the earnest money check?
a. Give it to the Ks.
b. Hold it until the closing.
c. Deposit the money in
his trust account.
d. Give the money to P for deposit
in his trust account.
25. An employment contract between a buyer and a broker would NOT be called
a. an exclusive buyer agency agreement.
b. an exclusive agency buyer agency agreement.
c. an open buyer agency agreement.
d. a net buyer agency agreement.
26. Before signing a buyer agency agreement a licensee would NOT
a. explain forms of agency available.
b. obtain financial information from the buyer.
c. inform the buyer of the charges or compensation for services.
d. describe specific services to be provided.
27. An owner lists her property for sale with a broker. Another broker, however, finds a buyer for the house. The listing broker did not receive a commission from the sale. The type of listing contract between the owner and the broker could have been a(n)
a. exclusive right-to-sell.
b. exclusive agency.
c. open listing.
d. multiple listing.
28. Under an exclusive (agency) buyer agency agreement the real estate broker would NOT be entitled to a commission
a. if the broker sells the buyer a listing from another firm.
b. if the property is a FISBO.
c. if the buyer finds a suitable property without the broker.
d. if the buyer cancels the agreement of sale.
29. The salesperson received $2,800 commission on her 35% share of the
total commission on the sale of a property that sold for $160,000.
What was the commission rate?
a. 10%
b. 5%
c. 7%
d. 4.5%
30. A broker hires sales associates with an agreement to split the commission between the broker - 45%, the listing salesperson - 30%, and the selling salesperson. If the broker’s share is $2,430, the property sold for $90,000, and the listing salesperson’s share was $1,620, what was the selling sales associate’s share?
a. $2,700
b. $1,800
c. $1,350
d. $1,295
Chapter 7 Answers
1. A statutory right that a family has in its residence is called
a. entirety.
b. survivorship.
c. curtesy.
d. homestead.
2. A person who has complete control over a parcel of real estate is said to own a
a. leasehold estate.
b. fee simple estate.
c. life estate.
d. defeasible fee estate.
3. A portion of W's building was inadvertently built on G's land. This is called an
a. accretion.
b. avulsion.
c. encroachment.
d. easement.
4. Many states determine the order of water rights according to which users of the water hold a recorded beneficial use permit. This allocation of water rights is determined by
a. accretion.
b. riparian theory.
c. littoral theory.
d. the doctrine of prior appropriation.
5. The purchase of a ticket for a professional sporting event gives the bearer
a. an easement right to park
his car.
b. a license to enter and claim
a seat for the duration of the game.
c. an easement in gross
interest in the professional sporting team.
d. a license to sell goods
and beverages at the sporting event.
6. Which of the following has an indefinite duration?
a. Freehold estate
b. Less-than-freehold estate
c. Estate for years
d. License
7. If the owner of the dominant tenement becomes the owner of the servient tenement and merges the two properties,
a. the easement becomes dormant.
b. the easement is unaffected.
c. the easement is terminated.
d. the properties retain
their former status.
8. A decedent left a will giving his neighbor the right
to use a well on the decedent's land as long as the
neighbor was alive. The neighbor's interest in the property is
properly called a(n)
a. license.
b. easement in gross.
c. easement appurtenant.
d. life estate.
9. Homeowner G acquired the ownership of land that was deposited
by a river running
through her property by
a. reliction.
b. succession.
c. avulsion.
d. accretion.
10. A life estate conveys to the life tenant
a. a leasehold for life.
b. a reversionary interest.
c. a legal life estate.
d. ownership for life.
11. J owned the fee simple title to a vacant lot adjacent
to a hospital and was persuaded to make a
gift of the lot. She had her attorney prepare a deed that conveyed
the ownership of the lot to the hospital "So long as it is used for medical
purposes." After the completion of the gift, the hospital will own
a
a. life estate.
b. tenancy for years.
c. fee simple determinable.
d. periodic tenancy.
12. The most all-inclusive type of real property ownership is a
a. fee simple estate.
b. life estate.
c. conditional fee estate.
d. reversionary interest.
13. The rights of the owner of property located along the banks of a river are called
a. littoral rights.
b. prior appropriation rights.
c. riparian rights.
d. hereditaments.
14. The local utility company dug up F's garden to install
a natural gas line.
The company claimed it had a valid easement and proved it by
the county records.
F claimed the easement was not valid because he did not know about
it. The easement
a. was valid even though the owner did not know about
it.
b. was an appurtenant easement
owned by the utility company.
c. was not valid because
it had not been used during the entiretime that F owned prooperty.
d. was not valid because
F was not informed of its existence when he purchased the property.
15. Which of the following is NOT an ownership right to real estate?
a. Buildings located on the
property.
b. Air space above the property.
c. Easements running with
the land.
d. Navigable rivers running through
the property.
16. J and S are next-door neighbors. S tells J that he can store his camper in her yard for a few weeks until she needs the space. S did not charge J rent for the use of her yard. S has given J a(n)
a. easement appurtenant.
b. easement by necessity.
c. estate in land.
d. license.
17. Your neighbors use your driveway to reach their garage
on their property.
Your attorney explains that the ownership of the neighbors' real
estate includes an
easement appurtenant giving them the driveway right. Your property
is the
a. leasehold interest.
b. dominant tenement.
c. servient tenement.
d. license property.
18. Creditors suing a homeowner who has obtained a homestead
exemption as
provided by
state law
a. can have the court sell
the residence and apply the full proceeds of the sale to the outstanding
debts.
b. have no right to sell
the debtor's residence.
c. may request a court-ordered sale and have the proceeds in excess
of the statutory exemption and exempted liens applied to the debts.
d. can force the debtor to sell the residence in
order to pay the outstanding debts in full.
19. Q owned two acres of land. He sold one acre to F and
reserved for himself an appurtenant easement over F's
land for ingress and egress. F's land
a. is the dominant tenement.
b. is the servient tenement.
c. can be cleared of the
easement when Q sells the withheld acre to
a third party.
d. is subject to an easement
in gross.
20. G owns 50 acres of land with 500 feet of frontage on
a desirable
recreational lake. She wishes to subdivide the parcel into salable lots,
but she wants to retain control over the lake frontage while allowing lot
owners to have access to the lake. Which of the following types of access
rights would provide the greatest protection
for a prospective purchaser?
a. An easement in gross
b. An appurtenant easement
c. An easement by necessity
d. A license
21. A homestead exemption protects against judgments
a. of unsecured creditors.
b. that result from unpaid taxes.
c. that result from foreclosure of a mortgage.
d. that result from the costs of improvements.
22. The major intent of zoning regulations is to
a. demonstrate the police power of the state.
b. ensure the health, safety and welfare of the community.
c. set limits on the amount and kinds of businesses in a given
area.
d. protect residential neighborhoods from encroachment by business
and industry.
23. The owner of a secluded area adjacent to the Atlantic Ocean noticed that people from town walked along the shore in front of this property. The owner learned that the local citizens had been walking along this beach for years. The owner went to court to try to stop people from walking along the water's edge in front of his property. The owner is likely to be
a. unsuccessful because the local citizens have been doing this for
years and thus have an easement.
b. unsuccessful because the owner's property extends only to the high-water
mark and the public can use the land beyond this point.
c. successful because the owner's property extends to the middle of
the water bed.
d. successful because the owner can control access to his own
property.
24. A deed conveys ownership to the grantee so as long as the existing building is not torn down. What type of estate did this deed create?
a. A life estate
b. A nondestructible estate
c. A fee simple estate
d. A determinable fee estate
25. Which of the following best describes a legal life estate?
a. A homestead estate
b. An estate conveyed by one party to a second party for the life of
the second party
c. An estate created by a will
d. An estate conveyed to a second party subject to a condition
26. For land to be taken by the government under its right of eminent domain, which of the following must apply?
a. The taking must be for a public purpose.
b. There must be a statutory dedication.
c. This must be an adverse action.
d. There must be constructive notice.
27. H conveys a life estate to her grandson and stipulates that upon her death the estate will pass to her son-in-law. The son-in-law has a(n)
a. estate in reversion.
b. estate in remainder.
c. estate for years.
d. legal life estate.
28. L conveys the ownership of his house to his mother and stipulates that upon her death he will recapture the ownership. The interest L has in the ownership is a
a. remainder estate.
b. curtesy estate.
c. legal life estate.
d. reversion estate.
29. The process by which the government can take ownership of a building that has deteriorated, with bricks falling on a public sidewalk, is
a. escheat.
b. eminent domain.
c. condemnation.
d. doctrine of public protection.
30. Mrs. D conveys the ownership of her apartment building to a nursing home, anticipating that the rental income will help pay for her father's care there. When her father dies, Mrs. D will recapture the ownership of the apartment building. This is an example of a
a. remainder life estate.
b. legal life estate.
c. life estate pur autre vie.
d. leasehold estate.
31. The developer grants to the gas company the right to install
transmission lines. This right is called a(n)
a. license.
b. easement in gross.
c. easement by prescription.
d. conditional use permit.
32. A lot is encumbered by a sewer easement that runs where the foundation of a building would be. How will this affect the owner who wants to build a house?
a. It will have no effect because the
sewer line is deeper than the
foundation would be.
b. The house must be constructed to avoid the easement.
c. The municipality must move the
sewer line prior to construction.
d. Any easement through the
buildable part of the lot will
prevent construction.
33. A person wants to ensure that the ownership of real property can
be
willed to her children. Which of the following forms of ownership
would the person want?
a. A conventional life estate
b. A fee estate
c. A joint tenancy
d. A license
34. The owner divides a parcel into two lots, one of which is surrounded
by
other lots and has no street access. Which of the following is
true?
a. The municipality must construct a street to create access.
b. The owner must create an easement by condemnation to provide access.
c. An easement by prescription should be granted.
d. An easement by necessity should be created for the land-locked parcel.
35. A person who acquired ownership that can be inherited, with the
provision
that the land must always be used for recreational purposes,
has which of
the following?
a. A fee simple estate
b. A conditional fee estate
c. A restricted estate
d. An estate that cannot be sold
36. The power by which government can acquire ownership of private land
for
public use is
a. escheat.
b. eminent domain.
c. condemnation.
d. doctrine of public acquisition.
37. A father conveyed the family home to his daughter by will as a pur
autre vie
estate for the life of her mother. If the daughter should die
before the mother
who holds the property?
a. The mother
b. The remaindermen
c. The daughter’s estate
d. The father’s other children
Chapter 8
1. S and N bought a store building and took title as joint
tenants. N died testate.
S now owns the store:
a. as a joint tenant with
rights of survivorship.
b. in severalty.
c. as a tenant in common
with N's heirs.
d. in trust.
2. F has the legal right to occupy and use a certain
residential structure. Which
of the following does NOT describe F’s interest ?
a. Fee simple
b. Remainder
c. Leasehold
d. Life estate
3. Which of the following would be considered community
property?
a. A gift of property to
the wife during the marriage
b. Income earned by one spouse
during the marriage
c. Property inherited by
the husband during the marriage
d. Income earned by either
party prior to the marriage
4. A trust is a legal arrangement whereby the title to property
is held for the benefit of a third party by a(n)
a. beneficiary.
b. trustor.
c. trustee.
d. attorney in fact.
5. E lives in an apartment building. The land and structures are owned
by a
corporation, with one mortgage loan covering the entire property.
Like the other residents, E owns stock in the corporation and has
a lease to his apartment.
This type of ownership is called a:
a. condominium.
b. planned unit development.
c. time-share.
d. cooperative.
6. V and N are co-owners of a fee simple interest in a small
office building. N
dies intestate and leaves no estate to be distributed to his
heirs. V is neither
related to N nor a creditor of N. Which of the following would
explain why V
acquired the interest of N?
a. Adverse possession
b. Reversionary rights
c. Joint tenancy
d. Foreclosure
7. An ownership interest that is based on annual occupancy
intervals is the
a. leasehold.
b. time-share.
c. condominium.
d. cooperative.
8. J, M, and H are joint tenants owning a parcel of land.
H conveys his interest
to his long-time friend W. After the conveyance, J and M
a. become tenants in common.
b. continue to be joint
tenants with H.
c. become joint tenants
with W.
d. remain joint tenants owning
a two-thirds interest.
9. K and U owned a combination apartment building with a
small bar
and grill on the premises. They shared their profits and losses
on their venture
equally, but they did not own the business under any written
partnership
agreement. One day, U died of a heart attack. If, after U's death,
K continued to own the same undivided interest in the real estate as he
did before U's death and no more, then:
a. they were joint tenants.
b. they were tenants in common.
c. they were stockholders
in their
own corporation.
d. U died intestate.
10. Which of the following does NOT have equal rights of
possession?
a. Tenancy in common
b. Tenancy at will
c. Tenancy by the entirety
d. Joint tenancy
11. In a gift of a parcel of real estate, one of the two
owners was given an
undivided 60 percent interest and the other received an undivided
40
percent interest. The two owners hold their interests as
a. cooperative owners.
b. joint tenants.
c. community property owners.
d. tenants in common.
12. In a community property state, separate property is owned
a. solely by either spouse before the marriage or
acquired by gift or inheritance by either spouse during the marriage.
b. by one spouse before
the marriage and jointly with the other spouse during the marriage.
c. one-half by each living spouse during the marriage
and then passes entirely to the survivor.
d. jointly by one spouse
and his or her deceased spouse's descendants.
13. Under the community laws of the state in which they
live, which of the
following does NOT apply to the Ds ?
a. Each also owns separate
property.
b. They may not convey community
property without the other's consent.
c. Each also owns community property
with others.
d. They may not encumber
community property without the other’s consent.
14. To create a joint tenancy relationship in the ownership
of real estate, there
must be unities of
a. grantees, ownership, claim
of right, and possession.
b. title, interest, encumbrance,
and survivorship.
c. possession, time, interest,
and title.
d. ownership, possession,
heirs, and title.
15. A person who owns one unit in a multi-unit structure
together with a specified
undivided interest in the common elements would own a
a. cooperative.
b. share in a real estate
investment trust.
c. condominium.
d. time-share interest.
16. Separate property owned by a married person in a community
property state must be
a. incorporated into the
community property.
b. kept totally separate from the community property.
c. designed so that it eventually
becomes community property.
d. established prior to,
not during, the marriage.
17. A joint tenancy with right of survivorship may be created
a. automatically if the property is distributed to the surviving
children.
b. by presumption if another form of ownership is not described.
c. by deed or will.
d. when a deed is signed by both spouses.
18. The owner of a condominium unit learns that a neighbor has failed to pay his real estate taxes. If this neighbor does not pay the taxes
a. a lien can be filed against the condominium, including all of the
units.
b. a lien can be filed against the neighbor's unit and his percentage
of the common elements.
c. a lien can be filed only against the common areas of the condominium.
d. the taxing authority can order the condominium to be dissolved
19. A property held as tenancy by the entirety requires which of the following?
a. The cotenants must be husband and wife.
b. The property in question must be Torrens property.
c. Upon the death of a cotenant, the decedent's interest passes to
his or her heirs.
d. In the event of a dispute the property must be partitioned.
20. In a community property state
a. the property that a person accumulated prior to marriage is called
separate property.
b. the property that a person received as a gift during marriage
is known as community property.
c. all property owned by a married person is called community property.
d. the property paid for by the earnings of one spouse during the marriage
is knows as separate property.
21. Which of the following is NOT an element of a joint tenancy
with right of survivorship ?
a. It is created only when four unities are present.
b. It cannot be created by operation of law.
c. Each joint tenant may pass on his or her interest to the heirs.
d. The land may be the subject of a suit to partition.
22. Which of the following is a false statement about a condominium?
a. A declaration must be filed before any units may be sold.
b. Each unit owner has a fractional undivided interest in the common
elements.
c. Each owner receives a separate real estate tax statement.
d. Each owner has a proprietary lease with the association for his
or her own unit.
23. Because Mr. and Mrs. J no longer need their large house,
they decide to sell the house and move into a cooperative apartment
building. In a cooperative they will
a. become stockholders in a corporation.
b. own their individual apartment.
c. own the common elements.
d. receive a 20 year lease to their apartment.
24. The severalty owner of a parcel of land sells it to a buyer.
The buyer insists that the owner's wife join in signing the deed.
The purpose of obtaining the wife's signature is to
a. terminate any rights the wife may have in the property.
b. defeat any curtsey rights.
c. provide evidence that the owner is married.
d. subordinate the wife's interests to the buyer.
25. Under the condominium form of ownership, the owner's interest in
the unit would normally be
a. a life estate.
b. a fee simple estate.
c. a reversionary estate.
d. a proprietary leasehold.
26. A and B are joint tenants. B sells his interest to C. What is the relationship of A and C?
a. They are joint tenants.
b. They are tenants in common.
c. There is no relationship because B cannot sell to C.
d. A owns a 2/3 interest and C owns a 1/3 interest.
27. Tenancy with survivorship means
a. the tenancy interest may be inherited.
b. the tenancy interest may be held by the remaining tenants upon death.
c. the tenant's heirs are survivors.
d. this is not a legal tenancy.
28. Acquisition of real estate by a group that includes one or more
sponsors
(promoters) and several investors is called a
a. subdivision.
b. time share.
c. syndication.
d. group investment.
29. A person purchases a fee simple estate and has an undivided interest
in
common elements. What does this person own?
a. A tenancy in common
b. A cooperative
c. A condominium
d. A tenancy by the entireties
30. Which of the following is true about condominium ownership?
a. It cannot be mortgaged.
b. The corporation pays the real estate taxes.
c. The ownership cannot be willed.
d. The limited common elements cannot be sold separately.
31. The owner of a condominium is responsible for paying a monthly
maintenance fee. If the owner fails to make this payment, which
of the
following is true?
a. The owner is evicted.
b. The debt is collected from other owners.
c. The debt is liened against the unit.
d. The debt is added to the mortgage payment.
32. How does a cooperative obtain the funds necessary to cover on-going
operating expenses and mortgage payments?
a. Charge rent.
b. Sell common elements.
c. Assess shareholders.
d. Charge special assessments
33. A trust that is established after the death of the owner is called a
a. trust by will.
b. testamentary trust.
c. beneficial trust.
d. living trust.
34. In a land trust which of the following is NOT a correct statement?
a. The beneficial interest can be transferred by assignment.
b. The beneficiary is usually the trustor.
c. Public records list all the beneficiaries.
d. The property can be pledged as security for a loan without
recording a mortgage.
35. In a limited partnership
a. the number of investors is limited to 10.
b. all the partners participate in running the business.
c. the general partners run the business.
d. investors can participate with a small amount of capital with
a minimum risk.
36. In defining a corporation as a legal entity, which statement is NOT true?
a. Stockholders have a direct ownership interest in the real estate.
b. It is managed by the Board of directors.
c. It continues to exist until formally dissolved.
d. Profits are taxed on two levels: as corporation profit and as dividends
top stockholders.
37. The difference between time-share use and a time-share estate is
a. the amount of time sold to the buyer.
b. one limits use to certain months, the other provides a rotation
system for use.
c. time-share use sells only right of occupancy, not a fee-simple estate.
d. no difference except in terminology.
Chapter 9 Answers
1. How many acres are in a lot that is 1/4 of a mile wide by 1/4 of
a mile long?
a. 10
b. 120
c. 40
d. 80
2. The numbering of sections in a township begins in the
section in the
a. northeast corner and
then runs easterly.
b. northwest corner and
then runs easterly.
c. northeast corner and then runs
westerly.
d. northwest corner and
then runs westerly.
3. The following legal description contains how many acres:
the South 1/2 of the SE 1/4 of the NW 1/4 of the NE 1/4 of Section
7?
a. 2.5
b. 5
c. 10
d. 20
4. A township contains
a. 6 square miles.
b. 640 acres.
c. 23,040 square feet.
d. 36 sections.
5. Strips of land six miles wide that run north and south
are called
a. tiers.
b. ranges.
c. latitudes.
d. longitudes.
6. A metes and bounds legal description
a. can be made only in areas
excluded from the rectangular
survey system.
b. is not acceptable in
court in most jurisdictions.
c. must commence and finish at
the same identifiable point.
d. is used to complete areas
omitted from recorded subdivision plats.
7. How many lots, each measuring 72.5 feet wide by 100 feet
deep,
could be made from a two-acre parcel of land?
a. 6
b. 7
c. 12
d. 14
8. A parcel of land described as "the NW 1/4 of the SW 1/4
of Section 6, T4N, R8W
of the Third Principal Meridian" was sold for $875 per acre. The listing
broker will receive a 5 percent commission on the total sales price. How
much will the broker receive?
a. $1,750
b. $5,040
c. $14,000
d. $15,040
9. The section of land reserved for school purposes in the
rectangular survey
system is section
a. 12.
b. 16.
c. 20.
d. 36.
10. The system of legal description that defines a parcel of land
by its
perimeter is the
a. geodetic survey.
b. rectangular survey.
c. lot and block system.
d. metes and bounds system.
11. A metes and bounds legal description must
a. cover an area larger
than 10 acres.
b. be used in areas not
covered by the rectangular survey system.
c. commence and finish at the
same identifiable point.
d. always use north as the
basis for directions.
12. The primary survey line running east and west in the
rectangular survey system is the
a. township line.
b. base line.
c. range line.
d. principal meridian.
13. Which of the following parcels of land is the smallest?
a. Two sections
b. Five percent of a section
c. Two square miles
d. 1,280 acres
14. "Beginning at the SE corner of the NE 1/4 of the section,
then due west 5,280 feet more or less to the SW corner of the NW 1/4,
the north along the west line of the section 2,640 feet more or less
to the NW corner of said NW 1/4, then in a straight line to the point
of beginning."
How many acres does this parcel contain?
a. 80 acres
b. 160 acres
c. 240 acres
d. 320 acres
15. A section
a. is one mile square.
b. contains 460 acres.
c. has a perimeter of 5,280
square feet.
d. can be numbered from
1 through 50.
16. A lot with a depth of 80 feet and an area of 4,800
square feet was sold for $350 per front foot.
What was the total sales price?
a. $21,000
b. $28,000
c. $31,800
d. $35,000
17. The primary survey line running north and south in the rectangular
survey system is the
a. township line.
b. base line.
c. range line.
d. principal meridian.
18. A recorded subdivision plat is used in the
a. geodetic survey system.
b. rectangular survey system.
c. lot and block system.
d. metes and bounds system.
19. In parts of the country where there are many lakes and rivers,
the
rectangular survey system designations will often include
a. hyphenated sections.
b. meander-line sections.
c. mean water-line sections.
d. fractional sections.
20. The rectangular survey system section contains
a. 36 townships.
b. 160 government lots.
c. 160 acres.
d. 640 acres.
21. The method of describing land by degrees, feet and monuments is
known as the
a. angular system.
b. metes and bounds system.
c. rectangular survey system.
d. lots and blocks system.
22. How many acres are in a description reading, "The NW 1/4 of the
SE 1/4 and the
S 1/2 of the SW 1/4 of the NE 1/4 of Section 4”?
a. 40 acres
b. 50 acres
c. 60 acres
d. 80 acres
23. Which of the following is the best way to ensure that there are
no
encroachments and verify the boundaries of a parcel of land?
a. Write a legal description
b. Get a spot survey
c. Find the monuments
d. Verify the benchmarks
24. A farmer owned Section #17 and sold the south one half. He then
fenced in
the northern one half. How many linear feet of fencing did he
use if he had two
6 foot wide gates?
a. 27,720
b. 15,828
c. 18,530
d. 14,250
25. The owner has a large parcel of land surveyed into lots and streets
and files
a subdivision plat. Each lot can be legally described by use
of which of
the following?
a. Street address
b. Government survey
c. Metes and bounds
d. Lots and blocks
26. How many linear feet of fence are needed along 1.5 miles of
roadway?
a. 7,920
b. 8,250
c. 13,430
e. 16,450
Chapter Ten Answers
1. When properly recorded in the county where the real estate of the
defendant is located, a judgment becomes a(n)
a. voluntary lien.
b. involuntary lien.
c. specific lien.
d. equitable lien.
2. When a company furnishes materials for the construction
of a house and is subsequently not paid,
it may file a(n)
a. deficiency judgment.
b. lis pendens.
c. estoppel certificate.
d. mechanic's lien.
3. Which of the following liens does NOT need to be
recorded to be valid?
a. Mortgage lien
b. Real estate tax lien
c. Judgment lien
d. Mechanic's lien
4. When a lien against a parcel of real estate may
result from a lawsuit
currently before the court, one examining the public records
would
look for
a. the chain of title.
b. a lis pendens.
c. a suit to quiet title.
d. a judgment lien.
5. A mechanic's lien would be properly classified as a(n)
a. equitable lien.
b. voluntary lien.
c. general lien.
d. statutory lien.
6. The current market value of a property is $35,000.
For tax purposes, it is assessed at 40 percent of market value. The tax
rate of $4 per $100 of assessed value. What is the amount of the tax due?
a. $560
b. $625
c. $705
d. $740
7. Under which of the following types of liens can
both the real property and the personal property of the debtor be
sold to pay the debt?
a. Real estate tax lien
b. Mechanic's lien
c. Judgment lien
d. Assessment lien
8. Which of the following is a voluntary lien?
a. Mortgage lien
b. Estate tax lien
c. Real estate tax lien
d. Judgment lien
9. Mechanic's liens are based on
a. federal law.
b. state law.
c. common law.
d. case law.
10. A court orders real estate to be sold to satisfy an
unpaid lien in an
action known as a(n)
a. encumbrance.
b. attachment.
c. seizure.
d. foreclosure.
11. A mechanic's lien can be filed against an owner's real
estate by a(n)
a. real estate salesperson
claiming part of the broker's commission.
b. lumber company furnishing materials ordered by
the property owner.
c. real estate broker claiming
a commission under a rejected offer.
d. individual who obtained
a judgment against the property owner.
12. The current market value of a property is $255,000 and
it is assessed at
35 percent of its current market value with an equalization factor
of 1.25.
What is the amount of real estate tax due if the tax rate is
$3.50 per $100 of
assessed value?
a. $2,756.25
b. $3,445.31
c. $3,904.69
d. $4,880.26
13. Judgment liens are
a. specific liens.
b. voluntary liens.
c. statutory liens.
d. equitable liens.
14. A property owner contracted to have a swimming pool
installed on her
property. When the pool was completed, she refused to pay for
the improvement,
and the contractor filed a lien for nonpayment. This lien was
most likely a
a. general lien.
b. special lien.
c. specific lien.
d. voluntary lien.
15. G has defaulted in the payment of several of his debts,
and the court has ordered
his property sold to satisfy them. A title search revealed several
outstanding liens against the property. Which of the following liens has
first priority?
a. The outstanding first
mortgage lien dated and recorded one year ago
b. The current year's real estate
tax lien
c. The judgment lien rendered
and recorded last month
d. The mechanic's lien for
work started two months before the mortgage was recorded
16. After real estate has been sold by the state or county
to satisfy a delinquent
tax lien, the defaulted owner usually has a right to
a. have the sale canceled
by paying the back taxes and penalties.
b. pay his or her creditors
directly and have their liens removed.
c. redeem the property within
the time specified by law.
d. record a notice of non-responsibility
for the unpaid taxes.
17. Normally, the priority of general liens is determined by
a. the order in which they are filed or recorded.
b. the order in which the cause of action arose.
c. the size of the claim.
d. the court.
18. Which of the following is NOT a specific lien?
a. Real estate taxes
b. Judgments
c. Mortgages
d. Mechanic's liens
19. Which of the following is a lien on real estate?
a. An easement
b. A recorded mortgage
c. An encroachment
d. A restrictive covenant
20. When establishing priorities for liens
a. a mechanic's lien is always first in priority.
b. the date on which the lien was recorded determines priority.
c. the date on which the debt was incurred determines priority.
d. a broker's lien is automatically first in priority.
21. The current value of a property is $40,000. The property is assessed
at 40% of its current value, with an equalization factor of 1.5 applied
to the assessed value. If the tax rate is $4 per $100 of assessed
value, what is the amount of tax due on the property?
a. $640
b. $960
c. $1,600
d. $2,400
22. What is the difference between a general and a specific lien?
a. A general lien cannot be enforced in court, while a specific lien
can be enforced.
b. A specific lien is held by one person, while a general lien is held
by at least two persons.
c. A general lien covers all of the debtor's property, while a specific
lien is covers only a certain piece of real property.
d. A specific lien covers real estate, while a general lien covers
personal property.
23. If the market value of a property is $84,500 and the assessment
ratio is 35%, what are the monthly taxes if the tax rate is 30 mills?
a. $887.25
b. $942.50
c. $73.94
d. $87.72
24. Taxes levied on a property owner to pay to install sidewalks or
sewers are
called
a. ad valorem taxes.
b. general property taxes.
c. special excise taxes.
d. special assessments.
25. Debts that are incurred by an individual and become liens against
the real property owned by that person are
a. general liens.
b. specific liens.
c. fiduciary encumbrances.
d. special assessments.
26. The real estate taxes are $1200 a year. If the assessment rate is
20%
and the tax rate is 120 mills, what is the current value of the property?
a. $120,000
b. $80,000
c. $250,000
d. $50,000
27. The monthly taxes on a property are $200. If the tax rate is $4
per $100 of assessed value, what is the assessed value?
a. $12,000
b. $90,000
c. $60,000
f. $240,000
Chapter Eleven Answers
1. A void contract is one that is
a. not in writing.
b. not legally enforceable.
c. rescindable by agreement.
d. voidable by only one
of the parties.
2. The legal proceeding or legal action brought by either
the buyer or the seller under a purchase contract to enforce the terms
of the contract is known as
a. an injunction.
b. a lis pendens.
c. an attachment.
d. specific performance.
3. The essential elements of a contract include all of the
following EXCEPT
a. offer and acceptance.
b. notarized signatures.
c. competent parties.
d. consideration.
4. If, upon the receipt of an offer to purchase his property
under certain conditions,
the seller makes a counteroffer, the prospective buyer is
a. bound by his original
offer.
b. bound to accept the counteroffer.
c. bound by whichever offer
is lower.
d. relieved of his original offer.
5. The amount of earnest money deposit is determined by
a. the real estate licensing
statutes.
b. an agreement between the parties.
c. the broker's office policy
on such matters.
d. the acceptable minimum
of 5 percent of the purchase price.
6. If the buyer defaulted some time ago on a written contract
to purchase a seller's real estate, the seller can still sue for damages
if he is not prohibited from doing so by the
a. statute of frauds.
b. law of agency.
c. statute of limitations.
d. broker-attorney accord.
7. A written real estate contract is assumed to be the
complete agreement of the parties
because of the
a. statute of frauds.
b. parol evidence rule.
c. statute of limitations.
d. rule of contracts.
8. Which of the following gives the best evidence of the
buyer's intention to
carry out the terms of the real estate purchase contract?
a. The "subject to" clause
b. The agreement to seek
mortgage financing
c. The earnest money deposit
d. The provision that "time
is of the essence"
9. The term "rescind" means
a. change.
b. cancel.
c. substitute.
d. subordinate.
10. Which one of the following is NOT essential to the formation
of a contract?
a. Offer
b. Acceptance
c. Consideration
d. Performance
11. An option
a. requires the optionee
to complete the purchase.
b. gives the optionee an
easement on the property.
c. keeps the offer open for a
specified time.
d. makes the seller liable
for a commission.
12. When a prospective buyer makes a written purchase offer that
the seller accepts, then the
a. buyer may take possession
of the real estate.
b. seller grants the buyer
ownership rights.
c. buyer receives legal
title to the property.
d. buyer receives equitable title
to the property.
13. H agrees to purchase V's real estate for $230,000, and
deposits $6,900
earnest money with Broker L. However, V is unable to clear the
title to the property,
and H demands the return of his earnest money as provided in the purchase
contract. Broker L should
a. deduct his commission
and return the balance to H.
b. deduct his commission
and give the balance to V.
c. return the entire amount to
H.
d. give the entire amount
to V to dispose of as he decides.
14. Every real estate contract must have a(n)
a. grantor and a grantee.
b. offer and acceptance.
c. acknowledgment by a notary.
d. legal description.
15. A bilateral contract is one in which
a. only one of the parties
is obligated to act.
b. the promise of one party is
given in exchange for the promise of the other party.
c. something is to be done
by one party only.
d. a restriction is placed
in the contract by one party to limit the performance by the other.
16. A buyer makes an earnest money deposit of $1,500 on
a $15,000
property and then withdraws her offer before the seller can accept
it. The
broker is responsible for disposing of the earnest money by
a. turning it over to the
seller.
b. deducting the commission
and giving the balance to the seller.
c. returning it to the buyer.
d. depositing it in his
or her trust account.
17. Broker K arrives to present a purchase offer to D, an
invalid, and finds her son and his wife also present. In the presence
of Broker K, both individuals persistently urge D to accept the offer,
even though it is much lower than the price she has
been asking for her home. If D accepts the offer, she may
later claim that
a. Broker K should not have
brought her such a low offer for her property.
b. she was under undue duress
from her son and daughter-in-law, and therefore, the contract is voidable.
c. Broker K defrauded her
by allowing her son and his wife to see the purchase offer he brought to
her.
d. her consumer protection
rights have been usurped by her son and daughter-in-law.
18. The law that requires real estate contracts to be in
writing to be enforceable is the
a. law of descent and distribution.
b. statute of frauds.
c. parole evidence rule.
d. statute of limitations.
19. If an owner takes his property off the market for a
definite period of time in
exchange for some consideration, but he grants the right to purchase
the
property within that period for a stated price, this is called
a(n)
a. option.
b. contract of sale.
c. right of first refusal.
d. installment agreement.
20. Which of the following best describes earnest money?
a. The consideration for
the sale of the property
b. The money put up by the buyer
at the time the offer is made
c. The commission to be
paid to the broker
d. The money to be used
for paying for some of the closing costs
21. A breach of contract is a refusal or a failure to comply
with the terms of the
contract. If the seller breaches the purchase contract, the buyer
may
do all of the following EXCEPT
a. sue the seller for specific
performance.
b. rescind the contract
and recover the earnest money.
c. sue the seller for damages.
d. sue the broker for nonperformance.
22. To assign a contract for the sale of real estate means
to
a. record the contract with
the county recorder's office.
b. permit another broker
to act as agent for the principal.
c. transfer ones rights under
the contract.
d. allow the seller and
the buyer to exchange positions.
23. When a valid purchase contract is signed by the seller
and the buyer,
a. the seller retains reversionary
rights.
b. the buyer receives equitable
title.
c. the seller transfers
legal title.
d. the buyer forfeits possessory
rights.
24. If a broker deposits the buyer's earnest money in a trust account,
at what time is the seller entitled to receive it?
a. When the offer is presented to the seller
b. At the time of settlement
c. After the settlement
d. When the seller accepts the offer made by the buyer
25. An offeree has the right to
a. reject an offer.
b. revoke an offer.
c. rescind an offer.
d. release an offer.
26. Which of the following best describes a contract that is voidable?
a. The contract has no legal effect.
b. The contract is oral.
c. The contract may be valid.
d. The contract has not been signed.
27. Two salespeople working for the same broker obtained offers
on a property listed with their firm. The first offer was obtained
early in the day. A second offer for a higher purchase price was obtained
later in the afternoon. The broker presented the first offer to the
seller that evening. The broker did not inform the seller about the
second offer so that the seller could make a decision about the first offer.
Which of the following is true?
a. The broker's actions are permissible provided the commission is
split between the two salespeople.
b. After the first offer was received the broker should have told the
salespeople that no additional offers would be accepted until the seller
decided on the offer.
c. The broker has no authority to withhold any offers from the seller.
d. The broker was smart to protect the seller from getting into a negotiating
battle over two offers.
28. A broker has an exclusive right-to-sell listing on a building.
The owner is out of town when the broker gets an offer from a buyer to
purchase the building providing the seller agrees to take a purchase
money mortgage. The buyer must have a commitment from the seller before
the seller is scheduled to return to the city. Under these circumstances
the
a. broker may enter into a binding agreement on behalf of the seller.
b. broker may collect a commission even if the transaction falls
through because of the seller's absence from the city.
c. the buyer is obligated to keep the offer open until the seller
returns.
d. the broker must obtain the signature of the seller to effect a contract.
29. A broker took a listing and later discovered that the client was previously declared legally incompetent. The listing is now
a. binding because the broker was acting as the owner's agent in good
faith.
b. of no value to the broker because it is now void.
c. the basis for the recovery of a commission if the broker produces
a buyer.
d. renegotiable.
30. On Monday the seller offers to sell his vacant lot to the
buyer for $12,000. On Tuesday, the buyer counteroffers to buy for $10,500.
On Friday the buyer withdraws the counteroffer and accepts the original
offer of $12,000. Under these conditions
a. there is a valid agreement because the buyer accepted the
seller's offer exactly as it was made.
b. there is not a valid agreement because the buyer's counteroffer
was a rejection of the seller's offer and, once it was rejected, it cannot
be accepted later.
c. there is a valid agreement because the buyer accepted
before the seller advised the buyer that the offer is withdrawn.
d. there is not a valid agreement because the seller's offer was not
accepted within 72 hours.
31. In a option to purchase real estate, the optionee
a. must purchase the property, but may do so at any time within the
option period.
b. has no obligation to purchase the property.
c. is limited to a refund of the option consideration if the option
is exercised.
d. is the prospective seller of the property.
32. The broker receives an earnest money deposit with a written offer to purchase that includes a ten-day acceptance clause. On the fifth day, before the offer is accepted, the buyer notifies the broker that she is withdrawing the offer and demands the return of the earnest money deposit. In this situation
a. the buyer cannot withdraw the offer because it must be held open
for the full 10 days.
b. the buyer has the right to revoke the offer at any time until it
is accepted and recover the earnest money.
c. the seller and the broker have the right to each retain 1/2 of the
deposit.
d. the broker declares the deposit forfeited and retains it for his
services.
33. At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil is firm enough to support the construction of a building when, in fact, the seller knew it is not. This contract is
a. void.
b. voidable by the buyer because of fraud.
c. voidable by the seller because of the mistake.
d. voidable by neither party because no harm was done yet.
34. After the buyer and seller have signed a sales contract, the seller
changes his mind and defaults. The buyer sues the seller to force
him to go through with the contract. This is known as a suit for
a. specific performance.
b. damages.
c. rescission.
d. forfeiture.
35. The concept that requires that an injured party to bring an action
within a specific period of time after the injury is
a. a variance.
b. the statute of limitations.
c. the statute of fraud.
d. a waiver.
36. A person must accept an offer to enter into a contract before
a. the payment of any money.
b. the death of the offeror.
c. the close of the 10th business day following the offer.
d. a similar offer is made to a third party.
37. A contract agreed to under duress is
a. voidable.
b. breached.
c. discharged.
d. void.
38. A real estate sales contract becomes valid or in effect when it
has been signed by
a. only the buyer.
b. the buyer and seller.
c. only the seller.
d. the broker and the buyer.
39. Which of the following would NOTterminate an offer?
a. Revocation of the offer before acceptance.
b. Death of the offeror before acceptance.
c. A counteroffer by the offeree.
d. An offer from a third party.
Chapter 12 Questions
1. The title to real estate passes when a valid deed is
a. signed and recorded.
b. delivered and accepted.
c. filed and microfilmed.
d. executed and mailed.
2. The primary purpose of a deed is to
a. prove ownership.
b. transfer title rights.
c. give constructive notice.
d. prevent adverse possession.
3. A special warranty deed differs from a general warranty
deed in that the grantor's covenant in the special
warranty deed
a. applies only to a definite limited
time.
b. covers the time back
to the original title.
c. is implied and is not
written in full.
d. protects all subsequent
owners of the property.
4. The law that requires transfers of real property ownership
to be in writing is the
a. parol evidence rule.
b. statute of limitations.
c. rule of civil procedure.
d. statute of frauds.
5. A third party holds title to property on behalf of someone
else through the use of a
a. devise.
b. quitclaim deed.
c. bequest.
d. trust deed.
6. In a real estate transaction, any transfer taxes that
are due are usually
the responsibility of the
a. buyer.
b. seller.
c. escrow agent.
d. licensee.
7. Title to real estate that is inherited from a person
who died intestate is
referred to as a
a. legacy.
b. bequest.
c. devise.
d. demise.
8. Which of the following documents is signed by the owner
of the real estate?
a. A gift deed
b. A trustee's deed
c. A reconveyance deed
d. A tax deed
9. Which of the following deeds contains no expressed or
implied warranties?
a. A bargain and sale deed
b. A quitclaim deed
c. A warranty deed
d. A grant deed
10. Which of the following is NOT required for a deed to
be valid?
a. Date
b. Legal description
c. Name of the grantee
d. Signature of the grantee
11. The reversion of real estate to the state because of
its lack of heirs or
other persons legally entitled to own the property is called
a. eminent domain.
b. escheat.
c. attachment.
d. estoppel.
12. What is the purpose of the acknowledgment by a notary
public on a deed?
a. To make the deed eligible
for recording
b. To assure that the title
is valid
c. To show the genuineness of the grantor's
signature
d. To prove that the property
has not been encumbered
13. P owns a one-quarter undivided interest in a parcel
of land, and he wants his interest transferred to his sister E. As
a general rule, which of the following actions will transfer P's undivided
interest out of his name?
a. The redemption from a
foreclosure sale
b. The making and the signing
of a will
c. The delivery of the deed during
the owner's lifetime
d. The acceptance by signature
of an offer to purchase
14. A valid will devises the decedent's real estate after
the payment of all debts, claims, inheritance taxes and
expenses through the
a. administrator of the
estate.
b. law of testate succession.
c. granting clause established
in the will.
d. court action known as probate.
15. When the grantor does not wish to convey certain property
rights, he or she
a. must note the exceptions
in a separate document.
b. may not do so, as the
deed conveys the entire premises.
c. may note the exceptions in
the deed of conveyance.
d. must convey the entire
premises and have the grantee reconvey the rights to be retained
by the
grantor.
16. F bought acreage in a distant county, never went to
see it, and did not use it, although he regularly paid
the real estate taxes on it. L moved his mobile home onto F's
property, drilled a well for water, and
lived there for many years. L may have become the owner of the acreage
if he has complied with the state laws regarding
a. intestate succession.
b. adverse possession.
c. the statute of frauds.
d. the statute of limitations.
17. In which of the following situations would a quitclaim
deed be the most appropriate type of deed to use?
a. To convey a marketable
title
b. To release a nominal
real estate interest
c. To remove a cloud on title
d. To warrant that a title
is valid
18. The condemnation of private property for public use
is exercised under the government right of
a. taxation.
b. escheat.
c. manifest destiny.
d. eminent domain.
19. A trespasser built a log cabin in a national park and
occupied the structure for over 15 years. That person will never be able
to claim the property under adverse possession statutes because
a. the possession was not
"notorious."
b. the possession was not
"hostile."
c. the property was not privately owned.
d. the property was not
properly fenced.
20. Grantee is to a deed as devisee is to a
a. trust.
b. will.
c. estate.
d. leasehold.
21. Which of the following is NOT true about adverse possession?
a. The person taking possession of the property must do so without
its owner's consent.
b. Occupancy of the property must be continuous over a specified period
of time.
c. The person taking possession must compensate the owner at the end
of the possessory period.
d. The person taking possession may become the owner of the property.
22. Which of the following would NOT transfer property upon the owner’s
death?
a. By devise
b. By dedication
c. By descent
d. By escheat
23. A deed must be signed by the
a. grantor.
b. grantee.
c. grantor and grantee.
d. grantee and two witnesses.
24. Normally a deed will be considered valid even if
a. it is signed by an attorney-in-fact rather than the seller.
b. the grantor is not a legal entity.
c. the grantor is a minor.
d. the grantor did not deliver the deed.
25. In order for a deed to be valid
a. the grantor must be legally competent.
b. the signature of the grantor must be witnessed.
c. the deed must be recorded.
d. the grantee must sign the deed.
26. The seller conveyed a quitclaim deed to the buyer. Upon receipt
of the deed, the buyer may be certain that
a. the seller owned the property.
b. there are no encumbrances against the property.
c. the buyer now owns the property subject to certain claims of the
seller.
d. all of the seller's interests in the property belong to the buyer.
27. The type of deed in which the grantor defends the title back to
its beginning is a
a. trustee's deed.
b. quitclaim deed.
c. special warranty deed.
d. general warranty deed.
28. Which of the following is true regarding a special warranty deed?
a. The grantor is making additional warranties beyond those given in
a warranty deed.
b. The grantor retains an interest in the ownership.
c. The grantor is warranting that no encumbrances exist against the
property.
d. The grantor's warranties are limited to the time the grantor
owned the property.
29. Two people own a building as joint tenants with right of survivorship.
One of the tenants dies intestate. The other tenant now owns the building
a. as a joint tenant with right of survivorship.
b. in severalty.
c. in absolute ownership under the law of descent.
d. subject to the terms of the deceased's will.
30. A single person owned a parcel of land. Subsequent to the
owner's death the probate court determined the distribution of the
land in accordance with the state's statutes. This person
a. died testate.
b. died intestate.
c. was the devisee.
d. was the grantee.
31. Which of the following is an involuntary alienation of property?
a. Quitclaim
b. Inheritance
c. Eminent domain
d. Gift
32. The type of deed in which the granting clause states "grant, bargain
and sell" or "convey and warrant" is a
a. special warranty deed.
b. bargain and sale deed.
c. general warranty deed.
d. reconveyance deed.
33. The type of deed in which the granting clause states "remise, release,
alienate and convey" is a
a. special warranty deed.
b. bargain and sale deed.
c. quitclaim deed.
d. sheriff's deed.
34. A grantor does not wish to be responsible for defects in the title
that arise from previous owners but will guarantee the title for the time
the grantor has the ownership. What type of deed would the grantor convey?
a. Bargain and sale deed
b. Quitclaim deed
c. Reconveyance deed
d. Special Warranty deed
35. Which of the following is an example
of involuntary alienation?
a. Selling a property to pay off debts
b. Giving a piece of land to the zoo
c. Having a piece of land sold for delinquent taxes
d. Letting another person plant crops on an unused portion of a piece
of land
36. The clause in the deed that conveys the rights and privileges of
ownership is called the
a. habendum clause.
b. appurtenance clause.
c. granting clause.
d. acknowledgment.
37. Which of the following deeds can be executed without subjecting
the grantor to legal warranties?
a. Quitclaim
b. Bargain and sale
c. Trust
d. Trustee's deed
38. The deed that "grants and releases" and implies that the grantor
has title is a
a. special warranty deed.
b. bargain and sale deed.
c. quitclaim deed.
d. trust deed.
39. The deed states that the grantor is conveying all rights and interests
of the grantor to have and to hold
by the grantee. This is the
a. acknowledgment clause.
b. restriction clause.
c. covenant of seizen.
d. habendum clause.
40. What will happen to the real estate if the deceased owner did not
write a will and has no
heirs?
a. The ownership will pass by devise.
b. The ownership will escheat.
c. The courts will seize the ownership.
d. The ownership will revert to the previous owner.
41. Under the terms of a trust established by a will, the trustee is
required to sell the real estate the trust holds.
The deed that will be delivered at settlement is a
a. deed of release.
b. warranty deed.
c. trustee's deed.
d. trustor's deed.
Chapter 13 Questions
1. Which of the following is acceptable as the evidence
of marketable title?
a. A trust deed
b. A warranty deed
c. A title insurance policy
d. An affidavit
2. When a claim is settled by a title insurance company,
the company acquires all rights and claims of the
insured against any other person who is responsible for the loss.
This is known as
a. caveat emptor.
b. surety bonding.
c. subordination.
d. subrogation.
3. Which of the following would be used to clear a defect
from the title records?
a. A lis pendens
b. An estoppel certificate
c. A suit to quiet title
d. A writ of attachment
4. The part of the title insurance policy that sets forth
all of the encumbrances and defects that will NOT
be insured against is called the
a. schedule of defects.
b. citation clause.
c. non-exclusionary clause.
d. schedule of exceptions.
5. An abstract of title does NOT provide evidence of title
unless it is accompanied by a
a. copy of the title insurance
policy.
b. letter of insurance coverage.
c. letter of warranty.
d. legal opinion of title.
6. A bill of sale is used to transfer the ownership of
a. real property.
b. fixtures.
c. personal property.
d. appurtenances.
7. When U purchased her home, the title insurance policy
she received did NOT include which of following ?
a. A list of outstanding mortgage
loans against the property
b. A record of all of the previous
owners of the property
c. A report of the existing
tax liens against the property
d. A list of the easements
held by utility companies
8. A written summary of the history of all conveyances
and legal proceedings affecting a specific parcel of real
estate is called a(n)
a. affidavit of title.
b. certificate of title.
c. abstract of title.
d. title insurance policy.
9. When the preliminary title report reveals the existence
of an easement on the property, it indicates that the
easement is a(n)
a. lien.
b. encumbrance.
c. encroachment.
d. tenement.
10. The recorded history of matters that affect the title
to a specific parcel of real property is called a
a. chain of title.
b. certificate of title.
c. title insurance policy.
d. abstract of title.
11. Generally, if some defect is found in the title to
real property, the effect on a sales contract is that
a. the contract is immediately
void.
b. a new contract must be
written.
c. the buyer has a reasonable
time to find another property.
d. the seller has a reasonable
time to correct the defect.
12. Which of the following would NOT be considered evidence
of marketable title?
a. An abstract of title
with a legal opinion
b. A title commitment or
title insurance policy
c. A certificate of title by a
real estate broker
d. A. certificate of title
by a real estate attorney
13. The recordation of a warranty deed
a. guarantees ownership.
b. protects the interests of the
grantee.
c. prevents claims of parties
in possession.
d. provides defense against
adverse possession.
14. Documents affecting real estate are recorded or filed
with the county in which the property is located to
a. satisfy the legal requirements
for recording.
b. give constructive notice of
the real estate interest.
c. comply with the terms
of the statute of frauds.
d. prove the execution of
the document.
15. Which one of the following would NOT be acceptable
as evidence of marketable title?
a. A Torrens certificate
b. A title insurance policy
c. An abstract and legal
opinion
d. A property owner's warranty deed
16. Under the Torrens system,
a. title passes when the registrar
approves the grantor's deed for registration.
b. the Torrens official
performs exactly the same functions as the recorder of deeds.
c. the original deed is
mailed to the buyer after it has been registered.
d. the registration of a
title can be canceled by the owner at any time.
17. The best assurance of good title that a real estate
purchaser can obtain is a
a. valid warranty deed signed
by the seller.
b. valid quitclaim deed
signed by the seller.
c. policy of title insurance.
d. certificate of title.
18. A document that protects against hidden risks such as
forgeries and loss due to defects in the title, subject to
specific exceptions, is call a(n)
a. chain of title.
b. abstract of title.
c. certificate of title.
d. title insurance policy.
19. The body of law that covers such topics as security
agreements, financing statements, and bulk transfers is the
a. American Land Title Association.
b. Uniform Commercial Code.
c. Parol Evidence Rule.
d. Statute of Limitations.
20. The recording of a deed
a. is all that is required
to transfer the title to real estate.
b. gives constructive notice of
the ownership of real property.
c. insures the interest
in a parcel of real estate.
d. warrants the title to
real property.
21. A buyer took delivery of the deed to his new house but forgot to
record the deed. Under these circumstances
a. the transfer of the property from the seller is ineffective.
b. the buyer's interest is not fully protected against third parties.
c. the deed is invalid after 90 days.
d. the deed in invalid after 6 months.
22. The mortgagee purchases a title insurance policy on the property
a buyer is pledging as security for the mortgage loan. Which of the
following is true?
a. The policy is issued for the benefit of the buyer.
b. The policy guarantees that the buyer's equity will be protected.
c. The amount of coverage is commensurate with the loan amount.
d. The amount of coverage increases as the borrower's equity increases.
23. Which of the following is an example of proof of ownership?
a. An abstract of title
b. A deed
c. Title insurance
d. A title search
24. A defect or a cloud on the title may be cured by
a. obtaining quitclaim deeds from all interested parties.
b. bringing an action to register title.
c. paying cash for the property at closing.
d. obtaining title insurance.
25. Which of the following is NOT true regarding public records?
a. They give notice of encumbrances.
b. They establish priority of liens.
c. They guarantee marketable title.
d. They provide constructive notice about interests in the property.
26. The primary reason a buyer obtains title insurance is
a. because the mortgage lender requires it.
b. to ensure that the buyer has marketable title.
c. to ensure that the abstractor has prepared a complete summary of
title.
d. to pay future liens that may be filed.
27. A sales contract requires the seller to deliver marketable title.
Which of the following is true?
a. The delivery of a general warranty deed will provide this assurance.
b. A search of the public records will prove that the title is marketable.
c. The seller will pay all liens that are pending.
d. All encumbrances will be removed by the seller.
28. An outstanding claim or encumbrance which, if valid, would impair
an owner’s title is a
a. color of title.
b. cloud on the title.
c. quiet title.
d. subrogation.
29. Quieting a title refers to
a. a title insurance company's search of the title.
b. a mortgagor relinquishing title after foreclosure.
c. the deposit of a title with an escrow agent.
d. the removal of a cloud on the title by court action.
Chapter 14 Questions
1. Under an installment contract, the title to the property
is held by the
a. vendor.
b. vendee.
c. trustor.
d. trustee.
2. Charging more interest than is legally allowed is known
as
a. escheat.
b. usury.
c. a deficiency.
d. an estoppel.
3. A mortgagor is the one who
a. gives the mortgage.
b. holds the mortgage.
c. provides the mortgage
funds.
d. forecloses on the mortgage.
4. A promissory note
a. may not be executed in
connection with a real estate loan.
b. is an agreement to perform
or not to perform certain acts.
c. is the primary evidence of
a debt.
d. is a guarantee by a government
agency.
5. A land contract provides for the
a. sale of unimproved land
only.
b. sale of real property
under an option agreement.
c. conveyance of legal title at
a future date.
d. immediate transfer of
reversionary rights.
6. The finance fee charged by the lender to make the loan
is a(n)
a. prepayment penalty.
b. advance interest payment.
c. loan origination fee.
d. prepayment of mortgage
insurance.
7. If the amount realized at a sheriff's sale as part of
a mortgage foreclosure is more than the amount of the
indebtedness and expenses, then the excess belongs to
a. the mortgagor.
b. the mortgagee.
c. the sheriff's office.
d. the county.
8. L has just made the final payment on her home mortgage
to her lender. There will still be a lien on her property until the lender
records a(n)
a. satisfaction of mortgage.
b. reconveyance of mortgage.
c. alienation of mortgage.
d. reversion of mortgage.
9. An existing mortgage loan can have its lien priority
lowered through the use of a
a. hypothecation agreement.
b. satisfaction of mortgage.
c. subordination agreement.
d. reconveyance of mortgage.
10. The right a mortgagor has to regain the property by paying the
debt after a foreclosure sale is called
a. acceleration.
b. redemption.
c. reversion.
d. recapture.
11. The clause in a trust deed or mortgage that permits
the lender to declare the entire unpaid balance
immediately due an payable upon default is the
a. judgment clause.
b. escalator clause.
c. forfeiture clause.
d. acceleration clause.
12. A building was sold for $115,000. Earnest money
in the amount of $15,000 was deposit in escrow, and
the buyer obtained a new loan for the balance of the purchase
price. The lender charged two discount
points on the loan. What was the total amount of cash used by
the buyer for this purchase?
a. $2,300
b. $15,000
c. $17,000
d. $17,300
13. When a mortgage loan has been paid in full, it is important
for the borrower to be sure that
a. the paid note is placed
in a safe deposit box.
b. he or she obtains a deed
of partial reconveyance.
c. the paid mortgage is
returned to the lender.
d. a satisfaction of mortgage is recorded.
14. In what way does a deed of trust differs from a mortgage
? i
a. In the number of parties involved
in the loan
b. In the obligation of the borrower
to repay the funds
c. In the redemption rights
allowed after foreclosure
d. In the time period permitted
to cure a default
15. A person who assumes an existing mortgage loan is
a. not personally liable
for the repayment of the debt.
b. not in danger of losing
the property by default.
c. personally responsible for
paying the principal balance.
d. generally released from
liability, but not always.
16. The interest in a property held by the owner in excess
of any liens against it is called
a. hypothecation.
b. subordination.
c. leverage.
d. equity.
17. The mortgagee foreclosed on a property after the borrower defaulted
on the loan payments. At the foreclosure sale, however, the house sold
for only $29,000. The unpaid balance of the loan at the time of the sale
was $40,000. What must the lender do to recover the $11,000 the borrower
still owes?
a. Sue for damages
b. Sue for specific performance
c. Seek a judgment by default
d. Seek a deficiency judgment
18. The clause in a mortgage instrument that would prevent the assumption
of the mortgage by a new purchaser is a
a. due on sale clause.
b. power of sale clause.
c. defeasance clause.
d. certificate of sale clause.
19. The defeasance clause in a mortgage requires the mortgagee to execute
a(n)
a. assignment of mortgage.
b. satisfaction of mortgage.
c. subordination agreement.
d. partial release agreement.
20. The seller agrees to sell the house to the buyer for $100,000. The
buyer was unable to qualify for a mortgage loan for this amount so
the seller and buyer enter into a contract for deed. The interest
the buyer has in the property under a contract for deed is
a. legal title.
b. equitable title.
c. joint title.
d. mortgagee in possession.
21. A "friendly foreclosure" enables a mortgagor to prevent the mortgagee
from taking the property by statutory means. This can be accomplished by
a(n)
a. deed in lieu of foreclosure.
b. reconveyance deed.
c. assumption.
d. escrow deed.
22. Mortgage lenders want assurance that future real estate taxes will
be paid. The most common way to do this is to require the borrower
to
a. obtain title insurance.
b. sign a note.
c. pay into an impound account.
d. submit paid tax receipts.
23. The pledging of property as security for payment of a loan is
a. disintermediation.
b. equity.
c. hypothecation.
d. subordination.
24. When real estate is sold under an installment land contract and
the buyer takes possession of the property, the legal title
a. is subject to a purchase money mortgage.
b. must be transferred to a land trust.
c. is kept by the seller until the purchase price is paid according
to the contract.
d. is transferred to the buyer.
25. Which of the following is true about an installment contract (land
contract)?
a. The buyer is given possession.
b. The seller delivers a deed to the buyer.
c. The buyer obtains a mortgage loan.
d. The seller delivers legal title to the buyer.
26. If a buyer obtains a $50,000 mortgage with 4 points, how much will
the lender charge at closing?
a. $6,000
b. $200
c. $2,000
d. $40,000
27. In absence of an agreement to the contrary, the mortgage having
priority will be the one
a. for the highest amount.
b. which was recorded first.
c. which was the first mortgage.
d. that is a construction loan.
28. The purpose of a mortgage is to
a. provide security for the loan.
b. convey title of the property to the lender.
c. restrict the borrower's use of the property.
d. create a lien on the property.
29. If a property sold at a mortgage foreclosure does not
sell for an amount sufficient to satisfy the outstanding
mortgage debt, the mortgagor may be responsible for
a. a default judgment.
b. a deficiency judgment.
c. liquidated damages.
d. punitive damages.
Chapter 15 Questions
1. K has just purchased his first home with a fixed-rate
loan. The interest he will pay over the life of the loan is
a. simple interest.
b. compound interest.
c. prepaid interest.
d. discounted interest.
2. The amount of a loan expressed as a percentage of the
value of the real estate offered as collateral is the
a. amortization ratio.
b. loan-to-value ratio.
c. debt-to-equity
ratio.
d. capital-use ratio.
3. The purpose of the Real Estate Settlement Procedures
Act (RESPA) is to
a. see that buyers do not
borrow more money than they can repay.
b. make real estate brokers
more responsive to the needs of buyers.
c. help sellers know how
much money is required to purchase the property.
d. see that buyers and sellers
know all of their settlement costs.
4. If the quarterly interest at 10-1/2 percent is $3,150,
the principal amount of the loan is
a. $30,000.
b. $60,000.
c. $90,000.
d. $120,000.
5. Fannie Mae
a. makes FHA loans.
b. buys FHA loans.
c. services FHA loans.
d. insures FHA loans.
6. The grantor becomes the lessee and the grantee becomes
the lessor under which of the following financing
arrangements?
a. Partial sale
b. Wraparound mortgage
c. Sale and leaseback
d. Assumption of mortgage
7. Which of the following pairs of terms is considered
synonymous?
a. Interim financing and construction
loan
b. Construction loan and
pass-through loan
c. Pass-through loan and
take-out loan
d. Take-out loan and construction
loan
8. The type of real estate loan that allows the lender
to increase the outstanding balance of a loan up to
the original sum in the note while advancing additional funds
is the
a. wraparound mortgage.
b. open-end mortgage.
c. growing-equity mortgage.
d. graduated-payment mortgage.
9. Which of the following statements is true?
a. The priority of a mortgage
is determined by the date on which it was executed.
b. A mortgage document contains
no covenants or promises on the part of the borrower.
c. A deed of trust is typically
conveyed by the trustor to the beneficiary.
d. A buyer does not have to be
a veteran to assume a VA loan.
10. Which of the following loans to individuals is NOT affected
by the Truth in Lending Law
implemented by Regulation Z, that sets forth certain requirements regarding
real estate loans?
a. Household use
b. Business use
c. Room additions
d. Swimming pools
11. An FHA-insured mortgage loan would be obtained from
which of the following?
a. The Federal Housing Administration
b. The Department of Housing
and Urban Development
c. Any qualified lending institution
d. Any qualified insuring
institution
12. Fannie Mae, Ginnie Mae, and Freddie Mac have in common
the purpose of
a. originating residential
mortgage loans.
b. purchasing existing mortgage
loans.
c. insuring residential
mortgage loans.
d. guaranteeing existing
mortgage loans.
13. A mortgage broker generally offers which of the following
services?
a. Handling the escrow procedures
b. Bringing the borrower and the
lender together
c. Providing credit qualification
and evaluation reports
d. Granting real estate
loans using investor funds
14. An eligible veteran made a purchase offer of $80,000
on a home he wants to finance with a
VA-guaranteed loan. Four weeks after the offer was accepted,
a certificate of reasonable
value (CRV) for $77,000 was issued for the property. In this
situation, the veteran could NOT do which of the
following ?
a. Withdraw from the transaction
without penalty.
b. Purchase the property
with a $3,000 cash down payment.
c. Negotiate with the seller
to reduce the price $3,000.
d. Borrow the $3,000 for the cash down payment.
15. A borrower obtained a $7,000 second mortgage loan for
5 years at 6 percent interest per annum. Monthly payments were $50. The
final payment included the remaining outstanding principal balance. What
type of loan is this?
a. A fully amortized loan
b. A straight loan
c. A partially amortized
loan
d. An accelerated loan
16. The discount points charged on a VA guaranteed mortgage
loan could NOT be paid by which of the following?
a. The buyer
b. The seller
c. The buyer and seller
d. The mortgage loan
17. The principal distinction between the primary mortgage
market and the secondary mortgage market is in the
a. insuring versus the guaranteeing
of mortgage loans.
b. origination versus the purchase
of mortgage loans.
c. use of mortgages versus
the use of deeds of trust.
d. use of discount points
versus the use of origination fees.
18. A real estate loan payable in periodic installments
that are sufficient to pay
the principal in full during the term of the loan is called a(n)
a. conventional loan.
b. straight loan.
c. participation loan.
d. amortized loan.
19. An extension of credit from a seller to the buyer to
allow the buyer to complete the transaction is called a
a. growing equity mortgage.
b. purchase money mortgage.
c. package mortgage.
d. blanket mortgage.
20. When compared with a 30-year payment period, taking
out a loan with a 20-year payment period would
NOT result in
a. faster amortization.
b. higher monthly payments.
c. quicker equity buildup.
d. greater impound amounts.
21. If the interest rate on an FHA-insured mortgage loan
is 11-1/2 percent and the monthly payment is
$1,412, the principal sum would be
a. $12,278.
b. $147,339.
c. $162,383.
d. $194,561.
22. PMI is the acronym for Private Mortgage Insurance often used by
borrowers whose LTV (loan-to-value) ratio is less than 20%. Lenders
must cease charging PMI when the LTV is
a. 22 %.
b. 27%.
c. 29%.
d. 35%.
23. From which of the following would a borrower most likely
obtain a residential real estate mortgage loan?
a. An insurance company
b. A pension fund
c. A commercial bank
d. A savings and loan association
24. Regulation Z applies to
a. business loans.
b. real estate sales agreements.
c. commercial loans under $10,000.
d. personal credit transactions under $25,000.
25. FNMA's activities do NOT include
a. buying and selling FHA and VA mortgages.
b. buying and selling conventional mortgages.
c. buying and selling mortgages at full face value.
d. buying and selling mortgages at discounted values.
26. As an entity operating in the secondary mortgage market, the Federal
Home Loan Mortgage Corporation was established to assist the
a. Federal Housing Administration.
b. Federal National Mortgage Association.
c. federal savings and loans.
d. federal banks.
27. A graduated payment loan is one in which
a. mortgage payments decrease.
b. mortgage payments balloon in 5 years.
c. mortgage payments increase.
d. the interest rate on the loan adjusts annually.
28. If the amount of a loan is $13,500 and the interest rate is 7 1/2%
what is the amount of the semiannual interest payment?
a. $596.55
b. $506.25
c. $602.62
d. $457.14
29. The type of mortgage loan that uses both real and personal property
as security is a
a. blanket mortgage.
b. package mortgage.
c. purchase money mortgage.
d. wraparound mortgage.
30. The supply of mortgage money for single-family homes is regulated
by the Federal Reserve System through which of the following?
a. Reserve requirements and discount rates
b. Federal National Mortgage Association
c. Federal Housing Administration
d. Resolution Trust Corporation
31. Which of the following normally purchases mortgages in the secondary
mortgage market?
a. Mortgage bankers
b. Ginnie Mae
c. Federal Housing Administration
d. Veterans Administration
32. If a house sold for $80,000 and the buyer obtained a loan
for $72,000, how much money would the buyer pay if the lender charged
3 points?
a. $2400
b. $2328
c. $2160
d. $240
33. A mortgage loan requires monthly payments of $175.75 for 20
years and a final payment of $5,095. This type of a mortgage loan is a(n)
a. wraparound mortgage.
b. accelerated mortgage.
c. balloon mortgage.
d. variable mortgage.
34. In a sale-and-leaseback arrangement the
a. seller retains legal title to the real estate.
b. buyer becomes the lessee.
c. broker will not earn a commission.
d. buyer becomes the lessor.
35. Last month's loan payment included $412.50 interest on a $60,000
loan balance. What is the annual rate of interest?
a. 7 1/2 percent
b. 7 3/4 percent
c. 8 1/4 percent
d. 8 1/2 percent
36. Mrs. D has owned her house for over 50 years. It has fallen into
disrepair but, because she lives on a fixed income, she does not have the
money to make the needed repairs. She has a considerable amount of equity
in the house. What type of loan best suits her needs?
a. A home equity loan
b. A reverse annuity mortgage
c. A blanket loan
d. An open-ended loan
37. The type of loan that will most likely have the lowest loan-to-value
ratio is a
a. VA loan.
b. FHA loan.
c. PMI loan.
d. conventional loan.
38. A lender may protect its interest in a mortgage loan by obtaining
additional security from
a. private mortgage insurance.
b. title insurance.
c. the borrower's note.
d. impound accounts.
39. A lender will take certain factors into consideration when deciding
whether to grant a borrower a mortgage loan. One of the following is NOT
a legitimate factor.
a. The marital status of the borrower
b. The creditworthiness of the borrower
c. The amount of the borrower's income
d. The ability of the borrower to make the payments
40. One of the ways lenders increase their revenue is by servicing
loans. Which of
the following is NOT an activity of servicing loans ?
a. Collecting payments
b. Paying real estate taxes from escrow accounts
c. Renegotiating interest rates
d. Sending overdue notices
41. A developer had a mortgage loan on his entire housing development.
When he sold a lot to a buyer, he was able to deliver title to that
lot free of the mortgage lien by obtaining a partial release. What type
of loan did the developer have?
a. Blanket mortgage
b. Purchase money mortgage
c. Package mortgage
d. Open-end mortgage
Chapter 16 Questions
1. The T's apartment lease has expired, but their landlord
has indicated to them that they may remain on the premises until a sale
of the building is closed. The Ts will be charged their normal monthly
rental during this period. The tenancy held by the Ts is called a(n)
a. year to year holdover.
b. estate for term.
c. estate at sufferance.
d. estate at will.
2. Generally, an oral lease for five years is
a. illegal.
b. unenforceable.
c. a short-term lease.
d. renewable only in writing.
3. An office rents for $450 per month and measures 12 feet
by 20 feet. The advertised annual rent per
square foot would be
a. $1.875.
b. $4.50.
c. $18.75.
d. $22.50.
4. Rent would best be defined as
a. the contractual consideration
to a third party.
b. the consideration for the use
of real property.
c. all monies paid by the
lessor to the lessee.
d. the total amount owed
under the terms of a lease.
5. Which of the following tenancies does NOT involve a
lessor-lessee?
a. Tenancy at will
b. Tenancy in common.
c. Tenancy from month to
month.
d. Tenancy from year to
year.
6. The tenant leases a heated apartment, but the landlord
fails to provide heat because of a defective
central heating plant. The tenant vacates the premises and refuses
to pay any rent. This is an example of
a. abandonment.
b. actual eviction.
c. constructive eviction.
d. lessor negligence.
7. A lease would be terminated by which of the following?
a. The sale of the leased
premises
b. The death of the tenant
c. The abandonment of the
leased premises by the tenant
d. The expiration of the term
of the lease
8. For a written lease to be valid, it must contain
a. the signatures of both
the lessor and the lessee.
b. a statement of the specific
length of time.
c. a statement of the retention
of the reversionary interest by the lessor.
d. a complete legal description
of the premises.
9. The authority to carry out the eviction of a delinquent
tenant from rented property is held by the
a. court.
b. landlord.
c. sheriff.
d. property owner.
10. Which of the following would NOT acquire title to real
property ?
a. The grantee
b. The devisee
c. The vendee
d. The lessee
11. A tenant's lease has expired, but the tenant has not
vacated the premises or negotiated a renewal lease, and the landlord has
declared that he does not want the tenant to remain in the building. This
type of occupancy is referred to as an estate
a. for years.
b. from year to year.
c. at will.
d. at sufferance.
12. D leases a barber shop from K. The lease does not specifically
indicate who is responsible for making repairs
to the premises. The expense of making such repairs is generally
a. paid by the lessor.
b. paid by the lessee.
c. shared by the lessor and the
lessee.
d. paid by the lessee who
will be reimbursed by the lessor.
13. When a tenant sublets all or any part of the premises
rented under a written lease,
a. the tenant assigns all
right title, and interest in the rented property to the new lessee.
b. the sublessee becomes
primarily responsible to the landlord for the payment of rent and maintenance
of the property.
c. the original lease is
automatically canceled and the sublessee takes possession of the property
on a month to month basis.
d. the original lease is unaffected
unless it contains a provision that prohibits such subletting.
14. A lessee who pays some or all of the lessor's property
expenses has a
a. gross lease.
b. net lease.
c. percentage lease.
d. sublease.
15. The principal difference between an estate for years
and an estate from year to year is that
a. an estate for years is
a life estate.
b. an estate for years cannot
be terminated.
c. an estate from year to
year must be in writing.
d. an estate from year to year
has no expiration date.
16. The covenant implied in a lease that ensures that the
tenant will not be evicted by someone claiming ownership of the property
prior to that of the lessor is the covenant
a. of seizin.
b. of quiet enjoyment.
c. of warranty forever.
d. against encumbrances.
17. A tenant has an estate for years. According to the written
one-year lease, the tenancy will expire on May
1st. For the landlord to obtain possession as of that date, he
must give the tenant
a. 30 days' notice.
b. 60 day's notice.
c. no notice.
d. notice as of April 15th.
18. The owner of real estate who leases it to another is
called the
a. vendor.
b. lessor.
c. grantor.
d. trustor.
19. A lease that will terminate within one year of its inception
a. is invalid.
b. violates the provisions
of the
statute of frauds.
c. must be in writing.
d. can be verbal.
20. Which of the following is the best definition of actual
eviction?
a. The right of a landlord
to use the rental premises
b. The enforcement of a
court order to remove a lessor
c. The landlord's reversionary
right in the rental premises
d. The enforcement of a court
order to remove a lessee
21. When a tenant holds possession of a landlord's property
without a definite lease term but with the consent
of the landlord, this is called
a. tenancy in common.
b. tenancy at sufferance.
c. tenancy at will.
d. trespass.
22. In the event that it is necessary for a landlord to
remove a tenant from the premises, he or she does it by
a. refunding any rents paid.
b. refunding any security
or other deposits paid.
c. filing an eviction suit.
d. using the minimum amount
of physical force necessary.
23. If a leased building collapsed and the tenant was forced
to move out, this could be called
a. constructive eviction.
b. effective eviction.
c. actual eviction.
d. detainer.
24. Under a tenancy for years
a. the term of the lease must be for at least one year.
b. no notice is required to terminate the lease.
c. a 30-day notice is required to terminate the lease.
d. the lessee has a freehold estate.
25. Under a gross lease, the lessee may be requested to pay
a. maintenance.
b. real estate taxes.
c. insurance.
d. a percent of sales.
26. A lessee is in possession of property under a tenancy at will.
Which of the following is true?
a. The lessee has not received the consent of the landlord to possess
the property.
b. The tenancy will terminate if the lessee dies.
c. The tenancy was created by the death of the lessor.
d. The tenancy has a definite termination date.
27. A tenant's lease does not terminate for five more years. The premises,
however, have become too small to accommodate the tenant's growing business.
Another business owner is interested in leasing the premises from the tenant
for 3 years. Which of the following would the parties use for the tenant
to lease the space to the business owner?
a. An assignment
b. A novation
c. A sublease
d. A tenancy at sufferance
28. A young couple with a toddler and an infant want to lease an apartment
in a complex that is occupied primarily by adults. The rental agent
shows the couple apartments only on the first floor. Which of the following
is true?
a. The rental agent is protecting the other adults from the disruption
of the children.
b. The rental agent should charge a higher security deposit for this
family.
c. The rental agent should have suggested that the couple look
elsewhere.
d. The rental agent should have inquired about the couple's preference
for apartments.
29. The landlord's lease prohibits tenants from altering the property
in any way. A young woman who uses a wheelchair cannot maneuver over
the doorstep into the apartment by herself. Nor can she use the bathroom
facilities in her wheelchair. Which of the following is true?
a. The landlord is responsible for making all apartments accessible
to people with disabilities.
b. The tenant cannot remedy these conditions because of the terms of
the lease.
c. The landlord should not have rented this apartment to the tenant.
d. The tenant is entitled to make the necessary alterations.
30. A tenant is leasing a house until he has saved enough money for
the down payment to perform on the sales contract. What type of an arrangement
is this?
a. Lease with an option
b. Lease purchase agreement
c. Periodic tenancy
d. Purchase money mortgage
31. A lease agreement is signed by a lessee who is 17 years of age.
Which of the following is true?
a. A 17 year old person cannot sign a lease.
b. The lease agreement is voidable.
c. The lease agreement is valid provided the security deposit is increased.
d. The lease agreement is void.
32. An individual rents an apartment for one year. The landlord sells
the building during the one-year lease
term. What effect does the sale have on the lease?
a. The sale does not affect the lease.
b. The lease is automatically terminated.
c. The new landlord will decide whether to honor the existing lease.
d. The lease is terminated after 60 days notice from the new owner.
33. The purpose of a security deposit is to
a. provide additional revenue for the landlord.
b. repair damage to the property caused by the tenant.
c. pay for the last month's rent.
d. ensure that the lease is valid.
34. The lessor and lessee have agreed to a lease term of 5 years. How
could the lessor ensure that the rental income during the term is reflective
of the market conditions?
a. Negotiate a new lease each year.
b. Collect an additional security deposit each year.
c. Negotiate an index lease.
d. Negotiate a gross lease.
Chapter 17 Questions
1. A management agreement is to a property manager like
a(n)
a. listing agreement is to a broker.
b. lease is to a tenant.
c. deed is to a buyer.
d. assignment.
2. A real estate broker acting as an owner's property manager
a. must not profit from private
contracts at the expense of the owner.
b. may manage the client's
property to his or her own advantage.
c. need not maintain complete
and accurate trust account records.
d. can personally collect
the interest earned on trust account funds.
3. Adaptations of property specifications to suit tenant
requirements are
a. tax-exempt improvements.
b. tenant improvements.
c. prohibited by most non-residential
leases.
d. generally not a good
idea.
4. A high vacancy rate may be caused by any of the following
EXCEPT
a. inept management.
b. poor location.
c. excessive rent.
d. strong amenities.
5. In determining rental amounts, a property manager considers
the economic principle of
a. marginal contribution.
b. supply and demand.
c. conformity.
d. balance.
6. Which of the following is NOT an important function
of a property manager ?
a. Supervising the maintenance
of the property
b. Protecting the physical
integrity of the property
c. Meeting the functional
requirements of the tenants
d. Preparing the owner's income
tax returns
7. When dealing with risk, the options of a property manager
include all of the following EXCEPT
a. avoid it.
b. retain it.
c. ignore it.
d. transfer it.
8. The property manager's chief concern should be that
a. the property is seldom
vacant because it is consistently rented at the lowest possible rents.
b. the property is managed to
achieve the highest rate of return possible for the owner's
investment.
c. the property manager's
time is maximized in his or her management of the property.
d. the property exhibits
the proper amount of the owner's pride of ownership.
9. The type of maintenance that is most often overlooked is
a. corrective maintenance.
b. repairs.
c. routine maintenance.
d. preventative maintenance.
10. A property manager's primary obligation is to
a. the tenants.
b. the owner.
c. the banker.
d. government authorities
11. Which of the following should be NOT be a consideration
in selecting a tenant for the property?
a. Size of the available
space relative to the tenant's requirements
b. Tenant's ability to make
the rental payments
c. Compatibility of the
tenant's business with those of other tenants
d. Ethnic background of the tenant
and his or her employees
12. A property management firm CANNOT receive its income
from
a. a fixed fee.
b. a percentage of the net
rentals collected.
c. a fixed fee with a percentage
on new rentals.
d. a percentage of purchases made
from suppliers.
13. The manager of a commercial building has many responsibilities
in connection with the operation and maintenance of the structure. The
manager would normally be considered the a. agent of the lessor of the
building.
b. lessee of the building.
c. lessor and the lessee.
d. resident manager.
14. The successful property manager does NOT
a. screen the tenants' ability to pay.
b. study rental rates in the area.
c. consider the type of business the tenant has.
d. appease the tenants by repairing their equipment.
15. Despite the complexity of the laws that affect today's properties,
a property manager does NOT need to
be familiar with
a. environmental hazards.
b. accessible construction.
c. nondiscriminatory practices.
d. investment securities laws.
16. The duties of a property manager generally do NOT include
a. renting space to tenants.
b. preparing a budget.
c. developing a management plan.
d. repairing a tenant's fixture.
Chapter 18 Questions
1. The income approach to value would be most important
in the appraisal of a(n)
a. condominium.
b. office building.
c. single-family residence.
d. vacant residential lot.
2. In an old retail building, which of the following would
most likely be a cause of incurable functional obsolescence?
a. Deficient and inadequate
lighting
b. Closely-spaced internal support
columns
c. An unattractive store front
d. A decrease in the area's
population
3. Which of the following is NOT a characteristics of value?
a. Scarcity
b. Transferability
c. Obsolescence
d. Utility
4. The expression "more buildings are torn down than fall
down" refers to
a. curable physical deterioration.
b. incurable physical deterioration.
c. the enforcement of building
codes.
d. functional and external depreciation.
5. An appraiser is responsible for
a. finding value.
b. computing value.
c. determining value.
d. estimating value.
6. The term depreciation refers to the
a. value of real estate
after the expiration of its useful life.
b. loss of value in real estate from any cause.
c. costs incurred to renovate
or modernize a building.
d. capitalized value of
lost rental income.
7. When appraising real estate, the first consideration
of the appraiser should be the
a. asking price of the property.
b. highest and best use of the property.
c. original cost of the
property.
d. selling prices of similar
properties.
8. Which of the following would be classified as external
depreciation?
a. A leaking roof that needs
to be completely replaced
b. Poorly-maintained properties
in the neighborhood
c. A poorly-designed floor
plan that could be modified
d. Convenient access to
schools and recreational facilities
9. It is necessary to calculate a dollar value for depreciation
when using which of the following?
a. The sales comparison
approach to value
b. The cost approach to value
c. The income approach to
value
d. Gross rent multipliers
10. The income approach, as used by an appraiser, makes
use of which of the following?
a. Equalization
b. Depreciation
c. Appreciation
d. Capitalization
11. In the valuation of a large apartment complex, the most
weight would be given to which of the following
approaches to value?
a. The cost approach
b. The income approach
c. The sales comparison
approach
d. All approaches equally
weighted
12. In the cost approach to value, the appraiser makes
use of
a. the owner's original
cost of the building.
b. the estimated replacement cost
of the building.
c. the sales prices of similar
buildings in the area.
d. the assessed value of
the building.
13. The sales comparison approach to value would be most
important when estimating the value of a(n)
a. existing residence.
b. apartment building.
c. retail location.
d. new residence.
14. In the income approach, the appraiser makes use of
a. reproduction cost.
b. capitalization rate.
c. depreciation schedules.
d. replacement cost.
15. An appraiser who is using the sales comparison approach
to value would NOT use which of the following
similar homes as a comparable properties? One that was
a. sold over six months
ago.
b. sold recently but is
located in another similar neighborhood.
c. sold by the owners who were
undergoing a foreclosure.
d. sold recently but is
located on a much larger lot.
16. Using which of the following would require the value
of the land to be calculated separately from the value of the improvements?
a. The income approach
b. The cost approach
c. The sales comparison
approach
d. The gross rent multiplier
17. Reconciliation is best described as
a. selecting the highest
value given by the three approaches to value.
b. comparing comparable
properties and identifying their amenities.
c. determining the final
value by selecting one value from those given.
d. analyzing the results obtained
from the three approaches to value.
18. A building is valued at $215,000 and contains 4 apartments
that rent for $470 each per month. The owner estimates that the net
operating income is 65 percent of the gross
rental receipts. What is the capitalization rate?
a. 3.7 percent
b. 7.0 percent
c. 10.5 percent
d. 14.2 percent
19. The steps in the appraisal process do NOT include
a. gathering specific data
on the subject property.
b. gathering general data
for the area of the subject property.
c. considering the seller's estimate
of the property's value.
d. applying the three approaches
to value to the collected data.
20. The gross rent multiplier is used as a guideline for
estimating value based on
a. the ratio of the gross
rents to the net rents after expenses.
b. the proportion of rents
due to the actual rents collected.
c. the capitalization of
the annual gross rental income.
d. the relationship of the sales
prices to the rental income.
21. Defined as a loss in value from any cause, depreciation
is generally divided into three categories. The loss of value due to the
normal wear and tear on a property is called
a. external depreciation.
b. physical depreciation.
c. functional obsolescence.
d. economic deterioration.
22. To find the value of a property using the income approach
to value, if the net operating income and the
capitalization rate were known, the appraiser would
a. multiply the net operating
income by the capitalization rate.
b. multiply the effective
gross income by the capitalization rate.
c. divide the net operating income
by the capitalization rate.
d. divide the capitalization
rate by the net operating income.
23. An appraiser has been employed to estimate the market
value of a parcel of vacant land.
The resulting appraisal report would NOT include reference to
a. the highest and best use of the parcel.
b. the listed price of the parcel.
c. the most probable price
the parcel will bring.
d. the physical dimensions
of the parcel.
24. When appraising a commercial property, the appraiser
is most concerned with the
a. accrued depreciation
on the property.
b. income generated by the property.
c. sales prices of comparable
properties.
d. total debt service on
the property.
25. In the appraisal of an office building, which of the
following would be classified as external depreciation?
a. Termite damage to the
structural components of the building
b. A poor architectural
design resulting in a cluttered floor plan
c. An inadequate number
of elevators and antiquated restroom facilities
d. A law requiring the building
to be retrofitted with fire sprinklers.
26. The period of time over which an improvement to the
property will contribute to its value is known as its
a. amortized life.
b. chronological life.
c. actual life.
d. economic life.
27. Which of the following would be considered specific
data?
a. The dimensions of the subject
property
b. The employment opportunities
in the area
c. The sales data for comparable
properties
d. The gross rent multipliers
for the area
28. When estimating the value of property using the cost
approach, all of the following would be considered by the
appraiser EXCEPT the
a. loss of value due to uncollected
delinquent rent.
b. estimated loss attributable
to an outdated heating system.
c. quality of materials
and workmanship in the original structure.
d. excessive amount of traffic
noise outside the property.
29. The market price of real estate is generally the same as
a. the sales price.
b. the market value.
c. the highest and best use.
d. the assessed value.
30. Reconciliation is an appraisal term used to describe
a. the appraiser's determination of a property's highest value.
b. an average of real estate values for properties similar to the subject
property.
c. the appraiser's analysis and comparison of the results of each appraisal
approach.
d. the method used to determine the most appropriate capitalization
rate for a property.
31. An appraiser has been hired to prepare an appraisal on a property
that includes an elegant old mansion that is now used as an insurance company
office. Which approach to value would the appraiser rely on most?
a. Income approach
b. Gross rent multiplier approach
c. Sales comparison approach
d. Replacement cost approach
32. A house with outmoded plumbing is suffering from
a. functional obsolescence.
b. curable physical deterioration.
c. incurable physical deterioration.
d. external depreciation.
33. A 4 bedroom house with 1 bathroom for today's standards would be
considered to be
a. physically obsolete.
b. functionally obsolete.
c. economically obsolete.
d. diminished.
34. In the cost approach an appraiser uses which of the following?
a. Sales prices of similar properties
b. The owner's original cost of construction
c. An estimate of the building's replacement cost
d. The property's depreciated value as used for income tax purposes
35. The purpose of an appraisal is to
a. estimate the value of a property.
b. set the market price of a property.
c. determine the projected income of a property.
d. set the amount of consideration the seller should accept from a
purchaser.
36. In the income approach, which of the following is NOT considered
when calculating the net operating income?
a. Real estate taxes
b. Management fees
c. Debt service
d. Utilities
Chapter 19 Questions
1. Zoning ordinances normally define specific uses for land that
are permitted within a municipality. Which of the following is NOT a designated
use in the ordinances?
a. Industrial
b. Commercial
c. Residential
d. Rental
2. The purpose of building permits is to
a. generate revenue for the municipality.
b. control the activities of building inspectors.
c. ensure compliance with building codes.
d. prevent encroachments.
3. When planning a subdivision, the developer should determine
the kinds of land uses to be involved and the
amounts of land to be allocated to each use by considering
a. which are the most profitable
types of buildings to construct.
b. his or her concepts for
what is considered as an ideal development.
c. the application of the economic
principle of highest and best use.
d. the customs of the area
and what other developers have already done.
4. Deed restrictions are NOT created by which of the following?
a. Deed
b. Statute
c. Written agreement
d. General plan of a subdivision
5. A subdivider or developer who fails to comply with the
requirements of the Interstate Land Sales Full Disclosure Act may be
a. subject to criminal penalties
of fines and imprisonment.
b. ordered to cease and
desist work on the project.
c. sanctioned and blacklisted
by lenders in the area.
d. unable to secure FHA-insured
and VA-guaranteed loans.
6. In a new subdivision, streets, curbs, and sidewalks
are usually required by the
a. municipality.
b. property owners.
c. developer.
d. state.
7. The purchaser of a property in a planned unit development
will usually NOT receive
a. an interest in the unit
owners' association.
b. a proprietary lease for the
unit to be occupied.
c. the title to the land
on which the unit is built.
d. a share in the control
of the commonly-owned elements.
8. In a new subdivision, streets, curbs, and sidewalks are
usually provided by the
a. municipality.
b. property owners.
c. developer.
d. state.
9. According to the Interstate Land Sales Full Disclosure
Act, if the property report is NOT given to the prospective
purchaser at least three days before the contract is signed,
a. the purchaser may revoke
the contract, at his or her option, up to midnight of the seventh calendar
day following the signing of the contract.
b. the purchaser may revoke the
contract up to two years following the signing of the contract.
c. the subdivider or developer
must see that the purchaser receives the report within two years
of the
signing of the contract.
d. the subdivider or developer
must see that the property report is delivered to the purchaser before
any construction is started on the property.
10. P is in the business of buying large tracts of land
and then re-selling them to consumers in small tracts. He is in
the business as a
a. developer.
b. real estate broker.
c. engineer.
d. subdivider.
11. A subdivision was developed, and one of the deed restrictions
covering all of the properties in the subdivision set aside the back six
feet of each parcel as a combination green belt area and bicycle path.
Homeowner U plans to convert the back one-half of her yard into an organic
garden. Her neighbors can
a. do nothing because individual
homeowners have no authority in this matter.
b. go to court in an attempt to
obtain injunctive relief.
c. force homeowner U to
sell her property.
d. share in the profits
from U's garden.
12. Q is in the business of buying tracts of land, constructing
buildings and making other improvements on them,
and then selling them to the general public. She is in the business
as a
a. developer.
b. real estate broker.
c. engineer.
d. subdivider.
13. Restrictive covenants than run with the land
a. are no longer effective
when the title is transferred.
b. apply only until the
developer has conveyed the title.
c. can be removed by a court
of competent jurisdiction.
d. apply to and bind all successive
owners of the property.
14. The primary intent of zoning ordinances is to
a. ensure the health, safety,
and welfare of the community.
b. demonstrate the police
power of the state.
c. limit the amount and
types of businesses in a given area.
d. protect residential neighborhoods
from commercial encroachment.
15. The condemnation of private property for public use
is made possible by the right of
a. police power.
b. escheat.
c. eminent domain.
d. confiscation.
16. For the past 30 years, the Ls have operated a neighborhood
grocery store. Last week the city council
passed a zoning ordinance that prohibits packaged food sales
in the area where the Ls' grocery store is
located. The store is now an example of a(n)
a. illegal enterprise.
b. nonconforming use.
c. violation of the zoning
laws.
d. variance of the zoning
laws.
17. Deed restrictions CANNOT legally restrict
a. sizes and types of structures
to be built.
b. potential future uses
of the properties.
c. future owners and occupants
of the properties.
d. exterior finish and decoration
of the structures.
18. Which of the following best describes the purpose of
a building permit?
a. The method for overriding
or substantiating deed restrictions
b. The municipal control
over the volume of construction
c. The evidence of compliance
with municipal regulations
d. The method of regulating
the area and size of buildings
19. A residential developer's deed restrictions would NOT
include
a. easements in gross for
the installation of public utilities.
b. an agreement NOT to sell without
the consent of the neighbors.
c. the minimum square-footage
for any home to be built in the subdivision.
d. a reference to the use of community facilities by residents only.
20. A development company owned property that the city wanted
so that it could extend the r unways at the
municipal airport. If the company refuses to negotiate with the
city, then the city may acquire the property by
a. escheat.
b. accretion.
c. confiscation.
d. eminent domain.
21. A tire company has a manufacturing plant located in
an area that has just been rezoned for residential use.
The company is allowed to continue operating the plant under
the new zoning classification.
However, the tire company
a. may not construct another plant in the neighborhood
without first applying for a zoning variance.
b. may not construct another plant
in the neighborhood under any circumstances.
c. may construct another
plant if it obtains the consent of the residents then living in the
neighborhood.
d. may construct another
plant without the residents' consent as long as the homeowners' association
approves it.
22. If the buyer of a vacant lot builds a house that violates
the restrictions in his or her deed, the buyer may
a. forfeit the title to the property.
b. be sued and required to alter
the structure to conform with the restrictions.
c. be sued and required
to pay damages to the other residents in the neighborhood.
d. do so without any fear
of reprisal by the residents in the area.
23. Which of the following is NOT an example of police power?
a. Zoning ordinances
b. Building codes
c. Restrictive covenants
d. City planning requirements
24. Before the government can exercise its right of eminent
domain, the use of the property must be
a. a public use for which the
property owner will be fairly compensated.
b. established for the health,
safety, and welfare of the government.
c. a local use that will
benefit the residents in the immediate area.
d. established as a fee
simple determinable estate for a particular use.
25. Legislation designed to convert residential zoning
into conservation or recreational purposes
a. is usually supported
by all of the residents of a given area so that the majority rules.
b. may be found by the courts
to be a "taking" without the payment of just compensation to the property
owner.
c. generally is supported
by special interest groups whose power might be greater than that
of the
courts.
d. may be found to be an
excessive use of police power by the courts and therefore ruled as unconstitutional.
26. A conveyance that includes a condition controlling
or limiting the use of the property conveyed is an example of
a. the need for competent
legal advice.
b. a deed restriction.
c. the need for a zoning
appeal.
d. a zoning variance.
27. In a widely-publicized dispute, H refused to sell his
land to the local school district. He believed that the
price the school district offered him for the land was not sufficient
consideration. If the school district were to pursue the matter in court,
what legal proceeding would it institute to force H to sell his land to
them?
a. Escheat
b. Foreclosure
c. Probate
d. Condemnation
28. Control by local ordinances does NOT regulate
a. the height of buildings in an area.
b. the density of population.
c. the use of the property.
d. the price of the property.
29. Deed restrictions are a means by which
a. local zoning laws are enforced.
b. the planning commission controls developers.
c. municipalities enforce building restrictions.
d. grantors control the future use of the ownership.
30. The owner constructed a building that is 7 stories high. Several
years later the municipality changed the zoning ordinance, prohibiting
buildings that exceed 6 stories in height. Which of the following is true
regarding the existing 7 story building?
a. It is a nonconforming use.
b. The building must be demolished.
c. It is a conditional use.
d. The owner must obtain a variance.
31. Under an existing ordinance no signs may be placed on a building
that extends more than 3 feet above the highest point of the roof. An owner
wants to erect a 9 foot high revolving sign on the roof of his store. In
order to legally do this, the owner must get a
a. deed to the air rights.
b. variance.
c. nonconforming use permit.
d. court order.
32. What cost would NOT be included as part of the development
costs of a lot ?
a. Curbs and gutters
b. The purchase price of the land
c. Site grading
d. Sanitary sewer installation
33. The purpose of bulk zoning is to
a. ensure that certain kinds of uses are incorporated into developments.
b. specify certain types of architecture for new buildings.
c. control density and avoid overcrowding.
d. set overall development goals for the community.
34. A municipality establishes development goals through its
a. subdivision regulations.
b. restrictive covenants.
c. environmental regulations.
d. comprehensive plan.
35. Which of the following is a variance?
a. An exception to a zoning ordinance
b. A court order prohibiting certain activities
c. A reversion of ownership
d. A nullification of an easement
36. The construction of a family room, additional bedroom and extra
bath has been completed on the owner's home.
Before the addition can be used, which of the following is true?
a. The municipality must issue a building permit.
b. The bath must be inspected by the plumbing inspector.
c. The municipality must issue an occupancy permit.
d. The municipality must issue a conditional-use permit.
Chapter 20 Questions
1. The Civil Rights Act of 1866 prohibits discrimination
in housing based on
a. race.
b. religion.
c. sex.
d. handicap.
2. The agency responsible for the enforcement of the Fair
Housing Act is the
a. Department of Justice.
b. Federal Housing Administration.
c. Department of Housing and Urban
Development.
d. Department of Veteran
Affairs.
3. It is illegal for a lending institution to refuse to
make a residential real estate loan in a particular area
only because of the
a. questionable economic
situation of the applicant.
b. physical location of the property.
c. applicant not being of
legal age.
d. deteriorated condition
of the premises.
4. A discrimination suit may be filed in federal court
by
a. the aggrieved person because
of racial discrimination.
b. the Department of Housing
and Urban Development.
c. the state or county nondiscrimination
officer.
d. the Federal Housing Administration.
5. The federal Fair Housing Act does NOT prohibit
a. blockbusting.
b. discriminatory advertising.
c. redlining.
d. discriminating on the basis of marital status.
6. In order to file a complaint of discrimination, the
complainant must
a. be able to prove that
discrimination occurred.
b. suspect that discrimination
occurred.
c. be able to prove that
the discrimination was intentional.
d. be able to produce witnesses
to the discrimination.
7. The Fair Housing Act of 1968 is contained in
a. Title VIII of the Civil Rights
Act of 1968.
b. the Civil Rights Act
of 1866.
c. the Civil Rights Act
of 1964.
d. Executive Order No. 11063.
8. A prospective homebuyer who is black inquires about
the availability of a home in a predominately white
residential neighborhood. What should the broker say to
this prospect?
a. "You wouldn't want to
live in this area because the neighbors are trying to protect the integrity
of the area."
b. "I'd be happy to show
you homes in other areas where black people are welcome."
c. "The residents here have
expressed a desire to keep the area homogeneous with no
minorities."
d. "I'll be pleased to show you
any houses that you're interested in."
9. Real estate brokers are NOT required to
a. take affirmative marketing
action in advertising.
b. take affirmative marketing
action in canvassing.
c. show all of the properties
they have listed.
d. prominently display the
equal housing opportunity poster.
10. Protection from threats or acts of violence against
those who assist and encourage open housing rights is
found in the
a. Civil Rights Act of 1866.
b. Civil Rights Act of 1964.
c. Fair Housing Act of 1968.
d. Fair Housing Amendments
Act of 1988.
11. The provisions of the Fair Housing Act apply
a. in all states.
b. only in those states
that have ratified the act.
c. only in those states
that do not have substantially equivalent laws.
d. only in those states
that do not have specific state fair housing laws.
12. The practice of channeling families with children away from other
buildings into an apartment building where other families with children
reside is
a. most practical.
b. blockbusting.
c. redlining.
d. steering.
13. Actions that are made illegal by federal and state
fair housing laws do NOT include
a. offering advantageous
loan terms to encourage the re-segregation of a residential area.
b. refusing to show certain
residential property to non-English-speaking individuals.
c. channeling members of
a certain minority group into an area already predominately occupied by
members of that minority.
d. refusing to show certain residential
property to people who are not financially qualified
to purchase it.
14. The refusal of a lending institution to make a residential
real estate loan strictly because of the racial or ethnic composition of
the neighborhood is called
a. blockbusting.
b. redlining.
c. steering.
d. panic peddling.
15. Discrimination based on familial status was prohibited
with the passage of the
a. Civil Rights Act of 1866.
b. Civil Rights Act of 1964.
c. Fair Housing Act of 1968.
d. Fair Housing Amendments Act
of 1988.
16. Discrimination on the basis of any of the following
could be construed as violations of fair housing laws EXCEPT for discrimination
based on
a. ethnic considerations.
b. sexual considerations.
c. economic considerations.
d. religious considerations.
17. There are exceptions to some of the fair housing laws
for all of the following criteria EXCEPT
a. retirement communities.
b. private clubs.
c. religious organizations.
d. racial considerations.
18. Steering is
a. leading prospective homeowners to or away from certain neighborhoods.
b. refusing to make loans on properties located in certain areas.
c. a requirement for the broker to join MLS.
d. a practice of standardizing commission rates.
19. Under the federal Fair Housing Act it is illegal to discriminate
because
a. a person has a history of dangerous behavior.
b. of a person's marital status.
c. a person has AIDS.
d. a person has been convicted of distributing a controlled substance.
20. A house for sale was advertised: "Fine executive home in an exclusive
neighborhood, suitable for an older couple; near St. Mary's Church." All
of the following are true EXCEPT
a. This is descriptive of the property for sale and a good ad.
b. An exclusive neighborhood could be interpreted to mean that
minorities are not welcome.
c. It appears that families with children are not welcome.
d. The neighborhood could appear to be undesirable for people who do
not follow the same religion as St. Mary's Church.
21. A broker employs several salespeople, one of whom is a minority.
The broker tells this salesperson to work only with minority buyers and
solicit listings in only predominately minority neighborhoods. Which of
the following is true?
a. The broker is entitled to direct the activities of this salesperson.
b. The fair housing laws do not apply to the broker's practices.
c. The salesperson's rights have been violated by the broker.
d. The salesperson should be satisfied with the broker's policy.
22. The restrictive covenant in a condominium complex prohibits pets.
A prospective buyer with a physical disability relies on an animal to assist
him. Which of the following is true?
a. The condominium has the right to establish this private restriction
if it chooses.
b. This restriction is unenforceable only if the animal is used to
assist people with visual impairments.
c. This restriction is unenforceable when any person with a disability
uses an animal for assistance.
d. The condominium can waive the enforcement of the covenant only if
there are suitable accommodations in the complex for an animal.
23. The Americans with Disabilities Act requires that
a. all real estate is free of barriers to people with disabilities.
b. all employers adopt nondiscriminatory employment practices.
c. reasonable accommodations be provided to people with disabilities.
d. the existing premises must be remodeled regardless of the
cost involved.
24. Which of the following is illegal?
a. Refusing to lend money to a minority person who has poor credit
b. Refusing to allow families with children to live in a housing development
intended
exclusively for people over 62
c. Refusing to hire an otherwise qualified person because he cares
for his wife who has a
disability
d. Refusing to rent to a person who has been convicted of distributing
cocaine
25. Which of the following would be considered to be legal?
a. Charging a family with children a higher security deposit than is
charged to adults
b. Requiring a person with a disability to establish an escrow account
for the costs to restore a property after it has been modified
c. Picturing only white people in a brochure as the "happy residents"
in a housing development
d. Refusing to sell a house to a person who has a history of
mental illness
26. When a salesperson represents that minorities are moving into the
area to get homeowners to sell their properties, this activity is
a. panic selling.
b. steering.
c. discriminatory advertising.
d. legal as long as it is true.
Chapter 21 Questions
1. A method of sealing off disintegrating asbestos is called
a. capping.
b. encapsulation.
c. containment.
d. contamination closure.
2. “Capping” is the method of
a. piling waste into a hill at surface level and covering with
clay.
b. compacting waste and sealing
In a container.
c. laying soil over the top of a landfill, and planting vegetation.
d. burying waste and covering with soil.
3. Which of the following is NOT true about asbestos?
a. It was commonly used as insulation.
b. Removal can cause further contamination of a building.
c. HUD requires all asbestos-containing materials to be removed
from residential buildings.
d. It is most dangerous when airborne.
4. The most common source of lead poisoning found in residential property
is
a. in asbestos.
b. in the basement.
c. caused by appliances.
d. in alkyd oil-based paint.
5. UFFI is found in
a lead-based paints.
b. insulation foam.
c. appliances in the home
d. electromagnetic fields.
6. In regulations regarding lead- based paints HUD requires that
a. homeowners test for presence.
b. paint must be removed from surfaces before selling.
c. known paint hazards must be disclosed.
d. only licensed contractors may deal with removal.
7. Radon is
a. only found in the eastern United States.
b. easy to detect because of its odor.
c. a known human carcinogen.
d. not found in older homes.
8. Which of the following is NOT true about radon?
a. It is colorless and odorless and tasteless.
b. Radon levels will vary depending on weather conditions.
c. Levels can be reduced by installing ventilation system.
d. Modern home construction reduces the potential for radon gas
accumulation.
9. Carbon monoxide is not
a. easy to detect.
b. a result of incomplete combustion.
c. quickly absorbed in the body.
d. a natural result of combustion.
10. Contamination by underground storage tanks is
a. found only in petroleum stations.
b. regulated by the EPA.
c. only caused by tanks currently in use.
d. easily detected and eliminated.
11. Electromagnetic fields
a. cause serious health problems.
b. are produced by appliances.
c. are suspected of causing cancer and other health problems.
d. are a major public concern.
12. Which of the following is NOT true about underground water contamination?
a. It is not a major problem in the United States.
b. Any contamination can threaten the supply of pure, clean water
for private wells and public water systems.
c. Protective state and federal laws concerning water supply
have been enacted.
d. Real Estate licensees need to be aware of potential contamination
sources.
13. Included in the regulations of the Superfund which was established
to cleanup uncontrolled hazardous-waste sites are
a. exemptions to responsibility for neighboring properties.
b. release of liability of owner is not responsible for contamination.
c. no provisions for recovery reimbursement for cleanup costs.
d. provisions for retraction liability.
Chapter 22
3. The Real Estate Settlement Procedures Act (RESPA) applies to the
activities of
a. licensed real estate
brokers when selling commercial and office
buildings.
b. licensed securities salespeople
when selling limited partnership
interests.
c. lenders financing the purchase
of a borrower's residence.
d. Fannie Mae and Freddie
Mac when purchasing residential
mortgages.
4. The details of a sales transaction are always governed by
a. the wishes of the seller
as expressed orally.
b. the wishes of the buyer
as expressed orally.
c. the escrow instructions
that both the seller and the buyer sign.
d. the terms of the properly executed
purchase contract.
5. At the closing, the real estate broker's commission generally appears
as a
a. credit to the seller.
b. debit to the seller.
c. credit to the buyer.
d. debit to the buyer.
6. The condition of the seller's title is generally determined from
a
a. title commitment or title insurance
policy.
b. physical inspection of
the property by the buyer.
c. closing statement prepared
by an escrow agent.
d. escrow report prepared
by an attorney.
7. The Real Estate Settlement Procedures Act (RESPA) provides that
a. all real estate purchasers
must receive their closing statements.
b. real estate advertisements
must include the annual percentage
rate, including all charges.
c. the borrower must be given
an estimate of the closing costs
before the time of the closing.
d. real estate syndicates must comply with the disclosure
of
"blue sky" laws.
8. The accrued interest on an assumed mortgage loan is entered on the
closing statement as a
a. credit to the seller
and a debit to the buyer.
b. debit to the seller and a credit
to the buyer.
c. credit to both the seller
and the buyer.
d. debit to both the seller
and the buyer.
9. As provided in a valid purchase contract, the real estate transaction
must be closed. This does NOT mean that
a. the seller must clear the title so that
the condition of the title complies with the terms of the contract.
b. the purchaser must pay
the balance of the purchase price to
the seller.
c. the broker must attend the
closing to receive any commission.
d. the seller must deliver
the deed to the purchaser.
10. The process by which expenses are handled at the settlement of a
real estate
transaction so that both the buyer and the seller pay their respective
portions of the debts is called
a. assessment.
b. proration.
c. balancing.
d. reconciliation.
11. Which of the following items is NOT usually prorated between the
buyer and seller at closing?
a. Recording charges
b. Real estate taxes
c. Rents
d. Utility bills
12. The Real Estate Settlement Procedures Act (RESPA) may apply to a
loan assumption if the
a. terms of the assumed loan are
modified by the lender.
b. lender charges less than
$50 for the assumption.
c. buyer must be qualified
by the lender for the assumption to
occur.
d. seller does NOT want
to be liable for the loan in the future.
13. The principal balance on an assumed mortgage loan is entered on
the closing statement as a
a. credit to the seller
and a debit to the buyer.
b. debit to the seller and a credit
to the buyer.
c. credit to both the seller
and the buyer.
d. debit to both the seller
and the buyer.
14. The Real Estate Settlement Procedures Act (RESPA) is a regulation
of the
a. state government.
b. federal government.
c. Department of Housing and Urban Development.
d. Department of Veteran Affairs.
15. The closing statement involves the debits and credits to the parties
in the transaction. A debit is a(n)
a. refund.
b. expense.
c. adjustment for an expense paid outside of closing.
d. proration.
16. The Real Estate Settlement Procedures Act requires
a. that the closing of a transaction be held within 90 days of the
date of the sales contract.
b. that disclosure be made of all closing costs prior to the
closing.
c. the lender to disclose the annual percentage rate the borrower will
be paying.
e. that lenders follow certain advertising procedures when advertising
credit.
20. In a closing statement, an accrued item is a(n)
a. item paid in advance.
b. item that is unpaid but is due.
c. prepaid expense.
d. proration.
21. Real estate firms are often affiliated with title insurance
companies or mortgage brokers. These business arrangements
are permitted by RESPA as long as
a. consumers are unaware of these arrangements.
b. consumer are required to use the services of the affiliated
companies.
c. the companies pay referral fees between them.
d. the companies make a written disclosure of their relationship with
one another.